As a part of the Business transformation module, I chose to work on the changing environment and the need for change for Alkaline battery businesses using Duracell brand as a example. The attached deck is a reading deck the covers opportunity and recommendation for the business.
2. The following presentation is focused on using
Duracell Batteries as a subject for Business
Transformation. More precisely, the alkaline primary
consumer battery business of Duracell.
The work enclosed herewith is for Academic Purposes
only. The data represented has been supported with
necessary references wherever possible.
4. The presentation aims to the cover the four key aspects of
Business Transformation.
1. Core reasons for choosing the said business and the
need for change in the industry and business.
2. The areas of opportunities identified from changing
market needs and digital development.
3. An idea concept that will allow the business to
explore new opportunities for future sustenance.
And...
4. The impact of change on the business and the
market.
6. Procter and Gamble
cuts the arm
Category Declines
and
Duracell Stagnates
Fall in sales of
products that work
on batteries
7. Procter & Gamble recently sold the Duracell business to
Warren Buffet’s Berkshire Hathaway. In 2014, according
to a report by Financial Times, P&G reported net earnings
of $2bn for the three months to the end of September
that were down $1bn from a year ago, due largely to a
Duracell-related non-cash charge.
In the United States, battery sales fell four per cent in the
fifty-two-week period ending in late September,
according to Nielsen data analyzed by Jefferies &
Company and cited in the Wall Street Journal. Energizer
Holdings CEO Ward Klein frankly told the Consumer
Analyst Group of New York's conference last February he
expects that the battery business will keep declining 2%
to 3% annually as consumers shift toward smartphones
and tablets, cited in Ad Age.
To further support the point by CEO Ward Klein, in a
report, by Vauhini Vara in the New Yorker, we see a
strong case on the effect of Smartphones on the primary
battery industry.
She argues, since the smartphone débuted (not all that
long ago, remember—Apple introduced the iPhone in
2007), it has displaced or considerably shrunk the
market for alarm clocks, music players, torches,
navigation devices, calculators, and even hotel key cards.
With the inseparable dependency of sale of batteries on
primary products and the increasing capabilities of
Smartphones, the need for change will only grow as the
technology advances.
10. Let’s start with looking at the Strengths & Weaknesses of
Duracell. Though the category overall has been declining
slowly the product has not yet turned obsolete.
Additionally, Duracell has managed to stand the force of
competition. As of 2013, Duracell's market share was as
high as 46% of the alkaline-battery category. In an
interview with Ad Age, Duracell MD Jeff Jarrett also
mentioned about the increasing trust shown by retailers
and the growing social media engagement with
consumers.
However, from the point of view of ‘job to be done’ the
product hasn’t changed. The disposable nature of the
product makes it less attractive to consumers when they
are offered options that are direct power source or charge
before use. The environmental hazards of battery
production and disposal make it further unattractive to
consumers in the future. In an article by Lynn Jefferys, on
the Battery Company, 98% of batteries bought in the UK
are not recycled and end up in landfills.
When taken to landfills, most batteries release harmful
metals into the environment causing soil contamination
and water pollution. The Waste Batteries and
Accumulators Regulations were introduced in 2009,
setting the following targets for the recycling of
disposable batteries; 25% recycling rate by 2012 and
45% by 2016. However, it continues to be a prevalent
problem.
12. Let’s move attention towards the threats, as the
smartphone turns more multi-functional, the need for
numerous products continues to decline. To cite an
example in 2008, David Pogue raved in the Times about
the Flip video camera (which ran on AA batteries) calling
it “one of the most significant electronics products of the
year” and “a mega-hit.” A year later, Cisco acquired the
startup that made the Flip. But smartphones were
starting to offer better and better video quality; by 2011,
the Flip had been discontinued.
Manufacturing of more products that are rechargeable
and depend on electricity as the primary power source
are a threat to the Alkaline battery industry due to the
convenience and the power capacity it can handle. On an
average we use between 6000 to 10000 mAh per day
to power our smart devices such as phones, tablets and
wearables. For instance, the capacity of Apple supplied
batteries is 1900mAh that often users charge twice
everyday. This makes the strength of Alkaline Batteries
seem weak in the digital age.
13. STRENGTHS
THREATS
WEAKNESSES
OPPORTUNITIES
Electricity is a loose
thread in a wireless
world
Green mindset
Smart devices
Change in
management
Brand
Credibility
Highest
Market share
Electricity,
rechargeable
Disposable,
environmental
concerns
14. To turn to the opportunities, the change in ownership
should be viewed positively. As the company is already
on it’s way to a management and functional change, the
time is right to pave a new path for re-inventive thinking.
While the brand explores new routes to a sustained
future there is one core value of batteries that already
competes with electricity, that is the convenience of
portability.
To add to the mix, there is also a wave of new consumer
behaviour in the energy consumption category, a recent
Nielsen global online study found that Millennials
continue to be most willing to pay extra for sustainable
offerings — almost 3/4 respondents in the latest findings,
up from approximately half in 2014.
“Brands that establish a reputation for environmental
stewardship among today’s youngest consumers have an
opportunity to not only grow market share but build
loyalty among the power-spending Millennials of
tomorrow, too,” says Grace Farraj, SVP, Public
Development & Sustainability, Nielsen.
15. “ How might we make
Duracell relevant to the
consumers in the future?
16. For a change in business, especially the product it’s
necessary to start with smaller steps.
Though the technology of Alkaline batteries is not
entirely obsolete, yet it is time to start the change today
while the company is still financially healthy to support
the change.
As we have learned through the application of the BCG
matrix, one needs to continue milking the Cash Cow to
earn profits to enable funding or sustaining other
premature businesses.
19. Combining all the insights from the previous two
exploratory stages has led us to a ‘sweet-spot’ scenario.
This will allow Duracell to stay ahead in the game, as the
competitors are not only behind in the current game of
Alkaline batteries, they have also not made
announcements of any transformative plans.
Complementing the first mover’s advantage to the other
variable - Targeting the new favourites, helps Duracell
earn back its relevance, same as it enjoyed in parallel
with the consumer goods market in the late 70s to the
early 2000s.
As the consumer, grows more aware and environmentally
concerned they look for investments and not for
disposables plus they demand more convenience and
control.
Cadex Electronics’ online Battery University questions,
how much the battery has changed in the last 150 years?
Compared to other advancements, the progress has only
been moderate. A battery holds relatively little power, is
bulky, heavy, and has a short life span. Battery power is
also very expensive. The smaller the battery, the higher
the cost-per-watt becomes.
Hence, the future consumer needs a solution which is an
investment and that empowers the consumer to
participate in the process.
21. While transforming a business that has a successful
heritage, it’s necessary to capitalise on the core
competencies of the brand. Duracell at its core is a
company that has for years provided an energy solution
that is simple to use, portable and based on storage.
In the future, Duracell can hold on to its core along with
an added factor of future relevance to stay ahead in the
game. According to an article recently published in the,
Tech World powering smart gadgets with wireless
technology is on its high road and expected to be a
natural progression. Additionally, wireless products that
will become available over the next six months will be
more powerful, and versatile, offering an even better user
experience.
The article elaborates, backwards compatibility is also a
very important feature, and there are already lots of Qi
enabled devices out there. That's why phone
manufacturers are very likely to stick to the Qi charging
standard with new devices, some may add AirFuel as
well, but Qi is guaranteed. Which means the industry
standardization of wireless compatibility in all smart
devices has already begun, paving a smoother way to
cater to the need.
The key differentiation for Duracell in the future will be
the method of generating this power. Which aims to not
only cater to the, ‘always connected, always on the go’,
needs of consumers, but also the shifting interest in
supporting and choosing brands that offer a green
product.
22. DuraMo
100 % wirefree portable charger, that
charges on kinetic energy.
Small as a coin
Can store up to 10000mAh power
as backup
How to charge
DuraMo?
Just carry it everywhere you go.
You can wear it around your
neck or carry it in your pocket.
Any moment is stored in
DuraMo as power you can use to
charge your devices.
Comes with an Android & iOS
app that records your daily
movement and displays the
energy you generate.
+ =
How to use
DuraMo?
Micro-rubber suction layer helps
you stick it on to any of your
devices you want to charge.
Can be used to charge any smart
devices with wireless charging
capabilities - Smartphones,
Smartwatches, Fitness bands,
Headsets, Speakers and more.
Track your energy generation
and fitness levels.
Works in all weathers.
23. Value Proposition
Duracell Alkaline Battery
PRODUCT
Benefits
Portable
100 % Wirefree
Green Energy
Features
Supported by a motion tracker app
Works in all weathers
Experience
Non-intrusive
Complete, in itself - Generates, Stores and Charges
CUSTOMER
Wants
To be connected always,
anytime, anywhere
Fears
About harming the environment any further
Needs
To always have his smart devices charged
SUBSTITUTES
Solar chargers - dependent on weather, not wireless.
Portable Power banks - Use electricity to recharge, limited life
when outside
24. Year 1
Wireless + Green
producer of power
Future
Product
development
Year 2 -3
Research on
contactless
power
transmission
Year 4
Launch
contactless power
sharing through
mobile app
25. There is already a lot of research and successful trial
being conducted in the area for wireless energy
transmission.
In fact, in 2014, Dr Hall, now Chief Technology Officer at
WiTricity, a startup developing wireless "resonance"
technology, said “We're going to transfer power without
any kind of wires,"
"But, we're not actually putting electricity in the air. What
we're doing is putting a magnetic field in the air." "The
challenge now is increasing the distance that power can
be transferred efficiently. This distance, Hall explains, is
linked to the size of the coil, and WiTricity wants to
perfect the same long-distance transfers to today's
small-scale devices."
Hence for the recommended Year 4 product
development plan of energy sharing with friends via a
mobile app, there is going to a need for additional
research and testing effort from Duracell’s innovations
team.
27. 10 Steps of Innovation
By Doblin
CONFIGURATION
Profit Model Network Structure Process
Shift from volume of sales to
value of purchase.
Materials Supplier network will
change. But the Distribution
network can remain the same.
Addition to existing structure, a
business that sits outside the
main hierarchy, in an incubator.
Consumer feedback will play a
vital role in product testing and
enhancement.
EXPERIENCE
Service Channel Brand Customer Engagement
With the change in length of relation and
the complexity of the product, the
customer service standards will have to
match that of the overall digital industry.
Addition of new
channel - Mobile
Application to support
the device.
The existing identity
should be capitalised
with the added badge
of ‘Green Energy’.
Higher involvement product requires
higher quality of conversation. Data
collected through App should be used
to personalise engagement.
OFFERING
Product Performance Product System
Change from Single usage to long
term usage.
Change from Alkaline to kinetic
energy generation.
29. There are two major ethical concerns that are possible to
arise in a case of Business Transformation of the
magnitude proposed for Duracell’s Primary Battery
business.
1. The employment security of the current staff:
There will be a need for potential downsizing and
replacement of staff members due to need for
different skillsets and knowledge.
However, the same can be addressed with long
term planning. As the mentioned earlier, the new
business in the start will not affect the existing
functions and products of Duracell. In future,
there will be gradual movement but the planned
transition will allow the employees time and
opportunities to learn or switch.
2. Privacy of data: Data collected through the app
will contain behavioural insights about a
consumer’s energy consumption as well their
fitness routines and levels.
This data can be useful to Duracell and other
brands to offer users personalised products /
services, the same can be carefully managed
through opt-in / opt-out procedures at the time of
set-up so users can decide the level of privacy.
30. “Affordable renewables are set to dominate the emerging power systems of the world,”
Dr. Birol said.
IEA, 2015
Energy Harvesting System Market Worth $974.4 Million by 2022.
Arch News, 2016
Potential
31. Conclusion
The enclosed case of Business Transformation has been
proposed keeping in mind the the changing market and
consumer needs. For a product that is dependent on the success
of other product categories needs to keep an agile foot in the
market to stay relevant. The impact on the business can be
managed if the steps towards change are taken in time!
32. Bibliography
Articles
Articles
Financial Times. (2016). P&G to sell off Duracell battery business - FT.com. [online] Available at: http://www.ft.
com/cms/s/0/77038ef2-5b72-11e4-a674-00144feab7de.html#axzz47UpfVv4N
Vara, V., Surowiecki, J. and Paumgarten, N. (2014). Duracell in the Age of the iPhone - The New Yorker. [online] The
New Yorker. Available at: http://www.newyorker.com/business/currency/duracell-age-iphone
Adage.com. (2016). Duracell vs. Energizer -- One Charges Up, One Sputters. [online] Available at: http://adage.
com/article/news/duracell-energizer-charges-sputters/245108/
Kell, J. (2014). Warren Buffett to buy Duracell from Procter & Gamble. [online] Fortune. Available at: http://fortune.
com/2014/11/13/warren-buffett-to-buy-duracell/
Jefferys, (2016). The Facts - Environmental impact of Disposable and Rechargeable Batteries - Battery Company Blog.
[online] Batterycompany.co.uk. Available at: http://www.batterycompany.co.uk/blog/the-facts-environmental-impact-of-
disposable-and-rechargeable-batteries/
Priority, G. (2016). Green Generation: Millennials Say Sustainability Is a Shopping Priority. [online] Nielsen.com. Available
at: http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-
priority.html
Batteryuniversity.com. (2016). The Future Battery – Battery University. [online] Available at: http://batteryuniversity.
com/learn/article/the_future_battery
MacRae, K. (2015). Why wireless charging will be coming to your smartphone in 2016. [online] Techworld. Available at:
http://www.techworld.com/personal-tech/future-of-wireless-charging-in-2016-3631199/
Nick Glass and Matthew Ponsford, C. (2016). Wireless electricity? It's here - CNN.com. [online] CNN. Available at: http:
//edition.cnn.com/2014/03/14/tech/innovation/wireless-electricity/
Achrnews.com. (2016). Energy Harvesting System Market Worth $974.4 Million by 2022. [online] Available at: http://www.
achrnews.com/articles/132403-energy-harvesting-system-market-worth---million-by--
Iea.org. (2015). October: Renewables to lead world power market growth to 2020. [online] Available at: https://www.iea.
org/newsroomandevents/pressreleases/2015/october/renewables-to-lead-world-power-market-growth-to-2020.html
33. Bibliography
Videos,
Tools,
Icons
Videos
YouTube. (2016). Top 5 Best Qi Wireless
Chargers PT. 2 - End of 2015!. [online] Available
at: https://www.youtube.com/watch?v=E_lxOHN-
f30
YouTube. (2016). Wireless Electricity
Transmission Circuit. [online] Available at: https:
//www.youtube.com/watch?v=77Qw_bExsJk
Icons
Noun Project. (2016). Noun Project. [online]
Available at: https://thenounproject.com/
Slides Carnival. (2016). Slides Carnival - Free
presentation templates. [online] Available at:
http://www.slidescarnival.com/
Tools
Netmba.com. (2016). BCG Matrix. [online]
Available at: http://www.netmba.
com/strategy/matrix/bcg/
Doblin. (2016). Ten Types. [online] Available at:
https://www.doblin.com/ten-types
Peter J Thomson. (2013). Value proposition
canvas template - Peter J Thomson. [online]
Available at: http://www.peterjthomson.
com/2013/11/value-proposition-canvas/
Vliet, V. (2013). SWOT Analysis, a powerful
problem solving tool - ToolsHero. [online]
Toolshero.com. Available at: http://www.
toolshero.com/problem-solving/swot-analysis/