Renova Toilet Paper Marketing Case
Renova has established itself as a global organization in the disposable paper industry with about 600 workers and posting sales of 104 million euros in 2005 specially within Portuguese, Spanish, French and central European markets. As a global market, the tissue one is dominated by strong companies as Procter and Gamble and Kimberly-Clark, two giants big enough to destroy any intention to survive unless Renova is able to overcome with a differentiation strategy.
My analysis indicates that success lies in Renova’s ability to raise awareness and image of the Renova brand by successfully positioning its new black toilet paper as a unique personal care product for youth consumers from higher social classes. The major impediment to this goal is that toilet paper is a highly commoditized category where price is the most important attribute for the majority of the consumers (60% in the case of the Portuguese market).
To overcome this impediment, Renova should leverage the launch of its new black toilet paper to strengthen its positioning as a product leader company selling unique products that go beyond the basic offering of toilet paper and communicate superior benefits in the minds of consumers of a specific targeted segment. This will allow Renova to create a distinctive brand positioning that will help them to attract new customers and not only retain its current customers but also getting them to increase the usage of its premium products.
Goal Analysis As a firm which pursues a Product Leadership approach, the most important goal for Renova is to focus on affluent consumers who care less about price and more about brand and image and get these customers to purchase a premium toilet paper, Renova black. Concentrating on this segment ensures long-term growth and profitability, as this segment is less sensitive to price and to switch to private label toilet paper offered by retailers or to other brands offered by giant competitors such as Procter & Gamble.
In addition, the launch of this new product could generate a significant impact in public relations thus increasing brand positioning, while increasing Renova’s share of the Western European market of disposable tissue and hygiene that in 2005 is only 1% of a $26 billion business. The alternative goals of reducing price to increase sales in the entry–level paper is flawed since that segment faces strong competition from big companies such as Procter & Gamble, who can achieve higher operational efficiencies due to their large global operations.
In addition, that alternative would not leverage on the value of the Renova brand as a pioneer in the product leadership discipline. Firms are cautioned not to overinvest “in areas where you won’t win competitively [and] that dilute your core strengths. ” Ultimately, to do so would adversely affect brand image and make it increasingly difficult to generate long-term profits. The other alternative of partnering with retailers to produce private labels is not well defined, as it encompasses a broad range of consumers ranging from consumers of basic toilet paper to consumers of premium toilet paper.
Second, although private labels account for 33% of the Portuguese toilet paper market, they are the strongest competitors to Renova and by switching to produce private label, Renova not only would empower its main competitor but also would reduce the differentiation of the Renova brand and would strengthen the competition based on price, since private labels focus on offering a superior quality/price ratio. Impediment Analysis The major impediment is that toilet paper is a highly commoditized category where price is the most important attribute for the majority of the consumers (60% in the case of the Portuguese market).
Moreover, colored toilet papers have almost entirely disappeared from supermarket shelves. Consequently, the benefits of Renova black must be positioned as a symbol of well-being and luxury. Erroneous comparisons or vague marketing campaigns can undermine the positioning of Renova black as a symbol. It might be argued that the greatest impediment to Renova’s goal is the growing share of private labels and its points of difference: private labels offer a better quality/price ratio. However, attempting to render a competitor’s point-of-difference a point of parity, would serve to only dilute the Renova black and its own point-of-difference.
It would be detrimental for Renova to address this impediment by assimilating private labels points-of-difference since Renova is a brand leader. Solution Analysis To overcome the impediment set forth in this discussion, instead of positioning Renova black against other toilet papers, it should be positioned as a personal care product and using its black color to provide it with a distinctive positioning and becoming Renova black not only a unique product but also a symbol for those consumers who seek for the best products to take care of their body.
This solution is derived from the following positioning statement: “For younger consumers from higher social classes who care about their image and seek for luxury personal care products for the superior care of their body, Renova black, offers the best quality in a toilet paper with a unique color, combining superior body cleaning with a desirable image. Feel the pleasure of being totally clean and enhance your image with Renova black. In this way, Renova will be able to generate a competitive frame to launch Renova black as a product for personal care.
Furthermore, the positioning statement provides the product with an evolution from the basic function of the category to a new attribute with an enhanced image. It is crucial for Renova not to focus on prices and to create a distinctive brand since it is vulnerable to private label competitors that are the fastest-growing category, gaining market share thanks to their superior quality/price ratio. Rather, it should focus on creating “… brand equity and differentiation to try to make comparisons across products more difficult.
The fact that toilet papers with new features, such as the moist toilet paper, haven’t had strong success in Portugal (moist toilet paper accounted for less than 0. 1% of the Portuguese market) illustrates the importance of providing a new attribute more than a new feature. In order for Renova to be appealing and successful over time, it must be positioned in a way that clearly solves the targeted segments needs and wants.
“The perception of a products value is the result not only of the product’s features, but also of service levels, brand name, company reputation, competitive offerings, and other factors. Moreover, this solution approach will reinforce Renova’s positioning as an innovative firm within the mature commodity-producing industry of toilet paper. Argument Against the Proposed Solution It might stand to reason that Renova should focus on its current customer base as this is the path of least resistance, seeking for alternatives to increase sales of its low entry product, Renova super that accounts for 76% of Renova’s total sales of toilet paper.
Current customers are cheaper to target since Renova is more familiar with their needs, and they are more familiar with the Renova brand, products, and quality. Further, it could be said that current customers are already loyal to the Renova brand, thus more receptive to adopt the new black color. Counter-argument Unfortunately, this proposed solution is flawed. While concentrating on current customers may initially be the path of least resistance, focusing on this segment will not drive the ultimate goal of becoming Renova a wellbeing brand.
First, by targeting to low-entry customers Renova will have to face strong competition from giants such as Procter & Gamble and retailers with private labels that offer a better quality/price ratio. Moreover, utilizing a point-of-entry strategy would not help Renova black toilet paper to become a product embodying image and luxury and would be compared to the regular toilet paper offered by many competitors.