Americans traveling abroad who turn on a television might be surprised to see a vaguely familiar but distinctly different pink rabbit hawking batteries. It’s the Duracell Bunny, a thin and running hare with the copper-top battery on its back.
Duracell’s arch-competitor, Energizer, has the more familiar Bunny, whose drum beats only in North America. However, it’s a copycat character that followed the Duracell Bunny by sixteen years. (Note to marketers: keep your trademark paperwork up to date).
Duracell lost its rights to the Bunny character in its North American advertising because it failed to secure trademark rights. A 1992 agreement between Duracell and Energizer allowed the former to continue using its Bunny character in Europe, Asia, and other continents. But again in 2016, another grey market scenario arose. Some distributors sold rabbit-emblazoned Duracell packages in the United States. This, of course, initiated a legal challenge from Energizer.
Competition in the Battery Industry
It turns out that consumer branded batteries is an enduring but competitive category, despite its market maturity. Waldemar Jungner developed alkaline batteries in 1989. It’s also a category surrounded by all kinds of technological innovations. One might expect the newer generation of batteries would toss Duracells and Energizers, both of which are alkaline, into the same dustbin as instamatic camera film. In fact, the market for all kinds of batteries—alkaline, lithium, nickel oxyhydroxide, zinc-carbon, and nickel-cadmium—is growing. That comes in part via the proliferation of consumer electronics, particularly in the developing world. Each type has performance pluses and minuses that effectively segment the market by application.
For Duracell, a company with $2 billion in annual revenues, the brand resonates with one name and his company: Warren Buffet and Berkshire Hathaway. Considered by many to be history’s most successful investor, the “Oracle of Omaha” purchased Duracell from Procter & Gamble Co. (P&G) in 2016. This transaction set the battery brand free in many respects. The move had implications for how it operates and, in particular, how it markets itself.
Just a year after that acquisition, it’s safe to say that the market for this product is healthy. (Think desktop computer mice, remote control devices, electronic door locks, and smoke and carbon monoxide detectors.) Plus, alkaline batteries can work in freezing conditions, including in freezer alarms in laboratories and food service environments, which is not the case with other battery technologies.
The Impact of Digital Marketing
Duracell’s chief marketing officer, Tatiana-Vivienne Jouanneau, believes digital marketing plays an important role in selling it. She told digital media and marketing outlet Digiday that the company expects a third of its growth to come from e-commerce channels. The fact that it now sells on Amazon is of course a big part of that. And yet Amazon sells more alkaline batteries under its private label than branded products.
Jouanneau, however, thinks beyond the distribution behemoth in how they do things. She’s a digital platform believer.
Duracell sells the sizzle of the steak, so to speak, with content focused on user experience, she says. And the timing of that content—high-quality video, for example, that shows a family able to enjoy its battery-powered presents on Christmas morning because someone had the foresight to have plenty on hand—matters as well. Jouanneau was with the brand when it was owned by P&G, which restricted digital budgets to 5–10 percent of the total budget.
Had Duracell not been acquired, that Christmas ad might not have seen the light of day. Or at least it would have seen fewer ads on fewer days. In July 2017, P&G announced a cut of more than $100 million to its digital ad spending. The broad-based consumer marketer spends a total of $2.4 billion in US advertising per year. It is skittish about “brand safety concerns and ineffective ads,” according to coverage in Adweek magazine.
The Future in VR storytelling
Jouanneau takes a friendlier view of innovative digital marketing. According to Digiday, she’s “exploring virtual reality (VR) storytelling, KPIs be damned.”
“For me, it’s the most disruptive innovation in entertainment since TV,” she said. Duracell’s agency, Grey London, is preparing creative that will initially run on Google Cardboard. The fold-out cardboard viewer-lens attaches to smartphones to create a 3-D experience. Marketers consider Google Cardboard to be a stepping stone tactic to future online VR platforms.
Warren Buffet is well-known for his belief in bread-and-butter industries and for avoiding the dot-com bubble bust. It’s hard to ignore how he cottons to this degree of digital marketing dabbling. But the hands-off approach taken by Berkshire Hathaway with its portfolio of companies is legendary. A December 2015 article in Harvard Business Review (HBR) discusses the company’s consistent outperforming, by about 10 percent, of the S&P 500 Index.
This comes, the article authors claim, from extreme decentralization.
“The company’s more than eighty operating subsidiaries have complete independence and minimal oversight from headquarters, which requires little else besides regular financial statements and the return of excess cash that is not needed to sustain and grow the business,” say corporate governance writers David Larcker and Brian Tayan in HBR.
Allowing Duracell to be Duracell
In other words, it’s a holding company that allows Duracell to be Duracell. People like Jouanneau and senior managers in the company’s Chicago headquarters have a lot to deal with. They have skills and marketing insight from the business they live day in and day out. Facing down bean counters from Berkshire Hathaway with quarterly expectations while working long-game strategies would make their work that much harder.
Those issues are many and myriad. In particular, there’s the grey market. Rogue importers are buying the firm’s products to package with appliances and remote controls minus ten-year guarantees and customer service contact information. One such case is currently the subject of a pending lawsuit brought by Duracell. Grey market schemes typically involve buying a product in a market where pricing is lower, often due to lower taxation. Individuals then resell it at a profit elsewhere. The idea of slipping it into electric-powered products that are sold abroad, as was the case with the company targeted in the Duracell lawsuit, blurs the grey even further.
But of perhaps even bigger significance is how Amazon is targeting about a dozen categories of goods that it thinks it can conquer with its own label. Noticeable among them from data analytics is how the AmazonBasics brand of alkaline batteries has already captured a third of all online battery sales. Search the retailer’s website for a television remote control, for example, and original equipment usually include the AmazonBasics battery. Search “alkaline batteries” and you’ll need to scroll down to the eighth product listed to find the Duracell brand.
The Future of the Battery Industry
There are currently more than 1.4 billion households across the globe with televisions, yet only 69 percent of homes in developing countries have a TV, according to Tom Butts, editor in chief at TV Technology magazine. And about half the world’s population has Internet access. Which is all to say, the $7.4 billion alkaline battery market has a fair amount of growth in its future.
Given that projected global growth of battery-dependent electronics, it’s understandable that all producers have interest in being a leading brand.
It’s clear that alkaline batteries aren’t anywhere near obsolescence. And with emerging technologies and developing economies, it appears that a billion or more consumers will need them in years to come, underscoring how people like Warren Buffet know a long-game business when they see it. Even pink, floppy-eared advertising characters endure, in different forms and on different continents, even while the Duracell marketing program fully delves into digital strategies and newest technologies.
You might say the battery business keeps going and going and going.
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“Bud is truly an energetic and authentic leader with a great vision for the future. It was a pleasure working with Bud and we are happy to be one of his core team to rebuild Duracell’s IT strategy and provide cost effective solutions to create a long-term sustainable growth.” Ketu Amin, President and CEO of VinaKim Communications, Inc.