Renova Case

Group Assignment – Case Write Up

Section A – Team 8 – Marketing

Due Date: March 1st, 2016
Case: Renova

Team Members:

Khalil Efendiev,

Monica Furuya,

Victor Godoi,

Christopher Grüne,

Shireen Husain,

Bhanu Musunuru

1.Which are the key factors that consumers consider when purchasing toilet paper?

The key factors considered by the majority of consumers when purchasing toilet paper, a highly commoditized category, comes down to mainly price and quality. As a matter of fact, the toilet paper industry in Western Europe is segmented based exclusively on these two main criteria.

As a sample of consumer behavior, specifically in the Portuguese toilet paper market, 60% of customers find price the most important characteristic when buying toilet paper and 30% find quality the most important attribute. These results clearly demonstrate the importance of these two factors on the purchase decision, while just 8% of consumers are concerned with the brand and only 2% with the format of the toilet paper. Consumers, who understand that quality, play the major role in their purchasing decision, there are also additional attributes of the product that comes to mind, and they are softness, strength and absorbency.

Since price is the most sensitive issue when consumers purchase toilet paper, it is important to mention, for example, that 55% of the Portuguese customers indicated that they do check the price of the toilet paper on the shelves before purchasing, while only 35% said they do not check the price beforehand.

Other data that supports the fact the price and quality are determinant for a consumer purchase decision, and the obvious importance of the association of these “attributes” with the available brands in the shelves, is the survey result that 98% of customers in Portugal purchase toilet paper in less than a minute, and actually almost half of that number actually takes only 15 to 30 seconds.

Considering these key criteria for customer’s purchase decisions, Renova needs to create a distinctive brand positioning that will help the company to attract new customers and not only retain its current customers, but also getting them to increase the usage of its premium products. Given the consumer behavior described above this will be a major challenge in the future since no real premium products exist in the toilet paper market.

2. Analyze key competitors in this industry?

Industry highlights and trend: The saturated market faces a reduced annual growth of approximately 2.4% annually. In Portugal, the growth has been about 1.5% the past years and this trend is expected to remain. Many competitors from global brands to private labels exist in the market, thus competing for low profit margins. While the severe competition reduces sales prices, the manufacturing costs are affected by volatile energy prices and paper pulp prices. In Portugal, sales prices are higher compared to the rest of Western Europe, because of the lower penetration of private labels. The overall industry trend is the growth of premium brands and private labels; the latter are the fasting growing categories in Portugal.