Duracell To Cut Prices, Promotional Spending
By Jeff Malester -- TWICE, 1/20/2003
BETHEL, CONN.— Faced with tough competition, heavy promotional spending and product confusion in the marketplace, Duracell said it is lowering list prices on top-selling AA and AAA batteries by about 13 percent, beginning Feb. 3.
The battery maker also is reducing promotional spending — eventually eliminating free battery offers — and realigning prices of similar pack-size formats to simplify the consumer shopping experience.
Duracell, which is owned by Gillette, expects price cuts to reduce 2003 sales by a percentage in the mid-single digits, with sales rising next year. However, the company expects incremental cost savings and reduced trade promotions to offset much of the impact of the lowered prices.
"The proliferation of trade promotions, deals and product giveaways has consumers bewildered and our retail partners complaining about the complexity of pricing and promotional activity," said Mark Leckie, Duracell president. "Our actions will result in more stable everyday prices across our entire line."
At the same time it is lowering some prices, Duracell plans to increase prices of C, D and 9-volt batteries by about 2 percent to 3 percent this year.
Counting more on advertising to drive sales growth, Duracell said it plans to cut promotional spending to retailers by about one third this year, with total promotional spending reduced by 40 percent to 50 percent.
Margins have been hard pressed by free battery offers and other significant price cuts. And despite the promotional spending, Duracell generally has not seen increases in unit growth, just increases in deflation.
Similar pack-size formats will be "line priced," to simplify consumers' shopping headaches and facilitate value comparisons across pack sizes, Duracell said.
For example, a regular pack of 4 AA or AAA batteries will be offered at the same price as a regular pack of 2 C or D cells and a single pack of the 9-volt cell. Battery prices have been varying widely from retailer to retailer, with price points ranging from $3.99 to $7.99 for a package of eight Duracell CopperTop AA batteries, depending on store location, the company said.
To counter stiff competition, Duracell, about a year ago, moved its product emphasis from premium-priced batteries, back to its workhorse CopperTop brand. Now, it will eliminate inefficient promotions, lessen the overall depth and frequency of trade promotions and increase marketing support behind its new "Trusted Everywhere" ad campaign.
