Gillette is to change the US marketing strategy for some of its Duracell batteries, ending promotional discounts and giveaways and using the money saved to fund a reduction in the price it charges retailers.
An attempt to recharge a weak battery sector, the move affects AA and AAA sizes, both of which will be sold to stores for 13% less. Some of these savings are likely to be passed on to shelf prices.
Gillette, the market leader, believes promotions are not increasing battery usage but are costing a fortune – it estimates the industry as a whole spent $250 million (€236m; £156m) on giving away batteries between 1999 and 2002.
Duracell’s competitors are expected to make similar moves. “As the smaller player, we needed to wait for the industry leader to play his card. I can tell you we will follow suit,” revealed Kent Hussey, president of number three contender Rayovac.
Gillette’s decision takes effect next month. It will slice an estimated $100m from revenues this year, though the drop in promotional spend and an ongoing cost-cutting initiative are expected to make up for the shortfall.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff