CULTURE MATTERS_UNIVERSITADEGLISTUDIDISIENA

The business case – Exercise n°1
Culture Matters
Università degli Studi di Siena
The picture represents the business analysis of Gamma’s internal and external environment in the battery field.
The external possibilities attraction lists the suitable targets that should be achieved while external risk repulsion shows the
main obstacles to be avoided.
Internal positive pole points out the already present advantages to focus on, to improve battery performance, while the
negative pole indicates the weaknesses that should be turned into strengths.
The relation between negative and positive pole is symbolized by the magnetic field, which ideally links the
different characteristics.
External possibilities
attraction
Duracell has the major market
share
Batteries’ negative trend
Batteries average margin close
to 50%
Duracell turnover is growing
in gamma
store
store
revenue
Power devices need batteries
Internal positive pole Internal negative pole External risk repulsion
30% of shoppers need batteri-
es (but do not buy)
Gamma turnover is high in
Potential turnover higher than effective sell out Batteries low presence on the shelf
Greater competitors capabilities
of selling batteries
magnetic field

Culture Matters
Question mark: According to our analysis the best
strategy could be investing and focusing on the
rechargeable sector “NEW CHARGED” AND “CEF”.
They are more expensive than traditional short-term
batteries, but they ensure cost savings in long term.
In addition, considering, the increasing attention paid
to the sustainability, the costs held for the disposal of
batteries, would be reduced or avoided. More and
more persons would be attracted by this new eco-
solution.
Dogs: we have included “TORCIA AND MEZZA
TORCIA PLUS POWER” in this area because we
consider them not profitable, relating to their turnover.
Cash Cows: are composed by MN21, and all the
PLUS POWER GAMMA except those above
mentioned. Thanks to their high usage and popularity
that provides continuous high cash flows, even if thei
market share is not so much elevated.
Stars: ULTRA POWER GAMMA are high volume and
turnover product that satisfy a wide range of
customers that are willing to spend more in order to
purchase a higher long-lasting product.
This BCG Matrix represents the best product assortment’s
solution in our point of view. The expected POTENTIAL
TOTAL GAMMA SUPERCHANNEL TURNOVER ON 90
DAYS is € 2.606.496, while for each SUPERMARKET is €
2.085 for 90 DAYS. This turnover is estimated on the basis
of given data, and the effective one will be higher thanks to
the implementation of our strategy on RECHARGEABLE
BATTERIES.

Culture Matters

TOOLS COST ROI
N° of time
for in
store
execution
N° of store
selected
TOTAL COST
SINGLE
INCREME
NTAL
REVENUE
TOTAL
INCREMENTAL
REVENUE
CUSTOMER
MARGIN

Expo pre
filled
(200pz)
170 1,7 4 per year 1075 € 182.750,00 289 € 310.675,00 € 127.925,00

Hostess
(weekend)
400 1,4 4 per year 140 € 56.000,00 560 € 78.400,00 € 22.400,00

Island 350 3,2 2 per year 175 € 61.250,00 1120 € 196.000,00 € 134.750,00
TOTAL

1,95

€ 300.000,00

€ 585.075,00 € 285.075,00
We based our choices on the following diversification, in order to create an efficient
business plan that could be in line with our previous product mix and our selling
philosophy. It considers:
•  A wide coverage of all selling points available (Expo pre-filled)
•  High use of specialized employees ( Hostess) in selling new products (rechargeable
batteries) ad personam
•  A selling tool that could provide a high return on investment in every
large selling point (Island)

On the basis of our selected promotional
marketing tools here are shown
potential results of Total Incremental
Revenue for all Gamma Stores,
weighted according to the number of
stores where the tools are going to be
placed and to the indexes given by P&G.
In addition we have highlighted the total
incremental margin in percentage (5.1%)
resulting from the ratio between the
potential Incremental margin with Promo
and the Current Gamma Margin before
the promotion.
We consider it a great solution because it
is both consistent with our strategy and
ensures a succesful economic result.
Culture Matters
Tool
Average
Sell-‐out
per
GAMMA
STORE
Increment
in
on
ba;eries
cat
revenue
in
1
store
per
1
tool
Incremental
revenue
per
store

N.
of
Store
per
tool
MARGIN
PROMO

Island
€
7.400,00
30%
€
2.220,00
175
20%

Hostes
(weekend
€
7.400,00
15%
€
1.110,00
140
20%

Expo
pre
ﬁlled
(200pz)
€
7.400,00
8%
€
592,00
1075
20%

TOTAL
INCREMENTAL

REVENUE
FOR
ALL
GAMMA

STORES
(CALCULATED

CONSIDERING
TOOLS
AND

N.OF
STORE
PER
TOOL)

€
1.180.300,00

CURRENT
GAMMA
MARGIN

(€9.250.000*50%)

€
4.625.000,00

INCREMENTAL
MARGIN

PROMO
(TOTAL

INCREMENTAL
REVENUE

WITH
PROMO*20%)

€
236.060,00

TOTAL
REVENUE
WITH

PROMO

€
10.430.300,00

TOTAL
INCREMENTAL

MARGIN

€
4.861.060,00

TOTAL
INCREMENTAL

MARGIN
IN
PERCENTAGE

5,10%

Potential Target – Potential Needs
These results are obtained from our survey based on a sample of 224 participants.
The chosen target is important for the amount of batteries that it buys (to make devices work) and also for
its high purchase power.
The sample is composed by an equal amount of female and male ( 51% - 49%) and the majority of an age
between 21- 40 years old ( 30% of the total participants are workers, 54% are students)
The main uses of batteries are: remote controls (46%), appliances (18%) and illumination/cameras
(11%).
Duracell is the most known and used battery (73%), followed by No Brand/ Discount batteries (11%)
Batteries are mainly bought in supermarkets (58%), drugstores (16%) and appliance stores (15%).
Usually batteries are bought in: a programmed way (62%) or an impulsive way (38%) and most of the samples
declare to buy them in supermarkets (80%)
The main discriminant factors that diversify the acquisition of batteries are:
1.  price (31%)
2.  brand awareness (30%)
3.  duration (25%)
4.  Other (14%)
Most of the statistical sample easily find batteries in supermarkets (87%) and they suggest to place stands
near the cash desks or the exits (91%)
Culture Matters

Explanation of the strategy
Analyzing the results of our questionnaire we can observe an increasing attention paid to the recycle
of batteries and to the respect of environment. Following these issues, our main task is to include the
recycle of uncharged batteries inside the “in store activities”, setting up specific areas where dead
batteries can be thrown away obtaining in exchange advantages or discounts for the purchase of new
ones.
This strategy is consistent with our choice of an ideal assortment that is mostly based on
rechargeable batteries. Placing high specialized hostesses in large supermarkets allows us to
explain to customers how to use rechargeable batteries and how much money they can save in
the long run purchasing them. Hostesses’ aim would be to push customers to discover and try these
sustainable products, provoking interest also in those suspicious clients that have never tried them,
advertising those one that still prefer the traditional batteries and the ones that do not trust rechargeable.
Another “in store activity” in which it could be profitable to invest is giving a greater visibility to
the stand where the batteries are placed using Islands and Expo pre-filled, considering the fact that
most of the shoppers purchase batteries in an impulsive way.
Our analysis highlighted that shoppers are particularly price-sensible, consequently they consider
price promotions as one of the best solutions for buying batteries. Notwithstanding the initial higher cost,
the purchase of rechargeable batteries would be the best alternative to save money in the long term.
Culture Matters

The execution: TOOLS
Culture Matters
Duracell
EXPO Pre-
fillled

HOSTESS

ISLAND

SPECIFIC
AREAS FOR
DEAD
BATTERIES

“A chance
To change.
Re-charge!”

Culture Matters
SERVICE
LEVEL %
Product Average SL
PLUS POWER STILO AA 96,6%
PLUS POWER MINISTILO AAA 97,0%
PLUS POWER MEZZA TORCIA C 99,2%
PLUS POWER TORCIA D 99,2%
PLUS POWER TRANSISTOR 9V 99,3%
PLUS POWER PIATTA 4,5 V 99,8%
ULTRA POWER STILO AA 99,8%
ULTRA POWER MINISTILO AAA 96,1%
ULTRA POWER MEZZA TORCIA C 100,0%
ULTRA POWER TORCIA D 99,7%
ULTRA POWER TRANSISTOR 9V 100,0%
NUOVA RICARICABILI PRE-CHARGED
STILO AA 4 PEZZI 100,0%
RICARICABILI PRE-CHARGED
MINISTILO AAA 4 PEZZI 100,0%
RICARICABILI VALUE STILO AA 2 PEZZI 99,9%
RICARICABILI VALUE MINISTILO AAA 2
PEZZI 99,9%
2 STILO LITIO DURACELL 99,4%
CARICATORE CEF 14 99,6%
PILA SPECIALISTICA SECURITY N 99,9%
PILA SPECIALISTICA ELECTRONICS
1220 99,7%
PILA SPECIALISTICA MN21 99,7%
The 3 items below Service Level target are:
•  Plus Power Stilo AA (96.6 % average)
•  Plus Power Ministilo AAA (97.0 % average)
•  Ultra Power Ministilo AAA (96.1 % average)
As we can see by our analysis on given datas, in
week 3 and 6 there are relevant delivery problems
from Gamma’s warehouse to Gamma Stores.
Moreover on week 10 there is a critical % of lack of
delivering service (about 60%) for Ultra Power
Ministilo AAA, considering the positive average of
all other SL in this week (near 100%).
P&G could, in our opinion, enact some actions in
order to improve the SL for these products if:
•  SL < 98%: Inefficiency onus
•  98%<SL<100%: Benefits agreed by contract
•  SL=100%: Performance bonuses

Culture Matters
AWI
Product
Average
AWI
PLUS POWER STILO AA 2,72
PLUS POWER MINISTILO AAA 3,58
PLUS POWER MEZZA TORCIA C 0,23
PLUS POWER TORCIA D 0,70
PLUS POWER TRANSISTOR 9V 10,06
PLUS POWER PIATTA 4,5 V 0,80
ULTRA POWER STILO AA 0,99
ULTRA POWER MINISTILO AAA 0,70
ULTRA POWER MEZZA TORCIA C 0,76
ULTRA POWER TORCIA D 0,57
ULTRA POWER TRANSISTOR 9V 0,65
NUOVA RICARICABILI PRE-CHARGED
STILO AA 4 PEZZI 1,03
RICARICABILI PRE-CHARGED MINISTILO
AAA 4 PEZZI 1,03
RICARICABILI VALUE STILO AA 2 PEZZI 0,14
RICARICABILI VALUE MINISTILO AAA 2
PEZZI 0,21
2 STILO LITIO DURACELL 0,68
CARICATORE CEF 14 0,70
PILA SPECIALISTICA SECURITY N 0,45
PILA SPECIALISTICA ELECTRONICS 1220 0,61
PILA SPECIALISTICA MN21 0,43
The 3 items that contribute to an excessive storage are:
•  Plus Power Stilo AA (3 weeks)
•  Plus Power MiniStilo AAA (4 weeks)
•  Plus Power Transistor 9V (10 weeks).
Inventory management is very important for every commercial
activity and we know that excessive storage it’s harmful for
the company because keeping exceeding items it only
represents an unrealized opportunity in investing money in
another way. Indeed excessive storage is sub-optimal
because it represents a form of obsolescence and it could enact
cash sunk into the ground.
Assuming that AWI for these 3 items is decreased by 1 week,
we observe that only PLUS POWER STILO AA fits P&G target
(lower than 2 weeks). It has a crucial importance to have a good
inventory management because P&G and GAMMA
Supermarket follow a demand-driven market and so they try to
minimize storage and to have an efficient lead time, two different
strategic aspects but, at the same time, coherent.

COMMERCIAL
STRATEGY
FINANCIALS
SHOPPER
TARGET
LOGISTIC
STRATEGY
Customer Needs Action/Choice Benefit
Culture Matters
Invert battery
trend
Focus on
Rechargeable
batteries
Retain & Attract
shoppers
Battery selling
promotion
Selected tools &
total store’s
coverage
5.1% Incremental
margin in Promo
Enlarge Target
group and increase
of rechargeable
awareness
Slogan:
“A chance
To change.
Re-charge!”
Build young
shoppers loyalty
Efficiency and
timeliness in
delivery
Different
thresholds
Different actions
Higher turnover and
satisfaction of
customer and
shoppers

Culture Matters
Aware that Gamma has great selling skills in food and home care, we have tried to take
advantage from the high inflow of shoppers in the store, bringing them close even to the
battery category. Through the battery selling promotion created ad hoc and focused on
marketing tools, such as the presence of expo prefilled (small and medium stores), hostesses
and islands (large stores), our goal is to raise the turnover of each store, increasing the
incremental margin up to 5.1 % (results obtained through excel calculation).
The aim of our strategy is to enlarge the target group and to strength the rechargeable’s
awareness, by building loyalty in young shoppers. As a matter of fact, the primary target we
identified through the use of a on-line questionnaire, is composed by young workers and
students who recognize on one hand, the importance of recycling and, on the other hand, the
possibility of long-term savings. For this reason these potential shoppers could prefer
stores, such as Gamma, that promotes the use of rechargeables and offer discounts to those
who bring back dead batteries.
Concerning logistic we have highlighted the importance of efficiency and timeliness in
delivery, proposing different actions for different thresholds of “Service Level”, with the aim of
increasing turnover and satisfaction of both consumer and shoppers.
We are sure that following this strategy we can invert the battery trend in GAMMA.
Our proposal is sustainable, both economically and environmentally, and for this reason
we think that is the best one possible.

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