Wednesday, November 28, 2012

Renova Toilet Paper: Escaping the Commoditization Trap - Abridged
©2012 INSEAD Case Study

Renova, a Portuguese toilet paper manufacturer, is battling to survive in a stagnant, commoditised market dominated by international giants and private labels. To grow and remain independent, CEO Paulo Pereira da Silva is considering three options: 1) price competition, 2) private label manufacturing, or 3) new functional innovations. There may be another way, but that is far from clear. What should he do? And how should the chosen strategy be implemented?
Pedagogical Objectives: In exploring the challenges facing small players in stagnant commodised categories where international giants and private labels dominate, this case provides detailed information on consumer behaviour, competition, and the company (including the brand and previous communication campaigns). It accounts for the success of private labels and explains when it makes sense to produce for a private label. It illustrates the key role of marketing and branding, showing how Renova differentiated on hedonic and symbolic benefits in a category that was thought to be hopelessly commoditized. Renova's solution - the launch of black toilet paper - is not hinted at in the abridged version of the case, and is left for the instructor to reveal.