Rayovac 2004 Annual Report Download - page 22

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became the owner of the VARTA trademark in the consumer battery category and Johnson Controls acquired
ownership rights to the trademark in the automotive battery category. VARTA AG and its VARTA
Microbatteries subsidiary continue to have ownership rights to use the trademark with travel guides, industrial
batteries and micro batteries. The four owners of the VARTA trademark are parties to a Trademark and Domain
Names Protection and Delimitation Agreement that governs ownership and usage rights and obligations of the
parties relative to the trademark.
As a result of the common origins of the Remington entity we acquired and Remington Arms Company,
Inc., the Remington trademark is owned by us and by Remington Arms, each with respect to its principal
products as well as associated products. As a result of our acquisition of Remington, we own the Remington
trademark for electric shavers, shaver accessories, grooming products and personal care products, while
Remington Arms owns the trademark for firearms, sporting goods and products for industrial use, including
industrial hand tools. The terms of a 1986 agreement between Remington and Remington Arms provides for the
shared rights to use the Remington trademark on products which are not considered “principal products of
interest” for either company. We retain the Remington trademark for nearly all products which we believe can
benefit from the use of the brand name in our distribution channels.
Competition
In our retail markets, companies compete for limited shelf space and consumer acceptance. Factors
influencing product sales are brand name recognition, perceived quality, price, performance, product packaging
and design innovation, as well as creative marketing, promotion and distribution strategies.
The battery marketplace is highly competitive. Most consumer batteries manufactured throughout the world
are sold by one of four global companies: Rayovac; Energizer, a subsidiary of Energizer Holdings, Inc.; Duracell,
a division of The Gillette Company; and Matsushita (manufacturer of the Panasonic brand). We also face
competition from the private label brands of major retailers, particularly in Europe. The offering of private-label
batteries by retailers may create pricing pressure and may also increase consumer perceptions that batteries are a
commodity product. Typically, private-label brands are not supported by advertising or promotion, and retailers
sell these private label offerings at retail prices below competing brands. The main barriers to entry for new
competitors are investment in technology research, cost of building manufacturing capacity and the expense of
building retail distribution channels and consumer brands.
In the U.S. alkaline battery category, Rayovac is positioned as a value brand while Duracell and Energizer
are positioned as premium brands. In Europe, the VARTA brand has premium positioning. In Latin America
where lower disposable incomes prevail and zinc carbon batteries still outsell alkaline, Rayovac is positioned as a
value brand.
Our primary competitors in the electric shavers market are Koninklijke Philips Electronics NV (“Philips”)
(which only sells and markets rotary shavers) and Braun (which only sells and markets foil shavers). Only
Remington competes in both the foil and rotary segments. Our major competitors in the personal care market are
Conair, Wahl and Helen of Troy. Companies that are able to maintain or increase the amount of retail shelf space
allocated to their respective products can gain competitive advantage.
Our major competitors in the consumer battery and electric shaver markets have greater financial and other
resources and greater overall market share than we do. They have committed significant resources to protect their
own market shares or to capture market share from us in the past and may continue to do so in the future. In some
key product lines, our competitors may have lower production costs and higher profit margins than we do, which
may enable them to compete more aggressively in advertising and in offering retail discounts and other
promotional incentives to retailers, distributors, wholesalers, and, ultimately, consumers.
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