Gardena US Entry Strategy

8/10/2019 Gardena US Entry Strategy

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Portfolio Planning Garden Hose Reel Line

Market Entry Investigation for the Americas

FY 2012

Scott Massing | Product Planning [Matt Mayfield] | Institute of Design | Fall 2011


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Scott Massing | Product Planning | Fall 2011 | Portfolio

Company BackgroundGardena founded in Germany in 1961 - 50 years ago

Innovative Brand with household recognitionin Germany/EU - #1 Watering brand in EU

Top EU brand garden tools, ponds, pumps, products

Discipline of focus is to be Product Leader

Value proposition - to make gardening easy by sellinga garden system that ts any need

Part of Husqvarna since 2007

Acquired to compliment Husqvarnas powered con-sumer garden products

2010 restructured 2 business segments (consumerproducts and professional products) to 3: EU/Asia,

Americas, and Construction.

Sales up 5%, but prot down 30%, need higher mar-gin products to correct this trend, Gardena can help

Gardena to become global brandfor Husqvarna

GARDENA Live your gardenSince its foundation in 1961, GARDE-NA has developed from a small tradingcompany for garden tools into a world-wide recognized manufacturer of intel-ligent products and systems for gardencare within a few decades. Te secretof success is based on the high innova-tion strength of the brand as well as aconsistent sales and marketing policy.

Strengths: Innovative Company Trusted Brand in EU Husqvarna has extensive

sustainability resourcesWeaknesses: Husqvarnas broad product

line may dilute Gardena R&D Weak US presence and brand

recognition Few US distribution channelsOpportunities: Use innovative staff to create

unique product lines for USA

Use Husqvarna distribution toenter US

Husq. reducing brands, turn-ing Gardena into global brand

Threats: Weak global economy Suncast beginning to inno-

vate and do M&A Toro researching sustainable

watering technology

Watering regulations emerg-ing due to frequent droughts

Product Categories

Water management

Lawn Care

Tree and shrub care

Garden care tools

Product Categories

Ride on

Walk behind

Handheld

Watering

Accessory / Garden

Construction

Sources:DataMonitor, Husqvarna Jan11; Pack-aged Facts, Lawn and Garden Edition, Jul09;Husqvarna Annual Report 2010

Husqvarna GoalGardena to be global brand

Bring back high margins


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INDUSTRY CONTEXT

Intra-Category Rivalry Crowded eld of 10+ brands Flat growth but recent innovations

are increasing the competition US market has been focused on

price, and not innovative product Competitors have recently been

liquidated or acquired (Nelson) Acquisitions diluting margins

Threats of Substitutes High - upscale users move to lawn

care services, low-end users skiplawn care chores or scale back

Urban migration reducing the market Water regulation may require drip

irrigation in place of hose watering

Threat of New Entrants

High threat - low barrier to entry/exit Asian suppliers compete with cheap

labor, and often knock-off designs

Bargaining Power of Suppliers Low - standard manufacturing

processes are utilized Low - Vertically integrated manu-

facturing

Bargaining Power of Buyers High - many suppliers Big box retailers drive prot-

abilty down Online comparison shopping

and reviews on the rise Brand reputation only as

good as your latest onlinereview

Introduction Growth Maturity Decline

EU market capped

Regulation limitingMatures aging

Ace (1)Akro-Mils (1)AM Leonard (1)Ames (17)Bosmere (1)CC Home (8)Claber (8)Colorite (2)

Delta (1)

Emsco (4)Gardena (15)Gilmour (1)Imperial (1)Jackson (2)Legacy (1)Liberty (1)Mintcraft (1)

Nelson (1)

Plow&Hearth (1)Reel (1)Reelcraft (2)Suncast (44)Tahoe (1)Vulcan (1)Whitehall (6)Yard Butler (2)

Hose Reel Competitors

* from Amazon.com, with (#) of reels represented

L&G Industry Life CycleNational Gardening Survey

70% all household participate in activity 81 million households do L&G activity Total L&G sales stagnant over 5 years Averge household spend = $444 Total spend in N.A. of $36 billion (+3%)

Competitive Innovation Rising

Water powered, auto-matic rewind reel $89


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Current Portfolio Accessible to N.America

Portable

Wall Mount

Trolleys

2647$130

2656$200

2600$72

2650$83

756$98

2674$219

2634$162

2684$147

8000$125

2681$122

2613$102

2690$63

2683$129

$50 $100 $150 $200 $250

Characteristics

High Quality, 5 star Amazon reviewsInnovative features

User centric design executionForm follows function

DurabilityHigh pricing

Common design languageMobile

Theme

Bright (blue and orange color scheme)Fun

Efcienciency in use

SmartOriginal and unique

Summer

Product Line Features

$250$200$150$100$50

2602$98

Thin out,Clarify

Noted problems

Lack of decorative optionsfor US

No Green products

Trolley line confusing


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Current and Potential Users and Channels

Current Channel Type Share

Home Centers 70%

Discount Chains/ Mass Market 15%

Garden Centers/Nursuries 5%

Power Equipment Dealers 5%

Other 5%

Channels to Develop

Online +20%Lawn Service +10%

Current LineMatchup

L&G Market Size (2014Estimate)$19 Billion

Potential LineMatchup

Consumer71%

Commercial29%

Product

Lines

Matures

52% of Consumer

Boomers

32%

X&Y

16%

Lawn Service

76%

Municipal

24%

Trolley

Wall Mount

Portable

Green

Water Service

Car Kit

Golf Course

MaturesDemographic

1909 - 1945Rural and SuburbanUpper Income

BoomersDemographic

1946 - 1964Rural and SuburbanUpper to Middle Income

Gen X & YDemographic

1965 - 1978Suburban to UrbanMiddle Income

ServicesDemographic

Men 30 - 50sRural and SuburbanLocal small operators

MunicipalDemographic

Men 20s to 60sRural and SuburbanLower Income

Psychographic

Erognomically focusedFret about needing elder-careDIYs turning into DIFMsWant assistive products

BehavioralStruggling with usual tasksYard work is their exerciseExtreme cocooningShops at garden centersRelys on store specialist

Psychographic

Erognomically focusedYard work relaxes themLike the exercise of yard workFeel good if yard looks good

Psychographic

Environmentally focusedImmaculate yards seems sillyWater bill double in tough tmesEnjoy yard tasks with kids

Psychographic

Economy reducing customersLooking to new services to sellBuilding trust with customersCustomers like eco-friendly

Psychographic

Results focusedTime efciency is huge

Frustrated by hoses for greensCost not an issue - club pays

BehavioralPlants owers/garden annually

Does all yard work challengesDoing more cocooningShops at Home CentersLike browsing new products

BehavioralFood garden to save moneyFew owers to reduce watering

Likely to shop onlineInterested in non-yard, like car

Always making garage space

BehavioralStarted snow plow service tooLike commissions to sell reelsInvestigating watering servicesNeed quality productNeed intro to new customers

BehavioralStruggling to cart hosesWheels cant gouge greensCareful not to hurt my back

By 2014 the Matures are declining, andBoomers replacing them. But who will re-place Boomers? Research shows Greengrowing X&Y, and Servicesbeing adoptedby aging Matures no longer as capable.

Watering regulationsare transforming theindustry, with rain col-lection systems beinga neccessity ratherthan a niche. To hedgeagainst hose wateringbeing rationed, rain col-

lection features need tobe incorporated

Current in black Potential in Orange

Sources:Packaged Facts, Lawn and Garden Edition, Jul09


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Competitive Landscape

Form Category Generic BudgetHose Reel Watering/Spraying Lawn and Garden ~$150 Home Products

Claber Pronto$90

Suncast$50

Rapid Reel$165

Gardena$72.00 Cordless Shears

$114

Water Timer$84

Leaf Blower$70

Wet Dry Vac$140

Weed Wacker$140

Mower$155

Patio Set$153

Pressure Washer$150

Grill$120

Patio Heater$150

Fireplace$150

Greenhouse$147

Sprinkler System$138

Rain Barrel$120

Watering Can$113

Water Scarecrow$154

Commercial Hose$130

Sprinkler$89

Drill$138

Faucet$111

Gardena Full Kit

$97.00

Ladder$160

Suncast -rapidly innovat-ing or perform-ing acquisitions

into new cate-gories. Recent-ly purchasedwater winding technology, andcommerciallized it. By far thelargest portfolio of products inthe category. Concentrate onless costly products, but alsorelegate themselves to poor userperception because of it. Have

extensive decorative line.

Yard Butler$89

Toro - researching complexground moisture characteristicsand investing heavily in waterconservations and precisionor smart irrigation technology.Recently made two strategic

acquisitions to buy Main Masterand Turf Guard. While this Intel-lectual Property applies primarilyto the prfessional sector, itwill provide competi-tive advantage acrosstheir entireWater-ing and

Spraying line.

Sources:Amazon.com, Packaged Facts, Lawnand Garden Edition, Jul09


7/10Scott Massing | Product Planning | Fall 2011 | Portfolio

Husqvarna/Gardena Market Comparison

Americas

EU and Asia

Market Comparison

Watering is 15% of EU sales Watering is 0% of American sales Huge opportunity for growth

America is largest global marketat SEK75 billion, with the UScomprising 85% of that

Sources:Husqvarna Annual Report 2010



Portfolio Objectives and Strategy

Husqvarna Objective Grow Gardena into global brand

Gardena Objective Enter American market, sustain EU market

Portfolio Objective Thin out Trolleys, Invent Green, Invent Services and Municipal

Customer Strategy Expand in Americas (lacking quality product), Extend into Green and Services

Competitor Targets Suncast (capture share), Toro (develop comparable IP)

Product Strategy Leverage EU brand and Husvarnas US channels/manufacturing

Product Positioning As the high quality, easy to use, well designed, top end of the line

Brand Strategy A quality German brand that is now available through Husqvarna in the US

Distribution Channels Current Husqvarna outlets, develop Home Centers, and online

New Business Model Leverage Lawn Care Operators (LCOs) as direct marketing experts

I purchased this for the deck (12 high) so my wife could water her plants

on the deck and below. It does not take up any room and it does not leak

at the connections - we keep the water on constantly b/c the spigot is at

ground level. When winter comes, it will be a simple matter to keep it in

the laundry room where I can take it out to wash the cars - no stiff fro-

zen hoses. I cant say enough about the quality of the materials and the

design. Never thought such an ordinary device could be improved uponlike Gardena has done with their hose reel.

I lived in Germany for app. 19 years,so Ive learned to appreciate good

quality German products! And Gardena products are just awesome!!!

I was really surprised to see that Amazon carries Gardena, because I

dont think anyone else does!!

It was easy for me to pull being elderly and love the snap on connections.

User Comments



Portfolio Options

Markets

New

NewExisting Products

MarketAttractiveness

High

HighCompetitive Advanctage

Expansion

Penetration Extension

Innovation

1 Piece Hose HangerTo introduce the brand to the entrylevel consumer in the US, as Gar-dena has no low end offering

A

Decorative LineThe US consumer likes to hide theirhoses, and Gardena only offers Ger-

man form follows function reels

B

Integrated Miracle Grow PortPartnering with a well known USfertilizer brand will help introduce theGardena brand and build condence

C

US Market Color StudyThe blue and orange color schemeis well known in the US, but may not

appeal to US decorative preferences

D

Car Wask KitGen X&Y is more urbanized thanBoomers, and less garden prone;with afnity to cars, and little space

E

Green - Integrated Rain BarrelSustainability is an X&Y require-ment, not just a preference; Garde-

na can leverage Husqvarna here

F

Golf CourseGreens keepers require a portableyet robust hose carrier to reachspots the sprinklers cant

G

Lawn Care Pro Distribution ModelLCOs can reach the aging Matures,and will need new products to begin

handling their daily watering needs

H

Low

A 3 5 5 5 9 6 33 4

B 5 5 5 4 7 5 31 6

C 7 7 8 9 6 7 44 2

D 4 4 3 4 9 5 29 8

E 5 5 6 7 8 4 35 3

F 7 8 9 9 7 7 47 1G 4 4 5 7 7 4 31 6

H 5 5 5 7 7 3 32 5

Dynamic RankOrder

F

C E

A

G E

C F

H

BD

Ansoff Risk Reward



Recommendations and Options

Required Actions Clarify the existing product in the Trolley line, as they are

very close in price, but with many different feature sets. Itis difcult to comprehend what is being purchased, and the

average consumer will skip over this decision not buyinganything from the line.

Focus on growth by Expanding into America - predominantlythe US as that is where most potential buyers with dispos-able income are concentrated

Study the US consumer and adjust non-functional features totailor the product to American preferences (Decorative Line).

Build presence at Home Centers as that is where 70% ofBoomers and Gen X&Y shop. To attract Matures to yourinnovation product line of Trolleys, garden centers will need

to be targeted. This will require a technical sales force toeducate that group as to the benets and ergonomic trolley

features

Options Option 1: Use the Dynamic Rank Ordering and Risk Reward

method to sort all 8 projects and then lter any that are not

above average for market attractiveness. This woudl pro-mote Concepts F and C. This will work to Extend, Expand,and ensure new product for our existing EU market (Penetra-tion).

Option 2:Use the Strategic Buckets Method to ensure abalanced portfolio of projects across all 4 Ansoff quadrants.This method may reduce the budget for concepts F and C inOption 1, but it will help ensure future growth through Busi-ness Model Innovation (concept H Lawn Care Distributionand Services), and add 3 additional projects to the slate,thereby reducing risk through a more balanced and diver-sied product portfolio (E attracting X&Y car guys and A

appealing to the entry level buyer, or cash strapped homeowner).

Markets

New

NewExistingProducts

Expansion40%

Penetration20%

Extension25%

Innovation15%

Strategic Bucket Method(Using Ansoff 2x2)

C 2

E 3

F 1

A 4

H 5

Gardena US Entry Strategy

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