Spectrum Brands Sales Force Dilemma: Merger Integration Analysis

Introduction to Spectrum Brands and Its Market Strategy

Spectrum Brands is a highly diversified company, encompassing consumer batteries, lawn and garden care products, specialty pet supplies, and shaving and grooming products. There is no single consumer profile for all of these products; a wide range of demographics are encompassed, although overall Spectrum capitalizes upon a strategy of broad market outreach with relatively low prices, versus niche marketing. Consumers generally wish to purchase the majority of products issued by Spectrum at the lowest price possible. However, competing solely on price is not a wise strategy, given that price wars can drive product pricing below profitable levels, even for a company able to operate at a large economy of scale such as Spectrum.

Additionally, distinguishing the brand from generics and cultivating brand loyalty is important: customers should ideally believe that all products offer some added value in terms of quality, durability, and other desirable features. Formerly famous as the Rayovac Corporation, the company is attempting to capitalize upon its synergies while still remaining true within each product segment to what consumers have liked and been loyal to for many years.

Merger Integration and the Canadian Sales Force Challenge

The fact that the company is newly merged with other organizations presents an additional challenge for Spectrum. This is the central dilemma facing the vice-president of sales and marketing for the Canadian division, who wanted to ensure, despite the differences among the diverse groups, that he still maintained a team that would effectively and efficiently continue to increase the sales of each business unit. However, he remained unsure whether changing the current sales structure was preferable to retaining it, given the successes it had generated in the past.

The company has attempted to accrue value through economies of scale via strategic acquisitions. Although the conventional wisdom is that mergers often fail, the organization believed that these acquisitions made sense in several critical respects. First, they would allow the organization to leverage global distribution channels, purchasing power, and operational processes. These mergers provided the company with an extended brand portfolio, allowing all of the brands to access a number of new retailers where they had not previously been able to gain shelf space. In turn, this increased the ability for each brand to compete within its given markets. Spectrum became the global leader in aquatic supplies, the number two player in the lawn and garden industry, the household insect control market, and pet supplies as a result of several mergers with smaller entities.

The company's diversification also allowed it to manage products with highly seasonal demand. Batteries are at peak demand during Christmas, when many personal electronic products are given as gifts; lawn and garden supplies are most desirable in the spring; and aquatic supplies peak in the summer.

Current Sales Force Structure Across Divisions

The current sales team is organized by distribution channel and by geographic area, depending on the product and the location. The vice-president of the Canadian division must find a way to reorganize the sales staff for the newly merged entity in order to capitalize upon its current strengths while still leveraging the benefits from the merger.

For example, in Canada, the Rayovac/Remington sales force is organized by distribution channel: the eight sales representatives serving this division were responsible for selling all products under both the Rayovac and Remington brand names to their assigned retailers. But what worked for Rayovac and Remington did not work for all of the brands under the Spectrum umbrella. For example, Nu-Gro had been struggling, as the company's operations and product offerings were extremely unfocused, despite having a similar organizational profile in terms of its sales force.

For Tetra/United Pet Group, while the sales force in the United States was regionally based so that each sales representative could ensure an ample supply of product for their distributors and dealers, in Canada sales for the division were handled by distributors. Thus, even within brands, there was bifurcation in terms of how sales were handled. Sales managers were responsible for managing the representatives in their specific geographic regions. Within Canada, the VP determined he would organize around three regions — the West, Ontario, and the East — with one manager responsible for the sales representatives within each region.

Reference

Spectrum Brands, Inc.: The Sales Force Dilemma. (2007).