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

Company Background
Gardena founded in Germany in 1961 - 50 years ago
Innovative Brand with household recognition
in 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 selling
a garden system that fits any need
Part of Husqvarna since 2007
Acquired to compliment Husqvarnas powered consumer garden products
2010 restructured 2 business segments (consumer
products and professional products) to 3: EU/Asia,
Americas, and Construction.
Sales up 5%, but profit down 30%, need higher margin products to correct this trend, Gardena can help
Gardena to become global brand for Husqvarna

Strengths:
Innovative Company
Trusted Brand in EU
Husqvarna has extensive
sustainability resources
Weaknesses:
Husqvarnas broad product
line may dilute Gardena R&D
Weak US presence and brand
recognition
Few US distribution channels
Opportunities:
Use innovative staff to create
unique product lines for USA
Use Husqvarna distribution to
enter US
Husq. reducing brands, turning Gardena into global brand
Threats:
Weak global economy
Suncast beginning to innovate and do M&A
Toro researching sustainable
watering technology
Watering regulations emerging due to frequent droughts

Husqvarna Goal
Gardena to be global brand
Bring back high margins

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

Product Categories
Ride on
Product Categories Walk behind
Water management

Handheld

Lawn Care

Watering

Tree and shrub care

Accessory / Garden

Garden care tools

Construction

GARDENA Live your garden

Since its foundation in 1961, GARDENA has developed from a small trading
company for garden tools into a worldwide recognized manufacturer of intelligent products and systems for garden
care within a few decades. The secret
of success is based on the high innovation strength of the brand as well as a
consistent sales and marketing policy.

Scott Massing | Product Planning | Fall 2011 | Portfolio

INDUSTRY CONTEXT
L&G Industry Life Cycle

National Gardening Survey

EU market capped
Regulation limiting
Matures aging

Introduction

Growth

via
growth
Maturity

&
en
gre

A
US

Threat of New Entrants

High threat - low barrier to entry/exit
Asian suppliers compete with cheap
labor, and often knock-off designs

Hose Reel Competitors

* from Amazon.com, with (#) of reels represented
Emsco (4)
Gardena (15)
Gilmour (1)
Imperial (1)
Jackson (2)
Legacy (1)
Liberty (1)
Mintcraft (1)
Nelson (1)

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%)

Decline

Bargaining Power of Suppliers

Low - standard manufacturing
processes are utilized
Low - Vertically integrated manufacturing

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

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

Intra-Category Rivalry
Crowded field 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 skip
lawn care chores or scale back
Urban migration reducing the market
Water regulation may require drip
irrigation in place of hose watering

Bargaining Power of Buyers

High - many suppliers
Big box retailers drive profitabilty down
Online comparison shopping
and reviews on the rise
Brand reputation only as
good as your latest online
review

Competitive Innovation Rising

Water powered, automatic rewind reel

$89

Scott Massing | Product Planning | Fall 2011 | Portfolio

Current Portfolio Accessible to N.America

$50

$100
2690
$63

2650
$83

Portable

2600
$72

$200

$150

756
$98

2602
$98

$250

Characteristics

Theme

High Quality, 5 star Amazon reviews

Innovative features
User centric design execution
Form follows function
Durability
High pricing
Common design language
Mobile

Bright (blue and orange color scheme)

Fun
Efficienciency in use
Smart
Original and unique
Summer

2647
$130

Product Line Features

2656
$200

Noted problems

Lack of decorative options

for US

Wall Mount

No Green products
Trolley line confusing
Thin out,
Clarify
2613
$102

2681
$122

8000
$125

2683
$129

2684
$147

2634
$162

2674
$219

Trolleys

$50

$100

$150

$200

$250

Current and Potential Users and Channels

Current in black Potential in Orange

Matures
Demographic
1909 - 1945
Rural and Suburban
Upper Income

Boomers
Demographic
1946 - 1964
Rural and Suburban
Upper to Middle Income

Gen X & Y
Demographic
1965 - 1978
Suburban to Urban
Middle Income

Services
Demographic
Men 30 - 50s
Rural and Suburban
Local small operators

Municipal
Demographic
Men 20s to 60s
Rural and Suburban
Lower Income

Psychographic
Erognomically focused
Fret about needing elder-care
DIYs turning into DIFMs
Want assistive products

Psychographic
Erognomically focused
Yard work relaxes them
Like the exercise of yard work
Feel good if yard looks good

Psychographic
Environmentally focused
Immaculate yards seems silly
Water bill double in tough tmes
Enjoy yard tasks with kids

Psychographic
Economy reducing customers
Looking to new services to sell
Building trust with customers
Customers like eco-friendly

Psychographic
Results focused
Time efficiency is huge
Frustrated by hoses for greens
Cost not an issue - club pays

Behavioral
Struggling with usual tasks
Yard work is their exercise
Extreme cocooning
Shops at garden centers
Relys on store specialist

Behavioral
Plants flowers/garden annually
Does all yard work challenges
Doing more cocooning
Shops at Home Centers
Like browsing new products

Behavioral
Food garden to save money
Few flowers to reduce watering
Likely to shop online
Interested in non-yard, like car
Always making garage space

Behavioral
Started snow plow service too
Like commissions to sell reels
Investigating watering services
Need quality product
Need intro to new customers

Behavioral
Struggling to cart hoses
Wheels cant gouge greens
Careful not to hurt my back

Current Line
Matchup
Potential Line
Matchup
Product
Lines

L&G Market Size (2014 Estimate)

$19 Billion
Consumer
Commercial
71%
29%
Matures
Boomers
X&Y
Lawn Service Municipal
52% of Consumer
32%
16%
76%
24%

Trolley
Wall Mount
Portable
Green
Water Service
Car Kit
Golf Course
Sources: Packaged Facts, Lawn and Garden Edition, Jul09

By 2014 the Matures are declining, and

Boomers replacing them. But who will replace Boomers? Research shows Green
growing X&Y, and Services being adopted
by aging Matures no longer as capable.
Watering regulations
are transforming the
industry, with rain collection systems being
a neccessity rather
than a niche. To hedge
against hose watering
being rationed, rain collection features need to
be incorporated

Current Channel Type

Home Centers
Discount Chains/ Mass Market
Garden Centers/Nursuries
Power Equipment Dealers
Other
Channels to Develop
Online
Lawn Service

Share
70%
15%
5%
5%
5%
+20%
+10%

Scott Massing | Product Planning | Fall 2011 | Portfolio

Competitive Landscape
Suncast Faucet
$111
Fireplace
$150

Gardena
$72.00
Watering Can
$113

Rain Barrel
$120

Leaf Blower
$70

Water Scarecrow
$154

Water Timer
$84

Claber Pronto
$90

Yard Butler
$89

Drill
$138

Cordless Shears
$114

Rapid Reel
$165

Sprinkler
$89
Weed Wacker
$140

Suncast
$50
Commercial Hose
$130

Mower
$155

Ladder
$160

Hose Reel
Form

Sources: Amazon.com, Packaged Facts, Lawn

and Garden Edition, Jul09

Patio Set
$153

Sprinkler System
$138

Greenhouse
$147

Gardena Full Kit

$97.00

Wet Dry Vac

$140

rapidly innovating or performing acquisitions

into new categories. Recently purchased
water winding technology, and
commerciallized it. By far the
largest portfolio of products in
the category. Concentrate on
less costly products, but also
relegate themselves to poor user
perception because of it. Have
extensive decorative line.

Watering/Spraying
Category

Pressure Washer
$150

Grill
$120
Patio Heater
$150

Lawn and Garden

Generic

~$150 Home Products

Budget

Toro - researching complex

ground moisture characteristics

and investing heavily in water
conservations and precision
or smart irrigation technology.
Recently made two strategic
acquisitions to buy Main Master
and Turf Guard. While this Intellectual Property applies primarily
to the prfessional sector, it
will provide competitive advantage across
their entire
Watering and
Spraying line.

Scott Massing | Product Planning | Fall 2011 | Portfolio

Husqvarna/Gardena Market Comparison

Market Comparison

EU and Asia

Watering is 15% of EU sales

Watering is 0% of American sales
Huge opportunity for growth
America is largest global market

at SEK75 billion, with the US

comprising 85% of that

Americas

Sources: Husqvarna Annual Report 2010

Scott Massing | Product Planning | Fall 2011 | Portfolio

Portfolio Objectives and Strategy

Husqvarna Objective
Gardena Objective
Portfolio Objective
Customer Strategy
Competitor Targets
Product Strategy
Product Positioning
Brand Strategy
Distribution Channels
New Business Model

Grow Gardena into global brand

Enter American market, sustain EU market
Thin out Trolleys, Invent Green, Invent Services and Municipal
Expand in Americas (lacking quality product), Extend into Green and Services
Suncast (capture share), Toro (develop comparable IP)
Leverage EU brand and Husvarnas US channels/manufacturing
As the high quality, easy to use, well designed, top end of the line
A quality German brand that is now available through Husqvarna in the US
Current Husqvarna outlets, develop Home Centers, and online
Leverage Lawn Care Operators (LCOs) as direct marketing experts

User Comments
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 frozen hoses. I cant say enough about the quality of the materials and the
design. Never thought such an ordinary device could be improved upon
like 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.
Scott Massing | Product Planning | Fall 2011 | Portfolio

Technical Feasibility

Financial Reward

Concept Total

Concept Rank

Extension

Products

Leverage Core Competency

Market Attractiveness

Innovation

Markets
Existing

Brand Building Capacity

High

Penetration

3
5
7
4
5
7
4
5

5
5
7
4
5
8
4
5

5
5
8
3
6
9
5
5

5
4
9
4
7
9
7
7

9
7
6
9
8
7
7
7

6
5
7
5
4
7
4
3

33
31
44
29
35
47
31
32

4
6
2
8
3
1
6
5

Risk Reward

New

Expansion

Competitive Advantage

Ansoff

Strategic Alignment

Dynamic Rank
Order

Portfolio Options

New

Decorative Line
The US consumer likes to hide their
hoses, and Gardena only offers German form follows function reels
Integrated Miracle Grow Port
Partnering with a well known US
fertilizer brand will help introduce the
Gardena brand and build confidence
US Market Color Study
The blue and orange color scheme
is well known in the US, but may not
appeal to US decorative preferences

C F

Low

1 Piece Hose Hanger

To introduce the brand to the entry
level consumer in the US, as Gardena has no low end offering

A
D B
E

Competitive Advanctage

High

Car Wask Kit

Gen X&Y is more urbanized than
Boomers, and less garden prone;
with affinity to cars, and little space

A
B
C
D
E
F
G
H
C

Green - Integrated Rain Barrel

Sustainability is an X&Y requirement, not just a preference; Gardena can leverage Husqvarna here
Golf Course
Greens keepers require a portable
yet robust hose carrier to reach
spots the sprinklers cant

Lawn Care Pro Distribution Model

LCOs can reach the aging Matures,
and will need new products to begin
handling their daily watering needs
Scott Massing | Product Planning | Fall 2011 | Portfolio

Recommendations and Options

New

Expansion
40%

Innovation
15%

Penetration
20%

Extension
25%

Existing

New

Concept

DRO Concept Rank

Products

Ansoff Quadrant
Resource priority (top - highest)

Options
Option 1: Use the Dynamic Rank Ordering and Risk Reward
method to sort all 8 projects and then filter any that are not
above average for market attractiveness. This woudl promote Concepts F and C. This will work to Extend, Expand,
and ensure new product for our existing EU market (Penetration).
Option 2: Use the Strategic Buckets Method to ensure a
balanced portfolio of projects across all 4 Ansoff quadrants.
This method may reduce the budget for concepts F and C in
Option 1, but it will help ensure future growth through Business Model Innovation (concept H Lawn Care Distribution
and Services), and add 3 additional projects to the slate,
thereby reducing risk through a more balanced and diversified product portfolio (E attracting X&Y car guys and A
appealing to the entry level buyer, or cash strapped home
owner).

Strategic Bucket Method

(Using Ansoff 2x2)

Markets

Required Actions
Clarify the existing product in the Trolley line, as they are
very close in price, but with many different feature sets. It
is difficult to comprehend what is being purchased, and the
average consumer will skip over this decision not buying
anything from the line.
Focus on growth by Expanding into America - predominantly
the US as that is where most potential buyers with disposable income are concentrated
Study the US consumer and adjust non-functional features to
tailor the product to American preferences (Decorative Line).
Build presence at Home Centers as that is where 70% of
Boomers and Gen X&Y shop. To attract Matures to your
innovation product line of Trolleys, garden centers will need
to be targeted. This will require a technical sales force to
educate that group as to the benefits and ergonomic trolley
features

Scott Massing | Product Planning | Fall 2011 | Portfolio