Out to Beat the Bunny

By Julie Norwell

A strange bird took flight on April 29 from Fujikawa runway in Shizuoka Prefecture, Japan. The world's first manned, disposable-battery-powered aircraft--running on 160 AAs--flew for 90 seconds in a test run to display the capability of Panasonic's new Oxyride Extreme Power batteries, released last year. Panasonic, best known for its consumer electronics, is planning to blast its way into the U.S. battery market with a new technology and a ton of aggressive brand campaigning. The company, a division of Japan's Matsushita Electric Industrial Co., craves no less than the top spot in the $4.1 billion U.S. disposable-battery industry. "When we decide we want to be No. 1 in a category, we will be No. 1," says Brian Kimberlin, director of marketing for Panasonic's North American battery unit. The company says its Oxyride battery works better than competitors' in power-hogging devices such as digital cameras. Yet it takes lots of gumption--or arrogance--to make such a statement, given that Panasonic, while No. 1 in Japan, has less than 2% of the U.S. market.

To reach its goal, Panasonic has to make copper come a cropper--and beat the bunny. It is going to be one nasty encounter. Duracell and Energizer, which enjoy about 29% and 25% market share, respectively, are two of the best-marketed brands in the U.S. Duracell, a.k.a. "the CopperTop battery," now owned by Procter & Gamble, has won five Effie Awards since 1992 for most effective ad campaign. As for Energizer, part of Energizer Holdings, its roaming pink bunny is a marketing icon. The 17-year-old Energizer Bunny is part of the vernacular, used to describe anything that continues relentlessly--sports figures, campaigning politicians, your motormouthed cousin.

Panasonic figures the U.S. market is critical geography for Oxyride. "We understand that the U.S. is the toughest market in the world," says Thomas Taguchi, director of Panasonic's global battery business unit. "But it's also the biggest. If we can succeed there, we can improve our global market share."

Kimberlin says his strategy is to target people in their early 20s, who are tech savvy and the biggest users of the high-drain devices Oxyride is most suited to run: digital cameras, MP3 players and handheld games. So the company advertises heavily on youth-magnet media such as MySpace com Yahoo! Instant Messenger and MTV com Panasonic has also become the battery sponsor of Anheuser-Busch theme parks and the Dew Action Sports Tour, a competition featuring skateboarding, BMX biking and freestyle motocross.

Just to get right in the face of Energizer, the company has designated June 14 as "Neuter Your Bunny Day," with you-know-who as the obvious target. A van will cruise New York City plastered in ads for Oxyride and NeuterYour Bunny.com a website extolling the benefits of both Oxyride and rabbit neutering, culminating with the neutering of about a dozen bunnies at a local veterinary clinic.

Energizer and Duracell, having witnessed the inroads a determined Japanese competitor like Fuji could make in film--in retail channels similar to batteries--are on guard. Duracell is promoting the same Oxyride technology in its newly released, higher-priced PowerPix-brand batteries, which, ironically, it acquired from Panasonic in a hush-hush licensing agreement that neither company will comment on.

Meanwhile, the folks at Energizer are miffed that Panasonic ads, claiming that Oxyride "beats the bunny" in comparison tests with leading alkaline batteries in digital cameras, left out Oxyride's performance against Energizer's e2 lithium batteries. "Their comparison is against one of the batteries in our portfolio that is recommended for everyday devices like flashlights, toys, smoke detectors," says Jeff Ziminski, vice president of North American marketing at Energizer. Energizer plans to let consumers know (loudly) that in tests specifically for digital cameras, e2 lithium batteries blow the socks off competitors.

Despite the challenges, Kimberlin makes clear that Panasonic will do whatever it takes to claw up the market. "Our plan is to keep doubling our advertising investment year over year. We are looking to be very, very aggressive," he says. It will have to be. Last year Panasonic spent $5 million to $10 million on advertising--peanuts compared with the $77 million that Duracell spent.

Is Oxyride a bunny beater? Panasonic says that before Oxyride, battery technology lagged behind the leaps in consumer electronics. The battery is made with a more efficient electrochemical process than alkaline versions, using nickel oxyhydroxide, which provides a higher voltage (1.7 volts) than alkaline batteries (1.5 volts). According to Panasonic, Oxyride delivers up to three times as many photos on your digital camera for a comparable price.

One hitch in that great new technology is that while Oxyride is clearly better for digital cameras and other gadgets that slurp up a lot of energy in pulses, it is less effective for things that consume low amounts of energy at a constant rate, like radios and smoke alarms. "Our preliminary tests show that Oxyride is a good cell," says Paul Klatt, a quality-assurance engineer for Batteries Plus, a retail chain specializing in batteries. "But its niche is really higher-drain devices."

And as good as it is for digital cameras, Oxyride can't hold a candle to Energizer's disposable e2 lithium battery, which delivered 3,107 digital shots to Oxyride's 990 according to the results of a comparative test in the June issue of POPULAR SCIENCE. But Panasonic is banking that most people will balk at paying $10 for a four-pack of lithium batteries when they can get a four-pack of Oxyrides for $5.

Some critics have chided Panasonic for not focusing more on environmentally friendlier rechargeable batteries. The company makes those too, but the U.S. remains a disposable society. In 2005 86% of U.S. households bought batteries at least once. Moreover, the market for disposables is forecast to grow 5% annually through 2009, to $5.2 billion, according to Joe Iorillo, an analyst at the Freedonia Group. "Price and convenience have a lot to do with the growth of the primary battery market," Iorillo says. "A lot of people don't want the hassle of recharging batteries."

If this fight runs true to form, consumers can expect to be winners, at least in the short term. They will get better products, and they may see some out-and-out price wars as Panasonic tries to lure away consumers and the others defend their turf at any cost. And if Panasonic's marketing creativity is anywhere near as good as Energizer's and Duracell's, this fight is going to be highly entertaining too.