Renova Toilet Paper: Avant-garde Marketing in a Commoditized Category

Paulo Pereira da Silva, a Swiss-trained physicist and CEO of Renova, a privately-owned Portuguese paper company, was attending a Cirque du Soleil show when he first came up with the idea of black toilet paper. To see how far-fetched the idea is, bear in mind that toilet paper is a highly commoditized category with sluggish growth and little innovation. Even though Renova is a relatively strong brand in its home country, it is just a medium-size family business facing fierce competition from such consumer goods behemoths as Procter & Gamble, as well as from multinational paper manufacturers such as Kimberly-Clark and Georgia-Pacific. Moreover, in a category where private labels are beginning to outsell national brands, Renova also has to deal with powerful retailers who are both customers and competitors.

Although the strategic challenges facing Pereira da Silva are common to all medium-size companies facing giants in commoditized consumer markets, it does not make them any easier to resolve. To grow and remain independent, he is considering five options: 1) increased price competition, 2) private label manufacturing, 3) continued technological innovations, and either 4) launching a black toilet paper as a limited PR coup, or 5) launching black toilet paper as a fully-fledged line extension immediately available to the greatest number of consumers. What should he do? And how should the chosen strategy be implemented?

The Renova case can be used in an introductory undergraduate, MBA, or executive education course on marketing management to show how marketing can create competitive advantage, reinvent lackluster categories, and beat the commoditization trap. In addition, it can be used in a brand management course to illustrate generation, development and implementation of creative brand differentiation strategies. Alternatively, it can be used in a marketing strategy course to study new product development, product diffusion dilemmas, and competition with private labels.