Remarketing Rayovac Batteries

Before founding Laitmon, Peter Laitmon orchestrated this Rayovac transaction when he served as the VP of Marketing for a company engaged in corporate barter. This more extensive example of a multi-stage barter transaction, transitioned into a challenge of remarketing.

Rayovac Batteries had excess production capacity. They wanted to use this production time to generate credit for advertising by paying with batteries that cost them less than paying with cash.

The barter company decided to pay Rayovac $1.5 million in cash and $4.5 million in credits to use when they bought advertising media, in exchange for $6 million worth of batteries at wholesale cost.

In order to cover the company's outlay on media credits, it was vital not only to sell the $6 million of batteries in the shortest period of time, but in a way that would not clog the channels of distribution used by Rayovac in their normal course of business.

This was facilitated by creating a sales plan for each of the battery sizes: AA - AAA - C - D, 6-volt and 9 volt. As the 9 volt accounted for over 50% of the batteries traded, the focus needed to be on selling this size; which was the weakest in retail sales due to changes in technology of consumer electronics.

Laitmon found a smoke detector manufacturer willing to trade completed smoke detectors for the batteries they needed to package with each detector. This was advantageous because the smoke detectors were far easier to remarket than the batteries.

Remarketing the smoke detectors was accomplished in a way that not only caused no disruption to the manufacturer's normal distribution channels, but generated incremental sales of smoke detectors in general.

Remarketing will always obtain a better return on excess inventory than liquidation.

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