Rubbermaid Want to Buy an Expensive Rubber1 Dustpan

THE BEST-SELLING CAR IN the world is not a VW, Toyota or Chevy, but the Little Tikes Cozy Coupe" - a leg-powered. Flintstones-like car for toddlers. It

Picture Most Expensive DustpanLittle Tikes Flintstone Car

is one of the thousands of products made by one of the world's most successful companies. Rubbermaid. The company's rise started in 1934 when the then Wooster Rubber Company made a little-noticed addition to its line of balloons: a rubber dustpan. It sold the new dustpan door to door for twice what competitors were charging for their metal versions. But this dustpan was special; it was well designed, long lasting and very high in quality, and it was good value. The Wooster Rubber Company became Rubbermaid and that lowly dustpan turned out to be a real winner. Since then, the same concepts that led to the development of the rubber dustpan have transformed Rubbermaid from a sleepy, small-town rubber-products company into a dynamic market leader.

Today, Rubbermaid thoroughly dominates its fragmented industry, without serious competition. It produces a dazzling array of more than

5,000 products, ranging from food containers, pedal bins and home organizers to toy cars, mailboxes and plastic bird feeders. It sells $2.2 billion worth of rubber and plastic household goods, toys, outdoor furniture and office products each year. Rubbermaid's rise has been spectacular. In the past decade or so, its sales have quadrupled and profits have grown sixfold. It has achieved 54 consecutive years of profits, 57 consecutive quarters of sales and earnings growth, and 15 per cent average earnings per share since 1985. Fortune magazine has rated Rubbermaid among the top seven most admired US corporations for ten years running.

Rubbermaid's success results from a simple but effective competitive marketing strategy: to offer consistently the best value to customers. First, the company carefully studies and listens to consumers. It uses demographic and lifestyle analysis to spot consumer trends and conducts focus groups, interviews and in-home product tests to learn about consumer problems and needs, likes and dislikes. Then it gives consumers what they want -a continuous flow of useful, innovative and high-quality products.

Rubbermaid has forged a'strong market position. To most consumers, the Rubbermaid name has become the gold standard of good value and quality. Customers know that Rubbermaid products are well designed and well made, and they willingly pay premium prices to own them. Rubbermaid management jealously protects this reputation. The company has an obsession with quality. Under its strict quality-control programme, no product with so much as a scratch ever leaves the factory floor. It's said that former Rubbermaid CEO Stanley Gat lit, who guided the company through its spectacular growth during the 1980s, used to visit retail stores several times a week to see how the compan^s products were displayed and to check on quality and workmanship. If he found a problem, he bought up the merchandise on the spot, brought it back to headquarters and severely lectured responsible company executives. Throughout the company, he was known to get livid about product defects.

Rubbermaid thrives on finding new ways to serve customers. Innovation and new-product development have become a kind of religion in the company. Rubbermaid introduces around 400 a year. Its goal is to generate at least 33 per cent of its total sales from products less than five years old, a goal that it usually meets or exceeds. The company even bases part of its executive compensation on new products' share of sales. Despite the hectic pace of new introductions, Rubbermaid has met with astonishing success. In a fiercely competitive industry where 90 per cent of all new products typically fail, Rubbermaid boasts an amazing 90 per cent success rate for its new products.

To speed up the flow of new products, Rubbermaid assigns small teams -made up of experts from marketing, design, manufacturing and finance - to each of its 50 or so product categories. These teams identify new product ideas and usher them through design, development and introduction. The teams tackle the new-product development challenge with enthusiasm. Por example, the manager of Rubbermaid's hath accessories, decorative coverings and home organizational products notes that her 'bath team' lives and breathes soap dishes, vanity wastebaskets and shower caddies. Team members go to trade shows, scour magazines, scan supermarket shelves and travel the globe searching for new-product ideas, 'We are like sponges,' she says,

Rubbermaid's versions of ordinary products usually offer simple but elegant improvements. For example, its simple yet stylish new Sidekick 'litter-free' lunch box features plastic containers that hold a sandwich, a drink and another item, eliminating the need for plastic wrapping, milk cartons, cans and other potential litter. The Sidekick is priced 20 per cent higher than competing products. Still, the colourful new lunch box has become all the rage among parents worried about America's garbage glut and among schoolchildren who have had environmental messages pounded into them at school. Rubbermaid's share of the lunch box market is expected to continue to exhibit strong growth and the company plans to introduce new Sidekick versions.

In addition to developing new products from scratch, Rubbermaid has been very successful at buying up and building small, undervalued companies. For example, in 1984 it added Little Tikes, a small producer of plastic toys, to its portfolio of businesses. In 1991, with the acquisition of Eldon Industries, it established its Office Products Group, which makes desktop accessories, office containers and organizers, modular furniture and other products for home and commercial offices. Such smart strategic planning moves have paid off. Little Tikes is now the company's second largest unit -it introduced over 50 new toys last year and currently contributes about 25 per cent of total sales. Rubbermaid is also gearing up to expand its dominance into global markets. By the year 2000, it plans to generate 30 per cent of sales from outside the United States, compared to the current 15 per cent.

Rubbermaid has also built strong relationships with its 'other customers' -retailers which operate the more than 120,000 outlets in the United States alone that sell Rubbermaid products. Retailers appreciate the company's consistent high quality, larger margins, outstanding service and strong consumer appeal. In fact, Rubbermaid recently received 'Vendor of the Year' honours from the mass-merchandising industry. It has built alliances aggressively with fast-growing discount stores that account for the bulk of household goods sales. It created 'Rubbermaid boutiques', which are whole sections within stores that stock only Rubbermaid products. For example, Twin Valu stores set up ten 24-foot-long shelves with Rubbermaid products, displacing between 20 and 490 feet of competing products. As a result, most of Rubbermaid's competitors have trouble simply getting shelf space.

Thus Rubbermaid has done all of the things that an outstanding marketing company must do to establish and retain its leadership. As one industry analyst notes; '[Rubbermaid has] the ability to execute strategy flawlessly. There's something about Rubbermaid that's magical, that is so difficult for competitors to replicate.' Rubbermaid has positioned itself strongly and gained competitive advantage by providing the best value to consumers. It has set the pace for its industry and kept competitors at hay through continuous innovation. Finally, it has developed a constant stream of useful, high-quality products in a constant quest to deliver ever more value to consumers. In fact, some observers wonder if Rubbermaid can maintain its current torrid pace. How many more new products and approaches, they ask, can the company find? 'It's a little like in 1900, when there was legislation to close the patent office,' answers a Rubbermaid executive. 'The country was convinced that everything that could be invented already was. [Rut when it comes to fresh and saleable new ways to serve our customers], we're never going to run out of ideas.'1

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Responses

  • idris
    Why rubbermaid successful?
    6 years ago
  • SINIKKA
    Why rubbermaid a success company in the us need to sell it product to customer in forrigncountries?
    6 years ago
  • TAIMI
    Why would rubbermaid need to expand to forign countries?
    6 years ago
  • michael
    What year did rubbermaid make the gold rubber dust pan?
    6 years ago
  • Negisti Teodros
    Why would rubbermaid need to expand and sell its products to customers in foreign countries?
    6 years ago
  • Felicita
    Why would a company need to expand and sell its products to customers in foreign countries?
    6 years ago
  • haile
    Why is rubbermaid so expensive?
    3 years ago

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