Essay about Gillette Safety Razor Division: Blank Cassette Project

1051 Words Apr 17th, 2011 5 Pages
In late 1970, after the split-off of the Toiletries Division, the Gillette Safety Razor Division (SRD) is considering a proposal to enter the blank recording cassettes market to try to achieve its assigned earnings growth target. The blade and razor business is mature and the SRD knows it won’t be able to achieve the growth target there, so it’s evaluating a diversification strategy to enter the new business. As in any diversification strategy, they are facing a new market, with a new product.
The first thing that SRD should do, in order to profitably satisfy customer needs, is to do a situation analysis. The firm first must understand its external and internal situation (strengths and weaknesses), including the customer, the market
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• Standard quality: prices ranging from $1.70 to $2.00 and a bigger market size than professional quality (assumption based on price oriented competition and size of budget quality). Similar characteristics to professional quality in terms of brands, a little less concentrated distribution and slightly lower quality in the materials to coat the tape and the packaging.
• Budget quality: low prices $1.00 but 50% market size in terms of dollars. Small players competing mainly with private labels. Very bad reputation in terms of quality.
From the information in the case we can also define four possible client segments:
• Audiophiles, focusing in the quality of the sound and less price sensitive.
• Teenagers, focusing mainly in music (with a growing trend to record of the air)
• Professionals, focusing mainly in recording meetings
• Automobile market, which needs a portable and safe to operate solution.
The third part is to understand the competition, which is fierce and price oriented but with no market leaders that dominate the market. Also, we know that new competitors are entering the market, RCA, Capitol Records and soon Memorex, all known players in related fields.
Finally, we need to look inside SRD to find its strengths and weaknesses:
• Main strengths: high volume manufacturing of precision metal and plastic products, marketing of mass distributed

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