FROM: Giuseppe Fornaro
TO: Edward “Cutting Edge” Barber, Head of Gillette Shaving Division
RE: Rejuvenating the strategy of Gillette’s razor business
Current Strategy
Gillette has grown to be a power brand in the shaving industry. Its products are seen as premium quality and are thus sold at a premium price. Gillette’s current business model consists of high spending in marketing and product development (R&D). Gillette’s traditional competitive strategy for razors is to focus technology and marketing on increasingly sophisticated blades. In other words, Gillette strengthens their position by introducing new products or services that make existing ones obsolete. By utilizing this tactic, Gillette is remaining competitive
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Value Chain Model
Currently Gillette is spending a great deal of money on product development (R&D) and marketing/advertising. Unfortunately, the Proctor & Gamble people are right; these are both individual development strategies. Combined, they can begin to form a strategy that is fresh and will allow Gillette to redefine the way their products are seen by consumers. As opposed to the old way of having marketing and product development as separate entities, they must be combined (see exhibit 2). When the product is being developed, it should be done with the customer in mind. Of course, the marketing/advertising team should be involved in this component. Although this is a complete overhaul of the current value chain, it will render a higher return on investment by having a product that was built to market. Over the years, Gillette has created high brand loyalty and trust with their consumers by delivering on their brand’s promise, quality razors (see exhibit 2). Gillette can use this status to help implement its new value chain. Product development and marketing working together will change the way the consumers are spoken to by the Gillette brand. For example, instead of the product development department adding a product line and sending it to the marketing team to sell, the marketing team will already know about this product and can market it to consumers.
By combining marketing team with the product developers, Gillette will now be able to have a
1. What changes are occurring in the non-disposable razor category? Assess Paramount’s competitive position. What are the strategic life-cycle challenges for Paramount’s current products as well as Clean Edge?
Examining the consumer behavior for nondisposable razors, we can observe that consumers are focusing on the premium segment. Also, they are becoming more sophisticated and expecting new technologies to smooth the shaving process. Focusing on that, Paramount should invest in the premium products category. Even though that would create cannibalism for the “pro-products” which is already loosing market.
As far as the third phase is concerned, it is a little risky. Gillette’s history has showed that during the time the company had a broader product portfolio (from
Colgate-Palmolive Company (CP) launched a new toothbrush, Colgate Precision, to the market. But having developed for three years, CP was fiercely competing with other companies in the market. In order to have the power to fight in the highly competitive market with substantial product activity, Colgate-Palmolive Co. was in a problem of considering the how to position its new product--Precision, and to define the market strategy in terms of positioning, branding, and communication strategy. It provided some options with details to the reader, hence, for such purpose, this case would be a decision case, finding the optimum to segment the new product to the target and how it should be marketed.
Synopsis: Gillette has long been known for innovation in both product development and marketing strategy. In the highly competitive, but mature, razor and blade market, Gillette holds a commanding worldwide market share. The peak of its innovation occurred in 2006 with the introduction of the Fusion 5-bladed razor. Today, innovation in razors and blades is thwarted by a lack of new technology and increasing consumer reluctance to pay for the “latest and greatest” in shaving technology. Gillette must decide how to put the razor wars behind them and maintain or increase its share of the global razor market.
The brand seeks great opportunity to further develop the business, enhance product design as well as company’s brand image.
* Customers: Male consumer products have been trending upward in the last decade. The customer segments are broken up into three areas; social/emotional, involved razor users, and uninvolved or maintenance users. Social/emotional are responsible for 39% of Nondisposable razors, Involved is for 28%, and maintenance users account for 33%. In 2009 consumers razors and replacement cartridges at a higher rate than ever before.
The Procter & Gamble has vast differentiated products due to its innovation culture. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business (Charan, 2008). The product differentiation allows the P&G to charge premium price for its products and assists to capture market share from its rivals by increasing the product demand.
For this reason, Gillette has always been trying to innovate in the market with new products. But they did not want their product to be bought just because they are a novelty but because it was perceived by the customer as a good quality product and have a staying power and product loyalty. This can be illustrated by the launch of the “Fusion” product by
Paramount Health and Beauty Company is in the process of launching a new technologically advanced nondisposable razor “Clean Edge”. With its improved design, Clean Edge provides superior performance by utilizing a vibrating technology to stimulate hair follicles and lift the hair from the skin, allowing for a more thorough shave. The company has decided to introduce it in the men’s market where it has a strong presence. The company is now focussing on positioning and naming of this new product. It also needs to decide on the promotional activities to be performed adhering to the budget constraints and also must decide on the distribution channels through which it can reach to the masses.
The Gillette Company has effectively entered the razor blade market in the main parts of Indonesia. Even though there is still a lot of potential for growth, it faces stiff competition, as well
Could you identify any product systems in this product mix? Is the toothpaste considered a shopping, specialty or convenience product? At what conditions, could this product considered a business product? With respect to Scope, do you consider it a "star" or "cash cow"? Why? With respect to the product life cycle of scope, what is the current status of the product? What is your marketing advice at this particular product life cycle stage?
Although Gillette uses spokespeople like marketing tools to endorse its brand, the company stands on its own as men grooming giant, who main purpose is to help
P&G has merged with Gillette which poses a threat to L'Oreal as they do not have the strong market share in the men's product (Euromonitor, 2005)
Because of their similarities, Proctor & Gamble and Gillette are a good strategic fit. Between the two entities they have the ability to combine operations, technology, resources, distribution channels and research costs in efforts to drastically cut spending. With lower costs, and the merger complete, the collaboration of Proctor & Gamble and Gillette should achieve a 1+1=3 effect.