Gillette case study-Why Innovation May Not Be Enough

Why Innovation May
Not Be EnoughArmenush Archuniani-
June 2017 Semester-
Marketing-Doc. Amirshahi

'To build total brand value by innovating to
deliver consumers value and customer
leadership faster, better and more completely
than our competitors.'

 This commitment to giving men the very best
is carried into our line of personal care
products, including deodorant and body
wash.
 All designed for the unique needs of men –
helping them to look, feel and be their best
every day.

'Delivering value' to consumers is not
necessarily about being the cheapest, but
about earning a reputation for high quality
products that represent good value for money.
That's true of many industries, and particularly
those in which consumers believe there is a
direct relationship between price and quality.

Consumer Market Segmentation
DEMOGRAPHIC
• Men/students/young working men
between 15 to 24 years old, that
have a low disposable income;
• Men older than 24 years old, with
low and medium disposable
income (1500-5000$);
• Men older than 24 years old, such
as executives with high disposable
income (>5000$);
• Women/students between 13 to
22 years old, that have a low
disposable income;
• Women older than 22 years old,
with low and medium disposable
income(1200-4500$);
• Women older than 22 years old,
with high disposable income
(>4500$).
PSYCHOGRAPHIC
• Single men;
• Men who are actively seeking
female companions, married,
engaged and in relationship;
• Innovators and early adaptors
(or people who are able to
adapt to new technologies and
embrace them);
• Beauty conscious (focused on
physical appearance);
• Men and women who are
actively involved in sports or
are popular sports fans;
• People who do not shave due to
cultural, regional reasons;
• People who follow western
shaving life-style.

GEOGRAPHIC
• Europe;
• USA;
• Latin America-such as Mexico;
• Asia-Pacific;
• Consider India and China
individually, because they have
big market.
BEHAVIORAL
• People who shave regularly;
• Roles of culture, religion and
western influences play in
shaving behavior;
• Males who don’t shave due to
discomfort from shaving;
• People who do not shave due to
religious believes;
• People who do not care shave;
• European women who do not
shave due to cultural reasons;
• Western shaving life-style which
show the women with sleek
underarms and legs image.
Continue…

Target Market
• Urban, modern, appearance conscious male
population in the age group of 15-45 years. This
target group is the bread and butter project for
Gillette.
• Men with sensitive skins are special focus area of
the product development team, specially to
develop complementary products for them.
• The pearl target for Gillette is the women segment,
which is very profitable for Gillette, and the
complementary products for them.
• People who do not shave due to uncomfortable
feeling during and after shaving.
• Chinese and Indian market.

Gillette Positioning
Market Positioning =
Segmentation + Differentiation
QUALITY
PRICE

 The years between 1800 and 1900 have been
coined the “GOLDEN ERA” of the straight edge
razor.
 King Camp Gillette born in fond du Lac, Wisconsin
in 1855.
 William Painter, the inventor of disposable crown
cork bottle cap assured him that “A successful
invention was one that was purchased over
and over again by a satisfied customer”.

 In 1895, Gillette suddenly had a brilliant idea
while shaving.
 It was an entirely new razor and blade.
 A razor with a safe, inexpensive and disposable
blade.
 But because of technical problems idea was not
immediately successful.
 Until 1901 that King C. Gillette with technical
partnership of MIT graduate William Nickerson,
fundamentally transformed shaving with the
invention of the first safety razor in Boston.
 Gillette receives the first U.S. patent on the
safety razor on November 15th, 1904.

1901
 King C. Gillette invents
The safety razor with
disposable blades.

1920-1930
 Gillette’s success carried the company through
economic droughts and world war II.
Gillette by 2 unrelated ventures:
1. 1948: The Toni company-maker of DOY home
permanent-wave kits;
2. 1955: The paper mate pen company-producer
of retractable, refillable ball-point pens.
Unsuccessful because of declining demand and
innovative competitors- Bic’s low price disposable
pens.

1962
 English firm Wilkinson Sword introduced its
stainless-steel blade.
 Gillette starts to lose the market share and
didn’t know how to respond.
 Due to lack of sources Wilkinson Sword sold
much of its blade business.
 Already Gillette lost his market share from 70%
to 49%.

Gillette new CEO which believe in
diversification acquire following companies:
1. 1967: Braun AG- German manufacturer of small
appliances.
2. S.T. Dupont- French maker of luxury lighters.
3. Eve of Roma- high fashion perfume.
4. 1977: Buxton leather goods.
5. Welcome wagon Inc.
6. 1962: Sterilon hospital razors.
7. 1973: Jafra cosmetic- home sales.
4 of these were unprofitable, the other 3 had low profit.

Other Diversifications:
 1970: La Giulla- Chewing gum, candy.
 1979: liquid paper- fluid for typing correction.
 1984: Oral-B laboratories- dental care products.
 1987: Waterman pen company- premium writing
instruments.
 1993: Parker pen holding- writing products.
 1996: Duracell batteries- manufacturer of batteries.
 COO Michael Hawley sold the following:
 The Toni company
 The paper mate pen company
 Parker pen holding
 Waterman pen company
 liquid paper

1975
 Gillette introduce write brothers line of
disposable pens.
 Salvaged a good portion of lost market share.
1977
 Introduce cricket disposable lighters.
 Experience moderate success.
 Introduce Soft and Dri antiperspirant.
 At first, It was successful, but then because of
its damages to ozone layer experienced a sharp
decline in sales.

1971
 Gillette produces
The Trac II, the
first twin-blade
shaving system.

1977
 Gillette introduces the Atra/Contour system,
the first twin-blade shaving cartridge with a
pivoting head, which allows the blades to better
follow the contours of the face for a closer
shave.
1976
 Gillette introduces
Good News!, The
first twin blade
disposable razor for
men, and Daisy
razor for women.

 These products led Gillette to 75% of global
market in razors and blades.
 Majority of USA shaving market.

1985
 Gillette launches The
Atra Plus / Contour Plus
— the first razor with a
lubricating strip.
Atra
Plus
Overtook the Trac II as the
number one selling razor.
 Gillette updated its Good News! Disposable razor
with lubricating strip.
 Several introductions in personal care segment,
such as Aapri facial care products, Mink Difference
hair spray, moisturizers, etc.

1990
Gillette launches
Sensor — The first
razor with twin blades
individually mounted
on highly responsive
springs that
automatically adjust
to the contours of
every face.
1993
The Sensor Excel
razor blades.
1992
Development The
Sensor razor blades for
women.
1996
Development The
Sensor Excel razor
blades for women.

 Start of internal competition.
 Gillette represented The first product that was
able to effectively shift consumer demand and
sales away from the Atra and Trac II.
 Gillette is the best-selling disposable razor
worldwide.

 Gillette’s most
successful new
product ever.
 Sales rose to
1billion$ in first 18
months.
 The Match3 was
named winner of
American Marketing
Association Grand
Edison Award for
the best new
product of 1998.
The MACH3 Turbo for men
Venus system for women
1998
Gillette breaks the performance
barrier with The MACH3, the first 3-
blade technology, for an even
smoother, closer shave with fewer
strokes and less irritation.

2003
 Gillette faces new threatening competitor
- Schick and its product Quattro-the world
first four-bladed razor.
 They were in legal ping-pong match, due
to problems such as using the same
technology or having misleading
advertisement statement.
 Schick increase its market share to 17%
while Gillette’s market share fallen to
635.
Gillette established a two-fold attack plan:
I. Convert consumers to higher-price products;
II. Expand geographically.
Fight
back

2004
Gillette introduces
M3Power – the first micro-
powered wet shaving
system for men – making it
easier to shave more
thoroughly with one easy
power stroke.
A refillable triple-
bladed, battery powered
wet shaving system.

On October 1, 2005,
Procter & Gamble –P&G-
finalized its merger with
the Gillette Company.

Sold more
than 4
billion$ in
2 months
2006
Gillette Fusion razors debut in
Manual and Power versions. They
feature 5(+1) blades and beat
the MACH3 on every attribute,
providing Gillette’s closest and
most comfortable shave ever.
But
 Fusion is more expensive than
Mach3.
 Critics claim that It has no
additional performance benefits.

2007
Gillette Fusion Power
phantom or Stealth in UK
Features a redesigned
handle with a darker
color scheme than the
original.
2008
Gillette Fusion
Power Phenom
It has a metallic
blue and silver color
scheme.
2009
Gillette Fusion Power
Gamer razor
Synergy between product development
and marketing strategy

2010
Gillette Fusion ProGlide and Fusion ProGlide Power
Include new innovations
World’s best-selling razor
Best razor of 2011 by Men’s Health Magazine
Gillette market research indicates
that most men experienced
discomfort during and after shaving
Gillette defining new standards
Innovation and
global expansion
Grow Gillette Market Share

Gillette always made great strides in
appealing to the needs of women.
In 2010 won Gold
Award for its
women’s Venus razor
Venus was the first wet-shaving product
designed specially for women
Improve daily shave
experience for women

2012
Gillette Fusion ProGlide styler
Conjunction with a new “Masters Of
Style” campaign
Co-operation of P&G 2 brands-
Braun and Gillette
Also developed ProGlide
clear shave gel
3-in-1 Styling Tool

• Gillette entered the Indian market in 1984.
• Gillette launched its newest triple-blade system,
Mach3 in 2004, but sales were flat for a long time.
AND
Indian men do not consider shaving a
significant enough activity to justify such
a premium.
Gillette had to focus on changing the
consumer's attitude, leading to some
creative marketing campaigns
An estimated 400 million
customers not happy with
existing market
BUT

The company created the Women Against
Lazy Stubble (WALS) association
Until 2010, Gillette India had been following a strategy
of marketing cheaper-end US-developed razors.
Such as
‛Shave India Movement 2009’ campaign
'India Votes... to shave or not' to support this campaign
Which asked three controversial questions:
• Are clean-shaven men more successful?
• Did the nation prefer clean-shaven celebrities?
• And the big one: do women prefer clean-shaven men?
Gillette Guard, the first product
created just for the Indian market, was
introduced in October 2010

• It was more affordable.
• Valued safety and ease of use.
• Extra blades were eliminated.
• Design complexity was reduced.
• Easy-rinse cartridges, which help
customers save water and ensure
the blades are clean, even if
running water is not available
• Lightweight, ribbed handles were
designed.

A mistake that multinationals
make, is to push global
brands in a one-size-fits-all
strategy.
Gillette's strategy of
spending time and resources
understanding Indian
consumers' needs proved to
be the key to its success.

Razor manufacturers earn most
of their profits from blade
refills, not the initial razor
purchase.
Upselling And
Cross-Selling
matters.
so

2014
Gillette changes the landscape
of manscaping with the first
razor built for the male
terrain—GILLETTE BODY.

2014
Gillette Fusion ProGlide with
FlexBall Technology Razor is
the next evolution in our
shaving revolution—a pivoting
razor built to maximize
contact with every contour of
a man’s face.

2015
Gillette Fusion ProShield
provides lubrication BEFORE
and after the blades to shield
from irritation while you
shave to maintain maximum
contact.

By the way, Gillette focused on
releasing complementary
products, such as hair care or body
wash
 Enhancing product line
 Expand marketing strategy
Brand
standing
World’s Leading Male-grooming
Authority

Marketing strategies
 One of the Gillette’s core competencies is Gillette’s created
synergy between product development and marketing
strategy.
 Gillette’s stellar marketing focused heavily on male-
dominated sports marketing activities.
Gillette believes that the best way to
maintain top of mind awareness in
every market that it enters is sport
marketing and sponsorship

In 2004,
Gillette began
a partnership
with football
star, David
Beckham
Beginning in the
1970s, Gillette
sponsored
international events
such as the FIFA World
Cup, rugby, the
Gillette Cup in
Cricket and Formula
One racing.
in February 2007, Gillette
launched the Gillette Champions
program that highlighted the
athletic and personal
accomplishments of three of the
world’s greatest athletes – Roger
Federer, Thierry Henry, Tiger
Woods

Gillette’s stadium
 Located in Foxborough,
Massachusetts.
 It serves as the home stadium
and administrative offices for
both the NFL's New England
Patriots football franchise
and MLS's New England
Revolution soccer team, and also
home stadium for the football
program of the university of
Massachusetts (UMass).
 60% of Gillette’s sale is outside
USA.
 These sports are popular in Latin
America and Europe.
 Gillette extended its naming
rights until 2031.

Gillette’s young guns
campaign
 ABC Reality Television series
featuring twelve celebrities.
 Featuring NASCAR's Top Young
Drivers.
 The Gillette Young Guns are six
of racing's top young drivers.
 Matt Ryan and Ray Rice from football,
Evan Longoria and Carlos González
from baseball and Denny Hamlin and
Kyle Busch from auto racing.
 Promotes the fast and furious
life of men though television,
print, online, public relations,
and event marketing tactics.

London 2012
Olympic Games
 A team of 24 world-class athletes
from 18 countries.
 Each of these athletes will
participate in activities to help
inspire and encourage future
generations to achieve greatness
through great starts in athletics –
and in life.
Argentina-1 Brazil-4
Canada-1
Chille-1
China-1
France-1Germany-1 Italy-1
Great Bretain-2
Spain-1
Japan-1
Mexico-2 Peru-1Venezuela-1
Switzerland-1
United States-2
Ukraine-1 Russia-1

Gillette’s Social Media
presence-2007
 First step on Facebook, but not
seriously until 2011. but now on
Facebook and Twitter.
 Gillette answer the comments
on Twitter and Facebook.

Gillette
marketing
campaign
for the
Fusion
ProGlide
Styler, with
major
partnership-
MOVEMBER,
which
created a
cult charity
brand with a
strong
following of
a young ,
trendy
moustache-
sporting
guys.

MediaCom Communications-2014
 An impactful, innovative, immersive and
non-intrusive gaming experience.
 Tied the introduction of the MACH 3 razor
to Real Racing 3 - a car racing, mobile
game, to engage consumers and
associate the brand with technology
 A personal sporting experience.
 The user base matched the brand's core
target audience across India.
 When a user clicked on the banner, they
were prompted with the option to “begin
a race,” which would launch an
interactive game from inside the creative.
 To promote engagement, the campaign
awarded weekly prizes to the consumers
who had the fastest times in the game.

Rio 2016 Olympic
Games
 Gillette Unveils “Perfect Isn’t
Pretty” Campaign.
 This campaign reinforces the
role of Gillette as a brand that
promises and strives to
deliver the best for 800
million men every day and
has done so for over 100
years.
 Features Neymar Jr. (Brazil, Football),
Ashton Eaton (USA, Decathlon), Ning
Zetao (China, Freestyle Swimming) and
Andy Tennant (Great Britain, Team
Pursuit Cycling)

Gillette says ask your
dad, not the internet
 An advertisement, released just
in time for Father’s Day.
 A digital campaign to encourage
teens to 'Go Ask Dad' for advice
instead of the internet.
 That sets up a test where boys
first try learning things by
"asking the internet," then
asking their dads, and
comparing results.
 The Internet cannot put that
razor in your hand and guide
you during your first shave.

Global expansion
The best way to
understand
customer’s needs
Perform R&D where the
end product will be sold
Specially Gillette invest on
R&D outside the USA. Such as
India, China, etc.

Pricing Strategy
 Gillette has maintained the premium pricing of the product
and the quality of the products is certainly high.
 The company has fixed different prices over different
categories of the products based on their qualities and
technology, which is used in the preparation of the product.
 Evidence show that most men and women like less
expensive 3-blade razors.
 Men try to reduce their cost of shaving by various ways.
Gillette spokeswoman Kara Buckley said: We
need to do a better job of telling guys
we are available for them at a multitude
of price points."

High cost of shaving
Invent start-ups
The Blue Ocean
Strategy advises
that you compete
on attributes that
your competitors
have failed to
serve.
 Dollar Shave club-2011:
Delivers razors and other
personal grooming products to
customers by mail.
 It delivers razor blades on a
monthly basis and offers
additional grooming products
for home delivery.

P&G in recent
years launched
its own
competitor to
online razor
services,
The Gillette
Shave Club.

Online Blades And Razor Sales-USA2016

0
10
20
30
40
50
60
70
80
2010 2015 2016
US Market Share
US Market Share

Looking Toward The Future
 Consider roles of culture, religion and
western influences.
 Innovation whether in product design or
marketing.

Strengths
 Being first mover in razor and blade industry.
 Practice positive cannibalization.
 Strong brand image.
 The power to expand product globally-Global presence.
 Quality, technology and innovation.
 Market leader (Dominant market share).
 Strong market equity.
 Strong and aggressive advertising.
 Different and innovative marketing campaigns.
 Take parts in events, such as Olympic games, sponsorship, etc.
 Responsive I mage, especially in social media-Facebook and
Twitter.
 Creativity and strong R&D investments all around the world.
 P&G Resources and technology advantages.
 The power of company in creating synergy of its core business
and marketing programs.
 The power of the holding -P&G- in leveraging the strengths and
technologies of its different brands to develop new products-
such as skin care, hair care, etc.
 Gillette products for women are not just different in colors,
the razors have different system and features.

Weaknesses
 High price points.
 Narrow segment focus.
 Primary product is in the maturity stage of its product life
cycle.
 New products without substantial technological improvements.
 Inability to rise the market share - Remained stagnant recently
- “Sleeping Giant”-.
 The critics believe that new models have no additional
performance benefits.
 Not very active in online media.
 Made reckless acquisitions.
 High prices led to new start-ups such as Dollar Shave club, etc.
so Gillette market share fallen.
 Gillette’s products known as luxury products in comparison to
other competitors in this industry.
 Expensive brand maintenance.

Opportunities
 Promote Western-style culture-Campaigns to glamorize clean-
shaven.
 Make teenage male/female as lifelong users.
 Enter into competition with start-ups such as Dollar Shave
club, etc. to risen the market share.
 Expand/innovate creams and lotions-15% men don’t shave due
to discomfort, and 3% don’t care to shave!
 Product diversion and new product launch.
 Create strong, extensive and promising customer environment.
 Gillette products damage the environment, because most of
them are Non-recyclable, so Gillette should invest on
environmental issues.
 The opportunity to become the supplier of industries, such as
hospitals, etc.
 Improve consumer trust and loyalty.
 'More completely' recognizes that a razor is just one component of
the much broader market of 'personal appearance and wellbeing'.
'Looking good, feeling good' is a many-staged process of personal
grooming, of which shaving is just one aspect. So there is the
opportunity for inventing new related products, such as
electric and manual toothbrushes, ear and nose shaver, etc.

Opportunities
 New production technology.
 Razor manufacturers earn most of their profits from blade
refills, not the initial razor purchase, so improve cross-selling
complementary products.
 Consider the consumer spending power and lower the costs.
 Provide discount, coupons and seasonal promotion for
consumers.
 Expand the products to new markets, such as china, Latin
America, etc.

Threats
 Competitors such as Schick, Bic, etc.
 Manufacturing price increases.
 Increasing the customer’s bargaining power.
 New online start-ups such as Dollar Shave club, etc. which
work in this industry and take Gillette’s market share.
 Ongoing legal battles.
 Substitute products which are developed in the market, such
as electric razors, laser hair removal, Epilation, wax strips ,
etc. which are longer-lasting than razor.
 Price sensitive market.
 Cultural and religion issues.
 CASPIAN Launches Worldwide Gillette Boycott- CASPIAN
(Consumers Against Supermarket Privacy Invasion and Numbering) is calling for
a worldwide boycott of Gillette products since the company failed to
renounce a Gillette Mach3 "smart shelf" spy system.
 Heavy critics and negative online reviews.
 Low pricing strategy of new entrants from China, India.
 Economic down turn.

High barriers for competitors to
enter the space on large scale.
Large buyers such as Walmart,
Target, etc. have high bargaining
power, and individual customers as
well, because there is other same
products with lower prices, and the
customers willing to more
personalize products.
Intensive and fierce competition in
grooming industry.

1. Schick – its slogan is “free your skin” and offers razors for
both men and women. Schick focuses on breaking away from
their normal routine by exposing them to something new (try
Schick over Gillette for something new and different). This is
great for people wanting to try something new and different
than the normal shaving routine.
2. Norelco – its slogan is “maintain peak performance”. Norelco
focuses on performance and “not losing your edge” and
“maintaining your razors peak performance.” This idea of
durability/cost effective (this razor maintains performance, so
it doesn’t reach its peak). This is great for people who shave a
lot.
3. Braun – its temporary campaign is “if you expect your razor to
last a few years. We’d like to raise your expectations.” Braun
(similar to Norelco) is trying to capture its target audience
interest by showing its durability/reliability, as well as the
cost effective (not having to buy a razor again until 7 years).
This is great for people who don’t want to spend too much
time on choosing which razor to buy.

Gillette is a very big buyer of
supplier goods, so the bargaining
power of suppliers is low.
Customers have other cost effective
substitutes, so the switching cost is
low, and the threat of substitutes is
high.

Porter’s 2 New Forces
Supplementary
or
complementary
Force
Liquidity force
It refers to technology that the
company has, and this force for
Gillette is high.
This force refer to the power of
company to sell the
brand/company, and this force in
Gillette is low, because Gillette is
in maturity stage of its product
life cycle, and its hard to find
investors to buy the company,
and in addition brand equity is
very high.

DECLINE
• Increase firm
investment to
dominant the
market.
• Maintain firm
investment until
uncertainties are
resolved.
• Decrease firm
investment by
dropping
unprofitable
customer groups,
while increasing
investment in
profitable groups.
• Milk the
investment for
cash.
• Divest the line.
MATURITY
• Convert non-
users(pursue new
consumers).
• Enter new market
segments.
• Increase product
usage through
more frequent use
or additional
applications.
• Improve the
product.
• Modify marketing
programs.
• Find niche.
• Markdown prices.
• Increase
advertising and
promotions.
• Increase R&D for
product
improvements or
line extensions.
• Supply product for
private-label
branding.
GROWTH
• Maintain or slightly
increase
promotional
expenditures.
• Lower prices to
appeal to price-
sensitive buyers.
• Improve product
quality, add new
features.
• Add new
models/accessorie
s.
• Enter new market
segments.
• Increase
distribution
• Shift product-
preference
advertising.
INTRODUCTION
• Inform potential
customers.
• Induce product
trial.
• Secure
distribution in
retail outlets.
• Focus on higher-
income groups.
• Prices set high due
to high costs.
Product Life Cycle
Marketing
Strategies

Invent A
Purple Cow
Product Life Cycle Curve - Moor’s Diffusion Curve

1) Evaluate product
innovation at Gillette
throughout its history. Has
Gillette been a victim of
its own success?

Gillette’s Razor Evolution 1901: King C. Gillette
invents the safety razor
with disposable blades.
1903: Gillette
manufactures the first
safety razor. By year’s
end, Gillette sells 51
razor sets and 168 blades
1904: Gillette receives
the first U.S. patent on
the safety razor, sales
soar to 90,000 razors and
12 million blades.
1932-69: Gillette
introduces the Gillette Blue
Blade, Thin Blade, and
mostly improve the design.
1932-69: Gillette
introduces the Gillette Blue
Blade, Thin Blade, and
mostly improve the design.
1971: Gillette introduces
Trac II, the first twin-blade
shaving system.
Good News!, the first twin
blade disposable razor for
men.
Atra, the first razor with
a pivoting head.
the first razor with a
lubricating strip–AtraPlus.
the first disposable razor
with a lubricating strip –
Good News! Plus
1989: Gillette introduces Sensor, the
first razor with spring-mounted twin
blades.
1992: Gillette launches Gillette Series
line of shaving products with its
signature Cool Wave fragrance.
1994: Gillette introduces SensorExcel
featuring five flexible microfins for a
closer shave.
1998: Gillette’s MACH3 shaving
system, the first triple-blade shaving
system, "breaks the performance
barrier."
2004: Gillette introduces M3Power –
the first micro-powered wet shaving
system for men – making it easier to
shave more thoroughly with one easy
power stroke.
2005: Gillette launches the Gillette
Fusion shaving system with manual
and power razors.
2014: Gillette Fusion ProGlide with
FlexBall.
2015: Gillette Fusion ProShield.

 Gillette was in monopoly in the razor industry and personal
shaving market for quite a long time. As you see in the
Gillette’s Razor Evolution history they did not focus on
product innovation very much, just made some slight
improvements, specially in color and design, not on
performance features, and when it did, it focused on
acquiring existing product lines, which are not profitable
for Gillette.
 In 1962, when Wilkinson Sword launched its stainless-steel
blade, Gillette finally faces a serious threat, a competitor,
but they were unsure how to respond!! Gillette was lucky
this time and Wilkinson Sword couldn’t exploit the niche it
had created, and Gillette was able to purchase much of
their existing blade business, but Gillette already lost its
market-share dipped down to 49%.
 Gillette new CEO Vincent Ziegler, continued to diversify
their product line, and develop products, such as lighters,
deodorants, etc. and could experience moderate
successes.

 Under the leadership of Colman Mockler, Gillette launch
TracII razor, Atra razor and Good News! And deemed a great
success and thus continued Gillette’s dominance in this
market.
 By 1990, Gillette kept on innovating and attacking it own
products, and found an interesting position of cannibalizing
its own success, through introducing Sensor family of shaving
system, Mach3, Fusion, etc.
 In many ways Gillette has been a victim of its own success,
when they were being innovative, they were "cannibalizing"
their own successful products. While their new inventions
drove up their sales, it often took away from the sales of its
previous products and did not increase their market share,
and another problem is that, new introduced products are
costlier than the old ones, and majority of people are price-
sensitive, so they keep on using the old ones, or switch the
brand, and even use the new start-ups programs to decrease
their shaving costs.

 Cannibalization is perceived as a problem to many
venture capitalists as it may bring reduction in profit
and also steals away sales of an existing product, as a
result of introducing a new product. What seems at first
to be a successful new product can easily turn into the
wrong kind of success when total market share and
value is lost.
 Cannibalization clearly is a difficult and painful thing to
do. It requires firms to swim against the tide of
organizational inertia. Decision makers in organizations
often ignore or neglect the effects of cannibalization.
The effect of cannibalization on a market share can be
considered from two different perspectives:
1. Intra–product cannibalization can be observed between
products that are classified in different product groups,
look physically different, but offers similar functionalities.
2. Inter-product cannibalization is seen when different
products within the same product group in a firm competes
against each other for market niche.

 The answer lies in the extent to which the firms are
prepared to give up the old and embrace the new product.
Nevertheless, entrepreneurs need to realize that
cannibalization is not always avoidable.
 Product innovation isn’t an option in today’s business world
– it’s a necessity. Long gone are the days when companies
could rely on their flagship products, long product cycles, or
traditional business models to sustain growth.
 Nowadays, many firms have experienced the need to offer
more productivity because of increased competition and
more demanding customers.
 The most important issue is to know the best time to adopt
or avoid cannibalization to Minimizing the Effects of
Cannibalization on Firms’ market share.
 So Cannibalization may Increase Market Share, profit and
Success in Failure.
One of the Key success to result success in cannibalization
is strong brand loyalty to original product, as we know the
Fusion shaving system is costlier than Mach3, but Fusion
ProGlid system is the World’s best-selling razor, so the
cannibalizing was profitable in this case.

1962
Wilkinson Sword
launched its stainless-
steel blade

 According to BCG Market Growth-Relative
Market Share curve Gillette has high market
share, but due the product life cycle, razor
and blade industry is in maturity stage of
product life-cycle, so the growth is slow, so
Gillette is a CASH COW business for P&G.
 These units have cash-generating qualities and
typically generate cash in excess of the amount
of cash needed to maintain the business.
 They are to be "milked" continuously to produce
cash for Gillette to invest on R&D activities and
complementary product lines.
 In this case, Gillette should utilize Concentric
Diversification, Horizontal Diversification,
Conglomerate Diversification, and Joint
Venture Strategies.

1) … Has product
innovation in the wet-
shaving market come to an
end? Explain.

 I believe that product innovation in the wet-shaving
market has come to an end.
 The five blade Fusion did nothing significantly different
from their own Mach3 and Schick's Quattro and It has no
additional performance benefits.
 It also mentioned that when introducing each new product,
sales of the initial razor were higher than refill cartridges.
People are eager to try to the new product, but may be
they aren't pleased enough to buy refills, they like their
old product better, or they felt they were too expensive to
continue to use them, but we mentioned that razor
manufacturers earn most of their profits from blade refills,
not the initial razor purchase.
 In addition the Substitute products will decrease the demand
for razor, but the complementary product can be used even
by the people who don’t use razor.
 So, they should focus on enhancing current products,
developing complementary product (cross-selling and up-
selling), and improve the consumer’s loyalty to brand to
use the products of brand as a complete package for Skin
and hair care.

 As It is explained in the case , Gillette’s bread-
and-butter has always been male consumers,
the project development for Gillette is easier,
and the technical success is high in this
segment, but if the project done successfully,
the value creation is low.
 But Gillette start working significantly for the
women segment and introduce the Venus
system which create high value for Gillette and
P&G, and it will be as a pearl in Project
Portfolio-matrix Dimensions.

 As we see in the Project Portfolio-matrix
Dimensions, Gillette’s bread-and-butter has
always been male consumers, the project
development for Gillette is easier, and the
technical success is high in this segment, but if
the project done successfully, the value
creation is low, and, this issue can be
explained with effort and impact metrics too.
In male segments, it needs low effort, but the
impact is medium.
 But for the women segment, it needs high
effort, but the impact will be high, so it is good
project to invest.

Financial
Strength
SPACE MATRIX
Industry
Attractiveness
Environmental
Stability
Competitive
Advantage
Conservative
Competitive
Aggressive
Defensive

FS
SPACE MATRIX
IA
ES
CA
‫خانة‬‫شماره‬1
.1‫بازار‬ ‫توسعه‬
.2‫بازار‬ ‫در‬ ‫رسوخ‬
.3‫محصول‬ ‫توسعه‬
.4‫باال‬ ‫به‬ ‫عمودی‬ ‫یکپارچگی‬
.5‫پایین‬ ‫به‬ ‫عمودی‬ ‫یکپارچگی‬
.6‫افقی‬ ‫یکپارچگی‬
.7‫همگون‬ ‫تنوع‬
.1‫کاهش‬
.3‫افقی‬ ‫تنوع‬
.4‫ناهمگون‬ ‫تنوع‬
.5‫واگذاری‬
.6‫انحالل‬
.4‫مشارکت‬
.1‫کاهش‬
.5‫واگذاری‬
.6‫انحالل‬

Product
Market
Existing Relevant New
Existing
Increase the
number of
consumers
through
marketing.
Sell new models
of razors to
customers.
Sell
complementary
products to
customers.
Relevant
Sell razors to
hospitals, chain
stores, etc.
Sell relevant
products, such
as razor refills to
these relevant
markets, such as
hospitals, etc.
Sell
complementary
products to
these relevant
markets, such as
hospitals, etc.
New
Expand the
products to
other countries.
Expand relevant
products to
other countries.
Expand
complementary
products to
other countries.
Solutions About Market And Product
Type Development/Diversification

2) What do you make of
the razor wars, first
between Gillette and
Schick, and now with
online competitors? Does
Gillette face a serious
threat from competitive
inroads? Explain.

 Gillette feel the threat of competitors in 1962 for the
first time, by the new entrant Wilkinson Sword, It is true
that Gillette lost its market share, but Gillette acquire
much of Wilkinson business.
 But in 2003 Gillette face a new, more threatening
competitor Schick, and the world first 4-bladed razor
Quattro.
 Before launching Quattro, Gillette sued Schick for
illegally using the same progressive geometry technology
as the Mach3, and Schick countersued Gillette for
misleading advertisement statement, that “The World’s
Best Shaving” and “The best a man can get ” slogans can
confuse the customer.
 But the point in this legal war is that, Schick launch
Quattro and increase its market share to 17% and
Gillette’s market share decrease to 63%.
 And another point in this legal ping-pong match is that
the customer preferences and purchases changed.

 This one-upmanship did benefit Gillette. It propelled
Gillette to take a good look at it's strategy. They
prepared a two-fold plan and focused on converting
consumers to higher priced razors and expand into new
world markets.
 But these battles may distract business from innovations
and take its attention on respond to competitors act,
and loose the opportunities.
 Based on “Leading razor brands in the US in 2015-based
on sales ” statics, Schick Hidro5 is the best selling, but
the point is that the other products which have the
majority of sale are Gillette products.
 One of the most important KSF-Key Success Factor- of
Gillette is its R&D offices around the world, which help
Gillette to understand consumer demands. One of its big
successes was being unprecedented with Gillette Guard
among Indian men, which hold 50% market share in
India, and Gillette is working on entering Chinese
market, and Gillette products are best-selling in Europe
as well.

 In addition Gillette is leader in women
segment with Venus shaving system,
and have the dominance market-share
in this segment.
 The most important battle for Gillette is
the threat of new entrants with lower
prices, substitute products and online
competitors.

 With launching new online start-ups which give shaving
experiences with lower costs through different monthly
options and mail-order, which was very interesting for
customers, especially men, Gillette lost its market
share, and due to low investments in this business
model, the number of new entrants are increasing.
 As you see in Dollar Shave Club Revenue Growth curve,
it shows that customers spending increases widely, so it
shows the importance of this business type.
 P&G in recent years launched its own competitor to
online razor services, The Gillette Shave Club which
provide shave plans for consumers with free shipping,
but Dollar Shave club which was the first mover in this
segment is still the online market leader, and Harry’s
shave club which launched on 2013 can get the third
rank in online market.
 Gillette should work on strengthen rand loyalty, work on
customization, and even works on substitute products,
technologies and tools for the razor and blades.

DOLLAR SHAVE CLUB REVENUE GROWTH

3) What actions would you
recommend over the next five
years that would help Gillette
maintain its worldwide
dominance in the shaving
market? What specific
marketing program decisions
would you recommend? Should
Gillette be worried about its
pricing? Explain.

Since the razor market is very saturated there are not enough
options left in razor market.
 They have to focus more on their R&D to keep their brand image
high.
 There is 15 percent of the male population that doesn't shave due to
discomfort. Focus on product development for a razor that works for
those men with sensitive skin.
 Focus more on women market. Take advantage of other countries
whose women may be influenced by Western lifestyles, that include
women shaving being a part of everyday life.
 Consider cultural and regional segmentation, and try to penetrate a
life-style with every day shaving habits, use advertisements which
show the attractiveness of clear shaving for opposite gender.
 Considering Indian market entering success, focus on entering new
global markets such as China, Indonesia, Latin America, etc.
Chinese are luxury goods lovers, so expanding new products, with high
customization and high prices can be profitable in China.
 Develop cross-selling complimentary products.
 Work on lowering the costs to get the segment with low disposable
income and overcome the new entrants with lower costs.
 Product cannibalization could be an enormous opportunity for
Gillette as long as they keep focusing on their strong suits such as,
their innovative product development.

 In marketing programs, Gillette is heavily focused on
male shaving, Gillette can use women influencers, such
as actresses, female sports teams, superstars. With the
world-wide market share, they can take advantage of
other countries that include women who shave
everyday.
 Gillette can focus advertisements on different cultures
and life-styles, and encourage western shaving life-
style.
 Sales Promotion: Gillette usually runs sales promotion
schemes all the year. At times they give bundled
products at discounts or extra gel per canister or free
promotional products to popularize new products. The
main advantage of this strategy is that the young
customers' base feels good as they get more for the
same amount. For new products it gives customers a
chance to experience new technology shaving goods
free of cost which later helps them to make informed
buying decisions.

 Public Relations: Gillette's Public Relations
and charity efforts are an important pillar of
its promotional strategy. It is conscious of
its social image and reputation.
 Gillette should pay attention to
environmental sustainability and focusing on
recycling projects.
 One of the most important ,marketing
programs is social media and brand
generated content(BGC) and user generated
content(UGC) which can influence the
customer purchasing decision and change
shaving life-style gradually. Using viral
hashtags to trend Gillette in social media.
 Nowadays beard fashion is very popular and
feral, and there are viral in Youtube and
social media and there are famous beard
festival every year, so Gillette can run
campaign and sponsoring these festivals,
and use the winners of these matches as
influencers. They can promote Gillette as a
shaper to their beards.

As you see in the curve below which show the trend of day of week and
time of day which Gillette is purchased from the stores, this data and
knowledge can help the marketers to decide the timing of their marketing
programs, specially in Digital Marketing tools, such as email-marketing,
sending SMS, generating content on social media pages.

 In pricing strategy, Gillette should consider the fact
that majority of people spending power are low, and
customers, especially men always want to decrease
their shaving cost, and this is one of the reasons of
Dollar shaving club and such start-ups success, so
consumers are price-sensitive, so Gillette should lower
the costs, and giving discounts, coupons to them to
strengthen their loyalty to brand.
 Another threat is the new entrants with low prices, such
as Chinese manufacturer, which can get the segment
with low income, which is not small segment. So Gillette
should worry about its pricing strategy.

 https://www.slideshare.net/tarun_arya/diversification-of-gillette
 http://news.gillette.com/about/timeline
 https://gillette.com/en-us/our-history
 http://kotaku.com/5162888/finally-a-shaving-razor-for-gamers
 https://en.wikipedia.org/wiki/Gillette
 http://www.shavingdetective.com/gillette-young-guns-2011/
 http://news.gillette.com/press-release/product-news/gillette-
unveils-perfect-isnt-pretty-campaign-lead-rio-2016-olympic-
games
 http://www.mmaglobal.com/case-study-
hub/case_studies/view/41461
 http://www.adnews.com.au/campaigns/gillette-says-ask-your-
dad-not-the-internet
 http://www.mbaskool.com/brandguide/fmcg/812-gillette-
mach3.html
 https://www.studypool.com/questions/188805/1-evaluate-
product-innovation-at-gillette-throughout-its-history-has-gillette-
been-a-vi

 https://prezi.com/hlobuged53ho/gillette-case-study/
 https://www.researchgate.net/profile/Adeleye_Afolabi/publica
tion/269694210_Minimizing_the_Effects_of_Cannibalization_o
n_Firms%27_market_share/links/549269c50cf2484a3f3e0cbf/
Minimizing-the-Effects-of-Cannibalization-on-Firms-market-
share.pdf
 http://blog.innocellence.com/2015/11/19/what-are-the-
advantages-and-risks-of-product-innovation-and-how-can-a-
digital-innovation-consultant-help/
 https://prezi.com/nw8fv06t-ewf/gillette-case/
 https://portfolios.journalism.ku.edu/bryenn-lopez-
bierwirth/2012/12/16/strategic-message-plan-for-the-gillette-
fusion-proglide-power-razor/
 http://blog.euromonitor.com/2016/02/a-changing-
environment-for-online-shaving-clubs-in-the-us.html
 https://www.marketingsociety.com/sites/default/files/thelibrar
y/Gillette%20Turning%20Men%20into%20Gentlemen%20-
%20Public.pdf

 http://infoscout.co/brand/gillette
 http://www.businesstoday.in/magazine/lbs-case-study/gillette-
innovated-improved-its-market-share-in-
india/story/204517.html
 Minimizing the Effects of Cannibalization on Firms’ market
share, Adeleye Afolabi, Jawad Ahmad Choudary, and Reza
Shirazi, Technology Innovation Management, 2013.

Gillette case study-Why Innovation May Not Be Enough

Gillette case study-Why Innovation May Not Be Enough

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