Gillette Toiletries – Case Study

1.0  EXECUTIVE SUMMARY

Gillette has been the leading brand in men’s grooming industry across the globe. With its wide range of products caters to the premium segment of the men’s grooming market. It faces intense competition in the toiletries market whereas the competition in the razor market is not that intense.

This case study aims at identifying the problems faced by Gillette in the toiletries market. We have suggested a plan for Gillette toiletries along with other suggestions for Gillette to face the competition in the near future and the long run.

2.0 SITUATIONAL ANALYSIS

Of Gillette’s recent moves, by far the riskiest is the toiletries line. Gillette’s track record there is spotty, with successes in the 1960s and 1970s followed by a series of disappointments, such as a failed foray into European women’s toiletries in the 1980s. But Gillette’s strength is with men, and executives are convinced they can use their strong brand name as an umbrella for a wider range of men’s products. The line includes 14 items, notably pre- and after-shaves and a gel shaving cream. The most innovative product: a gel-based deodorant that will roll on using a patented, sieve like delivery system.

Will it work? Many outsiders are sceptical, citing Gillette’s sorry record in toiletries. Besides, competition has become very stiff in the once fragmented men’s toiletries business. Procter & Gamble now owns Old Spice and Noxzema, Colgate bought Mennen, and Unilever grabbed Faberge’s Brut brand. But nobody has a better brand name than Gillette.

If the line flops, some believe Gillette should simply abandon the whole field. But while the company has tried to apply the Gillette way to its toiletries, the basic problem remains: There’s not much difference between Gillette’s stuff and everybody else’s, except that Gillette’s costs more. That means toiletries become a kind of loss leader for Gillette’s shaving business. But would retailers refuse to stock Gillette’s blades–the best-selling blades in the world–just because they aren’t getting Right Guard too?

2.1 MARKET SUMMARY

The market for men’s toiletries has developed in tandem with a number of lifestyle changes affecting the population in general, and men in particular. These include a growing interest in health, fitness and appearance among consumers, with the rise in gym attendance having been of particular consequence to the market for men’s toiletries. There have also been changes in men’s perceptions of themselves, meaning that they are more willing to show their `feminine sides’. However, despite many attempts to `label’ this phenomenon, there is now a recognition that these changes have been more subtle than first thought and that changing the habits of men is not particularly easy. The development of the men’s magazine market, which began in earnest during the late 1980s, was very important in providing direct contact with male consumers through advertising. However, this sector declined sharply (in both volume and value terms) lately. Demographic trends (in particular, the ageing population) have not been particularly favourable to the men’s toiletries market. However, between in recent years, there was a significant increase in the number of men in the 15 to 24 age range. These men tend to be mass market consumers and their numerical strength, combined with a willingness to spend time and money on skincare products and grooming routines, has been beneficial to the male toiletries market in general. Although the male toiletries market has not performed as spectacularly as once predicted, the new millennium period witnessed steady progress; however, growth has slowed after its peak in 2005.

There are forecasts indicating that the male toiletries market will continue to be more dynamic than male fragrances. There is still plenty of room for growth in the former market, in particular as the current generation of young males reach a more mature life stage and, hopefully, will be more willing and able to spend on premium products. Growth in the male fragrances market will be less strong — the current economic climate may mean that consumers are less able to spend significant amounts of money on premium fragrances as gifts or as personal indulgences.

2.2 KEY ENVIRONMENT TRENDS

2.2.1 Competitive Environment

Gillette experiences intense competition for sales of its products in most markets. Gillette’s products compete with widely advertised, well-known, branded products, as well as private label products, which typically are sold at lower prices. In most of its markets, Gillette has major competitors, some of which are larger and more diversified than Gillette. Aggressive competition within Gillette’s markets to preserve, gain or regain market share can affect Gillette’s results in any given period.

2.2.2        Changes in Technology & New Product Introductions

In most product categories in which Gillette competes, there are continuous technological changes and frequent introductions of new products and line extensions. Gillette’s ability to successfully introduce new products and/or extend lines of existing products depends on, among other things, Gillette’s ability to identify changing consumer tastes and needs, develop new technology, differentiate its products and gain market acceptance of new products. Gillette cannot be certain that it will successfully achieve these goals.

2.2.3        Intellectual Property

Gillette relies upon patent, copyright, trademark and trade secret laws in the United States and in other countries to establish and maintain its proprietary rights in technology, products and Gillette’s brands. Gillette’s intellectual property rights, however, could be challenged, invalidated or circumvented. Gillette does not believe that its products infringe the intellectual property rights of others, but such claims, if they are established, can result in material liabilities or loss of business.

2.2.4        Cost Savings Strategy

Gillette has implemented a number of programmes designed to reduce costs. Such programs will require, among other things, the consolidation and integration of facilities, functions, systems and procedures, all of which present significant management challenges. There can be no assurance that such actions will be accomplished as rapidly as anticipated or that the full extent of expected cost reductions will be achieved.

2.2.5        Sales & Operations outside of the United States

Sales outside of the United States represent a substantial portion of Gillette’s business. In addition, Gillette has a number of manufacturing facilities and suppliers located outside of the United States. Accordingly, the following factors could adversely affect operating results in any reporting period:

- Changes in political or economic conditions;

- Trade protection measures;

- Import or export licensing requirements;

- The overlap of different tax structures;

- Unexpected changes in regulatory requirements or tax laws; or

- Longer payment cycles in certain countries.

Gillette also is exposed to foreign currency exchange rate risk to its sales, profits, and assets and liabilities denominated in currencies other than the U.S. dollar. Although Gillette uses instruments to hedge certain foreign currency risks (through foreign currency forward, swap and option contracts and non-U.S. dollar denominated financings) and is implicitly hedged through its foreign manufacturing operations, there can be no assurance that Gillette will be fully protected against foreign currency fluctuations.

2.2.6    Retail Environment

With the growing trend towards retail trade consolidation, especially in developed markets such as the United States and Europe, Gillette is increasingly dependent upon key retailers whose bargaining strength is growing. Accordingly, Gillette faces greater pressure from retail trade customers to provide more favourable trade terms. Gillette can be negatively affected by changes in the policies of its retail trade customers, such as inventory destocking, limitations on access to shelf space and other conditions. Many of Gillette’s customers, particularly Gillette’s high-volume retail trade customers, have engaged in accelerated efforts to reduce inventory levels and shrinkage and change inventory delivery systems. While Gillette expects the level of trade inventory of its products to decline over time, the speed and magnitude of such reductions and/or the inability of Gillette to develop satisfactory inventory delivery systems could adversely affect operating results in any reporting period.

2.3 MARKET PROFITABILITY & GROWTH

Gillette sold only 51 razors and 163 blades in its first year, but then discovered that men were “Willing to pay up to $5.00 for his new razor. Instead of paying at the local barbershop, men could now shave at home without the bother of sharpening the blades. Because blades were so cheap, they could be thrown out when they blunted. As shaving at home became cheaper and easier, social customs changed to encourage daily shaving. With these changes, Gillette’s business boomed. By that time, Gillette’s domestic market share had grown to exceed 80%, a leadership position it had sustained ever since.

Gillette then focused on growing sales at home and abroad. The company’s strategy turned to push for an extensive international. To supply foreign markets, which accounted for almost half of Gillette’s total sales and the growing demand in the United States, Gillette built new manufacturing plants in Boston and England.

Then Gillette began to expand its product line into other shaving products. Neither of these products was very successful, and Gillette’s management began to consider expanding outside the shaving industry to reduce the company’s dependence on blades.

Gillette has five major lines of business: blades and razors, toiletries and cosmetics, stationery products, Braun appliances, and Oral-B dental products. Blades and razors contributed over 60% of Gillette’s profits through most of the 1970s and 1980s. This performance let the company meet its stated goal of “sustained profitable growth.”

This tradition of profitable growth was challenged when profits on blades and razors faltered and the price of Gillette’s stock stagnated. The diversification strategy that distracted management’s attention from blades and razors had diluted the valuable Gillette brand name by associating it with non-shaving products.

To rectify that, Gillette’s management had to improve operating performance. Some managers believed that Gillette should concentrate on the blades and razors and sell off the other businesses, while others thought that those businesses should be retained but revamped. Gillette’s CEO believed in the synergy of the different businesses and regarded product innovation as the key to growth and profits. The result was the “Sensor” gamble.

The introduction of a line of men’s toiletries (Gillette Series) that was years in development represent a risky, perhaps final, attempt by Gillette to fix its flagging toiletries operation. The trouble: Despite its pre-eminence in razors and blades, Gillette has had difficulty persuading men to stock other Gillette goods in their medicine cabinets. In part, that’s because its offerings, including Right Guard deodorant and Foamy shaving cream, have suffered from unfocused marketing and commodity pricing.

2.4 CUSTOMER METRICS

2.4.1 Market share

Few firms have dominated an industry so completely and for so long. Wet-razor shaving is $900 million market. Gillette’s share is 62 percent, with the remainder divided among Schick (15 percent), Bic (11 percent), Wilkinson Sword (2 percent), and a number of private brands.

Disposable Razor Market Share

2.4.2. Satisfaction

Men toiletries’ preliminary main two segments are:

Experimenters and Adopters: This category of consumer comprises of males from the age group 16-30 years. These are the people who are willing to try new brands. These people are generally found to be taking more care than others in terms of grooming. These people want to make a style statement through the products they are using and hence are generally found using highly advertised products. They tend to prefer shopping centres with a wide variety.

Suspicious Traditionalists: These are men who are more traditional and not very much willing to try new brands. They are a slightly older age group (33-50 years) whose main concern is the safety and health of their skin. They also show a preference for products or brands that have been present in the market place for many years and which they have already tried and tested.

We can conclude that, Gillette toiletries primarily targets consumers which are more focused on the product attributes like brand, foam formation, ease of use etc.; whereas the perception of price sensitive consumer towards Gillette is of an over-priced brand.

• For price sensitive customers products like P & G’s Old Spice, Colgate-Palmolive and Johnson are more satisfying than Gillette.
• Gillette is considered to have the best packaging among all the brands. This feature highlights the fact that point of purchase is an important selling point for the toiletries market and Gillette has been outperforming the competitors.
• High satisfaction in the availability in stores shows the robust distribution system that Gillette has put into place to cater to diversified markets.
• In the customer-value hierarchy, Customers evaluate Gillette to be significant along the product attributes and the point of purchase factors, giving it an image of high quality brand with attractive packaging and best availability. Old Spice and Mennen are its closest competitors in attribute and price sensitivity respectively. Gillette lags behind all its competitors in price sensitivity which includes price and offers. Additional features of the Gillette toiletries have below satisfaction level performance which implies that the variants introduced in the market for toiletries have not able to satisfy the demand of the consumers.
• In analysing this case, it has been deducted that consumers are most satisfied with Gillette in all cases except when the purchasing decision is based on price along with additional features.

2.4.3. Loyalty

The study argues that it can be concluded that the Brand loyalty in the Gillette’s toiletries line segment has proven to be low compared to Gillette’s razor segment where customers would not stick to it and would easily switch to substitutes. The case also argues that convincing consumers that the Gillette Series line is actually better and the higher price justified is more difficult than in the case with Sensor.

With the razor, Gillette had name recognition as the dominant firm in the industry. In addition, the design differences in the Sensor were visible, and a consumer could directly experience the closer shave. With the toiletries, Gillette does not have a strong position in consumers’ minds, nor are the benefits provided by the products obvious.

2.5. BRAND WEAKNESSES & STRENGHTS (SWOT)

The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Gillette.

2.5.1. Strengths

Strong brand equity Gillette’s portfolio contains well established brands such as Gillette and Braun, Oral-B line and Duracell. It eases the introduction of new products, as consumers are already well acquainted with the names and more receptive to promises of improved user experiences. The strength and quality image of these brands allows the company to charge higher prices and achieve high margins.

Market Leadership the Company’s products are well known with a reputation of quality and a market leader in its respective market.

Well Diversified portfolio Gillette has a well-diversified portfolio in terms of product diversification and market diversification. Diversification of this nature helps the company avoid the risk of overdependence on any one source for its revenue stream.

Technological Innovation Gillette has always been an industry innovator, with ample budget allocation for R & D.

2.5.2. Weaknesses

Profitability highly dependent on core businessGillette’s profitability is highly reliant on the performance of its razors and blades business. A substantial portion of its revenues come from this sector. Any downturn in the sector or in Gillette’s competitive position within it could have a serious negative effect on the company.

Over-reliance on high-street retail outlets for example, Wal-Mart Stores is Gillette’s major customer. With a large part of its revenues originating from a single costumer, the company is at risk of adversely affecting its business, operating results and financial condition if its strategic relationship with Wal-Mart Stores is terminated for any reason.

2.5.3 Opportunities

New product launches Gillette is known for constantly introducing new products in the market with better technology and performance. This new product launches will help the company to gain competitive advantage over its competitors.

Price increases in premium shaving segments Gillette has been increasing the price of its razors and blades at an average rate of around 4% per year over the last ten years. This price increase will help the company to accumulate more profits from the present level of sales.

Changing Societal Attitudes Due to increased awareness and rising income levels, the industry is undergoing a major shift from traditional double-edged razors segment to twin, triple until five blades razors segment. Within the industry, cosmetics and personal care industry has been growing at an average rate of 20 per cent for the last few years. However, current consumption is still below many countries in Asia which shows that there are further growth opportunities. Thus, the industry is growing at a decent rate but still is at an infant stage and this offers great opportunities to players like Gillette to expand their customer base to include higher number of lower middle class people and thereby increase their revenues and profitability.

2.5.4 Threats

Imitations / disposables are a threat to the Gillette’s offering Gillette’s ability to sustain a price premium and earn an attractive return on its extensive investment ‘Sensor’, including disposables and private label systems, and even including Gillette’s own three-blade disposable. This numerous imitations are threat to the company in the long term as they going to reduce the sales of the original products.

Pressure on pricing power Gillette’s pricing power is being further eroded by channel migration and increasing consumer resistance to paying significantly higher prices for innovation. Pricing power is key to revenue growth in a mature category especially when Gillette’s strategy has historically been to drive revenue growth per consumer and not volume growth.

Competitive environment Gillette faces intense competition in most markets. Its products compete with widely advertised, well-known, branded products, as well as private label products, which typically are sold at lower prices. The company’s survival depends upon its ability to adopt itself in this kind of competitive environment.

3.0 COMPETITION

3.1. Competitive Forces

3.1.1. Threat of Intense Segment Rivalry

The segment of toiletries to Gillette is already unattractive because it already contains numerous, strong and aggressive competitors and have high stakes in staying in the segment. These conditions lead to frequent price wars, advertising battles, and new-product introductions and is making it expensive for Gillette to compete.

3.1.2. Threat of New Entrants

In the toiletries segment, entry barriers are high due high set-up costs as well and exit barriers are high too.

3.1.3. Threat of Substitute Products

In this segment, there are actual and potential substitutes for Gillette toiletries. Substitutes are placing a limit on prices and profits. Due to technological advances and increase in competition, prices and profits are likely to fall.

3.1.4. Threat of Buyers’ Growing Bargaining Power

Buyers in the toiletries segment possess strong or growing bargaining power. Wal-Mart being the main retailer for Gillette’s products makes us conclude that the potential profitability can become curtailed. This growing buyer’s bargaining power increases because toiletries represent a significant fraction of the buyer’s cost and the products are undifferentiated, and the buyers in this category are price sensitive.

3.1.5. Threat of Suppliers’ Growing Bargaining Power

For Gillette, this threat represents the least threat possible because it’s the manufacturer of its own products and maintains a win-win relationship with its raw-material suppliers, in addition to maintaining a powerful supply-chain management model over the years. Moreover, global competitiveness always keeps suppliers prices low.

3.2. Competition Analysis

The two main competitors for Gillette in the toiletries business are:

1. P& G, especially by acquiring Old Spice and Noxzema

Old Spice is one of the top brands across world in the shaving products category. In the shaving cream market it has a good hold over the perception of the consumers. It is recognised by its fragrance and is seen as a macho brand. It is has products in all the three categories (cream, gel and foam). Old Spice is also present in after shave market and its after shave product is very dominant in the market. It has a lot of products in the shaving products market. This also makes the brand much stronger than its competitor.

1. Colgate-Palmolive, especially by owning Mennen

Colgate-Palmolive is one of the largest companies in the FMCG sector. The Company has launched its International Palmolive Shave Gel and Palmolive Shave Foam in the in response to growing consumer interest in skin conditioning benefits. The company’s strategy for Personal Care is to remain in top niches. Every year, they intend to take 3-4 initiatives. Colpal has shaving products under the brand name Palmolive shaving cream. It has three variants in the shaving cream/gel/foam category.

4.0 MARKETING PROCESS: EFFICIENCY/EFFECTIVENESS

4.1 Product Development

At Gillette, it seems that almost everyone gets involved in one way or another with new-product development. Gillette also excels at bringing new products to market. The company understands that, once introduced, fledgling products need generous manufacturing and marketing support to thrive in the hotly competitive consumer products marketplace. To deliver the required support, Gillette has devised a formula that calls for R&D, capital investment, and advertising expenditures—which it refers to collectively as “growth drivers”—to rise in combination at least as fast as sales. Thus, over the decades, superior new products have been the cornerstone of Gillette’s amazing success. The company commands the loyalty of more than 700 million shavers in 200 countries around the globe. Gillette’s new-product prowess is so much a part of its image that it has even become the stuff of jokes.

4.2 Marketing of Sensor

Significant development and manufacturing costs dictated a premium price for Sensor. Gillette planned to price the razor at a level lower than some non-disposables but judged high enough to preserve Sensor’s prestige image. After allowing for the fact that disposable blades tended to provide fewer shaves than cartridge blades, it appeared that Sensor’s cost per shave would be slightly high. Such calculations were predicated, however, on specific assumptions about the number of “satisfactory” shaves per Sensor blade. If consumers used Sensor for just one more shave than the predicted 10 to 12 shaves per blade, the implied losses in unit volume might significantly affect Gillette’s bottom line.

Launch patterns raised a second issue. Gillette favoured introducing Sensor in January 1990 in the United States, during the Super Bowl, followed by rollout within a few days in 16 European countries, and within a month in Japan (where Gillette trailed Schick, the first-mover). The same visuals and music were planned for each country, although languages were to be varied appropriately. Gillette’s international rollouts had been staggered rather more in the past and had been tailored “on a national basis to address perceived nuances within each cultural area.”

Advertising levels constituted a final marketing issue. Gillette had already ratcheted up its advertising expenditures. The Sensor team was proposing an advertising campaign that would pump up the costs already being incurred to support existing razors by an additional $100 million based on the fact that there’s a price of entry in most consumer product categories and that lots of companies try to cheat, if you will, on putting the kind of dollars behind their program that is critical to its success.

4.3 Competitive Positioning of Sensor

The Sensor team wanted Sensor to be the antithesis of the disposable razor and become the best-selling cartridge razor in the North Atlantic market. It was unclear how well this quality over price positioning would work. If price-sensitivity continued unabated, Gillette’s top management would probably be ousted. And when Sensor did meet market share forecasts, its profitability to Gillette now depend on the sources from which it drew its customers.

5.0. GAPS IN PERFORMANCE, RELATIVE TO CORPORATE VISIONS/GOALS

1. The Gillette approach to innovation (which started with the SENSOR in late 80s when they faced the threat from the BIC disposable razor) is a classic example of big R&D leading to a blockbuster product. This approach is getting outdated. In sharp contrast is P&G’s connect + develop programme which is actively seeking technologies and ideas from the outside world, which are relevant to its categories /consumers and which can be successfully commercialised. This is not a covert corporate effort. There is dedicated website for it. There are already 5-6 big hits which have come out of this programme and come to think of it P&G with over 1000 Ph.D. scientists has perhaps the largest in-house R&D strength within the FMCG world.  This is more than a subtle shift. Every consumer goods company realises that to stay ahead of the game (in an environment of media fragmentation and big retail squeeze) they don’t just need to innovate faster and cheaper, but also have REAL innovation, which the consumer values enough to pay a premium for and which retailers value enough to list it in their outlets. Imagine going to Wal-Mart and asking for Shelf space because the company is launching a new extension of an already established Gillette Gel brand, called Gillette Gel with Aloe Vera. 

1. If Gillette was truly an innovative company it would have not missed the boom in the Male grooming segment. They stayed focused on just one aspect of the male grooming regimen (shaving) while Old Spice for Men, in the mass market and Clinique for Men, in the premium segment took the lead. Gillette’s belated attempt – the “Gillette Series” came in a bit too late. So what is the big point! It’s about consumer centricity vs. brand /product centricity. By narrowly defining its brand around shaving Gillette missed a huge opportunity. There was no other brand in a man’s toilet kit stronger than Gillette and they blew it up.  If they were spending time researching evolution of the male grooming habits (instead of tracking the rate at which the facial hair grows), other brands that focused largely on Men’s toiletries would not have been the market leader in that range.

1. The application of the manufacturer’s brand can have important strategic implications. Gillette consciously limited or de-emphasized the use of its name on its products. A key reason was the desire to enter multiple product categories, many of which were sold to women. Gillette was attacked by Bic through employing the opposite strategy to great effect. Bic built a formidable company across multiple categories with a single brand essence: “good enough, plastic disposable products at a very low price, with a bit of personality.” The strategy built sizeable advantages in plastic extrusion and superior scale in branding and distribution. With toiletries, Gillette is tying the new line to the Sensor but using a different brand name. If consumers don’t associate the Gillette series with the innovativeness and success of Sensor, the new line may just be another brand in the already cluttered market.

1. Gillette has made extensive promotion campaign for its razors in the market and the world market. Tiger Woods, David Beckham and Terry Henry are a few of Gillette’s global ambassadors called Gillette Champions. But for toiletries, Gillette does not have any brand ambassador nor has been much of advertisements. In fact, there is only one ad for Gillette Series Shaving Gel shown not too prominently. For the toiletries products, Gillette has co-advertised with its razors.

6.0. STRATEGIC ISSUES THAT REQUIRE MANAGEMENT ATTENTION

6.1.            Difficulty convincing consumers that the “Gillette Series” is actually better than the competition and the higher price justified.

ALTERNATIVE 1: Behavioural Segmentation

Using this strategy, Gillette will divide buyers into groups on the basis of their knowledge of, attitude toward, use of, price-sensitivity, loyalty and response to the product. The advantages are to combine different behavioural bases that can help provide a more comprehensive way to break down a target market by various behavioural segmentation bases. Gillette can also learn a lot by analysing the degrees of brand loyalty and relation to price. Split loyalty, for example, can show Gillette which brands are most competitive with its own, in addition to learning its marketing weaknesses and attempt to correct them. The disadvantage is that what would appear to be one purchase pattern due to certain behaviour (loyalty), for example, may reflect other behaviours, such as, habit, indifference, a low price, a high switching cost, or the unavailability of other brands.

ALTERNATIVE 2: Differentiated Marketing

By adopting this method, Gillette will operate in several market segments and apply product modifications indesign/ingredients of “Series” to fit each segment. Advantages are that differentiated marketing typically creates more total sales. However, a disadvantage is that it also increases the costs of doing business, because it leads to higher sales and higher costs, nothing general can be said about the profitability of the this strategy. Gillette should be cautious using this strategy about over segmenting their market. If this happens, counter segmentation measures should be taken.

ALTERNATIVE 3: Mixed Bundling Pricing

Since the “Gillette Series” line products are closely related in consumption behaviour, mixed bundling pricing could be a solution by offering the products both individually and in bundles. Gillette will charge less for the bundle than if the items were purchased individually, for example, aftershave and gel. The advantage is that customers may not have planned to buy all the products, but the savings on the price bundle will be enough to induce them to buy it. The disadvantage would be that as promotional activity increases on individual items in the bundle, buyers perceive less savings on the bundle and less apt to pay for it.

6.2.            With the toiletries, Gillette does not have a strong position in the consumers’ minds, nor are the benefits of the products obvious.

ALTERNATIVE 1: Lifestyle Positioning

Gillette as a global brand is well suited for lifestyle positioning. Lifestyle positioning allows consumers to wear a badge on how they want to be perceived. For consumers, lifestyle can be seen as self-indulgent but also as a reward for a life of hard work and achievement. It is not something experienced as passive observers, but rather something engaged in by all senses. More often than not, it involves a sense of community which is dynamic, individualistic and experiential. A value platform can be a solid base for Gillette to expand into markets, where consumers are becoming more aspirational and are moving out of basic needs into early wants. An advantage is that it puts the consumer in charge rather than the distributor, intermediaries, and retailers. It is also a pivot for entering emerging markets by introducing the idea of affordable pricing for value. The disadvantages are that Gillette needs to identify the key attributes or benefits that represent the value of “Gillette Series” along with investing heavily in customer-value market research and promises have to backed by support all the time to reinforce the “Series” value and “‘hype’.

ALTERNATIVE 2: Feature-driven Differentiation

Gillette should try relying on the “Series” features to differentiate it. The advantage is that the message is clear and the positioning will be credible if they stick to the facts about the product, especially that the trust is already there through the shaving experience. Unfortunately, the disadvantage is that feature-orientated stances are often rendered useless if the competition comes out with a faster or more advanced model.

ALTERNATIVE 3: Online Branding

Building an online “Gillette Series” brand doesn’t mean they are cheap. The main benefit is that they are going to be fast, and they will have a large selection. The prices in this case are not as important, service is not as important. Selection and delivery are the buzz word. The Web will allow “Gillette Series” to take on new edge or benefit that the company would not be able to use in the real world. For instance, the “Series” on the store shelf does not give many choices about the positioning of the products. An advantage of being online, however, Gillette can brand itself as more than just toiletries’ supplier, but rather as a hygiene/beauty expert. The site can walk visitors through a personalised analysis based on their needs, complexions and usage level. Once the information is entered into the database, answers are compressed, data is cross referenced, and information telling the customer which products to use from the “Series” and when. Another advantage is building a community — Community is the other buzz online. If Gillette can stimulate a community around it, then it has a powerful ally. For a community to be successful, it needs to have a category that will engage people and spur them to want to talk with one another, what better category than toiletries – “Gillette Series”? Customers of the “Series” will have opinions about what they like and don’t like, which leads to many opportunities for community interaction and product development at the same time.

6.3.            Gillette is tying the Series to Sensor but using a different name, which might cause disassociation in the consumers’ mind; hence, the company is not building up on Sensor’s success.

ALTERNATIVE 1: Value Pricing (Combination of high-low and everyday low pricing)

Gillette has priced its “Gillette Series” well above the industry average. The Perceived-value pricing strategy suggests that Gillette is leveraging its customer loyalty (i.e. the consumers who are brand loyal to Gillette razors). Gillette has been using Perceived-value pricing strategy for its toiletries products based on the buyer’s image of the product performance (Gillette’s quality perceived image), the channel deliverables and Gillette’s reputation, trustworthiness and esteem. This strategy has not been working well for Gillette in the toiletries category as this segment’s customers are price-sensitive because they are frequent users of this category of items. Gillette has failed to convince the customer that it offers the lowest total cost of ownership (TCO) so far. Value pricing strategy would be better for Gillette because the toiletries is a highly price sensitive and low price stimulus market growth industry. Its advantages is that production and distribution costs fall with accumulated production and a low price discourages actual and potential competition, in addition to maximising market share in this category. Value Pricing is aimed at wining loyal customers by charging fairly low price for a high-quality offering. It isn’t a matter of simply setting lower prices; it’s a matter of reengineering the Gillette’s operations to become low-cost producer without sacrificing quality – a strategy already adopted in the razor’s category – to attract a large number of value-conscious customers. Disadvantages would be the risk of getting trapped in to either, low-quality trap, fragile-market-share trap or price-war trap. In addition, Gillette has to be willing to make a commitment to have and be able to operate with lower ratios of expense than everybody else.

ALTERNATIVE 2: Brand reinforcement

The Gillette brand needs to be carefully managed so that its value doesn’t depreciate. Gillette brand equity can be reinforced by marketing actions that consistently convey the meaning of the brand in terms of: what products does the brand represent, what are the core benefits it supplies, how the brand makes the products superior, and which strong, favourable and unique brand associations should exist in the consumers’ mind. This requires more innovation from Gillette and relevance throughout the marketing programme. The advantages are maintaining the brand equity value and ultimately supporting all the brand products. Disadvantages of this strategy are that Gillette has to maintain consistency in amount and kind, recognising the trade-offs between activities that fortify the brand and reinforce its meaning. Failure to reinforce at any point will diminish brand awareness and weaken brand image.

ALTERNATIVE 3: Brand extension

‘Everything begins with shaving,’ ‘It’s the ultimate male ritual – the big “man moment” of the day. And this ritual can be used as a pivot for selling men a host of other toiletries based on the “Sensor” shaving ritual, from moisturisers and anti-ageing creams to fragrances and bronzing lotions. If the subtle link with the shaving ritual is established, the products take on a masculine image and the consumer doesn’t feel feminised.’ By using this strategy, Gillette is leveraging “Sensor” to introduce the “Series” under the same brand name. Two main advantages of brand extension are that they can facilitate the “Series” acceptance and provide positive feedback to the “Sensor” and Gillette. The disadvantages are that line extension may cause the brand name “Sensor” to be less strongly identified with any one product. The risk of brand dilution can occur if the consumers no longer associate “Sensor” with a specific product. The worse possible scenario is for “Gillette Series” not only to fail, but also to harm the “Sensor” brand image. Another pitfall is that even of sales of “Gillette Series” are high and meet targets, the revenue may be coming from consumers switching to the extension from and existing parent offering – in effect – cannibalising “Sensor”. By using this strategy, Gillette also forgoes the chance to create a new brand with its own unique image and equity.

6.4.            The ruthless competition in the toiletries market, which is far much stronger on Gillette than the razor market.

ALTERNATIVE 1: Co-Branding

Gillette will do good combining its toiletries products with one of its main competitors, such as P&G or Colgate-Palmolive (co-branding). The main advantage is that the toiletries line of products may be convincingly positioned by virtue of the multiple brands. Generate greater sales from the existing target market as well as opening additional opportunities for new consumers and channels. It images and speeds adoption, in addition to learning about consumers and how other companies are approaching them. The potential disadvantages are the risks and lack of control in becoming aligned with another brand in the minds of the consumers. Consumer expectations about the level of involvement and commitment with co-brands are likely to be high, so unsatisfactory performance could have negative repercussions for both Gillette and the other brand. On the other hand, if the other brand has entered into a number of co-branding arrangements, overexposure may dilute the transfer of any association. It may also result in a lack of focus on existing brands.

ALTERNATIVE 2: Guerrilla Warfare

We would argue that Gillette is a market challenger in the toiletries business after a life-time focus on shaving. Being a market challenger with “Gillette Series”, Gillette can adopt the Guerrilla attack. The idea is to wage small, intermittent attacks just to harass and demoralise its competitors with the launch of the new line, and eventually secure permanent footholds. These attacks could include selective price cuts, intense promotional blitzes, and legal actions on patents. The advantages is simply exhausting the competitors and gaining territory meanwhile. Gillette can challenge consumers to be the judge by investing heavily on creating a volunteers campaign to try the “Series” and enter their feedback on-line. The disadvantages are that these attacks can be expensive and ultimately they must be backed by a stronger attack if Gillette hopes to beat the competitors. There is also the risk of crossing the legality or the morality line.

ALTERNATIVE 3: Segment-by-segment invasion plans

Gillette would be wise to enter one segment at a time. The idea is to gain a foothold in one segment with one product and then move to another segment with another product or the same one. Gillette should analyse the profit potential of each product market segment singly and in combination and decide which segment to enter first. Gillette would enter the Gel in one segment first and then move it to another segment market, while surprising the competition with another product, shampoo for instance, for the second segment market, then take the Gel back to the first segment and then launch the third product, say foam, for the first segment market. The advantage of this strategy is that the competitors will not know to what segment(s) Gillette will move into with each product of the “Series” next. The other advantage is that if the plan works, Gillette will own a good part of the first two segments and serve them with two or more products. The disadvantage is that Gillette’s hidden planned moves are provisional in that much depends on the competitors’ segment moves and responses. 

7.0 INTEGRATED ACTION PLAN

The primary customers of this action plan will be those concerned about the attributes, additional features as well as the price of the “Gillette Series”. This segment comprises of more than 40% of the total male grooming market. Gillette can target this segment with the introduction of the “Gillette Series”. These customers are concerned about the attribute and additional features besides the price. The brands like P&G and Colgate-Palmolive can be said to be catering to the needs of this cluster of customers.

7.1 STRATEGY PYRAMID

7.1.1 SEGMENTATION

Behavioural Segmentation

In the toiletries market there exist different categories of customers who have different needs and are willing to pay different amount for the product that meets their demand. Introduction of the “Gillette Series” would help Gillette identify the needs of the customers and take advantage of the segment which has not yet been targeted by the company. Price sensitivity, importance of attributes, point of purchase decision makers and customers influenced by additional features are the factors on which we will segment the toiletries market.

• Segment One:  Is the most price-sensitive and values additional features the least. This segment has one third of our sample size. As Gillette is a premium brand which focuses on differentiating its products from the competitors and upgrading the customers in the value chain, targeting this segment will not be a strategically appropriate decision.
• Segment Two: Is more influenced by attributes of the products and is not a price sensitive segment. Gillette through its toiletries products iscurrently catering to this segment.
• Segment three: Is concerned about the attributes, additional features as well as price. This segment comprises of more than 40% percent of the total market. Gillette through its “Series” can enter this segment.

7.1.2. TARGETING

• Target market: – The target market has been identified as the customers who are concerned about the attributes of the products but are not willing to shift from the current price band to a higher price band.
• Competitor Brands:-.The Gillette Series will be competing with brands like P&G and Colgate-Palmolive.
• Choice Criteria:- The proposed 4 factors on grouping attributes that could contribute to the “Gillette Series” purchase decision are:

Factor 1: Product attributes (Fragrance, Brand Name, Foam Formation, Antiseptic Attributes and Ease of Use)

Factor 2: Price Sensitivity (Price, It takes care of Skin and Offers/Discounts)

Factor 3: Point of Purchase (Availability in Stores and Stylish Package Design)

Factor 4: Additional Features (Colour of toiletries and Ingredients)

7.1.3. POSITIONING

“Gillette Series” needs to position itself above P&G and Colgate-Palmolive in order to attract the target segment. “Gillette Sensor” has already achieved the top of the mind recall, which shows that Gillette has an excellent real positioning in the men’s grooming market and Gillette Series can leverage this positioning in the target market. Gillette needs to identify the key attributes or benefits that represent the value of “Gillette Series”.

Lifestyle Positioning

One way is through: Relevance to the customer’s lifestyle – The more apparent the connection is between the “Series” and Gillette’s customer’s daily activities, the greater the chances are that customers will buy them. Relevance, or the connection that the customer has to the brand identity, is how customers ultimately decide to buy the products.

Another is through: Promises backed by support – Benefits need to be backed with some sort of persuasive reason to believe the “Series” hype. The stress on the “uniqueness” of the “Series” by educating the customers about the formula that is “different” from all the other brands out there. The customer should think: Why do we trust “Gillette Series”, for instance? Because we believe in the brand’s “revolutionary” formula that complements “the closer shave”.

As part of the lifestyle positioning, the customer values to be promised and delivered by the new “Gillette Series” are: Functional value: The utilitarian/functional promise. Social Value: The espoused social value would be from the angle that everyone in the family and society has an instant respect and admiration for the clean shaven Gillette man. Emotional value: The emotional value promised is of great importance for a commoditised product like the toiletries line. The espoused value would be the charming yet masculine Gillette man who is attractive to all the people including women. Conditional Value: The best possible start for the day would be the conditional value. The value communicated should be of a confident, satisfied, and charged up man for the day’s grind.

7.1.4 Branding

Co-branding

Gillette will do good combining its toiletries products with one of its main competitor P&G (co-branding). For Gillette to succeed in co-branding, the two potential co-brands must have two separate brand equity – adequate brand awareness and a sufficiently positive brand image – which exists in case of P&G. The most important requirement is a logical fit between the two brands, such that the combines brand or marketing activity maximises the advantages of each while minimising their disadvantages, i.e. customers will prefer the two brands to complement each other more than being similar. Besides remembering these strategic considerations, Gillette managers must enter into the co-branding venture carefully. There must be the right kind of fit in values, capabilities, and goals, in addition to an appropriate balance of brand equity. There must be detailed plans to legalise contracts, make financial arrangements and coordinate marketing programmes.

8.0 MARKETING MIX

8.1 Product

Gillette products are currently fulfilling only the core and basic needs to some extent. But since the “Gillette Series” will target a new segment; it has to be very strong on attributes. Again, additional features need to be there to satisfy the basic and expected needs of the consumer. The “Series” should have superior fragrance and higher antiseptic attributes, in connection with “Sensor”. Further, initially, the product will be launched with variants. The new Gillette Series would target the basic and core product consumers where Gillette has no presence so far. So, the customer values promised and delivered would also be different from that of the premium segment. The focus would be to ‘Gillettifying’ the product. This is important because we have to reach a larger, price sensitive, not so loyal segment of the market. So far, Gillette has only followed a dumping strategy with very little customisation. For the “Gillette Series”, this strategy would not work well.

8.2 Pricing

Value Pricing (Combination of high-low and everyday low pricing)

Value pricing strategy would be better for Gillette because the toiletries is a highly price sensitive and low price stimulus market growth industry. Value Pricing is aimed at wining loyal customers by charging fairly low price for a high-quality offering. It isn’t a matter of simply setting lower prices; it’s a matter of reengineering the Gillette’s operations to become low-cost producer without sacrificing quality – a strategy already adopted in the razor’s category – to attract a large number of value-conscious customers.

8.3 Place (Distribution)

Hybrid Channels

Gillette’s major channel is Wal-Mart, which acts as a threat by having a buyer’s bargaining power. By adopting a hybrid channel strategy and having direct-response Internet site, virtual mall, and thousands of links and affiliated sites, Gillette can reduce this threat. Gillette must make sure that these channels work well together and match each target customer’s preferred ways of doing things. Customers expect channel integration to have features such as: the ability to order a product online and pick it up at a convenient retail location, the ability to return an online-ordered product to a nearby retailer and the right to receive discounts and promotional offers based on total online and off-line purchases.

8.4 Advertising and Promotion

The strategy of pitching men with a few extras while they’re in the barber’s chair is very old but shows no sign of dying out. Gillette should launch “Gillette Series” with its first male grooming collection by sending product samples to hair salons around the country. These should come with a ‘complete with a detailed guide suggesting language, dress code and marketing strategies design to make men feel more comfortable when reaching for Gillette shampoo, gel or aftershave’.

Gillette is to rely on word of mouth and media coverage to attract customers.

Choose authentic male role models. There are signs that the brand is shifting its focus away from technology and towards sponsorship. Celebrities and sports ambassadors of Gillette should be fully integrated into “Gillette Series” brand programmes as they did with “Sensor” and will be leveraged to the “Gillette Series” through multifaceted marketing initiatives, including global print and broadcast advertising, consumer promotions, point-of-sale materials, online and public relations in support of “Gillette Series” line.

Crucially, it should also depend on women. One of the surprising discoveries is that women are the most influential source to men when it comes to buying toiletries. Sales could be driven by gift vouchers, and most of those are bought by women for Father’s Day or birthdays (Never underestimate the influence of women).

Communicating Value Gillette should adopt a push and pull strategy to communicate the abovementioned values. The ads would involve a sturdy, tough, smart man and project him as the Gillette man (much like the Marlboro man). The focus would be on the “Gillette Series” though it will also co-advertise “Gillette Sensor”.

9.0 LESSONS LEARNED

• Consumer-driven innovation may sound obvious, but the latest technological discoveries are often what drive innovation in many companies (including Gillette). Yet technology-driven innovation is only successful if it fulfils an unmet consumer need. So by starting with a clear understanding of what the consumer desires and allowing that understanding to guide the search for innovation, the company increases its chance for success.
• Yesterday’s passive consumer is today’s engaged consumer: A company should not underestimate the importance of consumer-driven innovation in an environment where healthcare consumers are better informed and more demanding.
• The company should start with a consumer-driven product profile: Identify a winning product profile from the very start. Even when screening compounds or looking at receptors and molecules, have a clear vision of the consumer experience you want to create.
• The company should select a partner that can enhance your technical innovation and deliver differentiating commercial innovation: The partner should help you get the greatest consumer and commercial value from your innovation throughout its lifecycle. The chosen company should have a proven track record of building holistic brand experiences that differentiate each product’s value.
• Retaining customers isn’t about pricing, bundling or gimmicks.  It’s about getting your company so engrained into the customers’ unmet needs through the use of retention plans and the excellent execution that the company becomes essential to their success. As rewarding as companies at times find fire-fighting because of the “quick fix” satisfaction it provides, does nothing to actually hold onto customers.  Investing time in tailoring specific retention plans that deliver results does.
• Kill the brand, save the company. For companies with numerous brands it is often better to admit defeat early on and terminate a brand for the sake of the overall reputation of the company.
• Companies shouldn’t alienate their core customers. For brands that inspire strong loyalty, the temptation is to test that loyalty to its limits by stretching the brand into other product categories. However, this is a dangerous strategy and can lead to what marketing experts refer to as ‘brand dilution’ – in other words, a watered-down brand.
• Brand amnesia. For old brands, as for old people, memory becomes an increasing issue. When a brand forgets what it is supposed to stand for, it runs into trouble. The most obvious case of brand amnesia occurs when a venerable, long-standing brand tries to create a radical new identity.
• Brand irrelevance. When a market radically evolves, the brands associated with it risk becoming irrelevant and obsolete. A company must strive to maintain relevance by staying ahead of the category.
• Have a core brand. While Ries and Trout are right to highlight the potential problems of line extension, it is important to differentiate between those companies that can get away with it, and those that can’t. Brand extensions aren’t bad in themselves.

My Current skin care routine: Day & Night