Gillette and the Men’s wet-Shaving Market

Summary of the case

The name Gillette is introduced by King C. Gillette of Boston who invented the safety razor in 1895. After a decade it has become an established company all over the world of shaving equipments.

The product perfection of eight years Gillette started its operation in the market. It introduced various market operations through achieving booming successes and implementing visionary idea with the Government during world war. Because company founder King Gillette invented the first safety razor, Gillette had always been an industry inventor. It expanded its industry through introducing Blue and Thin blade, silicone-coated blade and the super blue blade in different years compiling the success and the growth of the market as well. In 1948, Gillette began to diversity in to new Markets through acquisition. It acquired the Toni Company, Paper Mate and Sterilon Corporation. In 1988, the Gillette Company was a leading producer of men’s and women’s grooming aids. Gillette introduced a number of innovative shaving systems in the 1970s and 1980s as a part of its strategy to sustain growth. It claimed that Trac II, the first twin-blade shaver represented the most revolutionary shaving advance ever. Gillette also developed a clog-free, dual blade cartridge for the Trac II system. Late in 1976, Gillette, apparently in response to BIC’s pending entrance in to the U.S. market, launched the first disposal razor for men in the United States. Because of BIC’s market operation Gillette came forward with its new dimension of product variation. In 1977, Gillette introduced a new blades and razor system at the expense of Trac II. It launched Atra (Automatic Tracking Razor Action) with $ 7 million advertising campaign and over 50 million $ 2 rebate coupons. It quickly achieved 7% share of the blade and about one-third of the razor market. It also introduced in Europe. In early 1980s, Gillette introduced most new disposal razors and product enhancements which insisted the BIC to move from the U.S. market. Despite these product innovations and introductions of early 1980’s Gillette primarily focused its energies on the Global markets and strategies. By 1985, Gillette was marketed 800 products in more than 200 countries. The company felt a need at this time to coordinate its marketing efforts first regionally and then globally.

Unfortunately for Gillette’s management team, others noticed its strong international capabilities. Ronald Perelman, Chairman of the Revlon Group attempted an unfriendly takeover in November, 1986. At the end Gillette and Perelman signed an agreement preventing Perelman from attempting another takeover until 1996. In 1988, just as Gillette returned its attention to new product development and global marketing, Coniston partners, after obtaining 6 percent of Gillette stock, engaged the company in a proxy battle for 4 seats on its 12 person board. In this regard the second takeover attempt forced Gillette to increase its debt load to $ 2 billion and pushed its total equity negative to $ 84,600.000. Moreover both takeover battles forced Gillette to “wake up”. Gillette closed or sold its Jafra Cosmetics Operations in 11 countries and Jettisoned weak operations. The company also thinned its workforce in many divisions. Despite Gillette’s concentration on fending off takeover attempts, it continued to enhance its razor and blade products. In 1986 it introduced the Contour Plus and in 1988, the company introduced Trac II Plus, Pivot Plus and the Daisy Plus. The warfare launched after capturing 16.2 percent U.S. market share by Schick. Though after few years it was broken down and in 1988 it introduced “guerrilla warfare”. Schick generated approximately 67 percent of its revenues overseas. By the 1988, Schick generated roughly 40 percent of its sales and 35 percent of its profits in Japan. Moreover BIC as like as Gillette frequently introduced new razor products and product enhancements. It also tried its commodity strategy on sail boards, car-top carries and perfume. BIC had exerted quite an influence since its razors first entered the U.S. market in 1976 and in 1988 BIC’s razors generated $52 million in sales with a net income of $ 9.4 million. The BIC’s market operation effected to lowering the Gillette’s profit margin. On the contrary Wilkinson Sword was introduced with its new strategy through customizing razors and other shaving equipments. It developed new dimension of blades and razors and launched R & D as a weapon to capture the market.

In 1988 Paul (Marketing Director of Gillette in Europe) identified that the market share of Gillette has fallen because of increasing competition in the market. Moreover there were nothing special about Gillette’s packaging and display. There were always been on male focused in which there were more women wet shavers rather than men in the U.S. market.

According to the problem Paul become concerned to develop their new strategies.


Internal & External analysis (SWOT)

Strength:

Ø Gillette is the market leader in the field of razor, blade and other shaving equipments.

Ø It has strong management team compiling visionary ideas and strategies.

Ø Gillette is able to capture major portion of the market share through customizing and launching product variations.

Ø It expanded its industry through introducing Blue and Thin blade, silicone-coated blade and the super blue blade, Trac II etc. in different years compiling the success and the growth of the market as well.

Ø It acquired the Toni Company, Paper Mate and Sterilon Corporation.

Ø Gillette Company is a leading producer of men’s and women’s grooming aids.

Ø It launched Atra (Automatic Tracking Razor Action) with $ 7 million advertising campaign and over 50 million $ 2 rebate coupons which quickly achieved 7% share of the blade and about one-third of the razor market.

Ø In early 1980s, Gillette introduced most new disposal razors and product enhancements which insisted the BIC to move from the U.S. market.

Ø By 1985, Gillette marketed 800 products in more than 200 countries.

Ø Gillette is always concerned about their growth including customer satisfaction and R & D process.

Weakness:
Ø Gillette’s management team, others noticed its strong international capabilities.

Ø Ronald Perelman, Chairman of the Revlon Group attempted an unfriendly takeover in November, 1986.

Ø The second takeover attempt forced Gillette to increase its debt load to $ 2 billion and pushed its total equity negative to $ 84,600.000.

Ø Gillette closed or sold its Jafra Cosmetics Operations in 11 countries and Jettisoned weak operations. The company also thinned its workforce in many divisions.

Ø In 1988 Paul (Marketing Director of Gillette in Europe) identified that the market share of Gillette has fallen because of increasing competition in the market.

Ø There were nothing special about Gillette’s packaging and display.

Ø There were always been on male focused in which there were more women wet shavers rather than men in the U.S. market.

Opportunities:
Ø Paul Hankins came in to operation as a Marketing Director of Gillette in Europe with Jim Pear, Vice President to implement a pan-European strategy.

Ø Prior to 1983, Gillette had organized and managed Europe as a classic decentralized market.

Ø The company had treated each country as a separate market.

Ø Gillette had launched Contour Plus, the European version of Atra Plus, in 1985-86.

Ø Paul became to formulate new strategy for Gillette in North Atlantic for shaving products.

Ø According to researchers, men rate system shavers significantly better than disposal razors.

Ø There were more women wet shavers than men in the U.S. market.

Ø Disposable razors are the wave of the future.
Threats:
Ø Schick generated approximately 67 percent of its revenues overseas.

Ø By the 1988, Schick generated roughly 40 percent of its sales and 35 percent of its profits in Japan.

Ø Moreover BIC as like as Gillette frequently introduced new razor products and product enhancements.

Ø BIC had exerted quite an influence since its razors first entered the U.S. market in 1976 and in 1988 BIC’s razors generated $52 million in sales with a net income of $ 9.4 million.

Ø The BIC’s market operation effected to lowering the Gillette’s profit margin.

Ø Wilkinson Sword was introduced with its new strategy through customizing razors and other shaving equipments.

Ø It developed new dimension of blades and razors and launched R & D as a weapon to capture the market.

Ø Competition is increasing day by day.




Problem Identification

Þ Atra blades seem to have leveled off and Trace II blades are declining.

Þ The share of the disposable razor market has fallen.

Þ Every 1 percent switch from system razors to disposable razors represents a loss of $10 million on the bottom line.

Þ Spending on advertising has fallen from $61 million in 1975 to about $15 million in 1987.

Þ Brand name (Gillette) is done in thin block letters on the product which is not I impact.

Þ Loosing focus on the brand name.

Þ There is nothing special about retail packaging and display.

Þ Focusing on male and through separating female who are the larger portion of its market potentiality.




Action Taken by the Gillette:

v Lowering the price of disposable razors and to raise the price of system razors.

v Increase the spending on advertising.

v Sponsoring on athletic events and launching slogan to capture the men over 40.

v Focusing on logos and brand names.

v Focusing the market potentiality of women regarding wet shave.

v Continue the business as usual as a give-up strategy.

v Building up the product image.

v Trying to protect the category profitability by segmenting the market and offering the value to those segments willing to pay for it.

v Continue to invest on R & D.
Recommendation:
Gillette can add more value and image with its product.

It should come up with Brand strategy and focusing on customer satisfaction.

It should introduce attractive advertisement that will capture the consumer’s mind.

Lowering the price of both disposable and system razors.

Propose the brand name through following the different cultural aspects of different segments and sub-segments.

Launching product variation to attack the competitors.

Its market strategy will be between the middle of company growth and the customer satisfaction.

Conclusion:
According to the above recommendations Gillette may achieve its desired objectives and fruitful their demand to the market but its overall strategy should be focusing on its building brand name as well as adding value with the product with minimum price in order to reach its desired destination.