Gillette Vs Bic Buying Decision Behavior Chap 6 Pg 268

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Gillette Vs Bic Buying Decision Behavior Chap 6 Pg 268

  1. 1. Marketing 2,0 / Principles of Marketing Kotler pg. 268 Chapter 6<br />Bic Versus Gillette: The Disposable Wars<br />ABOUT HALF OF ALL WESTERN men get up each morning, confront their stubble in the bathroom mirror and reach for a cheap disposable plastic razor. Schiek, Bic, Gillette, Wilkinson or whatever, most men think that one brand does as well as the next. Also, the razor makers seem always to have them on sale, so you can scoop up a dozen of them for next to nothing. The Gillette Company does not like this sort of thinking. Of course, women also use Gillette's razors, but Gillette worries about the growing number of men who use disposables. The company makes about three times more money per unit on cartridge refills for its Atra and Trac II razor systems than it does on its disposables. However, since the first disposables appeared in 1975, their sales have grown faster than those of system razors. By 1988 disposables accounted for 40 per cent of shaving product money sales and more than 50 per cent of unit sales. <br />Gillette: The Defender<br />Gillette dominates the world wet-shave industry with a 61 per cent share. Schiek is second with a 16.2 per cent share, Bic has 9.3 per cent and others, including Wilkinson, account for most of the rest of the market. In 1988 Gillette's blades and razors produced 32 per cent of its $3.5 billion sales and 61 per cent of its $268 million net income. Gillette earned its dominant position in the market through large investments in research and development and through careful consumer research. Every day, about 10,000 men carefully record the results of their shaves for Gillette. Five hundred of these men shave in special in-plant cubicles under carefully controlled and monitored conditions, including observation through two-way mirrors and video cameras. Shavers record the precise number of nicks and cuts. In certain cases, researchers even collect sheared whiskers to weigh and measure. As a result, Gillette scientists know that an average man's beard grows 0.04 cm a day (14 cm per year) and contains 15.500 hairs. During an average lifetime, a man will spend 140 days scraping 8.4 meters of whiskers from his face. Gillette even uses electron microscopes to study blade surfaces and miniature cameras to analyze the actual shaving process.<br />Armed with its knowledge of shavers and shaving, Gillette prides itself in staying ahead of the competition. As soon as competitors adjust to one shaving system, Gillette introduces another advance. In 1971 Gillette introduced the Trac II, the first razor system featuring two parallel blades mounted in a cartridge. In 1977, following $8 million in R & D expenditure, the company introduced Atra, a twin-blade cartridge that swivels during shaving to follow the face's contours. In 1985 Gillette launched the Atra Plus, which added a lubricating strip to the Atra cartridge to make shaving even smoother.<br />Although the company's founder, King Gillette, considered developing a disposable product early in the company's life, Gillette's marketing strategy has focused on developing products that use refill blades on a permanent handle. Gillette works to give its blades, and especially its handles, an aura of class and superior performance. By promoting new captive systems, in which blade cartridges fit only a certain razor handle. Gillette raises price and profit margins with each new technological leap. Atra cartridges do not fit the Trac II handle, so men had to buy a new handle to allow them to use the Atra blades when Gillette introduced that system. <br />Gillette has never bothered with the low end of the market - cheap, private-label blades. Status-seeking men, it believes, will always buy a classy product. Most men see shaving as a serious business and their appearance as a matter of some importance. Therefore, most men will not skimp and settle for an ordinary shave when, for a little more money, they can feel confident that Gillette's products give them the best shave.<br />Bic: The Challenge<br />The rapid rise of the disposable razor has challenged Gillette’s view of men's shaving philosophy. Bic first introduced the disposable shaver in 1975 in Europe and then a year later in Canada. Realizing that the United States would be next, Gillette introduced the first disposable razor to the US market in 1976 - the blue plastic Good News! which used a Trac 11 blade. Despite its defensive reaction, Gillette predicted that men would use the disposable only for trips and in the changing room when they had forgotten their real razor. Disposables would never capture more than 7 per cent of the market, Gillette asserted. <br />Marcel Bich, Bic's French founder, is devoted to disposability. Bich made his money by developing the familiar ballpoint pen. lie pursues a strategy of turning status products into commodities. Often a product has status because it is difficult to make and must sell at a high price. Bich brands his products, strips them of their glamour, distributes them widely and sells them cheaply. His marketing strategy is simple: maximum service; minimum price. Bic attacks the shaving business in a very different manner from Gillette. It does not have anyone exploring the fringe of shaving technology; it does not even own an electron microscope; and it does not know or care how many hairs the average man's beard contains. The company maintains only a small shave-lasting panel consisting of about 100 people. The Bic shaver has only one blade mounted on a short, hollow handle. Nevertheless, the Bic disposable razor presents Gillette with its most serious challenge since the company's early days. In 1988 Bic's shaving products achieved $52 million in sales with a net income of $9.4 million and held a 22.4 per cent share of the disposable market.<br />Early Battles<br />In their pursuits of disposability, Gillette and Bic have clashed before on other product fronts. First, in the' 1950s, they fought for market share in the writing pen market. Gillette's Paper Mate products, however, were no match for Bic's mass-market advertising and promotion skills. The two firms met again in the 1970s in the disposable cigarette lighter arena, where they again made commodities of what had once been prestigious and sometimes expensive items. Although Gillette did better in disposable lighters than it had in pens, Bic's lighter captured the dominant market share. <br />In the most recent skirmish, however, Gillette's Good News brand is winning with a 58 per cent market share in the disposable razor market. For Gillette, the victory is bittersweet. Good News! sells for a lot less than any of Gillette's older products. The key to commodity competition is price. To stay competitive with the Bic razor and with other disposables, Gillette has to sell Good News! for much less than the retail price of an Atra or Trac 11 cartridge. As many Trac II and Atra users have concluded; why pay more for a twin-blade refill cartridge from Gillette when the same blade mounted on a plastic handle costs half as much? Good News! not only produces less revenue per blade sold, it also costs more because Gillette has to supply the handle as well as the cartridge. Each time Good News! gains a market share point, Gillette loses millions of dollars in sales and profits from its Atra and Trac II products.<br />The battle between Bic and Gillette represents more than a simple contest over what kinds of razor people want to use. It symbolizes a clash over one of the most enduring daily rituals. Before King Gillette invented the safety razor, men found shaving a tedious, difficult, time-consuming and often bloody task that they endured at most twice a week. Only the rich could afford to have a barber shave them daily. Gillette patented the safety razor in 1904, but it was not until World War I that the product gained wide consumer acceptance. Gillette had the brilliant idea of having the military give a free Gillette razor to every soldier. In this manner, millions of men just entering the shaving age were introduced to the daily, self-shaving habit. The morning shaving ritual continues to occupy a very special place in most men's lives - it affirms their masculinity. The first shave remains a rite of passage into manhood. A survey by New York psychologists reported that, although men complain about the bother of shaving, 97 percent would not want to use a cream that would permanently rid them of all facial hair. Gillette once introduced a new razor that ease in versions for heavy, medium and light beards. Almost no one bought the light version because<br />few men wanted to acknowledge publicly their modest beard production.<br />Although shaving may require less skill and involve less danger than it once<br />did, many men still want the razors they use to reflect their belief that shaving is a serious business. A typical man regards his razor as an important personal tool, a kind of extension of self, like an expensive pen, cigarette lighter, attache case or set of golf clubs.<br />Gillette's Fight Back<br />For more than 80 years Gillette's perception of the men's shaving market and the psychology of shaving has been perfect. Its products hold a substantial 61 per cent share and its technology and marketing philosophy have held sway over the entire industry. Gillette has worked successfully to maintain the razor's masculine look, weight and feel as well as its status as an item of personal identification. Now, however, millions of men are scraping their faces each day with small, nondescript, passionless pieces of plastic an act that seems to be the ultimate denial of the shaving ritual. Good News! Is bad news for Gillette. Gillette must find a way to dispose of the disposables.<br />QUESTIONS<br />1. Who is involved in a man's decision to buy a disposable razor and what roles do various participants play?<br />2. Do these participants and roles differ for the decision to buy a system razor?<br />3. What types of buying-decision behaviour do men exhibit when purchasing razors?<br />4. Examine a man's decision process for buying a wet-shave razor. How have Gillette and Bic pursued different strategies concerning this process?<br />5. What explains Bic's differing success in competing against Gillette in the disposable pen, lighter and shaver market? <br />6. What marketing strategy should Gillette adopt to encourage men to switch from disposables to system razors? How would buyer decision processes towards new products affect your recommendations?<br />SOURCE: Portions adapted from 'The Gillette Company', in Subhash C. Jain, Marketing Strategy, 1990). Used with permission.<br /> <br />

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