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Gillette case study-Why Innovation May Not Be Enough

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Gillette case study-Why Innovation May Not Be Enough

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Gillette case study-Why Innovation May Not Be Enough

  1. 1. Why Innovation May Not Be EnoughArmenush Archuniani- June 2017 Semester- Marketing-Doc. Amirshahi
  2. 2. 'To build total brand value by innovating to deliver consumers value and customer leadership faster, better and more completely than our competitors.'
  3. 3.  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.
  4. 4. '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.
  5. 5. 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.
  6. 6. 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…
  7. 7. 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.
  8. 8. Gillette Positioning Market Positioning = Segmentation + Differentiation QUALITY PRICE
  9. 9.  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”.
  10. 10.  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.
  11. 11. 1901  King C. Gillette invents The safety razor with disposable blades.
  12. 12. 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.
  13. 13. 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%.
  14. 14. 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.
  15. 15. 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
  16. 16. 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.
  17. 17. 1971  Gillette produces The Trac II, the first twin-blade shaving system.
  18. 18. 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.
  19. 19.  These products led Gillette to 75% of global market in razors and blades.  Majority of USA shaving market.
  20. 20. 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.
  21. 21. 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.
  22. 22.  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.
  23. 23.  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.
  24. 24. 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
  25. 25. 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.
  26. 26. On October 1, 2005, Procter & Gamble –P&G- finalized its merger with the Gillette Company.
  27. 27. 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.
  28. 28. 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
  29. 29. 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
  30. 30. 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
  31. 31. 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
  32. 32. • 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
  33. 33. 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
  34. 34. • 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.
  35. 35. 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.
  36. 36. Razor manufacturers earn most of their profits from blade refills, not the initial razor purchase. Upselling And Cross-Selling matters. so
  37. 37. 2014 Gillette changes the landscape of manscaping with the first razor built for the male terrain—GILLETTE BODY.
  38. 38. 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.
  39. 39. 2015 Gillette Fusion ProShield provides lubrication BEFORE and after the blades to shield from irritation while you shave to maintain maximum contact.
  40. 40. 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
  41. 41. 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
  42. 42. 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
  43. 43. 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.
  44. 44. 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.
  45. 45. 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
  46. 46. 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.
  47. 47. 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.
  48. 48. 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.
  49. 49. 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)
  50. 50. 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.
  51. 51. 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.
  52. 52. 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."
  53. 53. 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.
  54. 54. P&G in recent years launched its own competitor to online razor services, The Gillette Shave Club.
  55. 55. Online Blades And Razor Sales-USA2016
  56. 56. 0 10 20 30 40 50 60 70 80 2010 2015 2016 US Market Share US Market Share
  57. 57. Looking Toward The Future  Consider roles of culture, religion and western influences.  Innovation whether in product design or marketing.
  58. 58. 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.
  59. 59. 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.
  60. 60. 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.
  61. 61. 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.
  62. 62. 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.
  63. 63. 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.
  64. 64. 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.
  65. 65. 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.
  66. 66. 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.
  67. 67. 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
  68. 68. Invent A Purple Cow Product Life Cycle Curve - Moor’s Diffusion Curve
  69. 69. 1) Evaluate product innovation at Gillette throughout its history. Has Gillette been a victim of its own success?
  70. 70. 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. 1976: Gillette introduces Good News!, the first twin blade disposable razor for men. 1977: Gillette introduces Atra, the first razor with a pivoting head. 1985: Gillette introduces the first razor with a lubricating strip–AtraPlus. 1986: Gillette introduces 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.
  71. 71.  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.
  72. 72.  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.
  73. 73.  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.
  74. 74.  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.
  75. 75. 1962 Wilkinson Sword launched its stainless- steel blade
  76. 76.  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.
  77. 77. 1) … Has product innovation in the wet- shaving market come to an end? Explain.
  78. 78.  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.
  79. 79.  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.
  80. 80.  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.
  81. 81. Financial Strength SPACE MATRIX Industry Attractiveness Environmental Stability Competitive Advantage Conservative Competitive Aggressive Defensive
  82. 82. 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 ‫خانة‬‫شماره‬2 .1‫کاهش‬ .2‫همگون‬ ‫تنوع‬ .3‫افقی‬ ‫تنوع‬ .4‫ناهمگون‬ ‫تنوع‬ .5‫واگذاری‬ .6‫انحالل‬ ‫خانة‬‫شماره‬4 .1‫همگون‬ ‫تنوع‬ .2‫افقی‬ ‫تنوع‬ .3‫ناهمگون‬ ‫تنوع‬ .4‫مشارکت‬ ‫خانة‬‫شماره‬3 .1‫کاهش‬ .2‫همگون‬ ‫تنوع‬ .3‫افقی‬ ‫تنوع‬ .4‫ناهمگون‬ ‫تنوع‬ .5‫واگذاری‬ .6‫انحالل‬
  83. 83. 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
  84. 84. 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.
  85. 85.  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.
  86. 86.  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.
  87. 87.  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.
  88. 88.  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.
  89. 89. DOLLAR SHAVE CLUB REVENUE GROWTH
  90. 90. Online Blades And Razor Sales-USA2016
  91. 91. 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.
  92. 92. 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
  93. 93. 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.
  94. 94.  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.
  95. 95.  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.
  96. 96. 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.
  97. 97.  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.
  98. 98.  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
  99. 99.  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
  100. 100.  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.

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