CULTURAL NORMS 4CASE STUDY GRADING CRITERIAPOINTS POSSIBLE.docx

CULTURAL NORMS 4
CASE STUDY GRADING CRITERIA
POINTS POSSIBLE
POINTS EARNED
Substance of Paper - Minimum 500-words – solid MARKETING
content. Template must be used & submitted in MICROSOFT
WORD document. Minus 5 points if template is not used.
Subject headers required – Introduction, Question # 1, etc. &
Conclusion – minus 5 points if not used for organization.
Writing caliber includes spelling, grammar, etc. (SEE
announcement in classroom – non-adherence to those items will
be deducted here). Do not write out questions – minus 3 points
if you do.
No Abstract is desired.
35
35 – good content
Two AUTHORED Outside Reference cited in APA format and
credited within your reference page at the end of your paper.
One source MUST be a peer reviewed Marketing reference –
specifically from the Journal of Marketing (if you deviate from
this peer-reviewed source, gain pre-approval 48-hours before
the paper is due by sending the actual article to your instructor
to gain approval). Citations must be appropriately done within
paper in APA FORMAT. Always provide the exact web site
address for this course in your recap of references for full
credit.
If reference page and citations do not match 100% - minus 10
points. Verify BEFORE you submit your paper.
No wikis, prezis, slideshares, dictionaries, encyclopedias,
videos, interviews, & podcasts allowed as references – only
scholarly written sources from well-respected sources.

10
0 – no references AUTHORED cited in paper
APA formatted paper with cover page and reference page,
Times New Roman 12 font, 1" margins, double-spacing, etc.
5
5
Total Points Earned
50
40
Written Assignment Expectations
I expect that ALL papers should adhere to APA
compliance...and that includes the following:
· NO PDF FILES - all papers must be submitted in Microsoft
Word
· Times New Roman 12 Font
· Double-Spacing
· Avoid using "I" statements, APA does not allow first person
writing.
· One Inch Margins
· And more...using the 6th Edition as our guide.
· Your reference list and your citations must match exactly - in
other words, do not list your reference as Forbes magazine and
then put the author in the citation credit (McFaul, 2011) - put
the author's name first in the reference list too! Match - match -
match! Otherwise, I might not be able to validate your
reference / citation and you would lose getting credit for that
source!
· Use subject headers for all papers - your reader appreciates

and expects that level or organization to your work!
· No contractions & No abbreviations - if you are referring to
the United States of America, write it out...do not write 'US' -
this is not stellar academic writing.
· Line spacing is double with 0 point spacing.
· Only one citation credit allowed per sentence in this course.
· Indent the first line of each new paragraph five spaces.
· No extra blank lines inserted between sections – deliver a tight
paper.
· No bullet points, alphanumeric lists, or numbered list - write
formally in full sentences / paragraphs.
· Numbers one through nine within your paper should be written
out
· Cover page and reference page required for ALL paper
submissions
· Never use all capital letters
· Use authored references for your research to earn full points.
An authored source is simply one that is associated with a
human(s) NAME. For example, your textbook is an authored
source. The United States Census Bureau is not an authored
source. But it is fine to use as long as you ALSO use an
authored reference source.
· Always include the full URL as to where you found your
research online articles - never just the home page

· Avoid wikis, blogs, tweets, videos, dictionaries, and
encyclopaedias as outside references - use Masters-level sources
like the Journal of Marketing or the Journal of International
Business - No wikis, prezis, slideshares, dictionaries,
encyclopaedias, videos, interviews, & podcasts allowed as
references – only scholarly written sources from well-respected
sources.
Dr. McFaul
Assignment # 2
Central Michigan University – MKT560
4/8/20
Introduction
Marketing is a very important factor in business. However,
companies should use the right strategies while advertising and
adhere to the laws. Otherwise, it might end up sending a wrong
message to potential buyers or users of the product. They should
ensure that they behave ethically to gain as many customers as
possible. The following paper evaluates the case study of Fair &
Lovely and the effects of their advertisements.
Question # 1
When companies behave ethically, customers develop positive
attitudes towards it and its products. Products have different
purposes of use. Therefore, if one sells a product that is mildly
effective, this should not be termed as unethical. People are free
to engage in different businesses. Regarding a company as
unethical because of selling a mildly effective product is
injustice.
Question # 2
Culture refers to human activity patterns and symbolic structure
that accord such activities significance. There are various
regulations in marketing and advertising that outlines the dos
and don’ts of marketers ("Journal of International Business
Studies", 2020).
It is unethical to use cultural norms and values to promote

different products. This may make companies to destroy their
reputations especially if their advertisements show favorism.
Question # 3
The advertisements from Fair & Lovely are perceived as
offensive to women. They took it too far by presenting young
girls with the fact that if they were dark, they would not be
receiving the same love they do. Banning these types of ads will
enable women to stand up for each other and appreciate their
bodies and skin color.
Question # 4
The marketing of HUL’S Fair & Lovely Foundation is ethical
since they do not deceive people with their advertisements.
After AIDWA raised concerns regarding the foundation, HUL
took great steps to change the negative image in the minds of
women in India. Their efforts to create awareness and
confidence among women through the Foundation emerged
positive. Many unemployed women secured jobs and it offered
training to women who were interested in acquiring beauty
skills. The response of the company to the accusations of
AIDWA of demeaning and racism led to India’s economic
boost.
Question # 5
If the company wants to sell more products, they need to use a
different approach of advertising. They can come up with
commercials that do not compare skin tones. They can create
commercials with the results of products ("Journal of
Marketing: SAGE Journals", 2020).
“Fairness” is the theme of the company and it should not be
changed. It should remain as it is because if you want your skin
to be lighter, you want to be fair.

Question # 6
The steps taken by the company after the allegations by AIDWA
were really great. They changed the message communicated
through their ads, showing happy and confident ladies. The
company created different sizes of their products, making them
available to many people.
Through Project Shakti, there was training to entrepreneurs,
which enabled women to make profit by selling the products. I
would also suggest the company to create a TV program for
women to share their experiences with the company’s products.
Question # 7
No. The argument still remains strong as the country tends to be
a patriarchal society. Their marketing strategy towards men
would be completely different from that of women. The strength
of the argument of AIDWA will not be weakened at all.
Question # 8
The project was meant to reach out to the rural people. It
intended to empower women in rural areas and create
opportunities for them. Most of the people in rural areas may
accept it since do not understand the charges of AIDWA or
reject it due to cultural beliefs.
Question # 9
The cosmetics industry is exploiting cultural norms unethically.
In India, being fair is uncommon and people are interested in
achieving what they are lacking. Such products reinforce
colorism. People are obsessed with having fairer skins since it
is associated with status. Indians value fair skin tone with poor
to look like the people who are likely to invade their territories.

Question # 10
The regulation will affect the company in different ways
depending on how it chooses to advertise its products. However,
there is no reason for justification behind making people with
dark skin feel inferior through their advertisements. They
should therefore, find different ways of advertising without
demonstrating colorism.
Conclusion
The above paper discusses the marketing strategies of Fair &
Lovely Company. It shows the importance of maintaining ethics
in marketing practices. Cultural norms and values should be
used with cautiously during advertising. It is also wrong to
demean others or make them feel bad through the
advertisements.
References
Journal of International Business Studies. (2020). Retrieved 6
April 2020, from http://www.jibs.net/
Journal of Marketing: SAGE Journals. (2020). Retrieved 6 April
2020, from https://journals.sagepub.com/home/jmx
�No author’s names?
�No author’s names?
�You must have authored sources – you have no author’s
names!

In answering the assigned questions, please always note the
following:
· Answer only the assigned question(s)
· A well-developed answer is required
· Thoughtful and thorough answers are expected
· Avoid rehashing case facts
· Make reasonable assumptions
· Don’t confuse symptoms with problems
· Make effective use of financial and other quantitative
developed in the case
· Make good use of evidence developed in the case
Case Study Grading
You will be graded on the following criteria:
· Case Studies should have 500-words MINIMUM. The best
work exceeds the minimum word count above.
· Include cover page, abstract, and reference pages -- these
do not count towards your total word count.
· Use TWO authored outside references with all submissions (an
outside reference is something in addition to our class
textbook). You must quote from this reference!.
· Utilize APA formatting at the end of your submission FOR all
assignments…if you do not, you will lose points.
· Case studies must be submitted in a Microsoft Word
document.
Writing Style Expectations
The following are writing style expectations:
· Use subject headers for all papers - your reader appreciates
and expects that level or organization to your work!
· No contractions & No abbreviations - if you are referring to
the United States of America, write it out...do not write 'US' -
this is not stellar academic writing.
· Use Times New Roman 12-point font, 1" margins, double-
spacing with 0 point spacing.

· Only one citation credit allowed per sentence in this course.
· Indent the first line of each new paragraph five spaces.
· No extra blank lines inserted between sections – deliver a tight
paper.
· No bullet points, alphanumeric lists, or numbered list - write
formally in full sentences / paragraphs.
· Numbers one through nine within your paper should be written
out
· Cover page and reference page required for ALL paper
submissions
· Never use all capital letters
· Use authored references for your research to earn full points.
An authored source is simply one that is associated with a
human(s) NAME. For example, your textbook is an authored
source. The United States Census Bureau is not an authored
source. But it is fine to use as long as you ALSO use an
authored reference source.
· Always include the full URL as to where you found your
research online articles - never just the home page.
· Avoid wikis, blogs, tweets, videos, dictionaries, and
encyclopedias as outside references - use Masters-level sources
like the Journal of Marketing or the Journal of International
Business - No wikis, prezis, slideshares, dictionaries,
encyclopedias, videos, interviews, & podcasts allowed as
references – only scholarly written sources from well-respected
sources.
Be sure to use the Writing Resources (see left menu) view the
"Instructor's Writing Guide and Reminders" under "Writing
Guide & Resources".
Plan ahead and do not wait until the last minute! Upload and
submit completed Case Study assignments via the associated
submission link (see below) by the end of assigned week.
CASE STUDY GRADING CRITERIA
POINTS POSSIBLE
POINTS EARNED

Substance of Paper - Minimum 500-words – solid MARKETING
content. Template must be used & submitted in MICROSOFT
WORD document. Minus 5 points if template is not used.
Subject headers required – Introduction, Question # 1, etc. &
Conclusion – minus 5 points if not used for organization.
Writing caliber includes spelling, grammar, etc. (SEE
announcement in classroom – non-adherence to those items will
be deducted here). Do not write out questions – minus 3 points
if you do.
No Abstract is desired.
35
Two AUTHORED Outside Reference cited in APA format and
credited within your reference page at the end of your paper.
One source MUST be a peer reviewed Marketing reference –
specifically from the Journal of Marketing (if you deviate from
this peer-reviewed source, gain pre-approval 48-hours before
the paper is due by sending the actual article to your instructor
to gain approval). Minus 3 points if you do not use the
Marketing Journal but have two other authored sources that are
valid. Citations must be appropriately done within paper in
APA FORMAT. Always provide the exact web site address for
this course in your recap of references for full credit.
If reference page and citations do not match 100% - minus 10
points. Verify BEFORE you submit your paper.
No wikis, prezis, slideshares, dictionaries, encyclopedias,
videos, interviews, & podcasts allowed as references – only
scholarly written sources from well-respected sources.
10
APA formatted paper with cover page and reference page,
Times New Roman 12 font, 1" margins, double-spacing, etc.
5
Total Points Earned

50
Shortened Title Goes Here 4
Running head: TITLE IN LESS THAN 51 CHARACTERS
CAPITALIZED
Assignment #
Your Name Here
Central Michigan University – MKT560
Date (optional)
Introduction
Start your paper here. An introduction paragraph is a good idea.
It should state the purpose of the paper and provide a roadmap
for the reader.
Please run the spelling and grammar checker before you submit
your paper. It will catch mistakes like more than one space
between sentences, spelling errors, punctuation mistakes, and
split infinitives. Specific errors common in student papers that
are not standard APA format include not having 1 inch margins
on all sides of your paper and use two spaces between
sentences. Note that in this example, there are no blank lines
between paragraphs. This is correct in APA format.
Question # 1
Paragraphs start with an indentation using the ruler setting. Do
not use spaces or the tab key. Do not use the “enter” key to get
to the next line, just keep typing, and let the computer do the
work. Please note that the references at the end of this paper are
not cited in the text. This is not okay. They are there to give
you examples of correct APA format for references. You must
use APA citation format for all sources you use to write your
paper.
Question # 2

paper.
You might not use this level of heading in your papers.
However, consider it is to your advantage to ensure the reader,
i.e., the instructor, sees the organization of your content fits the
assignment criteria. Every paragraph should have at least three
sentences and contain only one idea (this is not a good example
of that!)
Question # 3 (if there is one – if not, delete)
paper.
Conclusion
Your final paragraph should provide a summary of your paper.
This reminds the reader of where you took them on your road
trip. It is similar to reviewing your photographs after a
vacation. There should be no new information included in the
conclusion.
References
Do you need help with your APA format of references? Check

out http://www.calvin.edu/library/knightcite/index.php
Strategic decisions move a company toward its stated goals and
perceived success. Strategic decisions also reflect the firm’s
social
responsibility and the ethical values on which such decisions
are
made. They reflect what is considered important and what a
com-
pany wants to achieve.
Mark Pastin, writing on the function of ethics in business deci-
sions, observes:
There are fundamental principles, or ground rules, by which
organizations act. Like the ground rules of individuals,
organizational ground rules determine which actions are
possible for the organization and what the actions mean.
Buried beneath the charts of organizational responsibility,
the arcane strategies, the crunched numbers, and the politi-
cal intrigue of every firm are sound rules by which the game
unfolds.
The following situations reflect different decisions made by
multi-
national firms and governments and also reflect the social
respon-
sibility and ethical values underpinning the decisions. Study the
following situations in the global cigarette marketplace
carefully
and assess the ground rules that guided the decisions of firms
and
governments.

EXPORTING U.S. CIGARETTE
CONSUMPTION
In the United States, 480,000 deaths, about one in five, are
related to
smoking each year. About 250 billion cigarettes were sold in the
U.S.
in 2017, but sales are shrinking rapidly. Unit sales have been
drop-
ping about 1 to 2 percent a year, and sales have been down by
almost
5 percent in the last 10 years. The U.S. Surgeon General’s
campaign
against smoking, higher cigarette taxes, nonsmoking rules in
public
areas, and the concern Americans have about general health
have
led to the decline in tobacco consumption. Faced with various
class-
action lawsuits, the success of states in winning lawsuits, and
pend-
ing federal legislation, tobacco companies have stepped up their
international marketing activities to maintain profits.
Even though companies have agreed to sweeping restrictions in
the United States on cigarette marketing and secondhand smoke
and to bolder cancer-warning labels, they are fighting as hard as
ever in the Third World to convince the media, the public, and
policymakers that similar changes are not needed. In seminars
at
luxury resorts worldwide, tobacco companies invite journalists,
all
expenses paid, to participate in programs that play down the
health
risks of smoking. It is hard to gauge the influence of such semi-
nars, but in the Philippines, a government plan to reduce
smoking

by children was “neutralized” by a public relations campaign
from
cigarette companies to remove “cancer awareness and
prevention”
as a “key concern.” A slant in favor of the tobacco industry’s
point
of view seemed to prevail.
At a time when most industrialized countries are discourag-
ing smoking, the tobacco industry is avidly courting consumers
throughout the developing world using catchy slogans, obvious
image campaigns, and single-cigarette sales that fit a hard-
pressed
customer’s budget. The reason is clear: The Third World is an
expanding market. As an example, Indonesia’s per capita ciga-
rette consumption quadrupled in less than 10 years.
Increasingly,
cigarette advertising on radio and television is being restricted
in
some countries, but other means of promotion, especially to
young
people, are not controlled.
China, with more than 300 million smokers, produces and con-
sumes about 1.4 trillion cigarettes per year, more than any other
country in the world. Estimates are that China has more smokers
than the United States has people. Just 1 percent of that 1.4 tril-
lion cigarette market would increase a tobacco company’s
overseas
sales by 15 percent and would be worth as much as $300 million
in added revenue.
American cigarette companies have received a warm welcome
in Russia, where at least 50 percent of the people smoke.
Consum-

ers are hungry for most things Western, and tobacco taxes are
low.
Unlike in the United States and other countries that limit or ban
cigarette advertising, there are few effective controls on tobacco
products in Russia. Russia, the world’s fourth largest cigarette
mar-
ket, has proved to be an extremely profitable territory for
British
American Tobacco (BAT). BAT Russia, established in 1949,
sold
65 billion cigarettes in Russia in 2005, giving it almost one-
fifth of
the market share.
ADVERTISING AND PROMOTION
In Gambia, smokers send in cigarette box tops to qualify for a
chance to win a new car. In Argentina, smoking commercials
fill
20 percent of television advertising time. And in crowded
African
cities, billboards that link smoking to the good life tower above
the
sweltering shantytowns. Such things as baby clothes with
cigarette
logos, health warnings printed in foreign languages, and
tobacco-
sponsored contests for children often are featured in tobacco ads
in
Third World countries. Latin American tobacco consumption
rose
by more than 24 percent over a 10-year period.
Critics claim that sophisticated promotions in unsophisticated
societies entice people who cannot afford the necessities of life
to
spend money on a luxury—and a dangerous one at that. The

sophisti-
cation theme runs throughout the smoking ads. In Kinshasa,
Zaire,
billboards depict a man in a business suit stepping out of a
black
Mercedes as a chauffeur holds the door. In Nigeria, promotions
for
Graduate brand cigarettes show a university student in his cap
and
gown. Those for Gold Leaf cigarettes have a barrister in a white
wig and the slogan, “A very important cigarette for very
important
people.” In Kenya, a magazine ad for Embassy cigarettes shows
an
elegant executive officer with three young men and women
equiva-
lent to American yuppies. The most disturbing trend in develop-
ing countries is advertising that associates tobacco with
American
affluence and culture. Some women in Africa, in their struggle
for
women’s rights, defiantly smoke cigarettes as a symbol of
freedom.
Billboards all over Russia feature pictures of skyscrapers and
white
Making Socially Responsible and Ethical
Marketing Decisions: Selling Tobacco
to Third World Countries
CASE 4-6
CS4−16
cat12354_case4_CS4-1-CS4-27.indd 16 4/3/19 11:47 AM

Cases 4 Developing Global Marketing Strategies CS4−17
sandy beaches and slogans like “Total Freedom” or
“Rendezvous
with America.” They aren’t advertising foreign travel but
American
cigarette brands.
Every cigarette manufacturer is in the image business, and
tobacco companies say their promotional slant is both
reasonable
and common. They point out that in the Third World a lot of
people cannot understand what is written in the ads anyway, so
the ads zero in on the more understandable visual image. “In
most
of the world, the Marlboro Man isn’t just a symbol of the Wild
West; he’s a symbol of the West.” “You can’t convince people
that all Americans don’t smoke.” In Africa, some of the most
effective advertising includes images of affluent white
Americans
with recognizable landmarks, such as the New York City
skyline,
in the background. In much of Africa, children as young as five
are used to sell single cigarettes, affordable to other children, to
support their own nicotine habits. Worldwide nearly one-fourth
of
all teenage smokers smoked their first cigarette before they
were
10 years old.
The scope of promotional activity is enormous. In Kenya, a
major tobacco company is the fourth-largest advertiser.
Tobacco-
sponsored lotteries bolster sales in some countries by offering

as
prizes expensive goods that are beyond most people’s budgets.
Gambia has a population of just 640,000, but a tobacco
company
lottery attracted 1.5 million entries (each sent in on a cigarette
box
top) when it raffled off a Renault car.
Evidence is strong that the strategy of tobacco companies is
to target young people as a means of expanding market demand.
Report after report reveals that adolescents receive cigarettes
free
as a means of promoting the product. For example, in Buenos
Aires,
a Jeep decorated with the yellow Camel logo pulls up in front of
a
high school. The driver, a blond woman wearing khaki safari
gear,
begins handing out free cigarettes to 15- and 16-year-olds on
lunch
recess. Teens visiting MTV’s websites in China, Germany,
India,
Poland, and Latin America were given the chance to click on a
ban-
ner ad that led them to a questionnaire about their exposure to
ciga-
rette ads and other marketing tools in their countries. Some
10,000
teens responded to the banner ads. “In the past week, more than
62 percent of teenagers in these countries have been exposed to
tobacco advertising in some form,” the 17-year-old SWAT
(Students
Working against Tobacco) chairman told Reuters. “The tobacco
companies learned that marketing to teens and kids worked in
this
country, but since they can’t do it here anymore, they’ve taken

what
they learned to other countries.” At a video arcade in Taipei,
free
American cigarettes are strewn atop each game. “As long as
they’re
here, I may as well try one,” says a high school girl.
In Malaysia, Gila-Gila, a comic book popular with elementary
school students, carries a Lucky Strike ad. Attractive women in
cowboy outfits regularly meet teenagers going to rock concerts
or
discos in Budapest and hand them Marlboros. Those who accept
a
light on the spot also receive Marlboro sunglasses.
According to the American Lung Association Tobacco Policy
Trend Alert, the tobacco industry is offering candy-flavored
ciga-
rettes in an attempt to continue to target teens.1 Advertising and
promotion of these products uses hip-hop imagery, attractive
women, and other imagery to appeal to youth in similar ways
that
Joe Camel did a decade ago. Marketing efforts for candy-
flavored
cigarettes came after the Master Settlement Agreement
prohibited
tobacco companies from using cartoon characters to sell
cigarettes.
Researchers recently released the results of several surveys that
showed that 20 percent of smokers ages 17 to 19 smoked
flavored
cigarettes.
In Russia, a U.S. cigarette company sponsors disco parties
where thousands of young people dance to booming music.

Admis-
sion is the purchase of one pack of cigarettes. At other
cigarette-
sponsored parties, attractive women give cigarettes away free.
In many countries, foreign cigarettes have a status image that
also encourages smoking. A 26-year-old Chinese man says he
switched from a domestic brand to Marlboro because “You feel
a
higher social position” when you smoke foreign cigarettes.
“Smok-
ing is a sign of luxury in the Czech Republic as well as in
Russia
and other Eastern countries,” says an executive of a Czech
tobacco
firm that has a joint venture with a U.S. company. “If I can
smoke
Marlboro, then I’m a well-to-do man.”
The global tobacco companies insist that they are not attempt-
ing to recruit new smokers. They say they are only trying to
encour-
age smokers to switch to foreign brands. “The same number of
cigarettes are consumed whether American cigarettes or not,”
was
the comment of one executive.
Although cigarette companies deny they sell higher tar and
nicotine cigarettes in the Third World, one British tobacco com-
pany does concede that some of its brands sold in developing
coun-
tries contain more tar and nicotine than those sold in the United
States and Europe. A recent study found three major U.S.
brands
with filters had 17 milligrams of tar in the United States, 22.3
in

Kenya, 29.7 in Malaysia, and 31.1 in South Africa. Another
brand
with filters had 19.1 milligrams of tar in the United States, 28.8
in
South Africa, and 30.9 in the Philippines. The firm says that
Third
World smokers are used to smoking their own locally made
prod-
uct, which might have several times more tar and nicotine.
Thus,
the firm leaves the tar- and nicotine-level decisions to its
foreign
subsidiaries, who tailor their products to local tastes.
C. Everett Koop, the retired U.S. Surgeon General, was quoted
in a recent news conference as saying, “Companies’ claims that
sci-
ence cannot say with certainty that tobacco causes cancer were
flat-footed lies” and that “sending cigarettes to the Third World
was
the export of death, disease, and disability.” An Oxford
University
epidemiologist has estimated that, because of increasing
tobacco
consumption in Asia, the annual worldwide death toll from
tobacco-
related illnesses will more than triple over the next two decades.
Perhaps 100 million people died prematurely during the 20th
cen-
tury as a result of tobacco, making it the leading preventable
cause
of death and one of the top killers overall. According to the
World
Health Organization, each year smoking causes 4 million deaths
glob-

ally, and it expects the annual toll to rise to 10 million in 2030.
GOVERNMENT INVOLVEMENT
Third World governments often stand to profit from tobacco
sales.
Brazil collects 75 percent of the retail price of cigarettes in
taxes,
some $100 million a month. The Bulgarian state-owned tobacco
company Bulgartabac contributes almost $30 million in taxes to
the government annually. Bulgartabac is a major exporter of
ciga-
rettes to Russia, exporting 40,000 tons of cigarettes annually.
Tobacco is Zimbabwe’s largest cash crop. One news report
from a Zimbabwe newspaper reveals strong support for cigarette
companies. “Western anti-tobacco lobbies demonstrate
unbeliev-
able hypocrisy,” notes one editorial. “It is relatively easy to sit
in
Washington or London and prattle on about the so-called evils
of
smoking, but they are far removed from the day-to-day grind of
1See “From Joe Camel to Kauai Kolada—The Marketing of
Candy-Flavored Cigarettes,”
http://lungusa.org.
CS4−18 Part 6 Supplementary Material
earning a living in the Third World.” It goes on to comment that
it doesn’t dispute the fact that smoking is addictive or that it
may

cause diseases, but “smoking does not necessarily lead to
certain
death. Nor is it any more dangerous than other habits.” Unfortu-
nately, tobacco smoking has attracted the attention of a
particularly
“sanctimonious, meddling sector of society. They would do
better
to keep their opinions to themselves.”
Generally, smoking is not a big concern of governments beset
by debt, internal conflict, drought, or famine. It is truly tragic,
but the worse famine becomes, the more people smoke—just as
with war, when people who are worried want to smoke. “In any
case,” says one representative of an international tobacco com-
pany, “people in developing countries don’t have a long enough
life expectancy to worry about smoking-related problems. You
can’t turn to a guy who is going to die at age 40 and tell him
that
he might not live up to 2 years extra at age 70.” As for
promoting
cigarettes in the Third World, “If there is no ban on TV
advertis-
ing, then you aren’t going to be an idiot and impose restrictions
on yourself,” says the representative, “and likewise, if you get
an
order and you know that they’ve got money, no one is going to
turn
down the business.”
Cigarette companies figure China’s self-interest will preserve
its
industry. Tobacco provides huge revenues for Beijing because
all
tobacco must be sold through the China National Tobacco
Company
monopoly. Duty on imported cigarettes is nearly 450 percent of

their
value. Consequently, tobacco is among the central government’s
biggest source of funding, accounting for more than $30 billion
in
income in 2005. China is also a major exporter of tobacco.
FOCUS ON DEVELOPING MARKETS
Lawsuits, stringent legislation against advertising, laws
restricting
where people can smoke, and other antismoking efforts on the
part
of governments have caused tobacco companies to intensify
their
efforts in those markets where restrictions are fewer and
govern-
ments more friendly. As part of a strategy to increase its sales
in the
developing world, Philip Morris International (PMI) was spun
off
from Philip Morris USA in 2008 to escape the threat of
litigation
and government regulation in the United States. The move frees
the tobacco giant’s international operations of the legal and
public-
relations headaches in the United States that have hindered its
growth. Its practices are no longer constrained by American
public
opinion, paving the way for broad product experimentation.
A new product, Marlboro Intense, is likely to be part of an
aggressive blitz of new smoking products PMI will roll out
around
the globe. The Marlboro Intense cigarette has been shrunk down
by about a half inch and offers smokers seven potent puffs
apiece,
versus the average of eight or so milder draws. The idea behind

Intense is to appeal to customers who, due to indoor smoking
bans,
want to dash outside for a quick nicotine hit but don’t always
finish
a full-size cigarette. The CEO of PMI says there are “possibly
50
markets that are interested in deploying Marlboro Intense.”
Other product innovations include sweet-smelling cigarettes
that contain tobacco, cloves and flavoring—with twice the tar
and
nicotine levels of a conventional U.S. cigarette. Marlboro Mix
9, a
high-nicotine, high-tar cigarette launched in Indonesia in 2007
and
a clove-infused Mix 9 will be exported to other southeast Asian
markets next. Another iteration of the Marlboro brand, the
Marl-
boro Filter Plus, is being sold in South Korea, Russia,
Kazakhstan,
and Ukraine. It touts a special filter made of carbon, cellulose
acetate, and a tobacco plug that the company claims lowers the
tar
level while giving smokers a smoother taste.
One of PMI’s immediate goals is to harness the huge potential
of China’s smoking population, as well as some of that
country’s
own brands, which it has agreed to market worldwide. With
some
350 million smokers, China has 50 million more cigarette
buyers
than the U.S. has people, according to Euromonitor.
While smoking rates in developed countries have slowly
declined,

they have shot up dramatically in some developing countries
where
PMI is a major player. These include Pakistan (up 42 percent
since
2001), Ukraine (up 36 percent), and Argentina (up 18 percent).
ANTISMOKING PROMOTIONS
Since the early 1990s, multinational tobacco companies have
pro-
moted “youth smoking prevention” programs as part of their
“Corpo-
rate Social Responsibility” campaigns. The companies have
partnered
with third-party allies in Latin America, most notably nonprofit
educa-
tional organizations and education and health ministries, to
promote
youth smoking prevention. Even though there is no evidence
that these
programs reduce smoking among youths, they have met the
industry’s
goal of portraying the companies as concerned corporate
citizens.
In fact, a new study proves that youth smoking prevention ads
created by the tobacco industry and aimed at parents actually
increase the likelihood that teens will smoke. The study,
“Impact
of Televised Tobacco Industry Smoking Prevention Advertising
on Youth Smoking-Related Beliefs, Intentions and Behavior,”
pub-
lished in the December 2006 issue of the American Journal of
Public
Health, sought to understand how the tobacco industry uses
“youth
smoking prevention” programs in Latin America. Tobacco

industry
documents, so-called social reports, media reports, and material
provided by Latin American public health advocates were all
ana-
lyzed. The study is the first to examine the specific effect of
tobacco
company parent-focused advertising on youth. It found that ads
that the industry claims are aimed at preventing youth from
smok-
ing actually provide no benefit to youth. In fact, the ads that are
created for parental audiences also are seen by teens and are
associ-
ated with stronger intentions by teens to smoke in the future.
Brazil has the world’s strictest governmental laws against
smok-
ing, consisting of highly visible antismoking campaigns, severe
con-
trols on advertising, and very high tax rates on smoking
products. It
was the first Latin American country to outlaw flavored
cigarettes in
2012. Despite these obstacles, the number of smokers in Brazil
con-
tinues to grow, although the pace of increase is slowing. In
2017, there
were approximately 50 million smokers in the country (20
percent
of men, 12 percent of women), up from 44 million in 2006 and
38 million in 1997. Factors driving this trend include the low
price of
cigarettes, which are among the lowest in the world; the easy
access
to tobacco products; and the actions taken by the powerful
tobacco
companies to slow down antismoking legislation in Brazil.

ASSESSING THE ETHICS
OF STRATEGIC DECISIONS
Ethical decision making is not a simplistic “right” or “wrong”
deter-
mination. Ethical ground rules are complex, tough to sort out
and
to prioritize, tough to articulate, and tough to use.
The complexity of ethical decisions is compounded in the inter-
national setting, which comprises different cultures, different
perspec-
tives of right and wrong, different legal requirements, and
different
goals. Clearly, when U.S. companies conduct business in an
interna-
tional setting, the ground rules become further complicated by
the val-
ues, customs, traditions, ethics, and goals of the host countries,
each
of which has developed its own ground rules for conducting
business.
Cases 4 Developing Global Marketing Strategies CS4−19
Prominent American ethicists have developed a framework to
view the ethical implications of strategic decisions by American
firms. They identify three ethical principles that can guide
American managers in assessing the ethical implications of their
decisions and the degree to which these decisions reflect these
ethical principles or ground rules. They suggest asking
themselves

if their corporate strategy is acceptable according to the ethical
ground rules listed in the box on the right.
These questions can help uncover the ethical ground rules
embed-
ded in the tobacco consumption situation described in this case.
These questions lead to an ethical analysis of the degree to
which this
strategy is beneficial or harmful to the parties and, ultimately,
whether
it is a “right” or “wrong” strategy, or whether the consequences
of this
strategy are ethical or socially responsible for the parties
involved.
These ideas are incorporated in the decision tree in Exhibit 1.
Exhibit 1
A Decision Tree for
Incorporating Ethical and
Social Responsibility Issues
into Multinational Business
Decisions
Does the decision e�ciently optimize
the common good or benefits of:
Are there critical factors that
justify suboptimizing these
goals and satisfactions?
YES
YES
YES

YES
YES
YES
NO
NO
NO
NO
NO
NO
Are there critical factors that
justify the violation of a
canon of justice?
Does the decision respect the
rights of individuals involved?
Does the corporate decision
respect the canons of justice or
fairness to all parties involved?
Are there critical factors
that justify the abrogation
of a right?
Reject
Decision

THE BUSINESS FIRM?
Stockholders
Management
Profits
Growth
Other
THE ECONOMY?
Economic growth
Allocation of resources
Production and distribution
of goods and services
Other
SOCIETY?
Culture
Order
Justice
“The good life”
Other
THE INDIVIDUAL?
Freedom
Health and welfare
Self-realization
Human dignity
Opportunity
Other
Reject
Decision
Reject
Decision
Accept

Decision
Principles Question
Utilitarian ethics
(Bentham, Smith)
Does the corporate strategy
optimize the “common
good” or benefits of all
constituencies?
Rights of the parties
(Kant, Locke)
respect the rights of the
individuals involved?
Justice or fairness
(Aristotle, Rawls)
respect the canons of
justice or fairness to all
parties?
Laczniak and Naor discuss the complexity of international eth-
ics or, more precisely, the ethical assumptions that underlie
strate-

gic decisions for multinationals.2 They suggest that
multinationals
can develop consistency in their policies by using federal law as
a
baseline for appropriate behavior as well as respect for the host
country’s general value structure. They conclude with four
recom-
mendations for multinationals:
1. Expand codes of ethics to be worldwide in scope.
2. Expressly consider ethical issues when developing world-
wide corporate strategies.
3. If the firm encounters major ethical dilemmas, consider
withdrawal from the problem market.
4. Develop periodic ethics-impact statements, including
impacts on host parties.
See www.who.int, the World Health Organization’s website, for
more details regarding the current tobacco controversy.
QUESTIONS
1. Use the model in Exhibit 1 as a guide and assess the ethical
and
social responsibility implications of the situations described.
2. Can you recommend alternative strategies or solutions to the
dilemmas confronting the tobacco companies? To govern-
ments? What is the price of ethical behavior?
3. Should the U.S. government support U.S. tobacco company
interests abroad?

4. Should a company be forced to stop marketing a product that
is not illegal, such as cigarettes?
2Gene R. Laczniak and Jacob Naor, “Global Ethics: Wrestling
with the Corporate
Conscience,” Business, July–September 1985.
Sources: “Smoke Over the Horizon; U.S. Gains in Tobacco
Control Are Being Offset Internationally,” The Washington
Post, July 23, 2006; “Death and Taxes: England Has Become
the Latest in a Series of Countries to Vote for Restrictions on
Smoking in Public Places,” Financial Management (UK), April
1, 2006; “Trick or Treat? Tobacco Industry Preven-
tion Ads Don’t Help Curb Youth Smoking,” PR Newswire,
October 31, 2006; “China Exclusive: China, With One Third of
World’s Smokers, Promises a ‘Non-Smoking’ Olympics,”
Xinhua News Agency, May 29, 2006; “Tobacco Consumption
and Motives for Use in Mexican University Students,”
Adolescence, June 22, 2006; “A Change in the Air: Smoking
Bans
Gain Momentum Worldwide,” Environmental Health
Perspectives, August 1, 2007; “Adams Won’t Kick the BAT
Habit: The Head of British American Tobacco Is Stoical About
the
Looming Ban on Smoking in Public Spaces: BAT will Adapt,”
The Sunday Telegraph London, June 10, 2007; “Heart Disease,
Stroke Plague Third World,” Associated Press (Online),
April 4, 2006; “Get a Detailed Picture of the Tobacco Industry
in Brazil,” M2 Press Wire, December 20, 2007; Vanessa
O’Connell, “Philip Morris Readies Global Tobacco Blitz;
Division Spin-off Enables Aggressive Product Push; High-Tar
Smokes in Asia,” The Wall Street Journal, January 29, 2008;
“The Global Tobacco Threat,” The New York Times, Febru-
ary 19, 2008; “How to Save a Billion Lives; Smoking,” The
Economist (London,) February 9, 2008; “Whether Here or
There, Cigarettes Still Kill People,” The Wall Street Journal,

February 4, 2008; World Health Organization, 2018.
CS3−24
In April of 2010, Gillette released its Guard razor, capturing
50 percent of the Indian shaving market in just 6 months. The
Guard was a lightweight, disposable-blade razor that was devel-
oped after a year of research that involved observing Indian
men
as they purchased and used razors in their daily lives. The result
was a 15-rupee (0.34 USD) razor with 5-rupee (0.11 USD)
blades,
uniquely designed for Indian men. To help the Guard reach the
50 percent milestone, Gillette had been aggressively promoting
the product throughout the country of India, with billboards and
TV commercials featuring Bollywood actors shaving with the
razor. The price of the Guard was higher than that of the
market-
leading double-edge blades, but the new razor offered a close
shave
without the frequent cuts that resulted from quick-rusting,
double-
edge models.
In contrast, Gillette’s leading product in the U.S.—the Gillette
Fusion ProGlide—was Gillette’s most technologically
innovative
razor, with five blades on the skin contact surface. Gillette’s
fre-
quent TV commercials touted the ability of the Fusion ProGlide
to give a comfortable, close shave, while enabling men to create

elaborate facial hair designs. At $9.99 for the razor and $16.99
for a four-pack of blade cartridges, the Fusion ProGlide was not
only Gillette’s most advanced razor, but it was also Gillette’s
most
expensive and most profitable razor.
John Sebastian,1 Gillette’s manager of male grooming products,
sat at his desk at company headquarters in Boston,
Massachusetts,
holding a Gillette Guard and a Gillette Fusion ProGlide in his
hands, pondering next steps. Sebastian had been given the task
of
analyzing market conditions and making a recommendation to
the
vice president of male grooming for the Gillette Guard global
strat-
egy. There were over a billion men in low-income countries
who
potentially would be willing to try the Guard. The Guard could
be a viable low-cost option for many Americans. Despite the
fact
that the premium-priced Fusion ProGlide was Gillette’s best-
selling
razor, not every American was willing to pay such a high price.
Many Americans were especially price sensitive due to the state
of
the economy, which was slowly recovering from the 2008
financial
crisis. Introducing the Guard to the U.S. market could allow
Gil-
lette to dominate the low end of the shaving industry and boost
sales in a slow-growing market. On the other hand, Gillette’s
high-
margin products like the Fusion ProGlide might suffer if the
Guard
began to cannibalize sales. Sebastian was preparing for the

meeting
with his supervisor, during which he would offer his strategy
recom-
mendations to the vice president of male grooming for the
Gillette
Guard. The meeting was quickly approaching.
COMPANY HISTORY
The Gillette Company was founded in 1901 by King C. Gil-
lette to manufacture his invention—the disposable-blade safety
razor. At the time, the leading shaving products were straight-
edge razors. (See Exhibit 1.) After repeated use, the blade of a
Gillette: The 11-Cent Razor, India,
and Reverse Innovation
CASE 3-7
1The character and scenario are fictional. The company and
market details are factual.
©productpackshotphotography/Getty Images
Exhibit 1
Straight-Edge Razor
Exhibit 2
Safety Razor
©arobinson343/iStock/Getty Images
straight-edge razor becomes misaligned, and must be realigned
and polished by stropping the blade—dragging it along a strip
of
leather or canvas. While looking through a Montgomery Ward
mail-order catalog in 1895, Gillette noticed that Montgomery

Ward guaranteed that it would replace any defective razor, with
the disclaimer, if “properly used and stropped on a good smooth
strop.” Gillette recognized an opportunity to manufacture and
sell a razor with disposable blades that would not require main-
tenance. Patented in 1904, Gillette’s “safety razor,” as it came
to be known, consisted of a razor (handle and blade compart-
ment) and a disposable double-edge razor blade. (See Exhibit
2.)
Because customers would need to continuously buy new blades,
disposable razors would provide a steady, continuous source of
revenue for Gillette. The company’s original safety razor sold
for
$5 in 1904 (about $135 in 2015 dollars), and a pack of blades
that would last a year cost $1.
After expiration of the patent in 1921, Gillette feared that low-
cost imitators would erode his margins. Rather than simply
reduce
his prices, he took a two-pronged approach. First, shortly before
the patent was set to expire, Gillette released an upgraded
version
of the razor with a price of $5 and marked down the original
razor
cat12354_case3_CS3-1-CS3-39.indd 24 4/3/19 5:13 PM
Cases 3 Assessing Global Market Opportunities CS3−25
to $1. This new upgrade kept Gillette ahead of competitors at
the
high end of the market. Increased sales of Gillette’s original
razor
provided an even bigger boost to profits. The new, lower price
convinced large numbers of customers to try the razor. Second,

Gillette strategized that once these customers owned the razor,
they would be forced to buy the blades at full price to continue
using the razor. Recognizing the continuous stream of profits
that
resulted from getting the razor into the hands of customers, Gil-
lette began selling razors at low, promotional prices, and even
giv-
ing them away as a means to create demand for the high-margin
blades. This method of selling an initial product at a low price
to
stimulate demand for a higher-margin-related product is used in
many industries but is still referred to as the “razor-and-blades”
business model.
Throughout the 20th century, Gillette lived up to its slogan,
“The best a man can get,” by continuously developing the next
“best” razor to the market every few years. Gillette’s innova-
tions included a “Twist to Open” double-edge razor (Aristocrat,
released in 1934), a two-blade razor (Trac II, 1971), a razor
with
a pivoting head (Atra, 1977), a razor with spring-loaded blades
(Sensor, 1990), a three-blade razor (Mach 3, 1998), and a five-
blade razor (Fusion, 2006). Several variations of these prod-
ucts also were sold, including a women’s version of the Mach 3
(Venus), battery-powered razors that vibrated for an ever-closer
shave (e.g., Fusion Power), and razors with various
combinations
of features such as color schemes and lubricating strips. Gillette
also developed several disposable razors in which the entire
razor,
not just the blade, was to be thrown away after the blade
became
dull. Gillette expanded into the electric shaver market in 1967
by
purchasing Braun, a German consumer products manufacturer.
Electric shavers, in general, are faster and safer than shaving

with
a manual razor but are not able to provide the close shave of a
traditional razor.
From the 1950s through the end of the 20th century, Gillette
expanded into product lines outside of shaving by purchasing
market-leading brands such as Duracell, Liquid Paper, and
Cricket
Lighters. Razors remained Gillette’s core business, however,
con-
sistently accounting for more than half of the company’s
profits.
The 1990s were an especially prosperous time for Gillette. The
company developed innovative new products in all of its major
product categories, while experiencing rapid growth in new
mar-
kets such as China and Eastern Europe. Gillette’s stock price
grew
more than tenfold from the late 1980s to the late 1990s. But by
the early 2000s, the company’s rate of innovation and
international
expansion had slowed, and, with it, Gillette’s sales. Gillette’s
earn-
ings came in below estimates for 15 consecutive quarters, due in
part to what board member Warren Buffett commented were
unre-
alistically high estimates.
Jim Kilts was hired as Gillette Chief Executive Officer (CEO)
in 2001. Kilts’ mission was to reinvigorate the company, turn-
ing it around by reducing costs and reinvesting the savings into
aggressive research and development. This new strategy brought
Gillette back to profitability, and it posted six consecutive quar-
ters of record profits. Despite the company’s rebound, Kilts
believed that relying so heavily on razors would endanger the
company in the long run. Gillette merged with Proctor & Gam-

ble (P&G) in 2005 to take advantage of the marketing and
distri-
bution strength of P&G’s global organization. Although billed
as
a merger, the deal was essentially a $57 billion acquisition of
Gil-
lette. After 2005, several business units were separated from
Gil-
lette, returning the company’s focus to its core business—
shaving
products and personal care items, such as antiperspirant and
body wash.
GILLETTE IN 2010
By 2010, Gillette’s male shaving product line was led by the
Fusion ProGlide, a reengineered version of the Fusion razor
with
five thin blades. The Fusion ProGlide was backed by a national
advertising campaign featuring celebrities including actor
Adrien
Brody and hip-hop musician André 3000 with highly stylized
facial hair. Retailing for $10.99 ($11.99 for the battery-powered
vibrating version) with a four pack of blade cartridges that
retailed for $16.99, the Fusion ProGlide was Gillette’s best-
selling
and most profitable product. Gillette’s next most expensive
prod-
uct was the Mach 3, which retailed for US$6.99 with a four
pack
of blade cartridges selling for US$10.49. Gillette also sold
several
types of disposable razors, with prices as low as US$0.65 each
when purchased in a multipack. The company benefited from a
“trade-up” strategy—consumers often moved up from Gillette’s
less-expensive products to its more-expensive ones, but rarely

moved down the price scale. In this sense, cannibalization of
the
sales of existing products in favor of newer, more profitable
ones
was a fortuitous circumstance.
Gillette’s brand recognition, market share, and advantages
in technology and manufacturing had kept it at the top of the
razor market since the company’s founding. Gillette’s leading
competitor—Schick—held a 15 percent global market share
com-
pared to Gillette’s 70 percent. Throughout the 2000s, however,
Schick put pressure on Gillette as the two companies engaged in
what the media referred to as the “Razor Wars.” Schick was the
first company to release a razor with four blades: the Quattro.
Gil-
lette’s Fusion ProGlide was then the first razor with five blades.
Schick quickly followed with its own five-blade razor—the
Hydro
5. Volume growth in the U.S. shaving industry had been
stagnant
for several years, with sales growth derived primarily from
price
increases attached to new, innovative products.
Gillette, however, faced stiff competition in the disposable
razor
category, which was at the low end of the razor market.
Gillette’s
lowest-cost razors offered advanced features such as dual
blades,
pivoting heads, and lubricating strips. Competitors such as Bic,
Wilkinson Sword, and Schick not only sold products that rivaled
Gillette’s disposable razors in terms of features and price, but
also
produced bare-bones versions of the products. These very-low-

end
razors could be purchased for as low as $0.20 when purchased
in
a multipack.
Gillette also faced competition from store brands (“private
labels”), or razors that would be a brand unique only to that
store
(such as “Great Value” in Walmart). Otherwise, nationally
branded
products were primarily sold to retailers that, in turn, sold the
prod-
ucts to consumers. Throughout the 1990s, the retail industry
under-
went consolidation, with Walmart becoming the largest player
and
Gillette’s largest customer. Walmart’s purchasing power, as
well as its
low-priced store brands, enabled it to place downward price
pressure
on its suppliers. Despite the lower prices, however, the store
brands
did not take significant market share from name-brand products.
INTERNATIONAL STRATEGY
By 2010, Gillette held 70 percent of the global market share for
razors. The market share varied by region, and Gillette’s indi-
vidual country strategies of product development and pricing
differed based on characteristics of the country, such as

consumer
income levels. Europe and Australia resembled the U.S. market,
where consumers were willing to pay premium prices for pre-
mium products. To stay ahead of competitors, Gillette
introduced
its high-end razors and put significant money and effort behind
marketing the innovative products. By the year 2000, there were
limited opportunities for growth in these regions. In less-mature
markets, however, there were still huge opportunities for
growth.
Hundreds of millions of low-income consumers in countries
such as China and India often shaved with double-edge blades
instead of using Gillette’s products. Only wealthy consumers in
these countries could afford Gillette’s high-end razors, so
Gillette
focused on marketing its lower-cost products, rather than
promot-
ing higher-cost razors.
India, in particular, represented a massive untapped market
for Gillette. Of the 1.2 billion people in India, many belonged
to a group referred to as the “Base of the Pyramid” in economic
terms—the 4 billion people in the world who lived on US$1 to
US$3 a day. In India, despite the fact that such consumers had
low incomes, the sheer number of potential customers made the
region very attractive to Gillette. The majority of low-income
men in India—roughly 400 million—shaved using double-edge
razors, which cost only 1.5 rupees to 2 rupees (US$0.05) per
blade. Double-edge blades were inexpensive, but they rusted
eas-
ily and often caused cuts. Instead of trying to sculpt elaborate
facial hair designs with a razor, many low-income Indian men
would be satisfied with a blade that could give them a good
shave without nicking their skin and drawing blood. The leading
double-edge razor producer—Super-Max—held 15 percent
market

share. As of 2009, Gillette’s top two razors in India—the Vec-
tor and the Mach 3—held only 13 percent and 9 percent market
share respectively. (See Exhibit 3.)
GILLETTE GUARD DEVELOPMENT
Gillette realized that it needed to change its approach to product
development and pricing to achieve success in the low-income
Indian market. Gillette’s previous marketing process in India
involved little more than repackaging its existing razors and
chang-
ing the language on the labels. The Mach 3, which was one of
Gil-
lette’s leading razors in the U.S., had only 9 percent market
share
in India because the price for the product was too high for most
Indian consumers. Gillette’s lower-priced offering—the
Vector—was
closer to the appropriate price point, but it still could not win
over
more than 13 percent of the market. The Vector was a rebranded
Gillette Atra, a product that was introduced in the U.S. in 1977
but
had been discontinued.
Gillette turned to reverse innovation to develop the Guard.
The traditional path of a new innovation involves research and
development in wealthy Western countries, where plenty of
capi-
tal is available for investment, followed by market entry in low-
income countries. Reverse innovation turns the process around,
beginning with the development of an innovation in a low-
income country, then perhaps introducing it in higher-income
countries. For the new Indian razor, Gillette began with a price
customers would be willing to pay, and then it built the features
around the price.

A team of product development personnel was assembled and
given the task of learning what it is that Indian men wanted
from a
razor. The team spent thousands of hours studying and
observing
the Indian market first hand, following Indian men as they
shopped
for and used razors. The team also conducted interviews and in-
home visits, and fine-tuned its product ideas with thousands of
con-
sumers. Every element of the razor was viewed through the eyes
of
the low-income Indian consumer.
The Gillette team learned several lessons from its research. The
company learned that Indian men purchased razors primarily in
kiranas—small local shops—instead of at large retailers.
Gillette also
learned that Indian men often do not shave every day, and when
they do shave, it often happens while sitting on the floor with a
bowl of water and a hand-held mirror, rather than standing at a
sink with a large mirror. Through the course of its interviews,
the
team learned that Indian consumers valued affordability first
and
foremost, followed by safety and ease of use.
The team developed the Gillette Guard to address each spe-
cific need. For safety, the Guard included a safety comb and an
easy-to-hold grip. For affordability, the lubrication strip was
aban-
doned; only a single blade was used, and the Guard contained
80 percent fewer parts compared to the Gillette Vector. For ease
of use, the razor was lighter than double-edge razors and many
American razors, easy to rinse, flexible enough to reach areas

that are difficult to reach with a double-edge razor, and able to
cut longer hair because many Indian men did not shave every
day.
(See Exhibit 4.)
Brand Company Indian Market Share
Super-Max Super-Max 15%
Gillette Vector P&G 13%
Topaz Malhotra Shaving Products 10%
Gillette Mach 3 P&G 9%
Schick-Wilkinson Sword Energizer Holdings 8%
Laser Malhotra Shaving Products 6%
Exhibit 3
Gillette Competition
Cases 3 Assessing Global Market Opportunities CS3−27
form, in each of these countries. On the other hand, lessons
learned
in the Indian market may not have applied to every country. Just
as American products did not necessarily transfer easily to
India,
the Indian product may not have transferred easily to China. If
they
did, the possibilities of damaging stockouts loomed large if

produc-
tion could not keep up with demand.
Gillette’s next decision was whether or not it should complete
the reverse innovation process by releasing the Guard in the
U.S.
Gillette had been profitable in recent years despite stagnating
volume growth in the U.S. market, primarily due to high-margin
products like the Fusion ProGlide. Industry analysts questioned
the sustainability of this strategy. If Gillette chose to release the
Guard in the U.S., the low price would surely attract customers,
but this option carried some risk. The Guard may not meet the
quality demands of American customers, and even if it did, it
could cannibalize sales of Gillette’s higher-margin products
such
as the Mach 3 and Fusion ProGlide. Usually cannibalization
worked the other way around: trading up from a low-priced
prod-
uct to a high-priced one. As John Sebastian prepared to deliver
his recommendation to the vice president of male grooming, he
considered the ripple effects each option would have on Gillette
and its markets around the world. His recommendation could
determine the direction of the company, as well as his career,
for
years to come.
QUESTIONS
1. Describe the razor-and-blades business model.
2. How and why do U.S. razor consumers differ from razor
consumers in India?
3. How did Gillette’s product development process differ for
the Gillette Guard when compared to its previous product
development processes?

4. Should Gillette release the Gillette Guard in the U.S.?
Should it release the product in other low-income countries
besides India?
This case draws from “Gillette: The 11-Cent Razor, India, and
Reverse Innovation,”
written by Ryan Atkins, Terry School of Business, University of
Georgia. Used by
permission of William Davidson Institute, University of
Michigan. It is intended
to be the basis for class discussion rather than to illustrate
either the effective or
ineffective handling of a managerial situation. Sources: Byron,
Ellen. “Gillette’s
Latest Innovation in Razors: the 11-Cent Blade.” Wall Street
Journal, October 1,
2010. Accessed January 25, 2013; Ibid; Picker, Randal C. “The
Razors-and Blades
Myth(s).” University of Chicago Law Review 78.1(2011): p.
227; Ibid; “The Gillette
Company.” Form 10-Q Quarterly Report, March 31, 2005.
Boston: The Gillette Com-
pany; Roman, Kenneth. “The Man Who Sharpened Gillette.”
Wall Street Journal
September 5, 2007. Accessed January 25, 2013; Isidore, Chris.
“P&G to Buy Gil-
lette for $57B.” CNNMoney January 28, 2005. Accessed
January 25, 2013. Walmart.
com. Retail prices. Accessed January 25, 2013; “Triple Blades
Hone Trade-up Pitch.”
DSN Retailing Today 42.5. 2003; Narr, Susan McGinnis. “The
Razor Wars.” Early
Show. CBS News, New York. December 5, 2007; Glazer, Emily.
“A David and Gillette
Story.” Wall Street Journal April 12, 2012. Accessed January
25, 2013; Walmart.com.

Retail prices. Accessed January 25, 2013; Govindarajan, Vijay,
and Chris Trimble.
“Is Reverse Innovation Like Disruptive Innovation?” HBR Blog
Network Septem-
ber 30, 2009; “Gillette Guard Fact Sheet.” Ed. Proctor &
Gamble. 2013; Ibid; Ibid;
Govindarajan, Vijay. “P&G Innovates on Razor-Thin Margins.”
HBR Blog Network
April 16, 2012. Accessed January 25, 2013; Coleman-Lochner,
Lauren. “Why Proctor
& Gamble Needs to Shave More Indians.” Bloomberg
BusinessWeek. June 9, 2011.
Accessed July 1, 2015; “How Gillette Execs Spent a Fortune
Developing a Razor for
India Using MIT Student Focus Groups… Without Considering
the Country’s Lack
of Running Water.” Daily Mail October 3, 2013. Accessed July
1, 2015; Reddy, Srini-
vas and Christopher Dula. “Gillette’s ‘Shave India Movement.’”
Ft.com/management.
November 4, 2013. July 1, 2015.
©Editorial Image, LLC/Alamy Stock Photo
Exhibit 4
Gillette Guard
Gillette also set up its manufacturing and distribution with the
Indian consumer in mind. Labor costs were much lower in India
than in the U.S., and Gillette minimized shipping costs through
the
use of local production. On the distribution side, Gillette
developed
relationships with a number of the local kiranas to ensure that
they
would stock the Guard. This approach to distribution was vastly

different from the company’s U.S. strategy, which focused on a
few
large retailers.
The Indian market’s response to the Gillette Guard was
extremely favorable. In a survey, customers preferred the
Gillette
Guard 6-to-1 over double-edge razors. The positive perception
of the
Guard, along with its price that was not much more than double-
edge razors, meant that the Guard became an affordable luxury
for
many customers. The Guard managed to surpass 50 percent of
the
razor market by volume only six months after its launch in
October
2010. Whether or not these customers would trade up to higher-
cost
razors, as they often did in the U.S., remained to be seen, but
Albert
Carvlaho, Gillette’s Vice President of Male Grooming for
Emerging
Markets, felt confident that they would, saying, “When they
start
enjoying a better shave, they’ll be more open to all solutions.”
OPPORTUNITIES AND CHALLENGES
The tremendous success of the Guard left Gillette with
opportuni-
ties. Hundreds of millions of potential customers in China,
Indo-
nesia, and other low-income countries still shaved with double-
edge
razors. Gillette could immediately release the Guard, in its
present

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