Beacon February version

Volume 5, Issue 1 | 1
BEACON
VOLUME 5
ISSUE 1

2 | Feb 2017 Volume 5, Issue 1 | 3
The SIMCON - SIMSREE consulting club is an initiative
started in 2012 for those students in pursuit of excellence in
management consulting and strategic management. Aimed
at creating awareness among the students about consultancy
as a discipline, the club strives to maintain strong relations
with top consultancy firms and provide platform to craft highly
skilled & competent consultants from SIMSREE. The club is
a resource for information about consulting and a place for
students to obtain real-world consulting experience.
SIMCON provides an avenue of interaction among faculty,
students and alumni through competitions, live projects,
guest lectures, and conclaves. For this purpose the club has
also been publishing its monthly newsletter – BEACON (BE
A CONSULTANT) and maintains a FACEBOOK PAGE where
latest news and development in the consulting industry are
posted.
ABOUT US
VOLUME 5
ISSUE 1
MISSION
To create awareness
amongst the students
about consulting industry &
its latest trends.
To maintain strong relations
with top consultancy firms.
Contributions invited:
To make this feature a successful effort, we seek continued
involvement and contribution from our readers, that is YOU. We
invite articles, research papers, and trivia on themes related to
consulting. Be it industry news, consulting trends, a joke, a cartoon
or feedback, we are eager to hear from you. So go ahead, do your
research, pen down your thoughts and mail your entries to simcon.
simsree@gmail.com.
Best Regards,
SIMCON - SIMSREE CONSULTING CLUB
VISION
To provide platform to craft
highly skilled & competent
consultants from SIMSREE.
To provide exposure to
students via competitions,
live projects, guest lectures
& conclaves.
NIRANJAN
SATAM
ADITYA
SINGAL
JASPRIT
TANEJA
APURVA
GHUTUKADE
MANGESH
LAVTE
PRIYANKA
HEGDE
VIDHI
THAKKER
OUR TEAM
SWAPNESH
SAWANT

CONTENT
6-1012-17
OUR TEAM 04
BRAND ANALYSIS 12
CONCEPT OF THE MONTH 20
COMPANY ANALYSIS 06
CASE ANALYSIS 18
Marico Ltd.
COMPANY ANALYSIS
VOLUME 5
ISSUE 1

Introduction
Marico Limited is one of India’s leading costumer
products and services company operating in the beauty
and wellness space. They make a lot of difference to
the lives of all their stakeholders - members, associates,
consumers, investors and the society at large. Currently,
they are present in more than 25 countries across
emerging markets of Asia and Africa. Marico has
nourished multiple brands in the categories of hair care,
skin care, edible oils, health foods, male grooming, and
fabric care. Marico’s Indian business markets consists
of brands such as Parachute, Parachute Advance, Hair
& Care, Nihar, Nihar Naturals, Livon, Saffola, Set Wet,
Mediker and Revive among others that add value to the
life of 1 out of 3 Indians. The International business offers
unique brands such as Parachute, HairCode, Hercules,
Fiancée, Caivil, X-Men, Black Chic, Code 10, Ingwe and
Thuan Phat that are localized to fulfil the lifestyle needs
of international consumers. Marico’s annual turnover
in the year 2015-16 was INR 25,000 crore. “Be more
everyday” is the tagline of the company.
History
The company was a joint venture between Nissin of
Japan and Lever group of company. Since it obtained
the certificate of commencement of business on 22nd
November 1988, the company’s name was changed on
31st October 1989 officially. Marico was started by Harsh
Mariwala and Saffola won the most Outstanding “Brand
of the year” Award given by the Advertising club of
Mumbai in 1993. In 2006, Marico acquired HLL’s Nihar for
INR 216 crore. In 2007, Mr. Anand Kripalu was appointed
as the additional non-executive Director on the Board of
directors of the company.
Vision of The Company
Their vision “COME WIN…….” Has the following meaning:
1. Because of the Consumers, they exist.
2. The primary objective is to understand what
adds value to the consumer so as to change
and reinvent the company.
3. They translate the company’s needs and desires
into marketable products and the expansion
of loyal consumers along with the speed
and a quality of response that surpasses the
competition.
4. Membership is the sense of ownership which
empowers the company. The company gives
each member a role of articulating and shaping
the destiny of the company, which in turn, builds
commitment and ownership.
5. Marico focuses on policies and practices
where people produce better performances
consistently.
Analysis of Marico limited
Profit Analysis
Operating profit margin is a measurement of the
proportion of a company’s revenue that is left over after
getting paid for production costs such as salaries, raw
materials and administrative costs. The Operating profit
margin has increased from 15.16 in 2015 to 17.3 in 2016.
Net profit margin is derived by deducting non operating
expenses such as finance costs, depreciation and taxes
out of operating profit and it shows what is left for the
shareholders as a percentage of net sales. Net profit
margin has increased from 10.20 in 2015 to 12.01 in 2016.
These ratios together help in understanding the cost
and profit structure of the firm and analysing business
inefficiencies.
Organisational Resources
The company possesses the value of excellence,
innovation etc. and company’s operations always adhere
to these values. The company has always managed to
come up with innovative products. Eg- They are the first
one to come with the brand Parachute Stars which is
targeted to the children in the age group of 8-15 years.
Financial Resources
The company is consistently making profit from last 5
years.Thecompany’snetprofitgrewby21%inlastquarter.
The company is utilizing this fund in strengthening their
brands in foreign market and by acquiring the foreign
brands.
Technical Resources
The company has implemented SAP systems in their
supply chain and in various operations from Asia to
South Africa resulting in less procurement and operating
cost. The company uses G-talks for instant conversations
between various levels of employees.
Emperical Analysis
The company’s product line is segmented as hair care
(brands like Parachute and hair & care), skin care (Clinic
like Kaya skin care) and personal care (includes edible oil
like Saffola and Sweekar). The company’s products are
positioned in such a way that all are of high value for the
costumers.
The raw material used for the manufacturing of coconut
oil and edible oil are easy to procure and are easily available
in the market. Most of the products of this company
are easily substitutable and one can produce the same
products with hardly any differentiation except products
like Revive (Starch) and Mediker (Anti lie shampoo) which
doesn’t have any competitors in organized market but
there are substitutes in non-organized market which acts
as a threat for them. Brands like Saffola (edible oil) and
Parachute (coconut oil) are having close substitutes in
the market. Inspite of having imitated products in the
market, the company’s brand manages to hold a majority
share in their operational segment.
SWOT Analysis
Strengths
The company has an excellent distribution network and
product availability. The portfolio of Marico’s products
has brands consisting of Edible Oil, Hair Oils, Skin Care,
Fabric Care, etc. Popular brands, good brand visibility and
excellent advertising of products has led to strong brand
loyalty. It has great experience management and good
research and development. Marico is spread in more
than 25 countries across Asia and the African continent.
Marico reaches over 2.5 million outlets and around 130
million customers.
Key Internal
factors
Weight Rating
Weighted
Score
Strong
distribution
network
0.15 4 0.6
Fastest in the
industry
0.07 4 0.28
Innovation
driven
0.05 3 0.15
Understand-
ing of rural
market
0.11 3 0.33
In last 18 months, the company has acquired 8 other
companies in India and abroad as well. It has strong
distribution network cause of which it has acquired
distribution rights from its competitors like P&G.
Priyanka Hegde

Weaknesses
Market share of Marico limited is limited due to presence
of other strong FMCG brands. Marico’s products have
stiff competition from other big domestic players and
international brands. The company ranks 3rd in their
health care sector, they are having 23% market share
whereas its competitor Agro tech foods is having 34%
of the market share in the organized sector. There is a
wide difference for the company to bridge the gap in
terms of market share. The company’s current ratio i.e
2.72 indicates that the company dint allocate its funds
properly. The constant decrease in the company’s
earning per share ratios indicates that the company is
not paying the dividends to the stockholders properly.
Key Internal
factors
Weight Rating
Weighted
Score
High Current
Ratio
0.05 2 0.1
Market Share
Difference
0.02 1 0.02
Decrease in
Earnings per
share ratio
0.05 2 0.1
Opportunities
Marico can tap rural markets and in urban areas to
increase its penetration and sales. It can merge with
international and domestic companies to strengthen
the brand and can also acquire big brands under their
company.
Threats
There have been Intense and increasing competition
amongst other FMCG companies. Due to FDI in retail
CSFs Weight Rating Wtd score Rating Wtd score Rating Wtd score
Image of
Brand
0.05 3 0.15 2 0.1 3 0.2
Market Share 0.2 4 0.8 3 0.6 1 0.15
Image of
Company
0.05 3 0.15 3 0.15 3 0.15
Product
pricing
0.05 3 0.15 3 0.15 2 0.1
Table: Competitive Profile matrix for Natural care
Marico Adani Wilmar Agro tech foods
CSFs Weight Rating Wtd score Rating Wtd score Rating Wtd score
Image of Brand 0.05 3 0.1 4 0.02 4 0.01
Market Share 0.2 2 0.4 3 0.6 4 0.8
Image of Company 0.05 3 0.15 4 0.2 4 0.2
Product pricing 0.05 3 0.15 3 0.15 3 0.15
Table: Competitive Profile matrix for Health care
thereby , there has been increase in allowance of
international brands. Competition and imitation of the
products from unbranded and local brands. Improper
payment of the dividends to the shareholders might
result as a threat to the company.
Competitors
Marico limited is facing neck to neck competition with the
likes of Procter and Gamble, L’Oreal, Nirma limited, HUL,
Colgate-Palmolive, ITC limited, Dabur India etc. The table
showing competitve profile matrix for health care and
natural care is shown in the table on page 9.
Environmental Analysis
Strategic Advantage Profile (SAP)
It is a competitive advantage over the company’s
competitors gained by offering consumers greater and
better values, either by offering lower prices or by
providing greater benefits and services that justifies
higher prices.
Concept of Competitive Advantage
When there is a match between the distinctive
competencies of a company and the factors are critical
for the success of the industry that permits the company
to outperform its competitors, is when competitive
advantage exists. Organisational competence is internally
focused whereas, competitive advantage is internally
focussed.
The phenomenon of an organisation’s competence does
not lead automatically to competitive advantage can be
explained in two stages by two situations and they are:
1. The core competence of a firm may not be of
any importance to the industry in which the firm
is working. There are many examples of this
phenomenon where the organisations are failing
to diversify into non-core competence areas and
divest such business.
2. The particular firm may not have any competitive
advantage when other competitors may have
the same strength and core competence has
relevance in the industry segment.
References
Marico Company Website, Marico Equity Research, Strategic Analysis of Marico Industry Ltd., Scribd

10 | Feb 2017 Volume 5, Issue 1 | 11
Lamborghini
BRAND ANALYSIS
Mangesh Lavte
Vidhi Thakker
Introduction
Automobili Lamborghini S.p.A., an Italian brand and
manufacturer of luxury sports cars was founded in 1963
by Ferruccio Lamborghini with an objective of producing
a grand touring car to compete with established brands
like Ferrari. The company’s models were known for their
power, cultivation and comfort. It grew rapidly in its first
decade. Lamborghini produced high-performance cars
of the era with the production of Miura sports coupé
in 1966. The sales plummeted in 1973 due to the
worldwide financial downturn and the oil crisis. The
ownership of the company was sold to Georges-
Henri Rossetti and René Leimer in 1974. In 1984 the
Mimrans purchased the company and invested heavily
in its expansion. In 1998, Lamborghini was sold to the
Volkswagen Group and placed under Audi division. The
brand’s portfolio saw new products and model lines
and witnessed increased productivity for the brand
Lamborghini. During the worldwide financial crisis in
the late 2000s, its sales observed a fall of nearly 50
percent.
Brand Story
“Less is more” formed the basis of Lamborghini’s spatial
design philosophy. International showrooms, trade
show-stands have been organised by SCHMIDHUBER
since 1999. They decided to come up with something
unconventional and stop the traditional “red cord, red

12 | Feb 2017 Volume 5, Issue 1 | 13
carpet” way to convince the Italians that they needed
space, even if it turned to be a space that it gave the car
the attention it deserved.
Lamborghini- the wildest and the strongest sports car in
the world did not need to be communicated, they required
a different story that outdid the classic automobile
formulas. The exhibition gave an opportunity to those
who could not afford such cars to come up close and
personal with an automobile legend. They enabled the
new position of the brand by focusing on the Essence of
the vehicles which made them stand out as cult objects.
The 1999 Frankfurt Motor Show and TRIPARTITE FAÇADE
The development of the Lamborghini installation included
a cube with smooth surfaces, clear lines and black raw
steel. It was the creation of SCHMIDHUBER and the
agency KMS BLACKBOX. It marked the beginning of an
evolutionary development of the brand and its spatial
setting. The cube received a tripartite facade made
of LED screens at the 2010 Paris Motor Show. The quote
It takes about 130 people to hand-craft the Murcielago SV. The entire car is made of carbon fibre, except the
steel roof and the doors. Ferruccio Lamborghini chose the bull logo for Lamborghini because his sun sign
was Taurus. The cars, too, are named after fighting bulls, such as the Miura, the Diablo, the Gallardo and the
Murcielago.
The founder, Ferruccio Lamborghini, was
fond of Ferraris, but found them too noisy
for regular use. Once, Lamborghini realized
that the clutch of his Ferrari was broken,
and found that it was the same clutch he
uses in his tractors. When he approached
Ferrari for a replacement, the company
told him he was a tractor maker and knew
nothing about sports cars. Yeah, right.
explains “As a modern altarpiece that opens its windows
only on festive occasions, it celebrates the automobile
legend.” Trade fair exhibitions and installations have
played a significant role in strengthening the perception
of the Lamborghini brand over the years and building
legacies inspiring the design
of showrooms all over the
world.
Lamborghini Huracan Ad
Campaign
Lamborghini replaced
‘Gallardo’ by Huracan in
2014. Gallardo was the
most successful model in
its history having sold more than 14,000 units since its
launch in 2003. Lamborghini came up with a series of
viral videos to solicit public interest in the new supercar.
The ad campaign was named “Hexagon Project”, where
a group of English friends were making their way to
Lamborghini’s hometown to be the first persons to view
the car in the factory.
The “Hexagon Project” had 4 episodes; however the
ads were not engaging enough to keep the audience
waiting for the next one.
It was just an example
of stretching the joke
too far in an attempt at
being cool. There was no
question of the car being
seen in any of the videos
till episode number 3 and
the storyline or acting
wasn’t enough to keep
viewers looking forward to the next instalment. This
could be an example of an Ad Campaign gone wrong
in order to keep the customers engaged and excited
about the upcoming ads.
When you stop working you start to die
- Ferruccio Lamborghini
“
“

14 | Feb 2017 Volume 5, Issue 1 | 15
Logo Description
Iconic and instantly recognizable Lamborghini’s logo
depicts Ferruccio’s love of bull fights & symbolizes his
zodiac character – the Taurus. Lamborghini cars get
their styles from famous bulls. Golden colour depicts
excellence and rich tradition, the black colour represents
prestige, integrity and elegance. The bull represents
power.
Names
In 1962, Ferruccio Lamborghini visited Don Eduardo
Miura’s cattle ranch & was impressed by Miura’s fighting
bulls. He decided to adopt a raging bull in Lamborghini’s
logo. After producing the plainly titled 350 GT and 400
GT, Lamborghini turned once again to Don Eduardo’s
ranch for inspiration and the bull naming sequence
was started. All the cars’ name has one or the other
connection with fighting bulls. E.g. Lamborghini Asterion
is a hybrid car. Asterion relates to a creature in Greek
mythology: part man, part bull.
Product Portfolio
Aventador
Veneno
Markets
With 132 dealers serving 50 countries, Lamborghini’s
sales distribution is managed among three regions, EMEA
(Europe, Middle East, Africa), America and Asia Pacific,
each contributing approximately one third of total sales.
The USA is the largest single market with 30% of dealers
& sales, followed by Japan, UK, Germany, Canada, the
Middle East and China.
Sales
In 2016 Lamborghini’s sales surpassed 3400 units mark,
all time high confirming the substance & sustainability of
the brand.
Lamborghini and India
In 2015, Lamborghini sold 55 units in India which
is 40% of the India super sports luxury car market
share. Mr Sharad Agarwal, head of Lamborghini India,
pointed out that young first generation entrepreneurs
are buying the cars & demand is coming not only from
metros but from smaller cities like Agra, Bhubaneswar
and Kochi highlighting the potential of Indian market.
Models available in India include Lamborghini Huracan &
Lamborghini Aventador.
The Italian manufacturer also shortlisted 10 Indian
women who could be potential buyers, and took them
on a 50km drive from Delhi to the Buddh International
Circuit. The drive was led by Sheetal Dugar, the first lady
to own a Lamborghini Huracan in India.
0
500
1000
1500
2000
2500
3000
3500
4000
Cars delivered
2406
2430
2087
1515
1302
1602
2083
2121
2530
3245
3457
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source : Statista
Huracan
• Performance - Superior
handling and high speed
• Technology sharing -
Audi and Volkswagen
•Under the scanner of en-
vironementalists
• Premium nature and
pricing affects sales
• To increase customer
relationship events and
activities
• Increase the global out-
reach
• Intense competition in
the niche segment
• Government policies
against high fuel consum-
ing super cars
Strengths Weaknesses
Opportunities Threats
S
W
O
T
Fig:
Sales
Graph -
Cars De-
livered
from
2006 to
2016

16 | Feb 2017 Volume 5, Issue 1 | 17
THE 3D EXPERIENCE
The Italian company wanted to get closer to its potential
buyers with the launch of Lamborghini’s Huracán.
It wanted to give them the experience of the newest
10-cylinder model all before the car was made available
to them. They adopted an all-digital approach that
would incorporate a customized driving experience with
3D game technology. The 3D technology allowed the
prospective buyers to go through every nuance of the
exterior, interior and under-the-hood components. A
set of clickable buttons allowed the customers o choose
rims, brakes, interior and exterior colour and a variety of
other options.
The game was built from the actual data used to design
and build the car and the journey continued where the
customers were invited to take the custom cars they
had just created out for a virtual road test by tapping an
“Experience Your Instinct” tab.
It was a completely new experience where people could
see the car from a different point of view. This resulted in
Huracán becoming the best selling model in Lamborghini
history.
Future
Lamborghini is aiming to double its production to 7000
units by 2019, once it rolls out a new SUV Urus. Chief
Executive Officer Stefano Domenicali said company is
planning to cap the yearly luxury cars production at 3500
units. To boost the sales company is increasing dealer
network to 160 from 132 now. By introducing hybrid
electric version of the SUV in 2020, Lamborghini plans to
enter into zero-emission vehicle section.
References
Economic times Auto, Business Standard,
Statista, Carmagazine, Car-Brand-Names.com,
ManagementParadise.com, Compass, Schmidhuber,
lambocars.com

Volume 5, Issue 1 | 1918 | Feb 2017
The Good Batch
After the recall, Samsung initiated
an exchange program. Users of the
initial round of Note 7 phones could
exchange it in for an updated Note
7 or one of Samsung’s Galaxy S7 or
Edge phones. Those getting other
Note 7 phones could tell which set
the phone belonged to by looking
for a black square on the bottom of
the box.
It was believed that Samsung’s
second set of Note 7 devices would
take care of the initial fire issues. But
it wasn’t so.
Southwest Airlines Mishap
Southwest Airlines Flight 994 was
evacuated before take-off as a
response to a replaced Note 7 that
went up in smoke, leading the FAA
to warn against using the device on
flights.
The End of Note 7
Samsung ceased production of the
Note 7. Launched on August 19 and
killed off on October 11, the phone
lasted for just two months in the
market.
Having a phone explode because
of charging troubles wasn’t the only
issue with the handset. But offering
an explosive replacement led to
a bigger trouble for the company.
Inadvertently, Samsung became
a victim of the Cobra effect, which
occurs when the solution to the
problem gives birth to a problem
which is bigger than the original
problem it sought to solve!
Samsung said it had sold 2.5 million
Note 7 phones worldwide and by
February 2017 it recovered 97% of
phones back.
Nomura Securities predicted that
the decision to recover the Note
7 phones would cost Samsung
approximately $9.5 billion in lost
sales and put a $5.1 billion dent in
profit by the end of 2017.
The Lasting Effects on Samsung
Among all the Android hardware
makers, Samsung had enjoyed
the top spot for quite a while.
The Company used to sell well and
many saw the smartphone race not
as Apple versus Google, but Apple
versus Samsung. But repeated
offenses related to phones catching
fire changed the reputation the Brand
enjoyed. Even without a headphone
jack, the iPhone 7 sold well, like the
previous generations. The launch
of GooglePixel phone, the search
company has swiped a considerable
market share from Samsung.
The odds are against Samsung,
butthe South Korean hardware
maker is trying to make a comeback.
Without the Note 7, Samsung
doesn’t have an up-to-date phone
to offer its users until March 2017,
when the Galaxy S8 eventually hits
the market. Offering an amazing
new device could sway users back,
but Samsung will have to go out
of its way to cover the damage the
brand has suffered.
Business lessons for everyone
Do make an effort to follow System
Thinking – it will involve evaluation
of a proposed solution – end to end,
to ensure that it does not have any
unintended consequences!
Be the best, not the first in the
market.
Do not be competitor driven and
attempt to ambush its plan – many
at the time it backfires – just as
Samsung has realised much to its
embarrassment.
Samsung Galaxy Note 7
CASE ANALYSIS
Background
The Note 7 was well received amongst the reviewers
of the smartphone.The Verge, Wired, Time praised the
device. The Note 7 even earned a Mashable Choice
Award, which the publication retracted later.
Initial Reports of Combustion
The first incidences of Note 7 battery explosions were
reported in August, within a month after the device was
in the market. On August 24, a Note 7 device exploded
while it was connected to its charging cable. Similar
reports began to emerge on a regular scale.
Shipment Delays and Official Worldwide Recall
According to Reuters,Samsung immediately delayedthe
shipments of the Note 7 for quality control testing.
The Brand followed up by issuing an official worldwide
recall of the Note 7 in early September. While this spelled
bad news for Samsung, it was only the beginning of the
journey to hell.
Swapnesh Sawant
Introduced in August to great fanfare, Samsung Galaxy Note 7 was posed to
serve as the brand’s best 5.7 inch, stylus-wielding smartphone. The new device
offered Samsung users a smartphone option and served as a path to tide over
customers’ choice until the Galaxy S8 arrived in March 2017. Pre-orders poured in
and the stock price spiralled upwards!At least that was the plan, until Samsung’s
Galaxy Note 7 began to catch fire while plugged in to charge. Samsung had to
cease production on the Note 7 line until further notice.
Lithiumion batteries, like the ones found in smartphones and laptops, have an
ill reputation to catch fire in the past. Laptops from Sony had gone through
an identical flaming bout in the year 2014. The Note 7 had been a nightmare
sincethe very beginning

20 | Feb 2017 Volume 5, Issue 1 | 21
Volume 1
Issue 5
Cannibalisation
CONCEPT OF THE MONTH
Cannibalisation
The CEO of Apple once stated “Better to eat your own
than to have your own eaten by others”. In this age of
competition between products in the market one has to
be different and stand out from the crowd to be able to
capture the market. Not only innovation but the ability
to bring it first, in an efficient manner is becoming more
and more significant.
Market cannibalisation is a marketing strategy in which a
company, by intentionally or unintentionally introducing a
new product in the market, eats up the current market of
its own existing product. When it is unintentional, it may
eat up the market share of its current product instead
of tapping newer market segment, sometimes reducing
Jasprit Taneja
the overall sales of the company or brand, even though
the sales of the newer product are rising. An example of
cannibalisation is introduction of a newer iPhone model
by Apple in the market with improvements and new
features which makes the older iPhones obsolete thus
reducing their sales.
Why is it done?
Going by the basic definition cannibalisation refers to
a decrease in sales volume, sales revenue, or market
share of one product as a result of the introduction of
a new product by the same producer. One of the main
reason companies intentionally opt for cannibalisation
is to keep ahead of the competition when the market
share of the product is declining. To keep up with the
competition and to arrest the declining market share
companies sometimes introduce a newer better product.
For instance, when KitKat in Britain started losing market
share a newer chunkier variant of it was launched which
not only helped in retaining the old market but also to
a newer segment which loved chocolate bars. Bausch
and Lomb invented the soft lenses but didn’t launch it in
the market fearing it would eat up the market of drops
that hard lenses required as a result Johnson & Johnson
introduced the soft lenses and the market for hard lenses
and their drops vanished.
It is also done to tap the newer segment in the market
as in case of Tanishq which was launched by TATA as
a jewellery brand in 1995 which mainly targeted only
the major cities. The company later in 2005 launched
another jewellery brand GoldPLus to target smaller
The below graphs show how the launch
of newer iPhones affect the sales of the
previous version of the smartphone. There
is an abrupt decrease in the sales of older
iPhones as and when a newer version is
launched.

22 | Feb 2017 Volume 5, Issue 1 | 23
towns and cities which helped them expand the market
increasing the overall sales of the company.
Role of Brand equity
The success of cannibalisation depends on the loyalty
customers have towards the brand or the older product
of that brand. They are likely to try out the newer product
if they are more loyal to the brand. A brand therefore
tries to leverage upon this opportunity of brand loyalty
to launch a new product under the same brand rather
than launching a whole new brand with new name and
compete with existing product line as this would prove
to be costlier.
One such example is of Gillete, owned by Procter &
Gamble, which uses its brand reputation to launch newer
razors and blades in the market which compete with
the older, already existing products by the same brand.
Better to eat your own than
to have your own eaten by
others
“
“
on the customers using the older Gillete Mach 3, getting
them to purposely switch to the ProGlide. This was a
smart strategy, since Gillette was the number one selling
brand of razors in the world.
It’s evident in the TV commercials that they aired in the
U.K. and in North America that they wanted get people
to stop using the Mach 3, and transition to the Fusion
ProGlide.
But here’s a catch for customers, the newer product,
Fusion Proglide, was actually 40% more expensive than
then the Mach 3 when it was originally launched in the
year 2006. Two years later, it was able to achieve be a
billion dollar selling brand, and was the fastest brand in
P&G history to reach that milestone.
Today, the Fusion Proglide series is the best selling razor
in the world, and shows that cannibalization, when done
right, can be hugely profitable.
Currently Gillete makes two lines of razors, one is Mach 3
and the other is Fusion ProGlide.
When the Fusion ProGlide was launched, Gillete didn’t
target the newer market for this product, instead focused
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Volume 1
Issue 5

Beacon February version

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Beacon February version