2. 1
Critical analysis of the strategy being followed by P&G ‘s line of product -
Gillette:
We have chosen to frame our analysis in the following structure
COMPANY OVERVIEW:
The Gillette Company, Inc. manufactures and sells shaving systems for men. The company offers power
and manual razors, disposable razors, beard trimmers, refillable razors, and replacement blades; pre and
post shave products, such as shaving creams,gels, and foams, as well as skin care and aftershave
products, including face washes/cleansers,lotions/balms, moisturizers/creams, and splashes; and
deodorants, antiperspirants, and body washes. It sells its products online. The company was founded in
1901 and is based in Boston, Massachusetts. The Gillette Company, Inc. operates as a subsidiary of The
Procter & Gamble Company.
3. 2
GILLETTE INDIA:
The Company was Incorporated on 9th February 1984, at Rajasthan. The Company was jointly
promoted by House of Poddar Enterprises (HOPE) and Gillette Company, U.S.A. (Gillette). The
Company Manufacture stainless steel razor blades.
Gillette India Limited has three core businesses:
1. Grooming
2. Portable Power
3. Oral Care
Gillette has created a new market for power battery toothbrush through Oral-B. It also intoduced
Mach3Turbo, a triple blade shaving system in India. It has customized its products specially for
Indian customers.
Gillette India offers products as per these categories:
4. 3
1. Face Razors- Under this category it offers products like Proglide razors, Fusion razors, Mach3 razors
and disposable razors. They have recently launched a new line of razors under the Fusion razors with new
Flexiball Technology.
2. Body Razors
3. Replacement Blades
4. Pre & Post Shave
The number of products that Gillette offers is optimum as they try to cater to all the income categories
and different needs . They even provide complimentary products like before and after shaves,blades as
per the category of the razor we choose. Hence giving a complete grooming solution for the target
consumers of each category.
Product distinction and efficiency in addressing a genuine consumerneed
Gillette is a brand which constantly strives on innovation in its products. Most of its products are
made addressing a genuine consumer need whether it be affordability, ease of use or gender
specific for example when Venus was launched it was specially designed keeping women
anatomy in mind which was a unique innovation and a breakthrough. It was also launched in
pink color to keep men and boys from accidently taking it. Gillette realized that in a price
conscious market like India inspite of offering products which offer high ease of use, it can drive
larger sales through volume so it launched Gillette guard priced at Rs 15.
The various products which are offered under the Gillette brand can be divided into two main
categories
a. Razors and blades
b. Pre and Post Shave.
5. 4
BASIS OF PRODUCT
DISTINCTION
CONSUMER NEED IT IS
ADDRESSING.
PRODUCTS
1. Blade Count (2
Blade, 3blade, 5
Blade)
Effective closer shave,
Grooming.
(2blade- Gillette Guard ,3
blade- Gillette Vector, 5
blade - Gillette Fusion
2. Face and Body Razor The contours of face and
body are different. Using
the same blade can cause
cuts and nicks.
Face- Gillette Mach,
Fusion, Vector etc
Body- Gillette Body razor
3. Gender The male anatomy and
female anatomy are very
different and the place of
use also different.
Vector, Fusion, Mach etc
for men and Gillette Venus
for women.
4. Price Price sensitive market
(India).
People from different
economic backgrounds to
distinction based on their
behavior of how they
perceive shaving.
Gillette guard- Rs.15,
Gillete Vector-Rs 50
Mach 3 Turbo razor- Rs
200
Proglide styler trimmer
and razor – Rs 1500
5. Skin Types Normal to Sensitive skin. Gillette Mach 3 sensitive
for sensitive skin.
The razors are distinct as each is targeted to a different group which is social/emotional shavers ,
Aesthetic shavers and Maintenance shavers.
6. 5
Product Claim and Product Differentiation:
All the products mentioned in the above question cater to a different consumer with different
shaving needs. 28 different types of razors and blades have been grouped into 6 different
categories varying not only on the type of shaving experience but also the level of comfort.
Another differentiating factor is price, higher the price, better the experience.
For example, Fusion and Fusion Proglide is differentiated on the factor of closeness of shave,
Proglide providing better contact. However, fusion has been branded on their website and the
packaging saying that fusion blades provide a closer shave when used with fusion Proglide
razors.
Within the product categories there is further differentiation on the basis of the razor technology
they have for their blade.
Proglide Razors includes 3 types of razors, with flexball technology and the power razor, both
priced at Rs. 499 and Rs. 1500 respectively. The differentiating factor here again is the ease of
shaving. The power trimmer no doubt provides a closer , easier shave and is priced higher.
Looking at the secondary products we have shaving creams, gels and foams. The differentiating
factor here is again ease of use. A foam can be directly applied to the face followed by a razor
blade minimising the shaving time and eventually enhancing the experience, while a gel or a
cream will require efforts to create the foam. However, with gel as we increase the sensitivity
factor and the protection factor against cuts and burns (by making the hair softer hence easier to
shave), they cater to a higher priced category.
Tertiary products include brush and after shaves which do not have any other variant, hence no
product differentiation is required.
7. 6
Product differentiation from competition and its story :
Gillette products are primarily differentiated on the basis of the number of fixed blades the the razor has.
Two Blade, Three Blade and four blade razors, since there is very little competition in the razor segment,
the differentiation is within its own product line. Like Gillette Fusion is differentiated from Mach3 on the
basis of number of blades, more blades are projected to provide a closer and more comfortable shave.
Gillette India has been successfulin India primarily because of its ability to quickly adapt to cater the
local needs based on intensive market research and has come up with various campaigns and relevant
products. Taking the example of Gillette Guard, it accounts for nearly 66% of the razors sold in India.
While Gillette Mach3 has been successfully marketed to the more affluent urban target group, the bulk of
Gillette’s revenue comes from Gillette Guard, which is a more affordable razor which appeals to both the
urban population and the rural population. It addressed problems such as lack of running water and
affordability.
The Shave India movement was launched by Gillette to change the perception among youth regarding
shaving. The Tag line being “No more excuses for men not to shave!” for this Gillette created Women
Against Lazy Stubble (W.A.L.S). This campaign had generated a lot of traction online as well as offline,
and it generated a lot of excitement for the Mach3 razors.
Product comparison basis price with competition:
Considering the budget conscious Indian market Gillette offers a wide range of razor blades
catering to every man. Gillette razor blades can be classified into 3 categories on the basis of
their process:
Low Range:
Gillette Guard Razor INR 22.00
Gillette Vector Razor INR 50.00
Mid Range:
Gillette Mach 3 Sensitive INR 160.00
Gillette Mach 3 Razor INR 180.00
8. 7
Gillette Mach 3 Turbo INR 300.00
High Range:
Fusion Proglide Manual Razor INR 499.00
Proglide Styler Trimmer INR 1500.00
So, it can be clearly seen that Gillette has a very sorted pricing strategy and the blades normally
come in a pack of 3 or 5 to save the overall MRP for the customer.
The biggest competitor for Gillette in India is Supermax which runs on the similar pricing terms.
On analysing it was found that rural reach of Supermax is slightly better than Gillette but since
the presence of Gillette on ecommerce platforms like amazon is better than Supermax, the
market leader is soon going to change to Gillette.(as per the growth rate of Gillette India)
The new unseen competitor in market: With the introduction of electronic razors, the
competition seems to be rising and at a very decent pace. To cater to this, Gillette has only
Proglide Styler – Beard Trimmer and Power razor in the market which does not seem to be doing
the needful hence it needs to look out for this new arising competitor.
New product launch, its rationale, and views on cannibalization and incremental sales:
Gillette is one of dominant players in Indian grooming segment which hasn’t left any product
vertical untouched. The brand is one of the top 3 players in each segment – razor, shaving cream,
shaving gel aftershave etc.
Aftershaves is one of the high margin categories wherein Gillette’s market share isn’t as strong
as what they have in other verticals. The industry is split equitably between Nivea, Gillette, Axe,
Old Spice, Park Avenue etc.
One of the categories within aftershaves segment which Gillette can tap is the “Aftershave
Balm” which currently is dominated by Nivea through “Nivea Men Sensitive”. Other key
9. 8
players in this niche but fast growing segment are Biotique, Oriflame, Kaya, The Body Shop,
Neutrogena etc.
Men are slowly moving away from after shave lotion to towards after shave balm as they are
skin friendly, moisturize skin and don’t leave skin in dry condition due to negligible alcohol
content.
Though there would definitely be cannibalization of sales of Gillette’s after shave lotion, but this
category launch might help the brand in occupying a significant share of the overall after shave
market comprising of different sub-categories. Gillette being a trusted brand name amongst men
backed by robust distribution network, advertising budget and R&D capabilities has a very
strong potential to be a potent competitor to Niveain this category.
Needof marketing support for different products
Gillette® has been at the heart of men’s grooming for over 100 years. Each day, more than 600
million men around the world trust their faces and skin to Gillette’s innovative razors and
shaving products designed for the unique needs of men – helping them to look, feel and be their
best every day.
The razor range in India includes Gillette Vector, Gillette Mach3, Gillette Mach3 Turbo, Gillette
Guard and Gillette Mach3 Turbo Sensitive and Gillette Fusion.
The Shave Care range includes Gillette Fusion HydraGel, Gillette Series Sensitive Skin Foam,
Gillette Series After Shave & Gillette Classic Shave Foam Sensitive Skin.
10. 9
The Gillette Skincare regimen is a no-fuss and efficient solution in caring for the health and
appearance of men’s skin and includes a special range of designed-for-men Gillette Skincare
Foaming Wash.
P&G is focusing on 10 product categories with about 65 brands. These 10 categories have been
growing faster, and their operating margins are higher than those of the total Company. P&G is
the leader in seven of these categories and is #2 in the remaining three, with significant growth
potential in all of them.
Gillette is the global market leader in the blades and razors market. Their global blades and
razors market share is over 65%, primarily behind the Gillette franchise including Fusion,
Mach3, Prestobarba and Venus. Their electronic hair removal devices, such as electric razors and
epilators, are sold under the Braun brand in a number of markets around the world where they
compete against both global and regional competitors. They hold over 20% of the male shavers
market and nearly 50% of the female epilators market. They extended Gillette FlexBall
innovation to the market-leading women’s razor brand, with Venus Swirl. They’ve sold over 2.5
million Venus Swirl razors in the U.S., and Venus’ U.S. share of women’s system razors has
grown over four points to 64% since Venus Swirl’s January 2015 launch.
Thus the Marketing support should be provided to the razor range because of market
capitalization and the recent innovations that have been done. With higher sales already
happening in this portfolio they will be able to capitalize on the sales of other products which are
mainly into the related domains.
Assessment of brand’s Optimal Product Portfolio Strategy
As quoted by Gillette India's director, the sales for the Financial Year 2014-2015 has
experienced an increase of 13% and stands at Rs. 1971 crores driven by it's focus on brand
fundamentals and strength of product portfolio. Profit after Tax (PAT) for the Financial Year is
reported to have stood at Rs. 158 crores versus Rs. 51 crores last year. A resounding hike of 107
crores.
Organizations today need to maintain an optimal balance between the risk and the returns on
sales (ROS). This is commonly achieved by not just focussing on one or two product categories
but instead by diversifying the entire product portfolio.
11. 10
For an FMCG brand, Portfolio Optimization is done keeping in mind what category the product
belongs to and what is the extent to which it's productivity can be enhanced. To gauge this we
used the results published by HBR by using the 'Two Dimension, Four Strategy' technique.
According to this technique a product or service can be divided into four types based on two
parameters namely, the RMS (Relative Market Share) and "Premium" Degree of Category.
Apart from diversifying and innovating the types of razors sold, Gillette has also extended it's
product line. From being the industry Kings for men's grooming Gillette has come a long way as
is evident from the double digit sales in female personal care portfolio with Gillette Venus,
Venus Oceana, Disposables along with Satin Care Gel; the disproportionate growth in super
premium tier of manual brushes with the innovation driven Oral-B range; as well as it's
emergence as a leader in compact electrical storage devices with Duracell batteries.
However there’s a limit to the amount of innovation. Extremely high prices get profits that are
non sustainable. Existing literature on the subject suggests that consumers are more loyal to
premium brands that are only somewhat more expensive than value brands.
P&G serves approximately 4.8 billion people around the world with its brands. The Company
has one of the strongest portfolios of trusted, quality, leadership brands. Gillette, in specific, is a
premium brand under the P&G umbrella. We have seen a highly strategic approach adopted to
maximize productivity by the brand. Using results from existing literature in form of an HBR
case study on Gillette product portfolio we have brought out how beautifully the company,
taking into consideration it's " premium sector" status, builds on the overall productivity for the
brand. Furthermore, looking at Gillette India Director's Report for Fiscal year 2014-2015 and
seeing 13% increase in Sales and PAT standing at a flat 107 crores ahead of last year- we
12. 11
confidently conclude that Gillette indeed, has a very robust and optimal Product Portfolio
strategy going for it in the market.
13. 12
Appendix:
As per this model, Gillette lies in the " High- Road Brand" category of brands. High-road brands
generally earn more than 20% ROS. The keys to success in this quadrant are innovation and
consumers mostly tend to be loyal and willing to pay premium prices in return for continued
improvements and changes in product. When Gillette’s main competitor introduced low-cost
disposable razors sold by the bag, the dynamics of the razor category began to shift. At first,
Gillette’s managers responded in kind by introducing their own packages of low-cost disposable
razors. Realizing, however, that a dominant share in a value-oriented category would confine the
company to an ROS of 5% to 10%, they also began to consider other paths to profitability. As a
result, Gillette poured more than $200 million into R&D and introduced the Sensor shaving
system. The Sensor sold at a 25%price premium over Atra, another Gillette brand, which until
then had been the highest-priced system on the market.
Gillette successfully made consumers “trade up” to a new spending level—and a new set of
performance expectations. What’s more, 15% of Sensor sales came from people who had
formerly bought competitors’ disposable razors. Instead of paying roughly 40 cents per razor,
they began to pay $3.30 for a shaving system that required 70-cent replacement cartridges. The
Sensor and its succeeding generations of products—along with the innovations of other
companies that followed suit—restored the razor category to premium status.
(Mark, May-June 1997)