Gillette is the global leader in male toiletry products. It has a global presence with 61 facilities in 25 countries and 40,000 employees. Gillette's strategy focuses on maintaining market leadership through innovation, research and development, and brand building. Gillette's razor business generates over half of its profits and continues to grow through new products like Mach3. Gillette faces threats from competitors and changing consumer preferences but remains well positioned through its strong brands and innovation.

1. STRATEGY & MARKETING MANAGEMENT “ GILLETTE IS THE GLOBAL LEADER IN MALE TOILETRIES PRODUCTS” Data Monitor Research, Oct. 1999 19 th December 2001 Course Tutors : Professor Patrick McNamee Doctor Kate Stewart

2. PRESENTATION SUMMARY EDEL TONER - INTRODUCTION COLIN SYKES - ORGANISATION AND PRODUCTS ORLA OKUNAIYA - STRATEGY SARAH SHAW - FINANCIAL PERFORMANCE JIM McCALLUM - INDUSTRY AND MARKETS NILE SMITH - STRATEGY AND COMPETITORS PADDY McKIBBIN - CONCLUSIONS

3. THE GILLETTE COMPANY 100 YEARS 1901-2001 1901 Founded by King C Gillette with William Nickerson in Boston. 1902 1 st Product – Double edged, T shape disposable razors. 1905 Develops new markets by opening London Offices. 1914 Gillette brokers deal with US Army (3.5 Million razors, 36 Million blades) 1950 Spends $6 Million for TV rights to Baseball World series for 6 years. 1964 Gillette splits into 2 SBUs, for grooming, the other for all other products. 1973 Net Sales exceed $1Billion. 1980 Net Sales exceed $2 Billion. 2001 Gillette has 61 Facilities in 25 Countries, and employs 40,000 people

4. NORTH AMERICA SOUTH AMERICA UK EUROPE AFRICA ASIA AUSTRALIA GILLETTE WORLDWIDE MANUFACTURING SUBSIDIARIES

5. ORGANISATIONAL CHART Oral Care (Oral B Brand) Braun (Electrical Appliances) Portable Power (Duracell) Grooming (Blades & Razors) Global Business Management Latin America North America Asia Pacific Africa Middle East Eastern Europe Western Europe Eastern Hemisphere Commercial Operations Gillette Company Western Hemisphere

6. GILLETTE PRODUCT RANGE

7. PRODUCT MARKET PORTFOLIO RMS MARKET GROWTH (%) 1.0 Oral-B Toiletries Blades & Razors Duracell Braun

8. GLOBAL STRATEGY Corporate Objective global focus on consumer products global competitive advantage in quality, value added personal care/use products Global Market competing in the triad markets (Europe, Japan, North and South America) industry concentration (SWOT Analysis) global market leadership in male and female grooming products

9. THE GILLETTE STRATEGY Global resources organised and deployed to achieve market leadership in all their products to maintain and increase existing market share in male and female grooming products Corporate Strategy aggressive research and advertising strategic diversification e g mergers & acquisitions new product developments (invest in technology and product innovation) focus on core competencies maximise e-commerce opportunities build strong product portfolio

10. MERGER & ACQUISITION STRATEGY Diversification - make or buy decisions Stainless steel blade controversy and the multi-product market strategy String of multiple acquisitions - some successful and some unsuccessful Moderation of Diversification due to failed acquisitions

11. GILLETTE MARKET STRATEGY Strategic Market Objectives Achieve a well integrated programme of marketing mix elements. To enter the direct sell market via the Internet. Target Market Analysis early entry into the UK market by the FDI mode presence in the UK as a strategy for European Common Market high industry concentration ratio (SWOT Analysis) market leadership in men’s shaving products

12. SALES BY PRODUCT Sales of Blades & Razors up 8% 1999-2000 Sales of toiletries and Duracell products are both down from 1999 - 2000 Oral B products have had the largest increase of sales of 10% from 1999 - 2000 Braun has recovered from 1999 where its sales dropped by 9% from1998 and has increased by 3% in year 2000

13. GILLETTE'S PROFIT BY PRODUCT Blade and Razor profits up 11% in 2000, due mainly to sales of Mach 3 Profits for Toiletries and Duracell are both down but this is in line with Sales Oral B’s profit only increased by 3% even though sales increased by 10%, this was due to higher marketing expenses Braun’s profits increased by 41%, this reflects sales growth/improved mix and lower overheads Gillette Profits by Product 0 500 1000 1500 2000 2500 y2000 y1999 y1998 Year Profit $Millions Braun Products Oral-B Products Duracell Products Toiletries Blades & Razors

14. COMPANY SWOT ANALYSIS Strengths Threats Weaknesses Opportunities Market Leader Strong Brand Image Global Presence Aggressive Advertising Quality & Innovation Portfolio Range (Mach 3 etc) Long Development Cycles Relatively Static Market Growth Heavy Dependence on High Street Retail Outlets Expensive Brand Maintenance Demographic Changes Changing Societal Attitudes Consumer Brand Preference Demand for High Quality Use of JIT and ICT (e-com) New Production Technology Increased Grooming Sophistication New Competitors Cloning of Successful brands Increasing Buyer Power (Inventory De-stocking) Growth in Substitutes Own Label Fits Economic Downturn

15. BLADES & RAZORS SEGMENT Disposable Razors Shaving Systems Replacement Blades Blades & Razors Electric Shavers Shaving Products Pre-Shave Post-Shave Deodorants Toiletries Grooming Male & Female

16. TOTAL UK BLADES & RAZORS MARKET Replacement Blades Disposables Systems £m % Systems 102 64 Disposable 39 25 Replacement Blades 17 11 Source: Mintel Report, 1998

17. WET SHAVING PRODUCTS Mach3 Sensor & SensorExcel Atra Trac II Custom Plus Good News SensorExcel for Women Sensor for Women Agility Gillette for Women Venus

18. BiC Products Sensitive Twin Select Sensitive Skin Twin Lady Shaver Twin Select Silky Touch Softwin Softwin for Women Wilkinson Sword Products Extra II FX Diamond Lady Protector+ Protector 3D Diamond Xtreme 3 COMPETITOR SHAVING PRODUCTS

19. UK MARKET SHARE FOR BLADES & RAZOR (1998) 55% 25% 9% 11% Gillette Wilkinson Sword BiC Own Label Source: Mintel Report, 1998

20. MARKET POSITIONING Price Quality Wilkinson Gillette BiC Own Labels

21. BLADES & RAZORS STRATEGY Innovation through Research & Development Premium Brand - Premium Price Build Global Product Branding Build Strong Brand Loyalty Greater Efficiency at Lower Cost. Maintain Superior Growth in Market Share Build Shaving Systems Sub-Segment Invest in technology and product innovation

22. The Defender Product Development Consumer Research Elevate the “Psychology of Shaving” Captive Systems mean High Margins Women Shavers are Growth Area Razors are a Commodity Shaving is a Chore Price Positioning Innovation Short Product Life Cycles Disposables RAZOR WARS v

23. UK BLADES & RAZORS Source: Mintel Report, 1998

24. UK BLADES & RAZORS Source: Mintel Report, 1998

25. SALES / PROFITABILITY RAZORS & BLADES Increase in sales from 1998 - 2000 is 13% 5% 1999 and 8% 2000 Increase in profit from 1998 - 2000 is 16% 5% 1999 and 11% 2000 Gillette attributes the increase in sales and profits primarily to the sales growth of the Mach 3 in North America, Europe and Latin America.

26. PORTERS FIVE FORCES MODEL Blades & Razors Industry Competitors Strong image, Brand Loyalty, and Innovative R&D. Potential Entrants Barrier to entry - customer loyalty, high set-up costs. Buyers Retailers power increasing. Substitutes Electric razors - Gillette already competitive (Braun). Clever marketing - not socially acceptable not to shave. Suppliers Global economies of scale keep suppliers prices low. Source: Porter, 1978

27. MACH3 TURBO “ As the undisputed leader in men’s grooming, Gillette is committed to innovation and to developing products which will provide men with a superior shaving performance. MACH3Turbo and the new Gillette Series fulfil that promise” Peter K. Hoffman, President,Gillette Grooming Products 30 October 2001

28. FUTURE GILLETTE STRATEGIES High Branding/Quality - Premium Price Develop New Market Segments & Niches through R&D Maintain/Promote Strong Brand Loyalty Tailoring Demographic Targeting (E.g. US vs Europe) Reduction in Product Unit Costs Grow Razor Systems Segment Strategic Alliances (Suppliers and Distributors) Shedding Non-Core Businesses (E.g. Papermate)

29. CONCLUSIONS Diversifying capital, investment, products and other resources to maintain and expand position as market leader. Strategically positioned as leader, and regularly reorganising its structures to respond quickly to changes in business and competitive trends. Developing and maintaining a high profile for its brand names through marketing. Continuing to maximise efficiency in production and distribution, rather than focusing on direct retailing. Likely to remain as the market leader of Grooming sector products for the foreseeable future.

30. STRATEGY & MARKETING MANAGEMENT GILLETTE STILL THE GLOBAL LEADER IN MALE TOILETRIES PRODUCTS