AND THE MENS WET-SHAVING

MARKET
Product Policy and Brand management Case submission
Group 1 Section B
Jennifer Deniz IE/19/021
Vaishnavi Adapa
PGP/19/182
Alka PGP/19/186
Himanshu Garg PGP/19/202
Rahul Kumar PGP/19/217
Shekhar Teny PGP/19/227
Shruti PandeyPGP/19/229

Market overview of razors in 1988

Wet-Shave Market Market Share

$770 million
industry

Dry Shave Market

$250 million
industry

The Gillette Company - History

King C. Gillette of Boston invented the safety razor in 1895
Permanent razor handle replaceable blade systems
World War I wide consumer acceptance
Innovation driven
Advertising and Distribution the key to success
1948 diversify into new markets through acquisition
1970 1980: innovative shaving systems but permanent razor
important for companys overall health
1980s focused on global markets
1985 marketing 800 products in more than 200 countries need
to coordinate marketing efforts regionally and globally
1988 leading producer of mens and womens personal care
products
1986 and 1991 2 takeover battles (Coniston and Revlon Group):
Gillette woke up!

Evolution of Safety razors

Safety razor
launched to Gillette
the market Thin
Blade

1895 1903

First
safety
razor

1932

Gillette
Blue
Blade

1938

Super Blue
Blade (siliconecoated blade)

1946

First blade
dispenser
without
unwrapping
individual
blades

1959

Good News!first
disposable
razor in US

1971

Trac II - first
twin-blade
shaver

1976

Atra Plus and

MicroTrac :
disposable
razor with
ultra-slim
head

Swivel :
disposable
razor with
movable
head

1977

Atra first
twin-blade
shaving
cartridge with
a pivoting
head

1980

1984

Good News!
Pivot :
disposable
razor with
movable head

1985

Competitor analysis

Second major competitor in

the wet-shaving business
Late entrant in the disposable
shaving market (1984)
67% of its revenues are
overseas mainly Europe and
Japan

Third major competitor in the

wet-shaving business
Mainly concentrated in the
disposable market segment
Main Product BIC shaver for
sensitive skin
Planned to market only single
blade disposable razors

Fourth competitor in the wetshaving business

Entered with Super Sword
edge stainless steel blade
Introduced Ultra Glide to
compete with Gillettes Atra
Plus priced at 5-8% lower
Competed with Gillette using
comparative advertisement

Growth of disposable in the market

Low Pricing

Disposable razors are inexpensive and hence top choice for a price sensitive customer
All razors are similar-commoditized segment->less differentiation->leads to price wars among the players>reduces the profit margins

Ease of use

They are ease to use and throw

Easy to dispose off

Role of Gillette
Gillette fostered the trend started by other players- focus on price and not on quality
They taught the consumers that the best razor was cheaper one

Easy in selection
Preferred by Younger customers who do not perceive the differences between disposable and system razor
In case the razor is purchased by people who are unaware of the product characteristics then the disposables
are an easy purchase- Simpler to Buy

Market
trend:

Disposable market started growing at a very high rate and had ~ 50% market share in 1988
Expected to reach 100% in the coming years

Strategic issues identified by Sarah (1/2)

Price related
Gillette from the beginning under-estimated the growth in disposable razor segment
Use of prices low in the segment which impacted profitability for them as well as competitors
Raised the prices of system razors to compensate for low prices which further led to disposable growth

Failure to communicate advantages of system razors

Weight and balance contributed by permanent handle used in the cartridge contributed to better shave and
system razors were significantly better than the disposable razors

Reduced advertising spend

Same theme The Essence of Shaving has been used for system and disposable razors
Advertising was focussed more on product-based(~90%) than image-based(~10%)
The advertising spend has declined form $61Mn in 1975 to $15Mn in 1987

Brand Image
Significant difference in perception based on the age of male consumers
Strong image between Gillette and male image of shaving
Steel man- old men and system users; Plastic Men-Younger men who feel all shavers are the same

Strategic issues identified by Sarah (2/2)

Use of corporate Logo
Gillette brand name is used as the corporate logo
Use of thin, block letters might not create impact and required masculine feel
Brand looks tired and there is no unique retail packaging or display

Gillette brand association with men

Company always focussed on male ; even women identify the brand name with men and shaving
There are more women wet-shavers in US market but due to seasonality and low frequency of usage women
consume about 1/3rd of the volume consumed by men

Key issues to consider while developing the

new strategy
The divisions is 30% of sales but is responsible for 60% of the profit
Due to frequent takeover battles, there will be pressure to maintain and improve
profitability
Rest of the corporations will continue to expect cash to support diversification
Figure out a way to support financing for the initiative
Low morale in the company- sense the inevitable higher growth for disposability
The cannibalization effect on the existing products like disposables, Atra etc.

Analyzing Option 1: Give Up Strategy

To
Do:

Continue the business as usual

- Accepting that the disposable razors are wave for future
- Segment the customers based on performance

Disadvantages

Advantages

Companies will continue to have lower margins

as disposable gain higher share

Disposable market is growing fast and may

approach 100% market given current trends

Company can continue to gain profits from the

disposable razors category

For Gillette, the share of disposable market has

been falling fast

Segmented market will protect category

profitability

For every 1% switch from System to

Disposable represents a loss of $10Mn on the
bottom line

New product introduction such as disposables

with lubricating strips or movable heads Try to
cater to non price conscious consumer of
disposables

Possibility of cannibalization of system razors

and blades category

Increased pressure to improve profits due to takeover battles

Gillette will lose the advantage of their Brand

Given that For every 1% switch from System to Disposable represents
a loss
of $10Mn
the bottom
Systems
equity
acquired
in aon
category
that line,
is typically
price
represent 36% (61% of 60% - Exhibit 16) of market share for razors which
translates into losses of $360 mil. The PAT of
driven
the company in 1988 is $268 mil. This move would drive the company into losses and thus cant be recommended

Analyzing Option 2: Reinvigorate the system razor market

To
Do:

Slow the growth in disposables and focus on reinvigorating the system

razor market

Disadvantages

Advantages

System razor provide higher margin on the

product

Gillette can leverage the strong brand equity

and focus on the quality shave

Since products will be available at various price

points, the disposable razor consumers will be
tempted to step up to the lower category of
system razors

Focus on targeting the younger consumer

segment also which can enable brand loyalists
for future

R&D tests conducted so far has shown positive

results and hence innovation is key in this market
to stay ahead

Reduced focus on disposable razors might

reduce the market share in the segment
Marketing expenses for a new launch will be
expensive
May not necessarily have an impact on current
disposable users
Cannibalization on the existing products such as
Atra, disposables etc.

Our Recommendation

The questions facing us now are

1

If Gillette decides to reinvigorate the systems razors then should it also continue
spending money on disposables
No. We believe that that Gillette is market leader and the disposables category is growing
majorly because it is promoting the category. Market leader promotes the category as a
whole and not new entrants. Concept of brand versus category promotion.
If money is spent on both then the money would get wasted since the purpose of
both the marketing campaigns would be contradicted
We agree with the statement and thus propose not spending on disposables market at all
and slowly phase out advertisements
If we launch the new product, would it stop the disposables market or would it
cannibalize the sales of ATRA and Track 2
Cannibalization is likely to happen, but however with refocused advertisement, new target
market, new positioning strategy would lead to increase in sales of systems razors as a
category also

Improve the focus area

Expand depth
and breadth of
awareness and
usage of brand

Brand
Revitalization
strategies

Refresh old
sources of brand
equity

Create new
sources of brand
equity

Increase
frequency of
consumption
(how often)

Bolster fading
associations
Improve
strength,
favourability and
uniqueness of
brand association

Focus Area

Increase quantity
of consumption
(how much)

Neutralize
negative
associations
Create new
associations

Identify
additional
opportunities to
use brand in
same basic ways
Identify
completely new
and different
ways to use
brand
Retain valuable
customers
Recapture lost
customers
Identify
neglected
segments
Attract new
customers

Proposal to reinvigorate the brand

Plastic Men below the age group of 40 years

Target Segment &

Positioning

Key
Strategies

Focus on the superior shaving experience provided as compared to disposable razo

Bolster Fading Associations Look Sharp! Fee Sharp! Be Sharp!, Gillettes association
with athletic events Associated with 40+ men only are brand associations that Gillette
should preserve and promote these assets
Neutralize negative associations Commoditization, expensive price of system razors
for negligible incremental benefits, association with men only

Create new associations Innovative and attractive packaging, convenience and better
shave, associate with sophistication and youth so that it no longer comes across as a
utility
only product.
Overall
branding
of Gillette should be focused to enhance symbolic associations rather than
functional benefits. It should promote shaving as an exotic experience. This would go a long
way in preventing the razor market to get commoditized. Gillette should stand for
sophistication, pride and success.
The marketing spend would be stopped for disposables and increased for systems razors.

Thank-You