Transcript GILLETTE’S Razor Sharp Edge Over Its Competition

GILLETTE’S Razor Sharp
Edge Over Its Competition
Overview
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Background info on Gillette
Problems/Solutions company faced
Current info/issues
Background Information
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Founded in 1901
Flagship product—safety razor
Company’s strengths:
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Focus on scientific knowledge/studies
Innovative products
Large-scale manufacturing capability
Useful products sold at fair price
Sales in 2000: $9.3 billion
Global Company
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Strategy: “To manage its business with
a long-term, global perspective”
Over 1 billion people interact with a
Gillette product every day
Manufacturing operations located in 23
countries
Distribution in 200+ countries
40,000+ employees
Manufacturing Locations
United States:
-Andover, MA
-Chicago, IL
-Cleveland, TN
-Iowa City, IA
-La Grange, GA
-Lancaster, SC
-Lexington, NC
-South Boston, MA
European Locations
Manufacturing Sites:
-Belgium
-Czech Republic
-France
-Germany
-Ireland
-Poland
-Russia
-Spain
-England
R & D Facilities:
Germany, Spain, England
Vision Statement
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“To build TOTAL BRAND VALUE by innovating
to deliver consumer value and customer
leadership faster, better, and more completely
than our competition.”
Fundamental Principles:
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Organizational Excellence
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Superior performance at every level
Core Values
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Achievement, Integrity, Collaboration
Products Overview:
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Worldwide leader in 12 major consumer
product categories
Focus on continual development of new
products
Currently introduces 20+ new products
per year
Three Core Businesses
Gillette is the undisputed global leader in:
 Grooming
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Portable Power
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Oral Care
Grooming Products
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World leader in male
and female grooming
products
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Blades, razors
Wet, dry
700 million consumers
use Gillette razor blades
Shaving preparations
and after-shaves
Portable Power
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Duracell-most popular
brand of alkaline
batteries in the world
Offers strategic powerconsulting services to
leading electronic
device manufacturers
Oral Care
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Company’s fastest
growing business
Oral-B brand holds
#1 position globally
in manual and
power toothbrushes
Facts
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3 core businesses provide:
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80% sales
90% profits
These core brands are the strength of Gillette Co.
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Gillette Mach3
Gillette for Women Venus
Right Guard
Duracell CopperTop
Oral-B
Braun Oral-B
Braun
Problem Background
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1980s: Consumers chose inexpensive
disposable razors
Gillette helped to foster trend:
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Focus on price, not quality
Results:
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Disposable razor market inc. by 60%
Loss of quality image, loss of profits
*Gillette taught consumers the best razor was the
cheapest one!
Use of Marketing Research
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Focus groups and surveys revealed:
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Gillette must reform its approach by:
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Emphasizing quality and brand equity
Discontinuing use of disposable razor ads
Developing new products
Results of MR
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Inc. investments in research and
development
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Sensor, Sensor Excel, Mach III, Venus
Direct mail campaigns—free razors
Catchphrase: “The best a man can get.”
Able to reverse the trend—SUCCESS!
Role of Marketing Research
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Told Gillette that it could change its
former price approach to the market by
emphasizing quality and brand equity as
well as introducing new products.
Management Decision Problem
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What should Gillette do to change the
trend of our decreasing equity in the
market?
What should Gillette do to increase
consumer’s opinions of our brand
image?
Marketing Research Problem
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To determine the consumer’s opinions
regarding the quality of products over
their prices.
To determine the impact of Gillette’s
competition on its sales.
To determine the wants and needs of
consumers using Gillette’s various
shaving products.
Research Question and
Hypotheses
Are consumers more price conscious or brand
loyal?
H1: Price is most important to consumers.
H2: Price is not most important to consumers.
H3: Brand loyalty is most important to
consumers.
H4: Brand loyalty is not most important to
consumers.
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Current Issues facing Gillette
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Razor Wars
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Feb. 24, 2003
Gillette, Bic, Schick
Launch new razors in men and women’s
disposable lines
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Ex. Schick razor-dispenses shave gel for women
Ex. Gillette-Pink Passion Venus
Marketing efforts total $120 million combined
Ad campaigns launched this month
Note
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Increased attention for disposable
razors again—RISK
Caution: resulted in loss of market
share in the 1980s for Gillette
Gillette Marketing Spending
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Jan. 30, 2003
24% increase in ad spending (fourth
quarter)
2002: Global ad spending rose 12%-$650 million
New Challenges
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Jan. 30, 2003
Battery rival Energizer to acquire Schick
brand of razors
Energizer to invest $930 million
Result: Aggressive marketing wars?
Renegade Web Site
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Freerazor.com via mass e-mails offers free Gillette
Mach3 Turbo and Venus razors
Also automatically enrolls customers to receive 8
replacement blades every two months (Misleading)
Uses photos of Gillette products and copy similar to
Gillette’s ads
Gillette uncertain of legal implications (all terms
spelled out)
Feb. 11, 2003
Duracell
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Jan. 13, 2003
Cut price of AA and AAA batteries by
13%
Prompted to reduce price gap with
competitors
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Energizer, Rayovac
Concerned with competitor’s
heavy promotional activity
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Ethics
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April 14, 2003
Gillette exec (Gino Deluca) arrested on 15 counts of
mail and wire fraud and 1 count of money laundering
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Scheme: demanded kickbacks from 5 promotional
and marketing vendors
Allegedly received $600,000 in kickbacks
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pleaded not guilty
$260,000 Arizona condo, $32,000 home addition, vacations
and cruises, $225,000 wired to a Swiss bank account
Ordered his staff to select certain vendors despite
their quality problems
Questions and Answers
The End