GILLETTES Razor Sharp Edge Over Its Competition
Overview
Background info on Gillette Problems/Solutions company faced Current info/issues
Background Information
Founded in 1901 Flagship productsafety razor Companys strengths:
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
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
To build TOTAL BRAND VALUE by innovating to deliver consumer value and customer leadership faster, better, and more completely than our competition. Fundamental Principles:
Organizational Excellence
Superior performance at every level Achievement, Integrity, Collaboration
Core Values
Products Overview:
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
Portable Power
Oral Care
Grooming Products
World leader in male and female grooming products
Blades, razors Wet, dry 700 million consumers use Gillette razor blades
Shaving preparations and after-shaves
Portable Power
Duracell-most popular brand of alkaline batteries in the world Offers strategic powerconsulting services to leading electronic device manufacturers
Oral Care
Companys fastest growing business Oral-B brand holds #1 position globally in manual and power toothbrushes
Facts
3 core businesses provide:
80% sales 90% profits
Gillette Mach3 Gillette for Women Venus Right Guard Duracell CopperTop Oral-B Braun Oral-B Braun
These core brands are the strength of Gillette Co.
Problem Background
1980s: Consumers chose inexpensive disposable razors Gillette helped to foster trend:
Focus on price, not quality Disposable razor market inc. by 60% Loss of quality image, loss of profits *Gillette taught consumers the best razor was the cheapest one!
Results:
Use of Marketing Research
Focus groups and surveys revealed:
Gillette must reform its approach by:
Emphasizing quality and brand equity Discontinuing use of disposable razor ads Developing new products
Results of MR
Inc. investments in research and development
Sensor, Sensor Excel, Mach III, Venus
Direct mail campaignsfree razors Catchphrase: The best a man can get. Able to reverse the trendSUCCESS!
Role of Marketing Research
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
What should Gillette do to change the trend of our decreasing equity in the market? What should Gillette do to increase consumers opinions of our brand image?
Marketing Research Problem
To determine the consumers opinions regarding the quality of products over their prices. To determine the impact of Gillettes competition on its sales. To determine the wants and needs of consumers using Gillettes 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.
Current Issues facing Gillette
Razor Wars
Feb. 24, 2003 Gillette, Bic, Schick Launch new razors in men and womens disposable lines
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
Increased attention for disposable razors againRISK
Caution: resulted in loss of market share in the 1980s for Gillette
Gillette Marketing Spending
Jan. 30, 2003 24% increase in ad spending (fourth quarter) 2002: Global ad spending rose 12%-$650 million
New Challenges
Jan. 30, 2003 Battery rival Energizer to acquire Schick brand of razors Energizer to invest $930 million Result: Aggressive marketing wars?
Renegade Web Site
[Link] 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 Gillettes ads Gillette uncertain of legal implications (all terms spelled out) Feb. 11, 2003
Duracell
Jan. 13, 2003 Cut price of AA and AAA batteries by 13% Prompted to reduce price gap with competitors
Energizer, Rayovac
Concerned with competitors heavy promotional activity
Ethics
April 14, 2003
Gillette exec (Gino Deluca) arrested on 15 counts of mail and wire fraud and 1 count of money laundering
pleaded not guilty
Scheme: demanded kickbacks from 5 promotional and marketing vendors Allegedly received $600,000 in kickbacks
$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
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