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A Case Analysis on
Submitted by:
Vidar Halvorsen
Mike Maquilan
Submitted to:
Regina Dy
Professor of Marketing
Table of Contents
3.0 Analysis
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The Gillette marketing group has debated the background of the irtuation,
where it seems Gillette have created a situationof where they have
generalized the market, and focused less on marketing than on product.
Therefore an analysis on the status and a strategic marketing plan for the
coming year(s) ahead must be prepared.
3.Case Analysis
This part attemts to analyse Gillettte and the competition in terms of swot
analysis, competitor analysis , five forces and through general marketing
concepts.
Strengths Opportunities
- VERY strong focus on R&D - A largely untapped female
and innovation segment.
- General public associate - Large 17-30 Mens segment
Gilette with personal that’s still undecided in terms
grooming. of brand loyalty.
- Strong Brandname - Few competitors with the
- Long history financial backbone and
- 5 distinct company divisions; market experience Gillette
true to core competencies. has.
o Safety razors – 3 - Japan / Asian Market is
products depth available for further push
o Toiletries/cosmetics - /growth.
11 products depth
o Stationary products -
5 products depth
o Oral B / Care products -
2 products depth
o Braun Products -
5 products
- Systems razors have unique
patent, impossible to use non-
gillette cartridges on gillette
system.
- New entranants to market
must invest heavily in
systems to make blades.
- Strong financial backing
Weaknesses Threaths
- Global strategy, but weaker - Price vs percieved value to
on national adaptation. use with younger segments.
- Low profits on disposable - Low general brand awareness
razors. with younger “17-30”
- Declining advertising budgets. segment.
- Low brand loyalty with - Market positions , brand
younger men’s segment. recognition in Japan being
- Weak position in Japan (asia) dominated by Schick.
due to not using existing - New entrants from asia into
marketing channel partners the (,ow price ) market
- No clear slogan or brand
recognition theme. 4 slogans
been used over recent
history.
3.3 Porters 5 forces
model
Also, all new entrants to markets face the beurocratic red tape. Depending
on what part of the world the new entrants coose to challenge Gillette in,
they would have to adhere to a multitude of national regulations,
certification and political hindrances.
In the wet-shave market there arent that many direct subsidies to choose
from .. The product is razors, in different types, so there will be
ALTERNATIVE brands to choose from, but except for electric shaver,
sorting under DRY-SHAVE, there really arent many alternatives;( hair
removal creams didn’t enter the market before the 1990s and were
targeted on women exclusively.)
Another issue which help Gilette in terms of the lack of dubstitutes is the
cultural social image of unshaven men. Most custures prefer a clean
shaven man to a man who is unshaven; as it relates to image and
percception of hygiene.
The Common denominator for all rivals is their excisting presence in the
market, and the fact that they all have R&D facilities to further innovation
within the productlines. They also all have a certain level of brand
recognition and brand loyalty from excisting customers and consumers,
which willl be a challenge for Gilette. The cost of switching from an
existing brand to Gilette can percievably be a hinder for Gilette.
3.3.5.1 Schick
In 1989, Schick held 16.2% of the US wet-shave market, down from 23.8%
in 1980. This loss of market share was attributed to late entry into the
1
http://en.wikipedia.org/wiki/Razor_blade_steel
disposable razor market in 1984 as well as Warner-Lambert's channeling
Schick's profits to R&D for their other businesses.
Schick feels that it can catch up in lost market share with a $60 million
allocation from Warner-Lambert, which they used to fund technological
advances in disposable razors, hire a dedicated sales team, and allocate a
huge $8 million advertising budget to market its new line of razors.
3.3.5.2 BIC
BIC's concentration was the best quality products at the lowers possible
prices. (Price focus)
After their success in marketing their fountain pens, ballpoint pens and
disposable lighters, BIC entered the shaving market in 1975, launching
their BIC Shaver.
- Men aged 30 and up, most whom have grown up with Gillette as the
chosen, trrusted brand. These customers have a high brand loyalty
and a high treshold for swithching brands, even for a notably lower
price ( in terms of systems segment ). This segment ( late adopters /
sceptics ) will stick to Gillette unless Gilette changes their course
drasticly. Conclusively Giletteneeds to retain customer satisfaction
and a repurchasing, rather than attracting new clients from an
already matured and loyal customer segment.
- This segment is more price oriented and have far less brand loyalty.
In general the segment ( Gen X) belong more to the early adapters,
and are susceptible to marked advances from Gilettes competitors.
In 1998 BIC holds a higher brand regocnition than Gilette2. However,
the willigness to try out new offers, products and technologies, pose
an opportunity for Gillette to use a marketing machine with decades
of experience.
Women ( 17+ )
Product
A separate issue were the fact that Gilette had not stayed true to the
slogan of the brand name. 4 different slogans had been used, thus
creating confusion between the age segmetns. While Babyboomers still
recalled “look sharp, stay sharp, be sharp” Gen X’ers had little of that
slogan recall, little product knowledge and as a result products to this
segment was a challenge.
Place
Gilettes distribution channels went through its country offices and hubs,
and from there to local wholesalers. This gave Gillette ample opportunities
to see the market statistics per country region and so on. Being a research
driven company they used customer feedback as source for their further
developments.
Price
( The case file mention nothing on pricing terms for distribution channels)
Promotion
4
http://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-
History.html
brand with the diffferent age brackets of end-users, which is a problem
that must be adressed.
Gillette advertise its to the masses, to be purchased by end-users through
the retailing industry. Therefore promotions directly to the end user
through targeting advertising like DM is impractical. The contact price
per new customer would simply become too great ( Gilette being a global
company).
This part lists the theories used to analyse the case. The text is sourced in
its entireness from the listed locations.
5
http://notesdesk.com/notes/strategy/porters-five-forces-model-porters-model/
then segment is unattractive. Profits and prices are affected by
substitutes so; there is need to closely monitor price trends. In
substitute industries, if competition rises or technology modernizes
then prices and profits decline.
Industry is growing
These situations make the reasons for advertising wars, price wars,
modifications, ultimately costs increase and it is difficult to compete.
When suppliers have more control over supplies and its prices that
segment is less attractive. It is best way to make win-win relation
with suppliers. It’s good idea to have multi-sources of supply.
5. Bargaining power of Buyers
6
http://www.quickmba.com/strategy/swot/
selection. The following diagram shows how a SWOT analysis fits into an
environmental scan:
Environmental Scan
/ \
Internal Analysis External Analysis
/\ /\
Strengths Weaknes Opportunities Th
ses reats
|
SWOT Matrix
Strengths
A firm's strengths are its resources and capabilities that can be used as a
basis for developing a competitive advantage. Examples of such strengths
include:
• patents
• strong brand names
• good reputation among customers
• cost advantages from proprietary know-how
• exclusive access to high grade natural resources
• favorable access to distribution networks
Weaknesses
In some cases, a weakness may be the flip side of strength. Take the case
in which a firm has a large amount of manufacturing capacity. While this
capacity may be considered a strength that competitors do not share, it
also may be a considered a weakness if the large investment in
manufacturing capacity prevents the firm from reacting quickly to changes
in the strategic environment.
Opportunities
Threats
By making a push for a cemented 1st place in consumers mind, Gilette can
secure a stronger market position that can easiler be defended. Significant
efforts should be placed into a coherent strategy for a stable, coherent
and unchanging advertising approach that appeals to the younger
segments without affronting the excisting older segment.
Strategic alliances.
Gilette is at this point a corporation revolving around a few product lines.
By forming strategic alliance with distribution experts, especially in
markets with significantly different consumer environment, this could
strengthen their position. Alternately Gillette could look into forward
intergation ( buying a distribution network)-
7.0 Conclusion.
Considering the analysis given in this case, the group finds that the best
course of action would be a ( by SWOT analysis) STRENGT+
OPPOTRUNITIES approach.
We suggest the follwong changes to Gilettes Strategic Marketing plans.
1) Secure an up to date marketing budget, closer to the 61 milllion in
1975.
Sources:
- Gilllette history:
http://www.fundinguniverse.com/company-histories/The-Gillette-Company-
Company-History.html