Gillette

TheStrategyofInnovation
01_Introduction

MrKingC.Gillettedevisedandmarketedthefirstsafetyrazorin1901.Inashortspaceoftime,Gillette
convertedhisideaintoahighlysuccessful,marketableproduct.Speedtomarkethasbeenacharacteristic
ofthefamouscompany,whichstillbearshisnametoday.TheGilletteCompanycontinuestorecognise
theimportanceofbeingaheadofthefieldinacompetitivemarketinwhichconsumerrequirementsare
becomingincreasinglydiverseanddemanding.

Ratherlikebatteries,razorsandshaversareameanstoanenditswhattheyproducethatreallymatters.
Looksandstyleareincreasinglyimportant,buttothepersonlookingfortheperfectshaveitistherazors
performancethatmattersmostofall.

Marketresearchsuggeststhatmostpeoplewhoshavefinditachoremanyresentthetimetheydevoteto
it.Sotheywantaproductwhichnotonlyshortensthetimespentshavingbutwhichalsodoesthebestjob
andmakestheexperiencepleasurableandfulfilling.Foramanufacturer,theserequirementsrepresenta
toughchallenge.

MeetingthischallengeinvolvesGillettecomingupwithgoodideasforproductimprovementandthen
takingadvantageofmoderntechnologytoconvertthemintoeconomicallyviableproducts.

02_Firstmover:advantagesandrisks

TheGilletteCompanyhasalonghistoryofbeingthefirsttomarket...initsownareasofoperation.Its
achievementsincludeproducingthefirstsuccessful:

safetyrazor1901
twinbladedrazor1972
twinbladeddisposablerazor1976
pivotingheadrazor1979
pivotingheaddisposablerazor1980
razordesignedspecificallyforwomenSensor1992
triplebladerazorMach31998
batterypoweredrazorM3Power2004

Aswellasbeingfirsttomarket,Gillettehasalsocontinuouslyproducedproductswhichfeature
improvementstoexistingtechnologies,including3bladeddisposablesandergonomicallysuperiorhandle
developments,includingSensor,VenusDivineandM3Power.

Thistimelineabovealsodemonstrateshowthespeedofinnovationhasacceleratedwithshorterand
shortergapsbetweennewintroductionsandsuperiorproducts.Beingthefirsttocanbringadvantages
knownasfirstmoveradvantages.Theseincludebeingabletogenerateinitialconsumerinterestviaboth
mediainvestmentandaccompanyingpressandPRcoverage.Thisthenleadstothemainretailstores
displayingtheproductsinstoreandsupportingtheproductswithpowerfulpromotionalcampaigns.

Forsolongasproductsremaintheonlyoneoftheirkindavailable,the'firstmover'canestablishloyalty
andreputationinitsbrandsbeforepotentialcompetitorsgetgoingorcatchup.ABrandisthuscreated.

Thereareriskstobeingtheinnovator,however.Tobesuccessful,theinnovationprocesshastobe
conductedthoroughly.Thisusuallyinvolvesagreatdealofresearch,andinmorethanoneform.

03_Researchinganddevelopinganewproduct

Properlyconductedmarketresearchwillidentifythekindsofnew,improvedproductsthatconsumers
wouldswitchtoiftheybecomeavailable.Thatinvolvesaskingtherightquestionsoftherightpeople,and
alsoplacingaproperinterpretationontheiranswers.Inthepast,manufacturersproducedproductsand
thentriedtosellthemtoconsumers.Successfulorganisationsfindoutwhattheconsumerwantsandthen
producethisproductforthem.ThisisdoneviaResearch.Therearetwomainapproachestomarket
research:

Qualitativeresearch.e.g.workingwithseveralsmallfocusgroupscomprising,forexample,people
whoshave,anddiscussingwiththemwhattheylookforinarazor/blades/shavingsystem.Thisgenerates
acoreunderstandingofHOWconsumersuserazorsandwhattheythinkabouttheexperience.

Quantitativeresearch.e.g.usingaquestionnairewithalarge,representativesampleofpeople;thisdata
givesabroadviewoftheinformation,lookingmoreatthenumericalobjectivedataratherthanthemore
subjectivedataacquiredviaqualitativeresearch.Forexample,howmanypeopleshave,whatdotheyuse
toshave,whatproductsdotheybuy?

Fromconsumerresearchthecompanymovesintotechnologicalresearchanddevelopment.Thisinvolves
convertingagoodideaintoaproductdesignandthendiscoveringwhethermoderntechnologyisableto
reproduceittothehighspecificationsrequiredandinthequantitiesneeded.Usuallyafirmwillproduce
prototypesthatcanbetestmarketedonarepresentativesampleofpotentialconsumers.Inthelightoftheir
reaction,theproductcanthenberefinedanddevelopeduntilitisasgoodasitcanbe.

Withintheoriginalresearchandanalysis,thereisalsoanothervitalquestionwhichneedstobeasked.
"Willthisproposednewventuregenerateprofitsforthecompany?"Manybusinesseshavecomeunstuck
bywronglybelievingtheanswertobe"Yes".Usually,suchbusinesseseitherunderestimatedthe
investmentlevelsrequiredforresearchanddevelopment,orthecostofsettingupandoperatingthe
productionprocess,orboth.

Generallyspeaking,anybusinessmustbecarefulinestimatingpotentialsales;someorganisationsmay
getintofinancialdifficultiesiftheyareoverlyoptimisticintheirplanningwhichmayresultinthemgoing
bankruptorbeingacquiredbyabettermanagedrival.Ironically,therivalmaynotbeascreativebutare
betteratmanagingtheiroverallbusiness.

Asuccessfulproductwillgenerallyattractcompetition.Patentscanprotectproducts,butitisimpossible
topreventotherfirmscomingupwiththeirowninterpretationandapplicationoftheoriginalgoodidea
e.g.forselfadhesivelabels,shavers,orsubsonicaircraft.Inessence,thefactthatcompetitorsbringout
productstochallengetheoriginalidea,isgenerallygoodforthatcategorybecausethemarketbecomes
stimulatedandtotalsalescanincrease.Thisiswhyproductimprovementthroughinnovationinboth
conceptanddesignhastobeongoing.ThisisalsowhyGillettehaveremainedattheforefrontofthe
shavingindustryforthelastcentury.

04_Beatingthecompetitionandgrowingthebusiness

Inordertoguideitselfandensuretheentirecompanyisalignedinitsobjectives,anorganisationoften
developsavisionstatement.Avisionstatementisintendedtoconveywhattheorganisationisallabout.
Itisimportanttointernalaudiencesi.e.Gillettesstaff,sotheyallknowinwhichdirectiontopull.Itis
alsoimportanttoexternalaudiencessuchastheretailerswhobuyfromGilletteandselltheproductsto
consumers.Gillettesvisionstatementreads:

Tobuildtotalbrandvaluebyinnovatingtodeliverconsumersvalueandcustomerleadershipfaster,
betterandmorecompletelythanourcompetitors.

Thecomponentwordsreallydomatter.

Deliveringvaluetoconsumersisnotnecessarilyaboutbeingthecheapest,butaboutearningareputation
forhighqualityproductsthatrepresentgoodvalueformoney.Thatstrueofmanyindustries,and
particularlythoseinwhichconsumersbelievethereisadirectrelationshipbetweenpriceandquality.

Customerleadershipinvolvesdiscoveringwhatcustomersmostwantandthenfindingwaystofulfil
thosewants.Italsoinvolveshelpingcustomerstoobtainmaximumvalueoutoftheirpurchasese.g.by
providingsupportingliterature,soundadviceandagoodaftersalesservice,includingproductguarantees.

Faster,betterandmorecompletelyrepresentkeytargets.Assuggestedearlier,speedofresponseto
changingmarketconditionscanbevitaltosuccess.Aimingtobefasterrecognisesthatbeingsecond
to....canleadtopoorsalesandlowmarketshare.Beingfirstto...successfullycanalsogenerateintense
productandbrandloyaltyfromconsumersleadingthewaywithafirmfocusonconsumerneeds.

Aimingtobebetterrecognisesthattherearenogainsfrombeingfirstwithabigbreakthroughifthe
innovativeproductperformspoorly,failstomeettheclaimsmadeforit,earnsbadprofessionalreviews,
disappointsinitialpurchasers,andisrapidlyfollowedbyaclearlysuperiorproductfromarivalfirm.

Morecompletelyrecognisesthatarazorisjustonecomponentofthemuchbroadermarketofpersonal
appearanceandwellbeing.Lookinggood,feelinggoodisamanystagedprocessofpersonalgrooming,
ofwhichshavingisjustoneaspect.ItisnoaccidentthatGilletteisheavilyinvolvedinthemarketfor
deodorantsandantiperspirants.

Thecompanyrecognisedthatrisingincomeswouldleadconsumerstospendmoreonatotalpackage
thatenhancespersonalappearance,personalhygieneandassuchdevelopedastrategytoexpandits
positionwithinthisexpandingmarket.

Themarketforrazorsisnotoneuniformmarketbutamarketthatcontainsdifferentsegments,theneeds
ofwhichhavetobemetincarefullytargeted,subtlydifferentways.
Gilletterecognisedthatdifferentsegmentsofthemarketareseekingdifferentproductbenefits.So,over
theyears,ithassoughttodevelopseveralproductcategoriesrangingfrompopulardisposablerazorsto
elaborateshavingsystems.

IntheUKanincreasingnumberofmenhaveswitchedfromdisposablerazorstoshavingsystemswhich
fuelsthemarketdemandforhandleandreplaceableblades.

Gillettesoverallemphasisisonprovidingpremiumperformanceviathebestvalueformoneyshaving
experience,whetherthisisasystemrazorforthediscerningcustomerseekingthebestinshaving
technology,orahighqualitydisposableproductforpeoplelookingforagoodqualityshavewiththe
convenienceofadisposable.

Manybusinesseslooktoexpandintorelatedareasthatofferopportunitiesforgrowthandalsoanelement
ofprotectionthroughmarketdiversity.

Gillettehasfourcorebusinessareas.

PersonalgroomingarangeofproductsusingtheGillettebrand,includingrazors,razorblades,shaving
creams.BrandsincludeGillette,GilletteSeries,RightGuard,RightGuardExtreme,Natrel

PortablepowerthefullrangeofbatteriesandtorchessoldundertheDuracellbrandname

Oralcaredentalandoralcareproductse.g.OralBmanualtoothbrushesandBraunOralBelectric
toothbrushes

Electricalappliancesdomesticitemse.g.dryshavers,hairdryers,hairstylers,undertheBraunbrand
name.Personaldiagnosticappliancese.g.electronicearthermometers,undertheThermoScanbrand
name.ArrangeofBraunhouseholdappliancesincludingkettles,coffeemakersandfoodprocessors.

Gilletteisthemarketleaderinthemajorityoftheseareas,andthecompanycontinuestoinvestineachof
thesecorecategories.Clearly,Gillettehasgrownnotonlybydevelopingitscorebusinessbutalsoby
acquiringsuccessfulbusinesseswithgrowthpotentialinmarketsrelatedtoitscoreactivity.

05_Identifyingconsumersneedsandwants:Gillette

Gillettesresearchshowsthatin2002,morethan1.7billionmenover15yearsoldremovehairdaily,with
over80%usingabladeandrazor.Fromthis,Gillettehascalculatedthattheworldmarketforblades,
razors,shavingcreamsandgelsin2002wasinexcessof5billionayear.

Gillette'sresearchhasalsorevealedthattheprimaryfactorsthatconsumerslookforinclude:

Throughitsmarketresearch,Gillettehasidentifiedtwomainsegmentsofthemaleshavingmarket
SystemsandDisposables.

Withinthesystemssegment,wecanidentifytwosubsegments

Premiumshavingsystems,suchasSensorExcel,Mach3,Mach3
TurboandM3Power
Standardshavingsystems,suchasContourandGII

Withinthedisposablessegment,wecannowidentifyafurthertwosubsegments

Premiumdisposablese.g.Sensor3Disposables

Standarddisposables,egBlueII,Agilite

Consumersbenefitsdependuponwhichsegmenttheybuyinto.Forexample,consumersinthepremium
disposablemarketmaybeseekingaconvenientsetofrazorstotakeonholiday,whereasatthetopendof
themarketthoseconsumersbuyingpremiumshavingsystemsarelookingforallroundtopquality
shavingexperiences.

Gillettesadvertisingfocusesonclarifyingpremiumproductbenefits.Thisisbecausemoreandmore
consumersarepreferringtomoveupmarkettopremiumshavingsystems.

Thestandarddisposablerazorisstillextremelypopularbutthereisacleartrendtosystemrazors,suchas
M3PowerandVenusDivine.Nevertheless,Gillettehasstillimproveditsmarketshareinthissegment
becauseofthequality,valueformoney,andreliabilityofitsdisposableproducts.Gillette'sphilosophyis
veryclearinwhatevertheconsumerchoosestoshavewith,whetherasystemsproductordisposable,
Gillettewishestogivethatconsumertheopportunitytoshavewiththebestproductpossible.
Gillette'sBlueIIandGIIproductsremainkeyandthecompanyisconvincedthatconsumersatisfaction
withitsproductsleadsthemtocontinuetobuyitsproductswhentheyarereadytotradeuptomore
sophisticatedmarketsegments.Itisthereforeanentrylevelproductinthesamewayforexample,a
smallerBMW3SeriesrepresentsthefirstrungontheBMWladder.

06_Conclusion

Gillettehasalong,distinguishedhistory.Itremainsinnovative.Itsscientists,techniciansandproduct
engineersarecontinuallytryingoutnewfeaturesandproductiontechniqueswithaviewtoimproving
productperformancee.g.howto:

gettheclosestandmostcomfortableshave

makelongerlastingbatteries,whichmeetthechangingneedsoftheconsumer

produceincreasinglyeffectiveandbestinclasselectricandmanualtoothbrushes

designtheultimateuserfriendlyearthermometer,orthemosttechnicallyadvancedshaver.

Thecompanyslongstandinginterestinbeingfirsttogetitrightremainsakeyelementofitscontinuing
prosperityandprogress.

1 Howarepatentsawarded?Givethreeexamplesofsomebestknownpatentsintheworld.
2 Differentiatebetweenqualitativeandquantitativeresearchwithexamples
3 Fromconsumerresearchthecompanymovesintotechnologicalresearchand
development.Explainthisstatementbytakinganexampleofanothercompanyandrelatingit
toGillette.
4 Detailtheadvantagesandrisksofpioneeringnewproductswithexamples.
5 Giveyourownexampleofhowyouorsomeoneyouknowtradedupandwhatwerethe
factorsmotivatingthatdecision
6 Definecompetitiveness.