View
88
Download
5
Category
Preview:
DESCRIPTION
gillette case study
Citation preview
1
Case OF GilletteChoosing the right distribution channel
Introduction
2
Indian Shaving Products Limited(ISPL)- Gillette and Poddar
Gillette- 70% worldwide market shareSales in 1987-88 Rs 4 croresAccumulated losses Rs 7.24 croresStainless steel blades Priced its blades about 50%-80% over
Wiltechs’ Brands like 7 O'clock Ejtek, 7 O'clock Super
Stainless
Indian Shaving Market
3
World’s largest market in volume ( 2.4 billion blades annually)
Small in value terms
( Rs 250 cr vs. US’s $800 million )Low tech carbon steel blades
prominentStainless steel blades market smallTechnologically latest Twin blades
segment(less than 2%)
Competition
4
House of MalhotrasMarket leaders ( 80%-90% of market)Best selling brands like Topaz, Panama,
Laser etc7 manufacturing units; largest in
Calcutta with a capacity of 1500 million blades per year
Highly street smart ( imitation products etc)
Distributed products through network of very large wholesalers to semi wholesalers and retailers
Special promotions and stock push strategies
Competition
5
WiltechRP Goenka group and Wilkinson Sword
Ltd of UKCapacity of 120 million blades per year
and 80% capacity utilisationBrand like Wilman I, Wilman II50% market share in twin blade ( by
value)Priced its blade about 50% over
Malhotras brandsAccumulated losses of Rs 2 cr
ISPL’s Distribution Channel
6
Two options:Build own distribution networkTie-up to use Lipton’s network at 5% margin
Advantages of the tie-up with LiptonLow cost solution(5% commission)Well established sales networkFor Lipton, better utilization and profit
without extra investment
Problem
7
After 2 years, less than 3% market shareAccumulated losses of Rs 7.24 croresAccording to customer surveys, no serious
problem in product, prices, positioning.Problem in distribution strategy.
Comparison distribution channel:
8
Malhotra’s distribution channel
Malhotra’s
Primary Wholesaler
Secondary wholsaler
Retailer
Customer
Gillete distribution channel
Gillete
Lipton
Distributor
Stockist
Customer
9
Marketing Mix Analysis
Product
10
Low tech carbon steel blades making the bulk of the market
Stainless steel blades, present only in urban market
Latest Technology Twin Blades-market less than 2%
ISPL believed there was big opportunity at upper market.
Created Stainless Steel Blades
Price
11
ISPL believed that consumer is ready to pay higher price for a better product
ISPL priced 50%-80% above Wiltech’s brands, while Wiltech was priced 50% above Malhotra’s brands.
ISPL priced 125%-170% above the main competitor Malhotra’s price.
Promotion
12
Gillete and House of Poddars paid 5 Crores each. (5 Crores=24 %)
The joint venture raised 20.83 CroresInvestment on Plant- Over 20 CroresPresumably, small budget on PromotionNew Product- 7O’ Clock Launched at Higher
Price- Poor Sales
Place-Proper Distribution Channel
13
Combination of Push and Pull strategyMore Emphasis on Pull Strategy through
promotionsSimultaneously, start building its own
distribution networkVariable Sales Margin To Distributors &
Stockists
14
Target Market Segment Target Segment
15
Proposed solution
16
Combination of Push and Pull strategy should be used
Provide stainless steel blades to barbers all across the country at discounted rates
Simultaneously, start building its own distribution network
Target first time users, by promoting in high schools and colleges
Proposed Solution
17
Promotion of the advantages of stainless steel blades produced by ISPL
Extensive market research to exactly know the future of stainless steel blades market
Look for other tie-ups as part of horizontal marketing system
Target based commission to Lipton5% for sales upto Rs 5 crore7% for sales between 5 and 10 crore
What actually happened?
18
It merged Wilkinson Sword Pvt. Ltd. with itself
97% of today’s Inidan market is double edged blades
ISPL focusing only on premium products
Strategy: Move people towards twin blades segment and gradually move them towards premium products
Segmented the market with offerings at different price points 7’O Clock, Sensor and Mach III
THANK YOU
19
Recommended