GILLETTE’S Razor Sharp Edge Over Its Competition

Overview

Background info on Gillette Problems/Solutions company faced Current info/issues

Background Information Founded in 1901 Flagship product—safety razor Company’s 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 Core Values

Achievement, Integrity, Collaboration

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 power-consulting services to leading electronic device manufacturers

                                    

Oral Care Company’s

fastest growing business

Oral-B brand holds #1 position globally in manual and power toothbrushes

                                                                         

Facts 3 core businesses provide:

80% sales 90% profits

These core brands are the strength of Gillette Co.

Gillette Mach3 Gillette for Women Venus Right Guard Duracell CopperTop Oral-B Braun Oral-B Braun

Problem Background 1980s: Consumers chose inexpensive

disposable razors Gillette helped to foster trend:

Focus on price, not quality Results:

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 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 campaigns—free razors Catchphrase: “The best a man can

get.” Able to reverse the trend—

SUCCESS!

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 consumer’s opinions of our brand image?

Marketing Research Problem

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.

Current Issues facing Gillette

Razor Wars Feb. 24, 2003 Gillette, Bic, Schick Launch new razors in men and women’s

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 again—RISK

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 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 Jan. 13, 2003 Cut price of AA and AAA batteries

by 13% Prompted to reduce price gap with

competitors Energizer, Rayovac

Concerned with competitor’sheavy 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

The End