Why Innovation May

Not Be Enough Armenush Archuniani-

June 2017 Semester-

Marketing-Doc. Amirshahi

'To build total brand value by innovating to

deliver consumers value and customer

leadership faster, better and more completely

than our competitors.'

This commitment to giving men the very best

is carried into our line of personal care

products, including deodorant and body

wash.

All designed for the unique needs of men –

helping them to look, feel and be their best

every day.

'Delivering value' to consumers is not

necessarily about being the cheapest, but

about earning a reputation for high quality

products that represent good value for money.

That's true of many industries, and particularly

those in which consumers believe there is a

direct relationship between price and quality.

Consumer Market Segmentation

DEMOGRAPHIC

• Men/students/young working men

between 15 to 24 years old, that

have a low disposable income;

• Men older than 24 years old, with

low and medium disposable

income (1500-5000$);

• Men older than 24 years old, such

as executives with high disposable

income (>5000$);

• Women/students between 13 to

22 years old, that have a low

disposable income;

• Women older than 22 years old,

with low and medium disposable

income(1200-4500$);

• Women older than 22 years old,

with high disposable income

(>4500$).

PSYCHOGRAPHIC

• Single men;

• Men who are actively seeking

female companions, married,

engaged and in relationship;

• Innovators and early adaptors

(or people who are able to

adapt to new technologies and

embrace them);

• Beauty conscious (focused on

physical appearance);

• Men and women who are

actively involved in sports or

are popular sports fans;

• People who do not shave due to

cultural, regional reasons;

• People who follow western

shaving life-style.

GEOGRAPHIC

• Europe;

• USA;

• Latin America-such as Mexico;

• Asia-Pacific;

• Consider India and China

individually, because they have

big market.

BEHAVIORAL

• People who shave regularly;

• Roles of culture, religion and

western influences play in

shaving behavior;

• Males who don’t shave due to

discomfort from shaving;

• People who do not shave due to

religious believes;

• People who do not care shave;

• European women who do not

shave due to cultural reasons;

• Western shaving life-style which

show the women with sleek

underarms and legs image.

Continue…

Target Market

• Urban, modern, appearance conscious male

population in the age group of 15-45 years. This

target group is the bread and butter project for

Gillette.

• Men with sensitive skins are special focus area of

the product development team, specially to

develop complementary products for them.

• The pearl target for Gillette is the women segment,

which is very profitable for Gillette, and the

complementary products for them.

• People who do not shave due to uncomfortable

feeling during and after shaving.

• Chinese and Indian market.

Gillette Positioning

Market Positioning =

Segmentation + Differentiation

QUALITY

PR

ICE

The years between 1800 and 1900 have been

coined the “GOLDEN ERA” of the straight edge

razor.

King Camp Gillette born in fond du Lac, Wisconsin

in 1855.

William Painter, the inventor of disposable crown

cork bottle cap assured him that “A successful

invention was one that was purchased over

and over again by a satisfied customer”.

In 1895, Gillette suddenly had a brilliant idea

while shaving.

It was an entirely new razor and blade.

A razor with a safe, inexpensive and disposable

blade.

But because of technical problems idea was not

immediately successful.

Until 1901 that King C. Gillette with technical

partnership of MIT graduate William Nickerson,

fundamentally transformed shaving with the

invention of the first safety razor in Boston.

Gillette receives the first U.S. patent on the

safety razor on November 15th, 1904.

1901 King C. Gillette invents

The safety razor with

disposable blades.

1920-1930 Gillette’s success carried the company through

economic droughts and world war II.

Gillette by 2 unrelated ventures:

1. 1948: The Toni company-maker of DOY home

permanent-wave kits;

2. 1955: The paper mate pen company-producer

of retractable, refillable ball-point pens.

Unsuccessful because of declining demand and

innovative competitors- Bic’s low price disposable

pens.

1962

English firm Wilkinson Sword introduced its

stainless-steel blade.

Gillette starts to lose the market share and

didn’t know how to respond.

Due to lack of sources Wilkinson Sword sold

much of its blade business.

Already Gillette lost his market share from 70%

to 49%.

Gillette new CEO which believe in

diversification acquire following companies:

1. 1967: Braun AG- German manufacturer of small

appliances.

2. S.T. Dupont- French maker of luxury lighters.

3. Eve of Roma- high fashion perfume.

4. 1977: Buxton leather goods.

5. Welcome wagon Inc.

6. 1962: Sterilon hospital razors.

7. 1973: Jafra cosmetic- home sales.

4 of these were unprofitable, the other 3 had low profit.

Other Diversifications:

1970: La Giulla- Chewing gum, candy.

1979: liquid paper- fluid for typing correction.

1984: Oral-B laboratories- dental care products.

1987: Waterman pen company- premium writing

instruments.

1993: Parker pen holding- writing products.

1996: Duracell batteries- manufacturer of batteries.

COO Michael Hawley sold the following:

The Toni company

The paper mate pen company

Parker pen holding

Waterman pen company

liquid paper

1975 Gillette introduce write brothers line of

disposable pens.

Salvaged a good portion of lost market share.

1977 Introduce cricket disposable lighters.

Experience moderate success.

Introduce Soft and Dri antiperspirant.

At first, It was successful, but then because of

its damages to ozone layer experienced a sharp

decline in sales.

1971 Gillette produces

The Trac II, the

first twin-blade

shaving system.

1977 Gillette introduces the Atra/Contour system,

the first twin-blade shaving cartridge with a

pivoting head, which allows the blades to better

follow the contours of the face for a closer

shave.

1976 Gillette introduces

Good News!, The first twin blade disposable razor for men, and Daisy razor for women.

These products led Gillette to 75% of global

market in razors and blades.

Majority of USA shaving market.

1985 Gillette launches The

Atra Plus / Contour Plus

— the first razor with a

lubricating strip.

Atra

Plus

Overtook the Trac II as the

number one selling razor.

Gillette updated its Good News! Disposable razor

with lubricating strip.

Several introductions in personal care segment,

such as Aapri facial care products, Mink Difference

hair spray, moisturizers, etc.

1990 Gillette launches

Sensor — The first

razor with twin blades

individually mounted

on highly responsive

springs that

automatically adjust

to the contours of

every face.

1993 The Sensor Excel

razor blades.

1992 Development The Sensor razor blades for women.

1996 Development The

Sensor Excel razor

blades for women.

Start of internal competition.

Gillette represented The first product that was

able to effectively shift consumer demand and

sales away from the Atra and Trac II.

Gillette is the best-selling disposable razor

worldwide.

Gillette’s most

successful new

product ever.

Sales rose to

1billion$ in first 18

months.

The Match3 was

named winner of

American Marketing

Association Grand

Edison Award for

the best new

product of 1998.

The MACH3 Turbo for men

Venus system for women

1998 Gillette breaks the performance

barrier with The MACH3, the first 3-

blade technology, for an even

smoother, closer shave with fewer

strokes and less irritation.

2003 Gillette faces new threatening competitor

- Schick and its product Quattro-the world first four-bladed razor.

They were in legal ping-pong match, due to problems such as using the same technology or having misleading advertisement statement.

Schick increase its market share to 17% while Gillette’s market share fallen to 635.

Gillette established a two-fold attack plan:

I. Convert consumers to higher-price products;

II. Expand geographically.

Fight

back

2004 Gillette introduces M3Power – the first micro-powered wet shaving system for men – making it easier to shave more thoroughly with one easy power stroke.

A refillable triple-

bladed, battery powered

wet shaving system.

On October 1, 2005,

Procter & Gamble –P&G-

finalized its merger with

the Gillette Company.

Sold more

than 4

billion$ in

2 months

2006 Gillette Fusion razors debut in Manual and Power versions. They feature 5(+1) blades and beat the MACH3 on every attribute, providing Gillette’s closest and most comfortable shave ever.

But

Fusion is more expensive than

Mach3.

Critics claim that It has no

additional performance benefits.

2007 Gillette Fusion Power

phantom or Stealth in UK

Features a redesigned

handle with a darker

color scheme than the

original.

2008 Gillette Fusion

Power Phenom

It has a metallic

blue and silver color

scheme.

2009 Gillette Fusion Power

Gamer razor

Synergy between product development

and marketing strategy

2010 Gillette Fusion ProGlide and Fusion ProGlide Power

Include new innovations

World’s best-selling razor

Best razor of 2011 by Men’s Health Magazine

Gillette market research indicates

that most men experienced

discomfort during and after shaving

Gillette defining new standards

Innovation and

global expansion

Grow Gillette Market Share

Gillette always made great strides in

appealing to the needs of women.

In 2010 won Gold

Award for its

women’s Venus razor

Venus was the first wet-shaving product

designed specially for women

Improve daily shave

experience for women

2012 Gillette Fusion ProGlide styler

Conjunction with a new “Masters Of Style” campaign

Co-operation of P&G 2 brands-

Braun and Gillette

Also developed ProGlide

clear shave gel

3-in-1 Styling Tool

• Gillette entered the Indian market in 1984.

• Gillette launched its newest triple-blade system,

Mach3 in 2004, but sales were flat for a long time.

AND

Indian men do not consider shaving a

significant enough activity to justify such

a premium.

Gillette had to focus on changing the

consumer's attitude, leading to some

creative marketing campaigns

An estimated 400 million

customers not happy with

existing market

BUT

The company created the Women Against

Lazy Stubble (WALS) association

Until 2010, Gillette India had been following a strategy

of marketing cheaper-end US-developed razors.

Such as

‛Shave India Movement 2009’ campaign

'India Votes... to shave or not' to support this campaign

Which asked three controversial questions: • Are clean-shaven men more successful?

• Did the nation prefer clean-shaven celebrities?

• And the big one: do women prefer clean-shaven men?

Gillette Guard, the first product

created just for the Indian market, was

introduced in October 2010

• It was more affordable.

• Valued safety and ease of use.

• Extra blades were eliminated.

• Design complexity was reduced.

• Easy-rinse cartridges, which help

customers save water and ensure

the blades are clean, even if

running water is not available

• Lightweight, ribbed handles were

designed.

A mistake that multinationals

make, is to push global

brands in a one-size-fits-all

strategy.

Gillette's strategy of

spending time and resources

understanding Indian

consumers' needs proved to

be the key to its success.

Razor manufacturers earn most

of their profits from blade

refills, not the initial razor

purchase.

Upselling And

Cross-Selling

matters.

so

2014 Gillette changes the landscape

of manscaping with the first

razor built for the male

terrain—GILLETTE BODY.

2014 Gillette Fusion ProGlide with FlexBall Technology Razor is the next evolution in our shaving revolution—a pivoting razor built to maximize contact with every contour of a man’s face.

2015 Gillette Fusion ProShield

provides lubrication BEFORE

and after the blades to shield

from irritation while you

shave to maintain maximum

contact.

By the way, Gillette focused on

releasing complementary

products, such as hair care or body

wash

Enhancing product line

Expand marketing strategy

Brand

standing

World’s Leading Male-grooming

Authority

Marketing strategies

One of the Gillette’s core competencies is Gillette’s created

synergy between product development and marketing

strategy.

Gillette’s stellar marketing focused heavily on male-

dominated sports marketing activities.

Gillette believes that the best way to

maintain top of mind awareness in

every market that it enters is sport

marketing and sponsorship

In 2004, Gillette began a partnership with football star, David Beckham

Beginning in the

1970s, Gillette

sponsored

international events

such as the FIFA World

Cup, rugby, the

Gillette Cup in

Cricket and Formula

One racing.

in February 2007, Gillette

launched the Gillette Champions

program that highlighted the

athletic and personal

accomplishments of three of the

world’s greatest athletes – Roger

Federer, Thierry Henry, Tiger

Woods

Gillette’s stadium

Located in Foxborough, Massachusetts.

It serves as the home stadium and administrative offices for both the NFL's New England Patriots football franchise and MLS's New England Revolution soccer team, and also home stadium for the football program of the university of Massachusetts (UMass).

60% of Gillette’s sale is outside USA.

These sports are popular in Latin America and Europe.

Gillette extended its naming rights until 2031.

Gillette’s young guns

campaign

ABC Reality Television series

featuring twelve celebrities.

Featuring NASCAR's Top Young

Drivers.

The Gillette Young Guns are six

of racing's top young drivers.

Matt Ryan and Ray Rice from football,

Evan Longoria and Carlos González

from baseball and Denny Hamlin and

Kyle Busch from auto racing.

Promotes the fast and furious

life of men though television,

print, online, public relations,

and event marketing tactics.

London 2012

Olympic Games

A team of 24 world-class athletes

from 18 countries.

Each of these athletes will

participate in activities to help

inspire and encourage future

generations to achieve greatness

through great starts in athletics –

and in life.

Argentina-1 Brazil-4

Canada-1

Chille-1

China-1

France-1 Germany-1 Italy-1

Great Bretain-2

Spain-1

Japan-1

Mexico-2 Peru-1 Venezuela-1

Switzerland-1

United States-2

Ukraine-1 Russia-1

Gillette’s Social Media

presence-2007

First step on Facebook, but not

seriously until 2011. but now on

Facebook and Twitter.

Gillette answer the comments

on Twitter and Facebook.

Gillette

marketing

campaign

for the

Fusion

ProGlide

Styler, with

major

partnership-

MOVEMBER,

which

created a

cult charity

brand with a

strong

following of

a young ,

trendy

moustache-

sporting

guys.

MediaCom Communications-2014

An impactful, innovative, immersive and

non-intrusive gaming experience.

Tied the introduction of the MACH 3 razor

to Real Racing 3 - a car racing, mobile

game, to engage consumers and

associate the brand with technology

A personal sporting experience.

The user base matched the brand's core

target audience across India.

When a user clicked on the banner, they

were prompted with the option to “begin

a race,” which would launch an

interactive game from inside the creative.

To promote engagement, the campaign

awarded weekly prizes to the consumers

who had the fastest times in the game.

Rio 2016 Olympic

Games

Gillette Unveils “Perfect Isn’t Pretty” Campaign.

This campaign reinforces the role of Gillette as a brand that promises and strives to deliver the best for 800 million men every day and has done so for over 100 years.

Features Neymar Jr. (Brazil, Football), Ashton Eaton (USA, Decathlon), Ning Zetao (China, Freestyle Swimming) and Andy Tennant (Great Britain, Team Pursuit Cycling)

Gillette says ask your

dad, not the internet

An advertisement, released just

in time for Father’s Day.

A digital campaign to encourage

teens to 'Go Ask Dad' for advice

instead of the internet.

That sets up a test where boys

first try learning things by

"asking the internet," then

asking their dads, and

comparing results.

The Internet cannot put that

razor in your hand and guide

you during your first shave.

Global expansion

The best way to

understand

customer’s needs

Perform R&D where the

end product will be sold

Specially Gillette invest on

R&D outside the USA. Such as

India, China, etc.

Pricing Strategy

Gillette has maintained the premium pricing of the product

and the quality of the products is certainly high.

The company has fixed different prices over different

categories of the products based on their qualities and

technology, which is used in the preparation of the product.

Evidence show that most men and women like less

expensive 3-blade razors.

Men try to reduce their cost of shaving by various ways.

Gillette spokeswoman Kara Buckley said: We

need to do a better job of telling guys

we are available for them at a multitude

of price points."

High cost of shaving

Invent start-ups

The Blue Ocean

Strategy advises

that you compete

on attributes that

your competitors

have failed to

serve.

Dollar Shave club-2011: Delivers razors and other personal grooming products to customers by mail.

It delivers razor blades on a monthly basis and offers additional grooming products for home delivery.

P&G in recent

years launched

its own

competitor to

online razor

services,

The Gillette

Shave Club.

Online Blades And Razor Sales-USA2016

0

10

20

30

40

50

60

70

80

2010 2015 2016

US Market Share

US Market Share

Looking Toward The Future

Consider roles of culture, religion and

western influences.

Innovation whether in product design or

marketing.

Strengths Being first mover in razor and blade industry.

Practice positive cannibalization.

Strong brand image.

The power to expand product globally-Global presence.

Quality, technology and innovation.

Market leader (Dominant market share).

Strong market equity.

Strong and aggressive advertising.

Different and innovative marketing campaigns.

Take parts in events, such as Olympic games, sponsorship, etc.

Responsive I mage, especially in social media-Facebook and

Twitter.

Creativity and strong R&D investments all around the world.

P&G Resources and technology advantages.

The power of company in creating synergy of its core business

and marketing programs.

The power of the holding -P&G- in leveraging the strengths and

technologies of its different brands to develop new products-

such as skin care, hair care, etc.

Gillette products for women are not just different in colors,

the razors have different system and features.

Weaknesses High price points.

Narrow segment focus.

Primary product is in the maturity stage of its product life

cycle.

New products without substantial technological improvements.

Inability to rise the market share - Remained stagnant recently

- “Sleeping Giant”-.

The critics believe that new models have no additional

performance benefits.

Not very active in online media.

Made reckless acquisitions.

High prices led to new start-ups such as Dollar Shave club, etc.

so Gillette market share fallen.

Gillette’s products known as luxury products in comparison to

other competitors in this industry.

Expensive brand maintenance.

Opportunities Promote Western-style culture-Campaigns to glamorize clean-

shaven.

Make teenage male/female as lifelong users.

Enter into competition with start-ups such as Dollar Shave

club, etc. to risen the market share.

Expand/innovate creams and lotions-15% men don’t shave due

to discomfort, and 3% don’t care to shave!

Product diversion and new product launch.

Create strong, extensive and promising customer environment.

Gillette products damage the environment, because most of

them are Non-recyclable, so Gillette should invest on

environmental issues.

The opportunity to become the supplier of industries, such as

hospitals, etc.

Improve consumer trust and loyalty. 'More completely' recognizes that a razor is just one component of

the much broader market of 'personal appearance and wellbeing'.

'Looking good, feeling good' is a many-staged process of personal

grooming, of which shaving is just one aspect. So there is the

opportunity for inventing new related products, such as

electric and manual toothbrushes, ear and nose shaver, etc.

Opportunities New production technology.

Razor manufacturers earn most of their profits from blade

refills, not the initial razor purchase, so improve cross-selling

complementary products.

Consider the consumer spending power and lower the costs.

Provide discount, coupons and seasonal promotion for

consumers.

Expand the products to new markets, such as china, Latin

America, etc.

Threats Competitors such as Schick, Bic, etc.

Manufacturing price increases.

Increasing the customer’s bargaining power.

New online start-ups such as Dollar Shave club, etc. which

work in this industry and take Gillette’s market share.

Ongoing legal battles.

Substitute products which are developed in the market, such

as electric razors, laser hair removal, Epilation, wax strips , etc. which are longer-lasting than razor.

Price sensitive market.

Cultural and religion issues.

CASPIAN Launches Worldwide Gillette Boycott- CASPIAN

(Consumers Against Supermarket Privacy Invasion and Numbering) is calling for

a worldwide boycott of Gillette products since the company failed to

renounce a Gillette Mach3 "smart shelf" spy system.

Heavy critics and negative online reviews.

Low pricing strategy of new entrants from China, India.

Economic down turn.

High barriers for competitors to

enter the space on large scale.

Large buyers such as Walmart,

Target, etc. have high bargaining

power, and individual customers as

well, because there is other same

products with lower prices, and the

customers willing to more

personalize products.

Intensive and fierce competition in

grooming industry.

1. Schick – its slogan is “free your skin” and offers razors for

both men and women. Schick focuses on breaking away from

their normal routine by exposing them to something new (try

Schick over Gillette for something new and different). This is

great for people wanting to try something new and different

than the normal shaving routine.

2. Norelco – its slogan is “maintain peak performance”. Norelco

focuses on performance and “not losing your edge” and

“maintaining your razors peak performance.” This idea of

durability/cost effective (this razor maintains performance, so

it doesn’t reach its peak). This is great for people who shave a

lot.

3. Braun – its temporary campaign is “if you expect your razor to

last a few years. We’d like to raise your expectations.” Braun

(similar to Norelco) is trying to capture its target audience

interest by showing its durability/reliability, as well as the

cost effective (not having to buy a razor again until 7 years).

This is great for people who don’t want to spend too much

time on choosing which razor to buy.

Gillette is a very big buyer of

supplier goods, so the bargaining

power of suppliers is low.

Customers have other cost effective

substitutes, so the switching cost is

low, and the threat of substitutes is

high.

Porter’s 2 New Forces

Supplementary

or

complementary

Force

Liquidity force

It refers to technology that the

company has, and this force for

Gillette is high.

This force refer to the power of

company to sell the

brand/company, and this force in

Gillette is low, because Gillette is

in maturity stage of its product

life cycle, and its hard to find

investors to buy the company,

and in addition brand equity is

very high.

DECLINE • Increase firm

investment to

dominant the

market.

• Maintain firm

investment until

uncertainties are

resolved.

• Decrease firm

investment by

dropping

unprofitable

customer groups,

while increasing

investment in

profitable groups.

• Milk the

investment for

cash.

• Divest the line.

MATURITY • Convert non-

users(pursue new

consumers).

• Enter new market

segments.

• Increase product

usage through

more frequent use

or additional

applications.

• Improve the

product.

• Modify marketing

programs.

• Find niche.

• Markdown prices.

• Increase

advertising and

promotions.

• Increase R&D for

product

improvements or

line extensions.

• Supply product for

private-label

branding.

GROWTH • Maintain or slightly

increase

promotional

expenditures.

• Lower prices to

appeal to price-

sensitive buyers.

• Improve product

quality, add new

features.

• Add new

models/accessorie

s.

• Enter new market

segments.

• Increase

distribution

• Shift product-

preference

advertising.

INTRODUCTION • Inform potential

customers.

• Induce product

trial.

• Secure

distribution in

retail outlets.

• Focus on higher-

income groups.

• Prices set high due

to high costs.

Product Life Cycle

Marketing

Strategies

Invent A

Purple Cow

Product Life Cycle Curve - Moor’s Diffusion Curve

1) Evaluate product

innovation at Gillette

throughout its history. Has

Gillette been a victim of

its own success?

Gillette’s Razor Evolution 1901: King C. Gillette

invents the safety razor

with disposable blades.

1903: Gillette

manufactures the first

safety razor. By year’s

end, Gillette sells 51

razor sets and 168 blades

1904: Gillette receives

the first U.S. patent on

the safety razor, sales

soar to 90,000 razors and

12 million blades. 1932-69: Gillette

introduces the Gillette Blue

Blade, Thin Blade, and

mostly improve the design.

1932-69: Gillette

introduces the Gillette Blue

Blade, Thin Blade, and

mostly improve the design.

1971: Gillette introduces

Trac II, the first twin-blade

shaving system.

1976: Gillette introduces

Good News!, the first twin

blade disposable razor for

men.

1977: Gillette introduces

Atra, the first razor with

a pivoting head.

1985: Gillette introduces

the first razor with a

lubricating strip–AtraPlus.

1986: Gillette introduces

the first disposable razor

with a lubricating strip –

Good News! Plus

1989: Gillette introduces Sensor, the

first razor with spring-mounted twin

blades.

1992: Gillette launches Gillette Series

line of shaving products with its

signature Cool Wave fragrance.

1994: Gillette introduces SensorExcel

featuring five flexible microfins for a

closer shave.

1998: Gillette’s MACH3 shaving

system, the first triple-blade shaving

system, "breaks the performance

barrier."

2004: Gillette introduces M3Power –

the first micro-powered wet shaving

system for men – making it easier to

shave more thoroughly with one easy

power stroke.

2005: Gillette launches the Gillette

Fusion shaving system with manual

and power razors.

2014: Gillette Fusion ProGlide with

FlexBall.

2015: Gillette Fusion ProShield.

Gillette was in monopoly in the razor industry and personal

shaving market for quite a long time. As you see in the

Gillette’s Razor Evolution history they did not focus on

product innovation very much, just made some slight

improvements, specially in color and design, not on

performance features, and when it did, it focused on

acquiring existing product lines, which are not profitable

for Gillette.

In 1962, when Wilkinson Sword launched its stainless-steel

blade, Gillette finally faces a serious threat, a competitor,

but they were unsure how to respond!! Gillette was lucky

this time and Wilkinson Sword couldn’t exploit the niche it

had created, and Gillette was able to purchase much of

their existing blade business, but Gillette already lost its

market-share dipped down to 49%.

Gillette new CEO Vincent Ziegler, continued to diversify

their product line, and develop products, such as lighters,

deodorants, etc. and could experience moderate

successes.

Under the leadership of Colman Mockler, Gillette launch

TracII razor, Atra razor and Good News! And deemed a great

success and thus continued Gillette’s dominance in this

market.

By 1990, Gillette kept on innovating and attacking it own

products, and found an interesting position of cannibalizing

its own success, through introducing Sensor family of shaving

system, Mach3, Fusion, etc.

In many ways Gillette has been a victim of its own success,

when they were being innovative, they were "cannibalizing"

their own successful products. While their new inventions

drove up their sales, it often took away from the sales of its

previous products and did not increase their market share,

and another problem is that, new introduced products are

costlier than the old ones, and majority of people are price-

sensitive, so they keep on using the old ones, or switch the

brand, and even use the new start-ups programs to decrease

their shaving costs.

Cannibalization is perceived as a problem to many venture capitalists as it may bring reduction in profit and also steals away sales of an existing product, as a result of introducing a new product. What seems at first to be a successful new product can easily turn into the wrong kind of success when total market share and value is lost.

Cannibalization clearly is a difficult and painful thing to do. It requires firms to swim against the tide of organizational inertia. Decision makers in organizations often ignore or neglect the effects of cannibalization.

The effect of cannibalization on a market share can be

considered from two different perspectives:

1. Intra–product cannibalization can be observed between

products that are classified in different product groups,

look physically different, but offers similar functionalities.

2. Inter-product cannibalization is seen when different

products within the same product group in a firm competes

against each other for market niche.

The answer lies in the extent to which the firms are prepared to give up the old and embrace the new product. Nevertheless, entrepreneurs need to realize that cannibalization is not always avoidable.

Product innovation isn’t an option in today’s business world – it’s a necessity. Long gone are the days when companies could rely on their flagship products, long product cycles, or traditional business models to sustain growth.

Nowadays, many firms have experienced the need to offer more productivity because of increased competition and more demanding customers.

The most important issue is to know the best time to adopt or avoid cannibalization to Minimizing the Effects of Cannibalization on Firms’ market share.

So Cannibalization may Increase Market Share, profit and Success in Failure.

One of the Key success to result success in cannibalization

is strong brand loyalty to original product, as we know the

Fusion shaving system is costlier than Mach3, but Fusion

ProGlid system is the World’s best-selling razor, so the

cannibalizing was profitable in this case.

1962

Wilkinson Sword

launched its stainless-

steel blade

According to BCG Market Growth-Relative

Market Share curve Gillette has high market

share, but due the product life cycle, razor

and blade industry is in maturity stage of

product life-cycle, so the growth is slow, so

Gillette is a CASH COW business for P&G.

These units have cash-generating qualities and

typically generate cash in excess of the amount

of cash needed to maintain the business.

They are to be "milked" continuously to produce

cash for Gillette to invest on R&D activities and

complementary product lines.

In this case, Gillette should utilize Concentric

Diversification, Horizontal Diversification,

Conglomerate Diversification, and Joint

Venture Strategies.

1) … Has product

innovation in the wet-

shaving market come to an

end? Explain.

I believe that product innovation in the wet-shaving

market has come to an end.

The five blade Fusion did nothing significantly different

from their own Mach3 and Schick's Quattro and It has no

additional performance benefits.

It also mentioned that when introducing each new product,

sales of the initial razor were higher than refill cartridges.

People are eager to try to the new product, but may be

they aren't pleased enough to buy refills, they like their

old product better, or they felt they were too expensive to

continue to use them, but we mentioned that razor

manufacturers earn most of their profits from blade refills,

not the initial razor purchase.

In addition the Substitute products will decrease the demand

for razor, but the complementary product can be used even

by the people who don’t use razor.

So, they should focus on enhancing current products,

developing complementary product (cross-selling and up-

selling), and improve the consumer’s loyalty to brand to

use the products of brand as a complete package for Skin

and hair care.

As It is explained in the case , Gillette’s bread-

and-butter has always been male consumers,

the project development for Gillette is easier,

and the technical success is high in this

segment, but if the project done successfully,

the value creation is low.

But Gillette start working significantly for the

women segment and introduce the Venus

system which create high value for Gillette and

P&G, and it will be as a pearl in Project

Portfolio-matrix Dimensions.

As we see in the Project Portfolio-matrix

Dimensions, Gillette’s bread-and-butter has

always been male consumers, the project

development for Gillette is easier, and the

technical success is high in this segment, but if

the project done successfully, the value

creation is low, and, this issue can be

explained with effort and impact metrics too.

In male segments, it needs low effort, but the

impact is medium.

But for the women segment, it needs high

effort, but the impact will be high, so it is good

project to invest.

Financial

Strength

SPACE MATRIX

Industry

Attractiveness

Environmental

Stability

Competitive

Advantage

Conservative

Competitive

Aggressive

Defensive

FS

SPACE MATRIX

IA

ES

CA

1شماره خانة توسعه بازار 1. رسوخ در بازار 2. توسعه محصول 3. یکپارچگی عمودی به باال4. یکپارچگی عمودی به پایین 5. یکپارچگی افقی 6. تنوع همگون 7.

2شماره خانة کاهش 1. تنوع همگون 2. تنوع افقی 3. تنوع ناهمگون4. واگذاری 5. انحالل 6.

4شماره خانة تنوع همگون 1. تنوع افقی 2. تنوع ناهمگون 3. مشارکت 4.

3شماره خانة کاهش 1. تنوع همگون 2. تنوع افقی 3. تنوع ناهمگون 4. واگذاری 5. انحالل 6.

Product

Market Existing Relevant New

Existing

Increase the

number of

consumers

through

marketing.

Sell new models

of razors to

customers.

Sell

complementary

products to

customers.

Relevant Sell razors to

hospitals, chain

stores, etc.

Sell relevant

products, such

as razor refills to

these relevant

markets, such as

hospitals, etc.

Sell

complementary

products to

these relevant

markets, such as

hospitals, etc.

New Expand the

products to

other countries.

Expand relevant

products to

other countries.

Expand

complementary

products to

other countries.

Solutions About Market And Product

Type Development/Diversification

2) What do you make of

the razor wars, first

between Gillette and

Schick, and now with

online competitors? Does

Gillette face a serious

threat from competitive

inroads? Explain.

Gillette feel the threat of competitors in 1962 for the

first time, by the new entrant Wilkinson Sword, It is true

that Gillette lost its market share, but Gillette acquire

much of Wilkinson business.

But in 2003 Gillette face a new, more threatening

competitor Schick, and the world first 4-bladed razor

Quattro.

Before launching Quattro, Gillette sued Schick for

illegally using the same progressive geometry technology

as the Mach3, and Schick countersued Gillette for

misleading advertisement statement, that “The World’s

Best Shaving” and “The best a man can get ” slogans can

confuse the customer.

But the point in this legal war is that, Schick launch

Quattro and increase its market share to 17% and

Gillette’s market share decrease to 63%.

And another point in this legal ping-pong match is that

the customer preferences and purchases changed.

This one-upmanship did benefit Gillette. It propelled Gillette to take a good look at it's strategy. They prepared a two-fold plan and focused on converting consumers to higher priced razors and expand into new world markets.

But these battles may distract business from innovations and take its attention on respond to competitors act, and loose the opportunities.

Based on “Leading razor brands in the US in 2015-based on sales ” statics, Schick Hidro5 is the best selling, but the point is that the other products which have the majority of sale are Gillette products.

One of the most important KSF-Key Success Factor- of Gillette is its R&D offices around the world, which help Gillette to understand consumer demands. One of its big successes was being unprecedented with Gillette Guard among Indian men, which hold 50% market share in India, and Gillette is working on entering Chinese market, and Gillette products are best-selling in Europe as well.

In addition Gillette is leader in women

segment with Venus shaving system,

and have the dominance market-share

in this segment.

The most important battle for Gillette is

the threat of new entrants with lower

prices, substitute products and online

competitors.

With launching new online start-ups which give shaving

experiences with lower costs through different monthly

options and mail-order, which was very interesting for

customers, especially men, Gillette lost its market

share, and due to low investments in this business

model, the number of new entrants are increasing.

As you see in Dollar Shave Club Revenue Growth curve,

it shows that customers spending increases widely, so it

shows the importance of this business type.

P&G in recent years launched its own competitor to

online razor services, The Gillette Shave Club which

provide shave plans for consumers with free shipping,

but Dollar Shave club which was the first mover in this

segment is still the online market leader, and Harry’s

shave club which launched on 2013 can get the third

rank in online market.

Gillette should work on strengthen rand loyalty, work on

customization, and even works on substitute products,

technologies and tools for the razor and blades.

DOLLAR SHAVE CLUB REVENUE GROWTH

Online Blades And Razor Sales-USA2016

3) What actions would you

recommend over the next five

years that would help Gillette

maintain its worldwide

dominance in the shaving

market? What specific

marketing program decisions

would you recommend? Should

Gillette be worried about its

pricing? Explain.

DECLINE • Increase firm

investment to

dominant the

market.

• Maintain firm

investment until

uncertainties are

resolved.

• Decrease firm

investment by

dropping

unprofitable

customer groups,

while increasing

investment in

profitable groups.

• Milk the

investment for

cash.

• Divest the line.

MATURITY • Convert non-

users(pursue new

consumers).

• Enter new market

segments.

• Increase product

usage through

more frequent use

or additional

applications.

• Improve the

product.

• Modify marketing

programs.

• Find niche.

• Markdown prices.

• Increase

advertising and

promotions.

• Increase R&D for

product

improvements or

line extensions.

• Supply product for

private-label

branding.

GROWTH • Maintain or slightly

increase

promotional

expenditures.

• Lower prices to

appeal to price-

sensitive buyers.

• Improve product

quality, add new

features.

• Add new

models/accessorie

s.

• Enter new market

segments.

• Increase

distribution

• Shift product-

preference

advertising.

INTRODUCTION • Inform potential

customers.

• Induce product

trial.

• Secure

distribution in

retail outlets.

• Focus on higher-

income groups.

• Prices set high due

to high costs.

Product Life Cycle

Marketing

Strategies

Since the razor market is very saturated there are not enough options left in razor market.

They have to focus more on their R&D to keep their brand image high.

There is 15 percent of the male population that doesn't shave due to discomfort. Focus on product development for a razor that works for those men with sensitive skin.

Focus more on women market. Take advantage of other countries whose women may be influenced by Western lifestyles, that include women shaving being a part of everyday life.

Consider cultural and regional segmentation, and try to penetrate a life-style with every day shaving habits, use advertisements which show the attractiveness of clear shaving for opposite gender.

Considering Indian market entering success, focus on entering new global markets such as China, Indonesia, Latin America, etc.

Chinese are luxury goods lovers, so expanding new products, with high customization and high prices can be profitable in China.

Develop cross-selling complimentary products.

Work on lowering the costs to get the segment with low disposable income and overcome the new entrants with lower costs.

Product cannibalization could be an enormous opportunity for Gillette as long as they keep focusing on their strong suits such as, their innovative product development.

In marketing programs, Gillette is heavily focused on male shaving, Gillette can use women influencers, such as actresses, female sports teams, superstars. With the world-wide market share, they can take advantage of other countries that include women who shave everyday.

Gillette can focus advertisements on different cultures and life-styles, and encourage western shaving life-style.

Sales Promotion: Gillette usually runs sales promotion schemes all the year. At times they give bundled products at discounts or extra gel per canister or free promotional products to popularize new products. The main advantage of this strategy is that the young customers' base feels good as they get more for the same amount. For new products it gives customers a chance to experience new technology shaving goods free of cost which later helps them to make informed buying decisions.

Public Relations: Gillette's Public Relations and charity efforts are an important pillar of its promotional strategy. It is conscious of its social image and reputation.

Gillette should pay attention to environmental sustainability and focusing on recycling projects.

One of the most important ,marketing programs is social media and brand generated content(BGC) and user generated content(UGC) which can influence the customer purchasing decision and change shaving life-style gradually. Using viral hashtags to trend Gillette in social media.

Nowadays beard fashion is very popular and feral, and there are viral in Youtube and social media and there are famous beard festival every year, so Gillette can run campaign and sponsoring these festivals, and use the winners of these matches as influencers. They can promote Gillette as a shaper to their beards.

As you see in the curve below which show the trend of day of week and

time of day which Gillette is purchased from the stores, this data and

knowledge can help the marketers to decide the timing of their marketing

programs, specially in Digital Marketing tools, such as email-marketing,

sending SMS, generating content on social media pages.

In pricing strategy, Gillette should consider the fact

that majority of people spending power are low, and

customers, especially men always want to decrease

their shaving cost, and this is one of the reasons of

Dollar shaving club and such start-ups success, so

consumers are price-sensitive, so Gillette should lower

the costs, and giving discounts, coupons to them to

strengthen their loyalty to brand.

Another threat is the new entrants with low prices, such

as Chinese manufacturer, which can get the segment

with low income, which is not small segment. So Gillette

should worry about its pricing strategy.

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Minimizing the Effects of Cannibalization on Firms’ market

share, Adeleye Afolabi, Jawad Ahmad Choudary, and Reza

Shirazi, Technology Innovation Management, 2013.