gillette final
TRANSCRIPT
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STRATEGY & MARKETING MANAGEMENT
“GILLETTE IS THE GLOBAL LEADER IN MALE TOILETRIES PRODUCTS”
Data Monitor Research, Oct. 1999
19th December 2001
Course Tutors : Professor Patrick McNamee Doctor Kate Stewart
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PRESENTATION SUMMARY
•EDEL TONER - INTRODUCTION
•COLIN SYKES - ORGANISATION AND PRODUCTS
•ORLA OKUNAIYA - STRATEGY
•SARAH SHAW - FINANCIAL PERFORMANCE
•JIM McCALLUM - INDUSTRY AND MARKETS
•NILE SMITH - STRATEGY AND COMPETITORS
•PADDY McKIBBIN - CONCLUSIONS
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THE GILLETTE COMPANY100 YEARS 1901-2001
•1901 Founded by King C Gillette with William Nickerson in Boston.
•1902 1st Product – Double edged, T shape disposable razors.
•1905 Develops new markets by opening London Offices.
•1914 Gillette brokers deal with US Army (3.5 Million razors, 36 Million
blades)
•1950 Spends $6 Million for TV rights to Baseball World series for 6 years.
•1964 Gillette splits into 2 SBUs, for grooming, the other for all other products.
•1973 Net Sales exceed $1Billion.
•1980 Net Sales exceed $2 Billion.
•2001 Gillette has 61 Facilities in 25 Countries, and employs 40,000 people
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NORTHAMERICA
SOUTHAMERICA
UK
EUROPE
AFRICA
ASIA
AUSTRALIA
GILLETTE WORLDWIDE MANUFACTURING SUBSIDIARIES
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ORGANISATIONAL CHART
Oral Care(Oral B Brand)
Braun(Electrical Appliances)
Portable Power(Duracell)
Grooming(Blades & Razors)
Global Business Management
Latin America
North America
AsiaPacific
AfricaMiddle East
Eastern Europe
Western Europe
Eastern Hemisphere
Commercial Operations
Gillette Company
Western Hemisphere
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GILLETTE PRODUCT RANGE
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PRODUCT MARKET PORTFOLIO
RMS
MA
RK
ET G
RO
WTH
(%
)
1.0
Oral-B
Toiletries
Blades & Razors
Duracell
Braun
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GLOBAL STRATEGY
• Corporate Objective
– global focus on consumer products
– global competitive advantage in quality, value added personal care/use products
• Global Market– competing in the triad markets (Europe, Japan, North and South
America)
– industry concentration (SWOT Analysis)
– global market leadership in male and female grooming products
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THE GILLETTE STRATEGY
• Global resources organised and deployed to achieve market leadership in all their products
• to maintain and increase existing market share in male and female grooming products
• Corporate Strategy
– aggressive research and advertising
– strategic diversification e g mergers & acquisitions
– new product developments (invest in technology and product innovation)
– focus on core competencies
– maximise e-commerce opportunities
– build strong product portfolio
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MERGER & ACQUISITION STRATEGY
• Diversification - make or buy decisions
• Stainless steel blade controversy and the multi-product market strategy
• String of multiple acquisitions - some successful and some unsuccessful
• Moderation of Diversification due to failed acquisitions
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GILLETTE MARKET STRATEGY
• Strategic Market Objectives
– Achieve a well integrated programme of marketing mix elements.
– To enter the direct sell market via the Internet.
• Target Market Analysis– early entry into the UK market by the FDI mode
– presence in the UK as a strategy for European Common Market
– high industry concentration ratio (SWOT Analysis)
– market leadership in men’s shaving products
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SALES BY PRODUCT
• Sales of Blades & Razors up 8% 1999-2000
• Sales of toiletries and Duracell products are both down from 1999 - 2000
• Oral B products have had the largest increase of sales of 10% from 1999 - 2000
• Braun has recovered from 1999 where its sales dropped by 9% from1998 and has increased by 3% in year 2000
Gillette Sales by Product ($ Millions)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2000 1999 1998
Year
Sal
es
Braun Products
Oral-B Products
Duracell Products
Toiletries
Blades & Razors
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GILLETTE'S PROFIT BY PRODUCT
• Blade and Razor profits up 11% in 2000, due mainly to sales of Mach 3
• Profits for Toiletries and Duracell are both down but this is in line with Sales
• Oral B’s profit only increased by 3% even though sales increased by 10%, this was due to higher marketing expenses
• Braun’s profits increased by 41%, this reflects sales growth/improved mix and lower overheads
Gillette Profits by Product
0
500
1000
1500
2000
2500
y2000 y1999 y1998
Year
Pro
fit
$Mil
lio
ns
Braun Products
Oral-B Products
Duracell Products
Toiletries
Blades & Razors
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COMPANY SWOT ANALYSIS
Strengths
Threats
Weaknesses
Opportunities
Market LeaderStrong Brand ImageGlobal PresenceAggressive AdvertisingQuality & InnovationPortfolio Range (Mach 3 etc)
Long Development CyclesRelatively Static Market GrowthHeavy Dependence on High Street Retail OutletsExpensive Brand Maintenance
Demographic ChangesChanging Societal AttitudesConsumer Brand PreferenceDemand for High QualityUse of JIT and ICT (e-com)New Production TechnologyIncreased Grooming Sophistication
New CompetitorsCloning of Successful brandsIncreasing Buyer Power(Inventory De-stocking)Growth in SubstitutesOwn Label FitsEconomic Downturn
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BLADES & RAZORS SEGMENT
DisposableRazors
ShavingSystems
ReplacementBlades
Blades &Razors
ElectricShavers
Shaving Products
Pre-Shave Post-Shave Deodorants
Toiletries
GroomingMale & Female
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TOTAL UK BLADES & RAZORS MARKET
Replacement Blades
Disposables
Systems
£m
%
•Systems 102 64
•Disposable 39 25
•Replacement Blades 17 11
Source: Mintel Report, 1998
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WET SHAVING PRODUCTS
•Mach3
•Sensor & SensorExcel
•Atra
•Trac II
•Custom Plus
•Good News
•SensorExcel for Women
•Sensor for Women
•Agility
•Gillette for Women Venus
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BiC Products
• Sensitive
• Twin Select Sensitive Skin
• Twin Lady Shaver
• Twin Select Silky Touch
• Softwin
• Softwin for Women
Wilkinson SwordProducts
• Extra II
• FX Diamond
• Lady Protector+
• Protector 3D Diamond
• Xtreme 3
COMPETITOR SHAVING PRODUCTS
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UK MARKET SHARE FOR BLADES & RAZOR (1998)
55%25%
9%11%
GilletteWilkinson Sword
BiCOwn Label
Source: Mintel Report, 1998
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MARKET POSITIONING
Price
Quality
WilkinsonGillette
BiC
Own Labels
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BLADES & RAZORS STRATEGY
• Innovation through Research & Development
• Premium Brand - Premium Price
• Build Global Product Branding
• Build Strong Brand Loyalty
• Greater Efficiency at Lower Cost.
• Maintain Superior Growth in Market Share
• Build Shaving Systems Sub-Segment
• Invest in technology and product innovation
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RAZORWARS
v
• The Defender
• Product Development
• Consumer Research
• Elevate the “Psychology of Shaving”
• Captive Systems mean High Margins
• Women Shavers are Growth Area
• Razors are a Commodity
• Shaving is a Chore
• Price
• Positioning
• Innovation
• Short Product Life Cycles
• Disposables
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UK BLADES & RAZORS
0
50
100
150
200
250
1994
1995
1996
1997
1998
1999
2000
*
2001
*
2002
*
2003
*
Market by Value (£m)
Source: Mintel Report, 1998
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UK BLADES & RAZORS
0
2000
4000
6000
8000
1000019
94
1995
1996
1997
1998
1999
Monitored Advertising Expenditure (£000)
GilletteWilkinson SwordBiC
Source: Mintel Report, 1998
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SALES / PROFITABILITY RAZORS & BLADES
• Increase in sales from 1998 - 2000 is 13%
– 5% 1999 and 8% 2000
• Increase in profit from 1998 - 2000 is 16%
– 5% 1999 and 11% 2000
• Gillette attributes the increase in sales and profits primarily to the sales growth of the Mach 3 in North America, Europe and Latin America.
Razors & Blades - Profitability
0500
1000150020002500300035004000
y1998 y1999 y2000
Year
Val
ue £
000
sales
profit
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PORTERS FIVE FORCES MODELBlades & Razors
Industry CompetitorsStrong image, Brand Loyalty, and Innovative R&D.
Potential EntrantsBarrier to entry - customer loyalty, high set-up costs.
BuyersRetailers power increasing.
SubstitutesElectric razors - Gillette already competitive (Braun).Clever marketing - not socially acceptable not to shave.
SuppliersGlobal economies of scale keep suppliers priceslow.
Source: Porter, 1978
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MACH3 TURBO
“As the undisputed leader in men’s grooming, Gillette is committed to innovation and to developing products which will provide men with a superior shaving performance. MACH3Turbo and the new Gillette Series fulfil that promise”
Peter K. Hoffman, President,Gillette Grooming Products 30 October 2001
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FUTURE GILLETTE STRATEGIES
• High Branding/Quality - Premium Price
• Develop New Market Segments & Niches through R&D
• Maintain/Promote Strong Brand Loyalty
• Tailoring Demographic Targeting (E.g. US vs Europe)
• Reduction in Product Unit Costs
• Grow Razor Systems Segment
• Strategic Alliances (Suppliers and Distributors)
• Shedding Non-Core Businesses (E.g. Papermate)
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CONCLUSIONS
• Diversifying capital, investment, products and other resources to maintain and expand position as market leader.
• Strategically positioned as leader, and regularly reorganising its structures to respond quickly to changes in business and competitive trends.
• Developing and maintaining a high profile for its brand names through marketing.
• Continuing to maximise efficiency in production and distribution, rather than focusing on direct retailing.
• Likely to remain as the market leader of Grooming sector products for the foreseeable future.
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STRATEGY & MARKETING MANAGEMENT
GILLETTE STILL THE GLOBAL LEADER IN MALE
TOILETRIES PRODUCTS