And squeezed tight. Two things I consider why Gillette is on the top. Given the low barriers to entry in the razor business, there are some doubts about how Gillette will sustain its competitive advantage. At the same time the need for compliance with regulatory laws as Graham-Leach-Bliley, SEC 17a-3 and 17a-4, The Patriot Act, Sarbanes-Oxley sections 302 and 404 for public companies, IRS Rev. Although more than half of company profits are still derived from shaving equipment--the area in which the company started--Gillette has also attained the top spots worldwide in writing instruments (Paper Mate, Parker, and Waterman brands) and correction products (Liquid Paper), toothbrushes and other oral care products (Oral-B), and alkaline batteries (Duracell products, which ge… When introduced, the safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. Gillette products are produced in a wide range to accommodate the personal grooming market for men. Get step-by-step explanations, verified by experts. Common sense might suggest that if you found yourself in this envious position you would sit back and count the billions of dollars in annual revenues that this market share delivers. Targeting existing customers is usually easier and the conversion rates are better. 1) They have done a good job at keeping up with technology and trends including styling 2) They have targeted almost all the classes of society leaving space for no other brand. Vrio analysis for Gillette Fusion case study identified the four main attributes which helps the organization to gain a competitive advantages. Find an additional application. Although effective cost cutting has contributed to Gillette’s profits, the company’s annual rate of sales growth shrank from a 10-year average of 6 percent (from 1993 through 2003) to 1 percent over the three years from 2000 to 2003. If so, how? 5 Company Competitive Advantage in the Marketing Strategy of Gillette The survival in the increasingly competitive market requires Gillette to set the clear differentiation basis that could provide an edge against rivals. Third, drive usage. I think so. Reducing costs and increase service levels and operational efficiencies provides a competitive advantage vital to success. Fourth, don’t just sit there. It will deliver a huge amount of defensive awareness while keeping the brand contemporary and hip in the never ending battle to stay fresh. Persuade them to use it just a little more. How was Gillette initially able to gain a competitive advantage? Gillette invented the safety razor and also the razor-razor-blade business model that would sell low price razors and charge a premium for replacement razor blades. market share from Gillette? It may include- intellectual capital, assets, skills or distribution network. First, drive profitability. Let me take you away to an oasis of consumer loyalty where huge margins and a ridiculously dominant market share are the norm. the developing countries) still rely on waxing for body hair removal, Gillette has rightly recognized the potential in this market. Proc. Over the long term, it takes consistent revenue growth to deliver outstanding shareholder returns. Gillette Marketing Strategy should focus on identifying unique selling propositions (USPs). 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. used a innovation in the business model to disrupt an existing market. The marketing is widely derided. How about that for a margin? Finally, with this brand, P&G had created for itself a very stable business model. 1. For instance, the shaving gel is produced for men who value skin maintenance and grooming. Therefore, the new competitive advantage was to assist Gillette to compete and keep their market share. As long as cheap alternative are available, they will continue to take shares from the, more expensive razor company. It might sound less sexy than increasing share or price point – but believe me – increasing consumer usage of a brand has always been the number one way to fuel profitability. On the other hand, Duracell’s operating margin growth rate fell from +16.89% to -27.56% while its revenue growth rate fell from +10.08% to -5.47%. How was gillette initially able to gain a competitive advantage Was gillette, 45 out of 48 people found this document helpful, 3)How was gillette initially able to gain a competitive advantage? We’ve grown King of Shaves Azor to 10% handle share in less than 12 months, with a fraction of market spend, & without recourse to the dubious endorsement of 3 – surely it should be 5 – sporting superstars. However, they may not have the largest market share in this industry if … Look at Competitor Strengths 1. In Gillette’s case the company is investing heavily in an online campaign to encourage consumers to use their Gillette razor downstairs on the lower body area as well as upstairs on the face. Stable free cash flow provides opportunities to invest in adjacent product segments. But in 2003 Gillette face a new, more threatening competitor Schick, and the world first 4-bladed razor Quattro. When Spang retired in … Today, Gillette (and its parent Procter & Gamble) employs the strategy to great profit. Instead we have Harry’s, Dollar Shave and other online retailers attracting Gillette’s store-based clientele with the convenience and consistency of an online subscription model. Turn it on in browser settings to view this mobile website. Want to read both pages? Finally, stay frosty. Their fictional tie-in campaign shows a vampire endorsing Fusion as the best shave for the undead. Get consumers to stay with a brand for longer. It’s the alternative marketing universe occupied by Gillette. Continuous Innovation: Gillette is credited with being one of the most innovative companies in the business. “Sometimes you need a little push to let go of your Mach3 razor,” the narrator says. This preview shows page 1 - 3 out of 3 pages. Innovative start-ups (e.g. Market share might have reached its zenith, but that does not mean your margins can’t be squeezed. Another brilliant thing is the timing of their ads. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! Identify how Gillette aims to gain a greater competitive advantage from using canned software. Market Presence: P & G, the parent company of the brand sells its products in more than 180 countries through it fully owned business units or joint ventures. The Blake Project Can Help You Grow: The Brand Growth Strategy Workshop, Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education, FREE Publications And Resources For Marketers. You've reached the end of your free preview. And those levers provide brand managers with a vital, best practice lesson in growing a brand’s contribution even when market share remains constant. In doing so, they have created a huge new potential market for themselves – 50% of the population that was out of bounds for them as long as they were dealing with men alone. Gillette’s new strategy As mentioned in the case (pg. Was gillette able to sustain its, 4)What market opening did entrepreneurs, such as Michael Dubin with Dollar Shave Club, use to, enter the industry? Gillette could sell off Duracell since this acquisition did not benefit or gain a competitive advantage for the company, such as cost savings and market growth. Downstream competitive advantage, in contrast, resides outside the company—in the external linkages with customers, channel partners, and complementors. When introduced, the new safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. Then, adding to their competitive advantage, sellers have eliminated the … 2. Gillette’s sales are down. Today’s market dominator could end up being tomorrow’s has-been brand. Gillette’s Energy Drain (A): The Acquisition of Duracell MACK Consulting Michelle Neill, Ali Nassem, Cindy Arsenault, Krystal Mayne, Charlene Ford, Laura Robertson March 20, 2008 Bus 491 - Gary Evans PROBLEM STATEMENTS – STRATEGIC ISSUES The Duracell Division of Gillette has lost market share and … That’s why Gillette is now spending millions to compete against itself with ads and online comparisons that attempt to convince its Mach 3 consumers that their current razor is simply not good enough and to trade up to Fusion. Team involvement was important in consolidating individual interests with the interest of the company as a whole. We are committed to building shareholder value through sustained profitable growth. It also has a great song, “Dream Within a Dream” by Action Action. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. So take some comfort with your shrinking share, puny margins and tiny marketing budget. True, the market is nascent and a small chunk of their revenues; however the market itself has very few branded players, and even they are scattered in numerous categories – epilators, hair removal creams, etc. The only way gillette can slow this down will be to offer. Gillette’s caregiving innovation adds a competitive twist to the global nearly $50 billion men’s grooming market, which has seen a plethora of discount newcomers — from Dollar Shave Club to Harry’s — threaten Gillette's century-old dominance. The spot shows Tiger Woods, Derek Jeter and Roger Federer literally knocking Mach3 razors out of men’s hands with a golf ball, baseball and tennis ball, respectively. To sustain this advantage, Gillette. It’s more of a serious and inspirational ad than the last one I saw (set to “Staying Alive”) which fits with the championship theme they are working on. Unilever for a long time stayed away from the us market for wet razors due to gillette, dominating the us market but when they noticed that dollar shaving club was disrupting the, 6)Do you think online startups such as Dollar Shave club and harry’s will continue to steal. Gillette currently sells 23 different razors, 10 razor blades, 24 shaving creams, gels and foams, 10 after shaves, 13 deodorants, and 8 body washes. No surprise therefore that Gillette is one of the brands linked to the hottest TV series of 2009 – the second series of True Blood from HBO. They used a subscription-based business model which, charged members a monthly and then would mail them razors every month. Grooming . But Gillette is owned by P&G, and while even the best marketing company in the world can’t improve much beyond that level of market share – there are plenty of other levers to pull to generate shareholder value. Analyse Gillette through the Resource Based View 2. The Gillette is Also a global competitive advantage in quality, value function and use and care of products. No, it’s not a fantasy. Maybe P&G’s willingness to take risks and invest massively / far and above the competition in R&D / innovation to deliver superior products is another reason why they do well? Gillette’s Energy Drain (a): the Acquisition of Duracell 4251 Words | 18 Pages. Notify me of followup comments via e-mail. For Gillette that has meant a successful foray into the “software” side of shaving with up to a 50% share in the shaving cream category in many countries and a growing slice of deodorants and shampoos too. Gillette is the dominant market player in the grooming segment. Gillette is also participating in all the major competing markets like Europe, japan and Look how hard Gillette has to work with 70% share, 3000% mark up and no real competition. 522 Dollar Shave Club Case Study.docx, Institut Teknologi Bandung • SBM MM5004. Interactive videos with powerful messages like, “You might say when there’s no underbrush the tree looks taller” are increasing the frequency of blade use on those thicker, more stubborn lower body regions. MGMT 492 How the Dollar Shave Club disrupted Gillette.doc, New Jersey Institute Of Technology • MGMT 492, California Baptist University • BUS 547, Mgmt. But this time it is not Gillette. After the acquisition in 1996, Gillette’s total cost increased from $6,984 million to $7,211 million and its net income fell from $1,081 million to $392 million. These are the largest companies by revenue. While it may seem crazy to spend millions to compete against yourself, the margin differences mean that this will deliver a better ROI than targeting the small number of remaining non-Gillette consumers over to the brand. Neo took the Red Pill, hundreds of thousands of UK shavers are doing the same…perhaps Gillette was the best razor your Dad could get… But hey, I would say that, wouldn’t I! Question 2: How can Gillette overcome Weaknesses? Dollar Shave Club. 1. Threat Analysis (RBV??) One industry insider in the UK recently revealed that despite a retail price of £9.72 for a pack of four Fusion razor blades, the actual manufacturing and packaging costs for this product is less than 30p. cheaper razors as will as offer online shopping options. The Having dialed itself into the top right hand side of the box, selling the most product, at the highest price, Gillette is going to have to reverse out of a consumer cul-de-sac, which is going to be a real challenge, given the US$57Bn price tag, and the need to make huge profit to pay this down. A year ago Fusion started a TV campaign called “Nudging Disciples” in which ads argued that “five is better than three,” referring to the different blade counts of Fusion and Mach3. When first introduced, the safety razor was a radical innovation so it gave gillette a temporary competitive advantage. And yet now, recent results from Gillette can explain, at least in part, the negative performance of P&G’s value. How did they enter the industry? 2. They are good tactics, but don’t make the classic marketers error of overlooking the easiest and most powerful driver of profitability. With more cash in bank the company can invest in new technologies as well as in new products segments. It appeared to be a solid company, innovative and with a high degree of technological secrecy that made it very competitive. This textbook can be purchased at www.amazon.com. The Gillette Company is the world leader in the men's grooming product category as well as in certain women's grooming products. To sustain this advantage, Gillette followed up with incremental innovations, mainly by adding more blades to its razor until there were not one but six! Thanks to years of product innovation and heavy investment in marketing and advertising, Gillette occupies perhaps the most dominant position of any of the major global consumer goods brands with an estimated 70% share of the global razor blade category. Gillette launched its five bladed Fusion line in 2006 with a 40% price premium over Mach3, its previous three bladed offering. Extend the brand! Was Gillette able to sustain its competitive advantage? Competitive Advantages through Value Chain Analysis of Gillette It is important for Gillette to base its competitive advantage on activities in which it has access to the rare or scare resources. Despite the fact that both lines generate significant profits, with such a huge share of the shaving market it makes more sense for Gillette to focus its marketing resources on switching its own customers from Mach 3 to the more profitable Fusion line than trying to win any more share from competitors. A competitive analysis shows these companies are in the same general field as Gillette, even though they may not compete head-to-head. One of the joys of having a 70% global share is that you can run general campaigns to grow total category usage like this campaign, safe in the knowledge that most of the upturn in sales will benefit your brands. 5)Why did Unilever offer $1 billion for dollar shave club? The vast majority of spend on consumer goods marketing is spent defensively to maintain share, not grow it. Don’t fall in love with steps one and two that I listed above. A popular name in households, the trust that the name P &G evokes in the mind of the customer is one of Gillette’s biggest advantages. The Gillette Company is a globally focused consumer products marketer that seeks competitive advantage in quality, value-added personal care and personal use products. Course Hero is not sponsored or endorsed by any college or university. Introducing Textbook Solutions. This segment of customers is ready to pay the premium prices for products used for personal grooming. Where private label is non-existent and your biggest competitor is your second string product. I just saw a new Gillette Fusion ad the other day featuring Tiger Woods and Roger Federer…it’s launch date is no accident, coming right at the end of the US Open and at the start of Wimbledon. The market development will lead to dilution of competitor’s advantage and enable Gillette to increase its competitiveness compare to the other competitors. How do you determine Gillette's weaknesses? Who said brand management was ever easy? As Gillette’s portable power segment, Duracell only g… Second, practice positive cannibalization. This way will Gillette retain its competitive advantage and will re-introduce and position itself as a technology leader. This wide variety of products is what gives Gillette their competitive advantage that they have sustained for so long. Another aspect of Gillette’s excellent brand management is it’s blue ocean strategy – extending its brand to Women. With such a large presence and brand portfolio, the brand Gillette is able to minimize its operational cost and optimize its … Considering that majority of women around the world (esp. What type of innovation did they use, and, Dollar Shave Club saw an opening the the low-cost razor market, high-end, high-margin market. That’s a whopping mark-up of almost 3000%. To leverage its brand and to create market equity across geographic regions, it can provide, notably for experienced companies like Gillette, a sustainable competitive advantage. 1. strong product line: The company have the strong presence with a large number of offerings and extended product line which is supplementing each other in the long run resulting greater customer loyalty and brand recall. Products are over-priced, over-bladed & over-packaged. Why or why not? Just to draw a parallel with the Pharmaceutical industry, the second Fusion blade off the production line cost 30 pence to make but the first cost $300 million (the amount Gillette spent on research and development, resulting in numerous new patents to deliver a product technically superior to anything previously available). You have a billion dollar brand equity – use it to enter and take control of other related categories. Shaving products have a very competitive market, and All simple but powerful ways to drive increased sales from the same stable market base. You think you have it tough? Competitor Strengths Simple, inventive and innovative products. TERM Fall '17; TAGS Management, Shaving, Dollar Shave Club. As MC Donald, with Mach Gillette duplicates the part of it-value- creation-process on a global scale. If you believe it cost $US300m to develop the Fusion cartridge, well, carry on believing. Thanks to years of product innovation and heavy investment in marketing and advertising, Gillette occupies perhaps the most dominant position of any of the major global consumer goods brands with an estimated 70% share of the global razor blade category. The Gillette-Schick duopoly better watch out for Dollar Shave Club and Harry’s, which promise more convenience and less cost to do what men hate most in the morning. Great ad, by the way, if you’ve never seen it. Although Gillette uses canned software in its business operations, it does so with the intention of creating a competitive advantage. Gillette is to focus on global consumer products not any particular individual. Expert Answer 100% (1 rating) Initially Gillette was able to gain a competitive advantage by inventing the safety razor and selling the razor f view the full answer. They started by using social media by use a promotional video, that went viral with 25 million views. 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