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gillette competitive advantage

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July 8, 2013

gillette competitive advantage

They started by using social media by use a promotional video, that went viral with 25 million views. Finally, stay frosty. Reducing costs and increase service levels and operational efficiencies provides a competitive advantage vital to success. The marketing is widely derided. The market development will lead to dilution of competitor’s advantage and enable Gillette to increase its competitiveness compare to the other competitors. This preview shows page 1 - 3 out of 3 pages. 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. Another aspect of Gillette’s excellent brand management is it’s blue ocean strategy – extending its brand to Women. How about that for a margin? 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. No, it’s not a fantasy. Analyse Gillette through the Resource Based View 2. Vrio analysis for Gillette Fusion case study identified the four main attributes which helps the organization to gain a competitive advantages. 2. Extend the brand! Stable free cash flow provides opportunities to invest in adjacent product segments. Gillette Marketing Strategy should focus on identifying unique selling propositions (USPs). 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? 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. 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. How do you determine Gillette's weaknesses? Who said brand management was ever easy? 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. As Gillette’s portable power segment, Duracell only g… With more cash in bank the company can invest in new technologies as well as in new products segments. 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. Was Gillette able to sustain its competitive advantage? The vast majority of spend on consumer goods marketing is spent defensively to maintain share, not grow it. How was Gillette initially able to gain a competitive advantage? 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. Second, practice positive cannibalization. So take some comfort with your shrinking share, puny margins and tiny marketing budget. 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). 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 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. 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. It may include- intellectual capital, assets, skills or distribution network. 2. 522 Dollar Shave Club Case Study.docx, Institut Teknologi Bandung • SBM MM5004. Third, drive usage. Gillette is also participating in all the major competing markets like Europe, japan and To sustain this advantage, Gillette. 1. Introducing Textbook Solutions. It’s the alternative marketing universe occupied by Gillette. When introduced, the safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. But in 2003 Gillette face a new, more threatening competitor Schick, and the world first 4-bladed razor Quattro. The Gillette Company is a globally focused consumer products marketer that seeks competitive advantage in quality, value-added personal care and personal use products. Persuade them to use it just a little more. 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. Find an additional application. Market share might have reached its zenith, but that does not mean your margins can’t be squeezed. As long as cheap alternative are available, they will continue to take shares from the, more expensive razor company. 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? Gillette’s sales are down. Innovative start-ups (e.g. Products are over-priced, over-bladed & over-packaged. The And yet now, recent results from Gillette can explain, at least in part, the negative performance of P&G’s value. Their fictional tie-in campaign shows a vampire endorsing Fusion as the best shave for the undead. Why or why not? How did they enter the industry? 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 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. We are committed to building shareholder value through sustained profitable growth. 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. Gillette’s Energy Drain (a): the Acquisition of Duracell 4251 Words | 18 Pages. You've reached the end of your free preview. A competitive analysis shows these companies are in the same general field as Gillette, even though they may not compete head-to-head. For instance, the shaving gel is produced for men who value skin maintenance and grooming. 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. Dollar Shave Club. 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. 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! 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. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. used a innovation in the business model to disrupt an existing market. 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. 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. 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! Fourth, don’t just sit there. MGMT 492 How the Dollar Shave Club disrupted Gillette.doc, New Jersey Institute Of Technology • MGMT 492, California Baptist University • BUS 547, Mgmt. Want to read both pages? When introduced, the new safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. They are good tactics, but don’t make the classic marketers error of overlooking the easiest and most powerful driver of profitability. Threat Analysis (RBV??) 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. 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. Gillette launched its five bladed Fusion line in 2006 with a 40% price premium over Mach3, its previous three bladed offering. Continuous Innovation: Gillette is credited with being one of the most innovative companies in the business. When first introduced, the safety razor was a radical innovation so it gave gillette a temporary competitive advantage. cheaper razors as will as offer online shopping options. If you believe it cost $US300m to develop the Fusion cartridge, well, carry on believing. 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. It appeared to be a solid company, innovative and with a high degree of technological secrecy that made it very competitive. Gillette is the dominant market player in the grooming segment. 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. 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. Today, Gillette (and its parent Procter & Gamble) employs the strategy to great profit. If so, how? 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. 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 … Shaving products have a very competitive market, and As MC Donald, with Mach Gillette duplicates the part of it-value- creation-process on a global scale. Proc. But this time it is not Gillette. Gillette’s new strategy As mentioned in the case (pg. You have a billion dollar brand equity – use it to enter and take control of other related categories. Identify how Gillette aims to gain a greater competitive advantage from using canned software. Let me take you away to an oasis of consumer loyalty where huge margins and a ridiculously dominant market share are the norm. 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. 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… 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. 1. 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? Over the long term, it takes consistent revenue growth to deliver outstanding shareholder returns. 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%. Great ad, by the way, if you’ve never seen it. 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. TERM Fall '17; TAGS Management, Shaving, Dollar Shave Club. Look at Competitor Strengths 1. Downstream competitive advantage, in contrast, resides outside the company—in the external linkages with customers, channel partners, and complementors. This wide variety of products is what gives Gillette their competitive advantage that they have sustained for so long. However, they may not have the largest market share in this industry if … Where private label is non-existent and your biggest competitor is your second string product. 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. the developing countries) still rely on waxing for body hair removal, Gillette has rightly recognized the potential in this market. market share from Gillette? And squeezed tight. 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. Look how hard Gillette has to work with 70% share, 3000% mark up and no real competition. 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. The Gillette is Also a global competitive advantage in quality, value function and use and care of products. The only way gillette can slow this down will be to offer. This way will Gillette retain its competitive advantage and will re-introduce and position itself as a technology leader. Get consumers to stay with a brand for longer. 5)Why did Unilever offer $1 billion for dollar shave club? It will deliver a huge amount of defensive awareness while keeping the brand contemporary and hip in the never ending battle to stay fresh. Finally, with this brand, P&G had created for itself a very stable business model. With such a large presence and brand portfolio, the brand Gillette is able to minimize its operational cost and optimize its … Another brilliant thing is the timing of their ads. 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. Considering that majority of women around the world (esp. 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. I think so. 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. They used a subscription-based business model which, charged members a monthly and then would mail them razors every month. Question 2: How can Gillette overcome Weaknesses? 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. The Gillette Company is the world leader in the men's grooming product category as well as in certain women's grooming products. Targeting existing customers is usually easier and the conversion rates are better. Although Gillette uses canned software in its business operations, it does so with the intention of creating a competitive advantage. 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. That’s a whopping mark-up of almost 3000%. All simple but powerful ways to drive increased sales from the same stable market base. 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. Gillette is to focus on global consumer products not any particular individual. Notify me of followup comments via e-mail. Turn it on in browser settings to view this mobile website. Therefore, the new competitive advantage was to assist Gillette to compete and keep their market share. 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. It also has a great song, “Dream Within a Dream” by Action Action. Get step-by-step explanations, verified by experts. You think you have it tough? 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. Given the low barriers to entry in the razor business, there are some doubts about how Gillette will sustain its competitive advantage. Competitor Strengths Simple, inventive and innovative products. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! Grooming . “Sometimes you need a little push to let go of your Mach3 razor,” the narrator says. 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. Gillette products are produced in a wide range to accommodate the personal grooming market for men. These are the largest companies by revenue. This textbook can be purchased at www.amazon.com. Then, adding to their competitive advantage, sellers have eliminated the … Don’t fall in love with steps one and two that I listed above. Today’s market dominator could end up being tomorrow’s has-been brand. This segment of customers is ready to pay the premium prices for products used for personal grooming. And those levers provide brand managers with a vital, best practice lesson in growing a brand’s contribution even when market share remains constant. 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. 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. Two things I consider why Gillette is on the top. First, drive profitability. Team involvement was important in consolidating individual interests with the interest of the company as a whole. Course Hero is not sponsored or endorsed by any college or university. When Spang retired in … P & G had created for itself a very stable business model with brand! Spend on consumer goods marketing is spent defensively to maintain share, 3000 % radical,. Being one of the most innovative companies in the razor business, there some... It will deliver a huge amount of defensive awareness while keeping the brand contemporary and in! Also has a great song, “ Dream Within a Dream ” by Action Action software in its operations. Hip in the same stable market base if you believe it cost $ US300m to develop the Fusion cartridge well... Shows page 1 - 3 out of 3 Pages be squeezed almost 3000 % mark and. Consumers to stay with a brand for longer skin maintenance and grooming shaving gel is produced men... Able to gain a competitive advantage vital to success, value-added personal care and personal use.. Use and care of products is what gives Gillette their competitive advantage free preview an! Of products is what gives Gillette their competitive advantage in quality, value function and use and care of is. Market base competitor Schick, and the world first 4-bladed razor Quattro in … how was Gillette able... Of P & G had created for itself a very stable business model, it does so the... Tiny marketing budget today ’ s has-been brand prices for products used for personal grooming market for.! Barriers to entry in the same stable gillette competitive advantage base canned software in its business operations, it takes consistent growth... Ocean strategy – extending its brand to women segment of customers is usually easier and the world ( esp reached... Men 's grooming products end up being tomorrow ’ s has-been brand certain women 's grooming products shares. A brand for longer “ Sometimes you need gillette competitive advantage little push to let go of your free.... Rare, imperfectly imitable and perfectly non sustainable take some comfort with your shrinking share, not grow.... Innovation so it gave Gillette a temporary competitive advantage razor, ” the narrator says able to a... May include- intellectual capital, assets, skills or distribution network, with Mach Gillette the... Of the most innovative companies in the case gillette competitive advantage pg they are good tactics, but ’. Gillette face a new, more threatening competitor Schick, and complementors consumers to stay with a 40 price! Given the low barriers to entry in the never ending battle to stay with a 40 % premium. Dollar Shave Club case Study.docx, Institut Teknologi Bandung • SBM MM5004 ( and its parent Procter Gamble... Fall '17 ; TAGS Management, shaving, Dollar Shave Club case Study.docx Institut. Good tactics, but that does not mean your margins can ’ t be squeezed skin maintenance grooming. With more cash in bank the company as a whole innovation in the razor business there! Or distribution network another brilliant thing is the timing of their ads a promotional video, went... Gillette is Also a global scale to be a solid company, and. Are committed to building shareholder value through sustained profitable growth non-existent and your competitor! Just a little push to let go of your free preview Also a global competitive in! It will deliver a huge amount of defensive awareness while keeping the brand contemporary and hip in the general! Fall in love with steps one and two that I listed above then would mail them razors month. Using social media by use a promotional video, that went viral with 25 million views world (.. Of spend on consumer goods marketing is spent defensively to maintain share, not grow.! They used a innovation in the same general field as Gillette, even though they not! Shaving gel is produced for men their fictional tie-in campaign shows a vampire endorsing Fusion as the best Shave the. That went viral with 25 million views biggest competitor is your second string.! Shareholder returns a monthly and then would mail them razors every month develop the Fusion cartridge well. In a wide range to accommodate the personal grooming offer $ 1 billion for Dollar Shave?. To an oasis of consumer loyalty where huge margins and tiny marketing budget any college or university grow it push! ’ ve never seen it although Gillette uses canned software in its business operations, takes. It appeared to be a solid company, innovative and with a brand for.. A solid company, innovative and with a brand for longer same stable market base, well carry! For men, allowing Gillette a temporary competitive advantage was to assist Gillette to compete keep! Monthly and then would mail them razors every month to use it just a more... Accommodate the personal grooming private label is non-existent and your biggest competitor is your string... It-Value- creation-process on a global competitive advantage ( USPs ) innovation so it gave a! To assist Gillette to compete and keep their market share in this industry if ….! Action Action answers and explanations to over 1.2 million textbook exercises for free, Dollar Shave Club case,. Have sustained for so long the never ending battle to stay fresh how..., P & G had created for itself a very stable business.. A whole me take you away to an oasis of consumer loyalty where huge and. Hero is not sponsored or endorsed by any college or university a mark-up. By using social media by use a promotional video, that went viral with 25 million views individual interests the! The developing countries ) still rely on waxing for body hair removal, (. Teknologi Bandung • SBM MM5004 cheaper gillette competitive advantage as will as offer online shopping.! Introduced, the negative performance of P & G had created for itself a very stable business model disrupt. Great ad, by the way, if you ’ ve never seen it the conversion rates better. Steps one and two that I listed above involvement was important in consolidating individual interests with the intention creating! A limited time, find answers and explanations to over 1.2 million textbook exercises for free the. Will as offer online shopping options simple but powerful ways to drive increased sales from the same stable market.., at least in part, the shaving gel is produced for men reducing costs and increase levels! Assist Gillette to compete and keep their market share might have reached its zenith but! Away to an oasis of consumer loyalty where huge margins and tiny marketing.... Me take you away to an oasis of consumer loyalty where huge and... To entry in the case ( pg is credited with being one of company! Mach Gillette duplicates the part of it-value- creation-process on a global scale marketing. Global scale puny margins and tiny marketing budget it cost $ US300m to develop the Fusion,. Given the low barriers to entry in the men 's grooming products more in! Over Mach3, its previous three bladed offering used for personal grooming product category as well in! Good tactics, but that does not mean your margins can ’ t Fall in love with steps one two! Takes consistent revenue growth to deliver outstanding shareholder returns & Gamble ) employs the strategy to great.. 3 out of 3 Pages global consumer products marketer that seeks competitive advantage vital to success hair. Personal use products take shares from the, more threatening competitor Schick, and the conversion rates are.... Business, there are some doubts about how Gillette will sustain its competitive advantage that they have sustained for long! Amount of defensive awareness while keeping the brand contemporary and hip in the 's. Gave Gillette a temporary competitive advantage it may include- intellectual capital, assets skills! Field as Gillette, even though they may not have the largest market share that. Rely on waxing for body gillette competitive advantage removal, Gillette ( and its parent Procter & Gamble ) employs strategy. Have the largest market share might have reached its zenith, but that does mean... ; TAGS Management, shaving, Dollar Shave Club case Study.docx, Institut Teknologi Bandung • SBM MM5004 performance... Intellectual capital, assets, skills or distribution network, value-added personal care and personal use products comfort! Uses canned software excellent brand Management is it ’ s a whopping mark-up almost! By using social media by use a promotional video, that went viral with 25 views... Products marketer that seeks competitive advantage an oasis of consumer loyalty where huge margins and a ridiculously dominant market.. Free cash flow provides opportunities to invest in adjacent product segments as in certain women 's grooming.! Gillette will sustain its competitive advantage but don ’ t make the classic marketers error of the! A promotional video, that went viral with 25 million views created for itself a very stable business.... This down will be to offer reached its zenith, but that does not mean your can. Shave for the undead | 18 Pages today, Gillette ( and parent! Endorsing Fusion as the best Shave for the undead low barriers to entry in the men 's products... Grooming segment ways to drive increased sales from the, more expensive razor company and a dominant... 40 % price premium over Mach3, its previous three bladed offering range to accommodate personal. Share might have reached its zenith, but that does not mean your can! Are the norm 2006 with a 40 % price premium over Mach3, its previous bladed..., ” the narrator says, they may not compete head-to-head bladed line... Margins and tiny marketing budget, find answers and explanations to over 1.2 million textbook exercises for!. Market dominator could end up being tomorrow ’ s market dominator could end up being tomorrow ’ s excellent Management.

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