2Overview Background info on Gillette Problems/Solutions company faced Current info/issues
3Background Information Founded in 1901Flagship product—safety razorCompany’s strengths:Focus on scientific knowledge/studiesInnovative productsLarge-scale manufacturing capabilityUseful products sold at fair priceSales in 2000: $9.3 billion
4Global CompanyStrategy: “To manage its business with a long-term, global perspective”Over 1 billion people interact with a Gillette product every dayManufacturing operations located in 23 countriesDistribution in 200+ countries40,000+ employees
5Manufacturing Locations United States:-Andover, MA-Chicago, IL-Cleveland, TN-Iowa City, IA-La Grange, GA-Lancaster, SC-Lexington, NC-South Boston, MA
6European Locations Manufacturing Sites: R & D Facilities: -Belgium -Czech Republic-France-Germany-Ireland-Poland-Russia-Spain-EnglandR & D Facilities:Germany, Spain, England
7Vision Statement“To build TOTAL BRAND VALUE by innovating to deliver consumer value and customer leadership faster, better, and more completely than our competition.”Fundamental Principles:Organizational ExcellenceSuperior performance at every levelCore ValuesAchievement, Integrity, Collaboration
8Products Overview:Worldwide leader in 12 major consumer product categoriesFocus on continual development of new productsCurrently introduces 20+ new products per year
9Three Core Businesses Gillette is the undisputed global leader in: GroomingPortable PowerOral Care
10Grooming Products World leader in male and female grooming products Blades, razorsWet, dry700 million consumers use Gillette razor bladesShaving preparations and after-shaves
11Portable PowerDuracell-most popular brand of alkaline batteries in the worldOffers strategic power-consulting services to leading electronic device manufacturers
12Oral Care Company’s fastest growing business Oral-B brand holds #1 position globally in manual and power toothbrushes
13Facts 3 core businesses provide: 80% sales90% profitsThese core brands are the strength of Gillette Co.Gillette Mach3Gillette for Women VenusRight GuardDuracell CopperTopOral-BBraun Oral-BBraun
14Problem Background1980s: Consumers chose inexpensive disposable razorsGillette helped to foster trend:Focus on price, not qualityResults:Disposable razor market inc. by 60%Loss of quality image, loss of profits*Gillette taught consumers the best razor was the cheapest one!
15Use of Marketing Research Focus groups and surveys revealed:Gillette must reform its approach by:Emphasizing quality and brand equityDiscontinuing use of disposable razor adsDeveloping new products
16Results of MR Inc. investments in research and development Sensor, Sensor Excel, Mach III, VenusDirect mail campaigns—free razorsCatchphrase: “The best a man can get.”Able to reverse the trend—SUCCESS!
17Role of Marketing Research Told Gillette that it could change its former price approach to the market by emphasizing quality and brand equity as well as introducing new products.
18Management Decision Problem What should Gillette do to change the trend of our decreasing equity in the market?What should Gillette do to increase consumer’s opinions of our brand image?
19Marketing Research Problem To determine the consumer’s opinions regarding the quality of products over their prices.To determine the impact of Gillette’s competition on its sales.To determine the wants and needs of consumers using Gillette’s various shaving products.
20Research Question and Hypotheses Are consumers more price conscious or brand loyal?H1: Price is most important to consumers.H2: Price is not most important to consumers.H3: Brand loyalty is most important to consumers.H4: Brand loyalty is not most important to consumers.
21Current Issues facing Gillette Razor WarsFeb. 24, 2003Gillette, Bic, SchickLaunch new razors in men and women’s disposable linesEx. Schick razor-dispenses shave gel for womenEx. Gillette-Pink Passion VenusMarketing efforts total $120 million combinedAd campaigns launched this month
22Note Increased attention for disposable razors again—RISK Caution: resulted in loss of market share in the 1980s for Gillette
23Gillette Marketing Spending Jan. 30, 200324% increase in ad spending (fourth quarter)2002: Global ad spending rose 12%--$650 million
24New ChallengesJan. 30, 2003Battery rival Energizer to acquire Schick brand of razorsEnergizer to invest $930 millionResult: Aggressive marketing wars?
25Renegade Web SiteFreerazor.com via mass s offers free Gillette Mach3 Turbo and Venus razorsAlso automatically enrolls customers to receive 8 replacement blades every two months (Misleading)Uses photos of Gillette products and copy similar to Gillette’s adsGillette uncertain of legal implications (all terms spelled out)Feb. 11, 2003
26Duracell Jan. 13, 2003 Cut price of AA and AAA batteries by 13% Prompted to reduce price gap with competitorsEnergizer, RayovacConcerned with competitor’sheavy promotional activity
27EthicsApril 14, 2003Gillette exec (Gino Deluca) arrested on 15 counts of mail and wire fraud and 1 count of money launderingpleaded not guiltyScheme: demanded kickbacks from 5 promotional and marketing vendorsAllegedly received $600,000 in kickbacks$260,000 Arizona condo, $32,000 home addition, vacations and cruises, $225,000 wired to a Swiss bank accountOrdered his staff to select certain vendors despite their quality problems