GILLETTE’S Razor Sharp Edge Over Its Competition

Overview Background info on Gillette Problems/Solutions company faced Current info/issues

Background Information Founded in 1901 Flagship product—safety razor Company’s strengths: Focus on scientific knowledge/studies Innovative products Large-scale manufacturing capability Useful products sold at fair price Sales in 2000: $9.3 billion

Global Company Strategy: “To manage its business with a long-term, global perspective” Over 1 billion people interact with a Gillette product every day Manufacturing operations located in 23 countries Distribution in 200+ countries 40,000+ employees

Manufacturing Locations United States: -Andover, MA -Chicago, IL -Cleveland, TN -Iowa City, IA -La Grange, GA -Lancaster, SC -Lexington, NC -South Boston, MA                                                              

European Locations Manufacturing Sites: R & D Facilities: -Belgium -Czech Republic -France -Germany -Ireland -Poland -Russia -Spain -England R & D Facilities: Germany, Spain, England                                                                                   

Vision 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 Excellence Superior performance at every level Core Values Achievement, Integrity, Collaboration

Products Overview: Worldwide leader in 12 major consumer product categories Focus on continual development of new products Currently introduces 20+ new products per year

Three Core Businesses Gillette is the undisputed global leader in: Grooming Portable Power Oral Care                                                                                                                                               

Grooming Products World leader in male and female grooming products Blades, razors Wet, dry 700 million consumers use Gillette razor blades Shaving preparations and after-shaves                                                                                                                                                                                                                                                                                                  

Portable Power Duracell-most popular brand of alkaline batteries in the world Offers strategic power-consulting services to leading electronic device manufacturers                                     

Oral Care Company’s fastest growing business Oral-B brand holds #1 position globally in manual and power toothbrushes                                                                          

Facts 3 core businesses provide: 80% sales 90% profits These core brands are the strength of Gillette Co. Gillette Mach3 Gillette for Women Venus Right Guard Duracell CopperTop Oral-B Braun Oral-B Braun

Problem Background 1980s: Consumers chose inexpensive disposable razors Gillette helped to foster trend: Focus on price, not quality Results: Disposable razor market inc. by 60% Loss of quality image, loss of profits *Gillette taught consumers the best razor was the cheapest one!

Use of Marketing Research Focus groups and surveys revealed: Gillette must reform its approach by: Emphasizing quality and brand equity Discontinuing use of disposable razor ads Developing new products                                                                                                                                                                                                                                                                

Results of MR Inc. investments in research and development Sensor, Sensor Excel, Mach III, Venus Direct mail campaigns—free razors Catchphrase: “The best a man can get.” Able to reverse the trend—SUCCESS!

Role 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.

Management 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?

Marketing 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.

Research 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.

Current Issues facing Gillette Razor Wars Feb. 24, 2003 Gillette, Bic, Schick Launch new razors in men and women’s disposable lines Ex. Schick razor-dispenses shave gel for women Ex. Gillette-Pink Passion Venus Marketing efforts total $120 million combined Ad campaigns launched this month

Note Increased attention for disposable razors again—RISK Caution: resulted in loss of market share in the 1980s for Gillette

Gillette Marketing Spending Jan. 30, 2003 24% increase in ad spending (fourth quarter) 2002: Global ad spending rose 12%--$650 million

New Challenges Jan. 30, 2003 Battery rival Energizer to acquire Schick brand of razors Energizer to invest $930 million Result: Aggressive marketing wars?

Renegade Web Site Freerazor.com via mass e-mails offers free Gillette Mach3 Turbo and Venus razors Also automatically enrolls customers to receive 8 replacement blades every two months (Misleading) Uses photos of Gillette products and copy similar to Gillette’s ads Gillette uncertain of legal implications (all terms spelled out) Feb. 11, 2003

Duracell Jan. 13, 2003 Cut price of AA and AAA batteries by 13% Prompted to reduce price gap with competitors Energizer, Rayovac Concerned with competitor’s heavy promotional activity                                                                          

Ethics April 14, 2003 Gillette exec (Gino Deluca) arrested on 15 counts of mail and wire fraud and 1 count of money laundering pleaded not guilty Scheme: demanded kickbacks from 5 promotional and marketing vendors Allegedly received $600,000 in kickbacks $260,000 Arizona condo, $32,000 home addition, vacations and cruises, $225,000 wired to a Swiss bank account Ordered his staff to select certain vendors despite their quality problems

Questions and Answers The End