Gillette: Maintaining Dominance in the Global Razor Market - Assignment Example

?.Content Topic Page No. Executive Summary 2 Introduction 3-4 Product innovation at Gillette 5-7 Battle between Gillette and Schick: 7-10 Actions to be incorporated by Gillette 10-12 Conclusion 12-13 Bibliography 14 Gillette maintaining Dominance in the global Razor market: Executive Summary: The success of Gillette in the razor market has continued over the years. After continuing with the dominance in the market for several years the market of Gillette started taking a dip as Wilkinson Sword Schick emerged. In view of the competition from Schick, Gillette adopted the strategy of innovation and introduced a wide range of products in the market including some products in the wet shaving market which proved significant in re capturing their market share. In the context of the competition form Schick, Gillette introduced Mach 3 and in the response to Mach 3, Schick introduced the Quattro. However Gillette filed a lawsuit against Schick with the allegation that, Schick has used the same technology in the production of Quattro, which has been used by Gillette in the production of mach 3. The legal battle between the two organizations was further enhanced as Schick also filed a lawsuit against Gillette in protest to the tagline used by them in their advertising campaign. However the court allowed both the organizations to carry on with the products and advertisement. However the recent trend shows that Gillette has stopped innovation in the product of wet shaving market and they should launch new product in the section to continue with their dominance. Effective marketing skills are also to be undertaken by the organization for the effective promotion of their products in various parts of the world by associating them with major event taking place in various parts of the world along with engaging the brand name of the organization with major fashion events. Introduction: The global razor market has been one of the largest markets which many organizations have tried to exploit. One of the dominant and the key players in this segment of the industry has been Gillette. The vastness of the organization can be recognized from the fact that the organization maintains more than 64 manufacturing units in 27 countries and the products have become popular in more than 200 countries. And the most significant fact of Gillette is that a larger part of the sales outside the United States of America. Gillette has been the oldest of the organization dealing with razors and various shaving accessories starting its operation in the year 19.4 and in the first year itself it managed mammoth sales. The success of Gillette can be determined by the fact that it has reigned in the market for almost three decades virtually without any competition. One of the successful strategies of Gillette over the years has been the constant up-gradation of the products by their innovation from the research and development team. However towards the middle of 1962, competition emerged in the market and new products in the razor section was introduced along with products in different segments. The paper tries to investigate the strategies which Gillette had undertaken over the years which have been one of the prime causes for the success of the organization. The legal battle of Gillette and Schick has also been taken into account and an analysis of the case has been made. The present situation of Gillette has also been taken into consideration and recommendation has been made to improve the marketing strategy of the organization along with an increased focus on the innovation of the products. Various operational strategies are also been recommended to Gillette so that it can maintain the dominance in the global market over couple of years. The threat from competitors like Schick has also been considered in the recommendation of the strategies. The figure below describes the SWOT analysis of Gillette: Strengths Innovation Flexible marketing strategy Strong Brand Value Weakness Less number of automatic products Lesser number of products for female Opportunity More number of innovations in wet shaving market To be associated with fashion brands Important element of personal hygiene and further expansion of market Threats Competition from Schick Fewer innovations in wet shaving market in recent years. Increase in manufacturing price (Ferrel & Hartline, 2010 p.387) The SWOT analysis of Gillette reveals the fact that though possible threats from the competitors can cause sufficient problem to the organization but, Gillette can use its strength of brand value and innovation to become more competitive in the market. However Gillette should also look to improve on its weakness by introducing more range of automated products and increase the products for the section of women. Product innovation at Gillette The success story of Gillette can be traced back to the days of its inception in 1901. Gillette almost carried on with the monopoly in the market of shaving care products for both men and women until 1962. From the initial years of operation, Gillette focused on innovation and product development as the key to success in the market. The strong research and development team of Gillette have catered to the service of the customers over the years and this had led to the success of the company. With the emergence of the competitor in the market in the beginning of 1960’s Gillette introduced three products in the market which are the Gillette’s Mach 3, 4 bladed Quattro and 5 bladed fusions in the market to provide competition to the newly emerged Wilkinson Sword- Schick. However the popularity of the products of Gillette in the market made it an impossible task for Schick to capture the niche market. However Schick proved capable of creating a transition in the niche market and Gillette felt the pinch of the competition. However in respect to the competition which Gillette suffered, Gillette adopted the strategy of acquisition and further development of their products. As a part of the acquisition process, Gillette brought three organizations under its wing but the profitability achieved by them were below par However in 1975 Gillette incorporated new products in the product line with the introduction of new write brothers line of disposable pens and was successful in gaining a considerable portion of the market share with the help of price promotions (History of Paper mate, n. d). Gillette also introduced further products like cricket disposable lighters and soft antiperspirant in their product line which gained moderate success. Later in the same year Gillette introduced the Track II razor in the market which again became a preferable choice for the customers all over. The introduction of Track II in the market enabled the organization to continue with their dominance in the market. With the hiring of the new CEO in the organization, the organization further stressed on the product development by cutting unnecessary expenses on the other sectors of the business and investing the saving in the research and development wing of the organization. Under the new CEO, further products were introduced in the market and the most significant of them in terms of gaining in the market was that of the Atra razors, The Good news and The Daisy razor for women (Mc Kibben, 1998, p.68). With the introduction of these products at the end of 1980’s, the sales of the organization reached a figure of $2 billion for the very first time in the history of Gillette. Products of personal care system was also launched by Gillette and facial care products, deodorants, body lotion, shampoo and moisturizers emerged in the market under the brand name of Gillette. Considerable expansion was also undertaken in the writing instrument segment with erasable and disposable pens. The overall market of the paper correction fluids also improved significantly. The diversification of the product line was an important strategy adopted by Gillette, but the limitation of it was that the concentration from their main products in the wet shaving market started decreasing gradually. The most important product launched by Gillette which helped them in attaining a huge sales figure was that of the mach 3 razors which was also awarded as the best product to be launched in 1998 by the American Marketing Association (Gillette expanding market, 1999). Towards the middle of 2006 competition increased for Gillette and to recapture the market share, it launched the world’s first, 5 bladed razor in the market. The razor was launched in the market as fusion razor and it was also the first product after the merger of Gillette and Procter and Gamble (The Gillette Company, n. d). The dominance of Gillette in the market was also distinct in the year 2005 (Pitman, 2005). However the saturation in the market was soon reached and in the recent years Gillette has stopped innovating on their products of the wet shaving market and has provided much importance in the accessory segment of both men and women. In the recent years much innovation has not been undertaken by Gillette apart from the introduction of the battery operated shaver and few range of shaving creams. The feedback from the consumers regarding the fusion was not that much good after the initial days were over and the consumers felt that the product was of not much different from that of Mach 3. Even some of the brand loyal consumers started purchasing the refill cartridges and kept on using them instead of continuing with the new product. The extension of the products of Gillette in different segment as a strategy to gain back the market from Schick also harmed their innovation process in the wet shaving market. The organization should focus more on the innovation of the products as this has been the prime factor of success for Gillette over the years and unless few more innovations are offered the competitors will easily provide Gillette a hard time. Other than the focus in product innovation segment due consideration should also to be given on of the marketing of their products. However it terms of innovation Gillette has done harm to its own success. In times of innovation of the products, Gillette also overshadowed their existing products. With the new inventions fetching good amount of sales in the market, the sales of the already launched products hampered significantly. This was particularly due to the fact that in launching new products, Gillette focused much more attention to the promotion of the new products and the promotion of the older products in the market were significantly hampered. The new product brought substantial growth to the organization but also decreased the sales of the products which were doing well in the market as the new products were declared as obsolete in the market. Whenever the new products were launched Gillette had to depend solely on the performance of that particular product as consumers’ interest towards other products decreased significantly and they felt interested to try out the new products. Battle between Gillette and Schick: Gillette has ruled the market of wet shaving accessories over the years. The products of Gillette have been popular not only in USA but also in various other parts of the worlds. However the emergence of Schick in the market did some considerable hamper to the market share of the organization. Because of the rise in competition of Schick, Gillette also had to undergo a massive change in strategy with their products. In view of the competition from Schick, Gillette launched the mach 3 turbo which saw the emergence of the world first three bladed razors. The market share of Gillette was rising considerably and based on this success Gillette launched an advertisement campaign with the tag line “ The best a man can get “. The product along with such marketing activities did boost up the sales of Gillette. As a response to the new product launched by Gillette, Schick also introduced the Quattro which emerged out to be the first four bladed razors in the market. However Gillette filed a lawsuit against Schick and claimed that Schmit copied the same technology which Gillette used in the production of Mach 3. On the other side Schick filed a lawsuit against Gillette regarding the advertisement campaign and demanded the removal of such tagline as it is quite misleading. However the court allowed Schick to continue with the production and the selling operation of their new product and at the same time allowed Gillette to carry on with their marketing program. With no restriction in the selling of Quattro, Schick improved with their growth considerably and captured a subsistent portion of the market and on the contrary the market share of Gillette dropped considerably. Though the legal battle between the organizations ceased but the rivalry between them continued over the years in respect of gaining considerable market share. Much of the battle has been over the development of the product. The new innovations in the product line of Gillette have been challenged by Schick on a regular basis and have appeared to be a considerable threat for Gillette over the years (Gillette, 2010, pp.447-448). The battle of upmanship between Gillette and Schick often appears good for the organizations and the overall development of industry. Unless and until an effective competitor is present in the market, the monopoly market cannot develop. The presence of a strong competitor with an aim to override the other often brings out the best among the organization and increases the customer satisfaction and in turn helps in achieving the aims and goals of the organization. The battle of upmanship also helps in innovation of the products by adhering to the latest technology. The emergence of the new products helps the organization to increase their sales and to contribute significantly to the overall economy. In the case of Gillette and Schick, the battle has forced Gillette to adopt new policies in innovation and has resulted in the expansion of the overall product line. The competition from Schick has forced Gillette to try out different segment of the market in order to achieve their profitability target. However Gillette and Schick also have suffered in the battle of upmanship. The constant focus on the position of the rivals has forced them to withdraw attention from the customer’s needs and demands and they have provided much concentration in gaining competitive edge over each other. With Gillette‘s focus on Schick, much of the innovation process in their razor and the wet wash segment has come to a halt and they have tried to innovate in various other segment of the market. On the contrary the market of Schick has not reported any considerable improvement after the release of Quattro as they were happy to overweigh Gillette by the launch of the particular product. Schick should carry on further research in the market regarding the changing demands of the customers and should innovate their products based on the requirements of the customer rather than trying to deliver better products in the market in comparison to Gillette. The focus of both the organization has deviated considerably from the customers and thus the battle of upmanship has harmed their cause considerably. Gillette which had evolved as the brand name in the shaving segment has done considerable harm to the overall reputation and has engaged in other wide variety of activities. In spite of carrying a legal battle between each other, Gillette and Schick should have tried to incorporate strategies which could have helped them to attain the organizational aims and goals and could have provided a better stand in the market. As per Schick is concerned, they should have considered the popularity of Gillette and their dominance in the razor market which they had for years. Gillette operates in a vast scale and entering into a direct confrontation with Gillette by an organization which is relatively new in the market does not appears to be a good strategy as per Schick is concerned . It has also been observed that after the legal battle was over, and the success of Quattro was over, Gillette was back to its initial days as the threat from the market of Schick was over. In the case of the battle of upman ship between Gillette and Schick, the customers were largely benefitted by the new products in the market. Firstly, Gillette launched the mach 3 razor and in response to that Schick introduced the four bladed razors. As a result customers had two new varieties of products and they could also opt for the comparison of price between the products and chose accordingly (Gillette VS Schick, n. d). Actions to be incorporated by Gillette The study reveals that Gillette has virtually stopped expansion of the products in the wet shaving market. However the market share has not been hampered considering the brand value of the products. The expansion of Gillette in other lines of product has also done satisfactorily because of the perceived brand value of the products. However Gillette has to understand the fact that the success of the organization over the years has been due to the products in the wet shaving market and a sudden halt to their original line of product could hamper the interest among the customers in purchasing the other products of Gillette. In order to bring new products in the wet shaving market, careful research needs to be undertaken by Gillette regarding the taste and preference of the customers. The products to be launched in the market should be able to meet the demands of the customers on a global scale and at the same time should not hurt the product line which is already operational in the market. The trends among the customer in matters of shaving and their pattern of shaving should also be focused before launching the new product. Gillette should also be ready to undergo transformation in the business activities after careful identification of the process which requires transformation. Gillette may look to introduce new products in the market which will be dedicated to the younger customers, so that the younger generation develops a brand loyalty towards the product and continue to use the products of Gillette in the long run. Gillette can also look to introduce new range of products for the women section and be a popular product among this section of the society. Specific marketing program needs to be adopted by the organization in the process of launching a new product or in the process of expanding the market base which it originally has. As Gillette is a multinational brand, so it should carry out strong marketing across every country in which it has a strong base. It can also adopt for celebrity endorsement which Gillette has done in the past (Kotler, 1972, p.468). Gillette can also act as a sponsor of the major events which are taking place in various parts of the country. Considering the fact that the market in UK has yielded considerable profit for the organization in past, special attention needs to be provided in order to take advantage of the presence of brand loyal customers from that particular region. London is also going to be the venue for the Olympics this year and mass promotional campaign in this part of the year can increase the sales from this part of the world (London, 2012). Gillette can also take the strategy of being a major sponsor in this event and can hire eminent sport personality to endorse the products. As the people based in London are very excited about this mega event, so getting associated with the Olympics will help Gillette significantly. Another popular way for Gillette to reach out to the customers is associating the brand with popular fashion events. As the products of Gillette are popular among both men and woman and they help in makeover of the people, so engaging themselves with fashion events can boost the brand value of the products. In view of the new policies to be adopted by Gillette a clear focus on the consumers needs are to be maintained for a considerable period of time. The organization needs to be careful about the threat from competitions like Schick and should manipulate effective strategy in order to outweigh them. Schick has been successful in capturing the market share of Gillette in the past and the organization should keep that factor in mind before incorporating any changes and also should review the strategies adopted by them. Though Gillette should keep a track about the operation of Schick as precaution measures but it should have confidence in its own operation considering the fact that the market of Gillette is huge. The strategies to be incorporated by Gillette in the future should not be framed as an effort to outweigh the policies of Schick, but should focus on the customer’s needs and demands. Conclusion: The study of the case reveals the fact though Gillette has continued its dominance in the razor market over the years but in the recent times the stoppage in the innovation of the products in the wet shaving market has caused significant damage to the overall brand value. Gillette has received substantial threat from competitors like Schick and the concern over the share of the competitor in the market has caused them to deviate from the main product. Gillette should understand the importance of the product in their main category and should stress on further innovation of it. The overall innovation of the products of Gillette will definitely help them to increase the sales. In innovation of the new products, proper market research should be done by the organization to find out the requirement of the customers. However at the same time Gillette should be conscious of the fact that the sales of the older products have taken a dip in the past, with the introduction of new products. So to safeguard the interest of the already launched products, proper promotional activities should be taken by the company along with the marketing activities of the new products. Other than the innovation in the market, proper strategy should be incorporated in the marketing division so that the promotion of the products can take place in a better way. Gillette should recognize the fact that the razor is a quite mature and some innovative steps should be incorporated by them so that the popularity of the product increases and the organization manages to increase the database of brand loyal customers. Bibliography: 1. Ferrell, O. C & Hartline, M. (2010), Marketing Strategy, Kentucky: Cengage Learning. 2. Gillette VS Schick, (n. d), badgerandblade, retrieved on February, 3, 2012 from: http://badgerandblade.com/vb/printthread.php?t=40645 3. Gillette, ( 2010), unirazak, retrieved on February, 3, 2012 from: www.elib.unirazak.edu.my/az_library/.../BKM5013_GSOB_SEP2010.pdf 4. Gillette expanding market, (1999), New York Times, retrieved on February, 3, 2012 from: http://www.nytimes.com/keyword/mach3 5. Mc Kibben, G, (1998), Cutting edge: Gillette's journey to global leadership, Boston: Harvard Business Press, 6. History of Paper mate, (n. d), papermate, retrieved on February, 3, 2012 from: http://papermate.com/pages/about.aspx# 7. Kotler, P, (1972), Marketing – Management, New Delhi: Pearson Education India, 8. London, (2012), London 2012, retrieved on February, 3, 2012 from: http://www.london2012.com/ 9. Pitman, S. (2005), Market rends, cosmeticdesign, retrieved on February, 3, 2012 from: http://www.cosmeticsdesign-europe.com/Market-Trends/2005-world-cosmetic-market-dominated-by-P-G-Gillette-merger 10. The Gillette Company, (n. d), funding universe, retrieved on February, 3, 2012 from:http://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-History.html Read More