Techniques of Selling: Gillette Mach3 - Essay Example

Techniques of Selling "Gillette Mach3" Introduction Gillette is the global leader in razorsand blades, claiming a near 72% market share in 2005. Its shaving systems include the Mach3, Sensor Excel, Sensor and Trac II brands, as well as disposable razor brands such as Custom Plus and Good News. The company is also the world leader in sales of women's wet shaving products. Gillette's female shaving systems include Gillette for Women Sensor Excel and Sensor for Women brands, and Gillette for Women Venus. Gillette is ranked number one in all major geographic regions of the world. Its success in razors and blades is based on a blend of loyal repeat customers, production innovation that leads the market in terms of technology and almost universal distribution. Product Blades & Razors is Gillette's leading business division, accounting for around 41% of sales. Division growth for the year, at 11.9%, was slightly down on 2003 (12.6%); however, performance should still be considered strong given the increase in competition, in particular from Energizer's Schick Quattro 4-blade razor product. Driving growth was the company's continued investment in product innovation, its ongoing focus "trading up" to premium, higher margin products and growth in emerging markets. A notable increase in advertising also contributed. Major product launches during the year were the M3 Power razor and the Venus Vibrance razor for women. Blades & Razors accounts for by far the largest proportion of operating profit, at 63% in 2004, at US$1.6 billion, due largely to higher sales and margins. Performance in 2004 represented an increase of 14% over 2003. Operating profit fell slightly in 2003 chiefly due to a US$50 million charge relating to the realignment of the European manufacturing and distribution operations. Focusing on Gillette's core sectors, its primary interest lies in men's razors and blades in which it was ranked number one in the world in 2004 with an increased market share of 65.5%. Gillette competes with Energizer Holdings, which was ranked second in 2004, with a market share of 15.3%, and Bic, in third place with 4.8%. Although its strong performance in 2004 meant that lower placed rivals had little chance of making up ground, razors and blades witnessed intensification in competition which while not causing Gillette to lose ground stopped its ascendancy. In late 2003, Energizer launched its Schick Quattro 4-blade razor product despite an attempt by Gillette to halt the market entry through the law courts. As a result, following three years of market share gain, Gillette recorded stagnation in 2004. Gillette responded to this launch in 2004 with a new introduction of its own, presenting the M3 Power product, a battery powered wet shaving system, in North America in May 2004. The product has since been given a wider global roll-out. Gillette have launched their new product, it's a partially new product called the Mach 3, it has had minor changes from their existing product the Sensor Excel, and they have invested heavily in the development and launch. Although this is really just a product improvement on their old razor through continuous development, Gillette has also incorporated room for product additions. This could be seen as repositioning their old product. Gillette gives continuous innovation to their products, whether it's a new product line or a new product all together. Why launch a new product I hear you say, consumer needs haven't really changed, and nothing has created new consumer needs, Gillette must have accessed competitor activity and realized a decline in the market of there existing products. There existing razor had gone through the product life cycle, it had been introduced, experienced growth, reached maturity and then entered a decline. Description of the launch strategy Gillette has identified the potential of the new product. They have analyzed the competition and technology, and taken into account the consumer problems, behavior and trends. Gillette defined objectives, assessed their strategic options, analyzed a target market also analyzing competitor targets, then and only then developed a 'core' strategy. After Gillette had exhausted and considered its market research and identified the market segment, it intends to target the need to offer a total package to meet the customer's needs and wants. Four key areas are initially blended to produce the required response in the target audience: Product, Price, Place and Promotion. Then, further more, People, Process and Physical evidence. These areas make up the marketing mix. Gillette developed the supporting marketing mix tactics to support the overall delivery of the strategy and then established its market position by concentrating the marketing effort on the particular segment which was likely to yield the highest sales form its products. The advantage of identifying target groups is that the sales effort can be directed by means of 'rifle shot' approach at the people that are most likely to buy; this is far more effective than aiming the sales effort at the market in general, as in the scattered 'shotgun' approach. There can be obvious links made between Gillette's product strategy and the elements within the marketing mix mentioned above. They are aiming at capturing new users into the Gillette franchise, and to encourage users of disposables to trade up to the new systems style. The place of the market is global, and the geographic location of Gillette is global too. Gillette has used new technology to design a new product to aim towards this segment, and the promotional strategy is to television advertise globally using the same advert for every country with only minor alterations to the script, this is cost effective, and quick. This not only steals our (Wilkinson Sword's) customers but also aims to aggressively grow the sector. With a previous good grasp of the business environment and organizational structure, Gillette strategy aims for TQM (Total Quality Management). Gillette is the market leader. It has the dominant brand share with 105 million users of its products - 65% of the market, they invest heavily in advertising and promotion and product development. Wilkinson Sword is the only major competitor in the systems market competing directly, and can be seen as the only market challenger. The market is large and internationally based, Gillette have taken a global approach to promoting there products, meaning positional decisions can be standardized. Consumer image of the Gillette brand is excellent, and the combination of trademark modern packaging and stylish design has enabled them the function of facilitation i.e. Repeat purchases, as there is no interchangeability of blades with other systems. This means the customer is restricted to purchasing Gillette branded blades. Consumers can identify the product and will be more willing to try new product as they carry the same familiar branding traits. Through Gillette's branding strategy, they have produced premium priced products which has enabled a basic level of differentiation in the market. Also, through its advertising they have managed to capture market segmentation and positive brand loyalty with low consumer perceived risks and low psychological risks. Gillette has managed to create both customer and financial brand equity. Although Gillette offers a high standard of tangible product it also offers a service. This is a 'add value' service in the form of a money back guarantee if you're not happy with the product. There has been great need for services such as this to be effectively marketed due to increasing competition. As yet no competitor offers such service. Findings and Recommendations Gillette is in a fast moving consumer goods market that tends to be highly segmented, however they need to be aware of the danger of fragmentation. This occurs if they try to cater for too many segments, and each segment becomes so small that very little profit is generated. New product development costs can be reduced by developing a few global or regional products rather than many national products. One reason for the high costs is the duplication of effort across countries, a common design platform needs to be implemented, and the concentration or focus will save those millions by eliminating duplicative efforts and saving on retooling factories. From the evidence above we can see that Gillette's continuous investment into product development and promotion has kept them market leader. With proven brand strategies, the results speak for themselves. They have accomplished a premium priced, highly desirable product with related, superbly balanced, supporting marketing mix elements. The outlook for Gillette's main men's grooming sector is bright, with robust growth of 22% forecast over the 2006-2011 period. Such a prediction bodes well for the company given its strength in the sector, where it dominates men's razors and blades with its Mach3 and Sensor brands. The outlook for men's razors and blades is equally positive, predicted to grow by 20% over the forecast period, marginally above that of the overall cosmetics and toiletries industry. Gillette would do well to continue to invest in expanding its men's razors and blades presence in emerging markets, in particular Eastern Europe, which is predicted that it will grow by a dramatic 57% over the forecast period, and Africa and the Middle East, which is forecast to grow by 22%. The broad focus of Gillette's razors and blades portfolio should enable it to take full advantage of this trend as it is able to compete in both mass and premium segments. Gillette is also well positioned to weather difficult times in the key North American market, which is forecast to grow by only 9% to 2011. With consumer demand for prestige goods on the rise, Gillette's premium focus should enable it to maintain forward momentum. As Gillette are the first movers toward launching this product, they have gained benefits of economies of scale and curve effects; and built customer loyalty, however in this hypercompetitive environment it is difficult to sustain. Gillette is very well placed in 2006, with its focus on product innovation, the premium sector and investment in key, high growth product areas, such as dental vanity, forming a strong strategy with which to expand its global brand strength. Bibliography Global Gillette retrieved from www.datamonitor.com on October 5, 2006 Rajiv Grover & Marco Vriens. The Handbook of Marketing Research: Uses, Misuses and Future Advances SAGE Publications Ltd, 2006, 250-278 Read More