A competitive analysis shows these companies are in the same general field as Gillette, even though they may not compete head-to-head. Second, practice positive cannibalization. Question 2: How can Gillette overcome Weaknesses? 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). 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. Two things I consider why Gillette is on the top. 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. It appeared to be a solid company, innovative and with a high degree of technological secrecy that made it very competitive. This textbook can be purchased at www.amazon.com. The Notify me of followup comments via e-mail. 2. How did they enter the industry? They are good tactics, but don’t make the classic marketers error of overlooking the easiest and most powerful driver of profitability. 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. Proc. But this time it is not Gillette. 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. If so, how? 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. 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? Let me take you away to an oasis of consumer loyalty where huge margins and a ridiculously dominant market share are the norm. 2. The only way gillette can slow this down will be to offer. We are committed to building shareholder value through sustained profitable growth. 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. Get step-by-step explanations, verified by experts. 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. 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. Who said brand management was ever easy? Great ad, by the way, if you’ve never seen it. You've reached the end of your free preview. First, drive profitability. Finally, with this brand, P&G had created for itself a very stable business model. Reducing costs and increase service levels and operational efficiencies provides a competitive advantage vital to success. 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. 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. 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. 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. Gillette’s sales are down. Introducing Textbook Solutions. When introduced, the new safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. Gillette’s Energy Drain (a): the Acquisition of Duracell 4251 Words | 18 Pages. Another aspect of Gillette’s excellent brand management is it’s blue ocean strategy – extending its brand to Women. 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. 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. And those levers provide brand managers with a vital, best practice lesson in growing a brand’s contribution even when market share remains constant. Why or why not? 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. 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. Want to read both pages? Get consumers to stay with a brand for longer. If you believe it cost $US300m to develop the Fusion cartridge, well, carry on believing. Look how hard Gillette has to work with 70% share, 3000% mark up and no real competition. Over the long term, it takes consistent revenue growth to deliver outstanding shareholder returns. 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. Considering that majority of women around the world (esp. Persuade them to use it just a little more. The Gillette Company is the world leader in the men's grooming product category as well as in certain women's grooming products. Dollar Shave Club. Grooming . the developing countries) still rely on waxing for body hair removal, Gillette has rightly recognized the potential in this market. 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. The Gillette is Also a global competitive advantage in quality, value function and use and care of products. Gillette currently sells 23 different razors, 10 razor blades, 24 shaving creams, gels and foams, 10 after shaves, 13 deodorants, and 8 body washes. I think so. These are the largest companies by revenue. 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. 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. The Gillette Company is a globally focused consumer products marketer that seeks competitive advantage in quality, value-added personal care and personal use products. And yet now, recent results from Gillette can explain, at least in part, the negative performance of P&G’s value. 5)Why did Unilever offer $1 billion for dollar shave club? 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. How was Gillette initially able to gain a competitive advantage? Gillette launched its five bladed Fusion line in 2006 with a 40% price premium over Mach3, its previous three bladed offering. Find an additional application. Although Gillette uses canned software in its business operations, it does so with the intention of creating a competitive advantage. However, they may not have the largest market share in this industry if … 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! 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. Today, Gillette (and its parent Procter & Gamble) employs the strategy to great profit. 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. 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. Continuous Innovation: Gillette is credited with being one of the most innovative companies in the business. It will deliver a huge amount of defensive awareness while keeping the brand contemporary and hip in the never ending battle to stay fresh. Their fictional tie-in campaign shows a vampire endorsing Fusion as the best shave for the undead. Finally, stay frosty. Shaving products have a very competitive market, and Gillette is also participating in all the major competing markets like Europe, japan and Gillette is to focus on global consumer products not any particular individual. 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. Look at Competitor Strengths 1. With such a large presence and brand portfolio, the brand Gillette is able to minimize its operational cost and optimize its … Competitor Strengths Simple, inventive and innovative products. Products are over-priced, over-bladed & over-packaged. This wide variety of products is what gives Gillette their competitive advantage that they have sustained for so long. used a innovation in the business model to disrupt an existing market. So take some comfort with your shrinking share, puny margins and tiny marketing budget. Gillette is the dominant market player in the grooming segment. 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. 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. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Gillette products are produced in a wide range to accommodate the personal grooming market for men. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! This way will Gillette retain its competitive advantage and will re-introduce and position itself as a technology leader. 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%. When introduced, the safety razor was a radical innovation, allowing Gillette a temporary 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. Identify how Gillette aims to gain a greater competitive advantage from using canned software. 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. 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. The marketing is widely derided. The vast majority of spend on consumer goods marketing is spent defensively to maintain share, not grow it. Vrio analysis for Gillette Fusion case study identified the four main attributes which helps the organization to gain a competitive advantages. 1. 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 … 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. As MC Donald, with Mach Gillette duplicates the part of it-value- creation-process on a global scale. Another brilliant thing is the timing of their ads. 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. Downstream competitive advantage, in contrast, resides outside the company—in the external linkages with customers, channel partners, and complementors. 1. Team involvement was important in consolidating individual interests with the interest of the company as a whole. Threat Analysis (RBV??) Targeting existing customers is usually easier and the conversion rates are better. This preview shows page 1 - 3 out of 3 pages. It may include- intellectual capital, assets, skills or distribution network. They used a subscription-based business model which, charged members a monthly and then would mail them razors every month. As Gillette’s portable power segment, Duracell only g… Extend the brand! Analyse Gillette through the Resource Based View 2. 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… “Sometimes you need a little push to let go of your Mach3 razor,” the narrator says. It also has a great song, “Dream Within a Dream” by Action Action. Fourth, don’t just sit there. Given the low barriers to entry in the razor business, there are some doubts about how Gillette will sustain its competitive advantage. You have a billion dollar brand equity – use it to enter and take control of other related categories. They started by using social media by use a promotional video, that went viral with 25 million views. No, it’s not a fantasy. How about that for a margin? This segment of customers is ready to pay the premium prices for products used for personal grooming. 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. Don’t fall in love with steps one and two that I listed above. When Spang retired in … market share from Gillette? But in 2003 Gillette face a new, more threatening competitor Schick, and the world first 4-bladed razor Quattro. 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. The market development will lead to dilution of competitor’s advantage and enable Gillette to increase its competitiveness compare to the other competitors. 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. Today’s market dominator could end up being tomorrow’s has-been brand. It’s the alternative marketing universe occupied by Gillette. All simple but powerful ways to drive increased sales from the same stable market base. For instance, the shaving gel is produced for men who value skin maintenance and grooming. Course Hero is not sponsored or endorsed by any college or university. How do you determine Gillette's weaknesses? 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! Where private label is non-existent and your biggest competitor is your second string product. 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