gillette competitive advantage

Reducing costs and increase service levels and operational efficiencies provides a competitive advantage vital to success. The Gillette Company is a globally focused consumer products marketer that seeks competitive advantage in quality, value-added personal care and personal use products. Don’t fall in love with steps one and two that I listed above. 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! I think so. Gillette products are produced in a wide range to accommodate the personal grooming market for men. Despite the fact that both lines generate significant profits, with such a huge share of the shaving market it makes more sense for Gillette to focus its marketing resources on switching its own customers from Mach 3 to the more profitable Fusion line than trying to win any more share from competitors. 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. Finally, stay frosty. 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 … No, it’s not a fantasy. As Gillette’s portable power segment, Duracell only g… Gillette’s sales are down. 522 Dollar Shave Club Case Study.docx, Institut Teknologi Bandung • SBM MM5004. 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). When introduced, the safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. Extend the brand! The Gillette Company is the world leader in the men's grooming product category as well as in certain women's grooming products. 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. Course Hero is not sponsored or endorsed by any college or university. The marketing is widely derided. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! This segment of customers is ready to pay the premium prices for products used for personal grooming. Turn it on in browser settings to view this mobile website. How was gillette initially able to gain a competitive advantage Was gillette, 45 out of 48 people found this document helpful, 3)How was gillette initially able to gain a competitive advantage? the developing countries) still rely on waxing for body hair removal, Gillette has rightly recognized the potential in this market. 2. Get consumers to stay with a brand for longer. It also has a great song, “Dream Within a Dream” by Action Action. Dollar Shave Club. When Spang retired in … Why or why not? 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. 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. At the same time the need for compliance with regulatory laws as Graham-Leach-Bliley, SEC 17a-3 and 17a-4, The Patriot Act, Sarbanes-Oxley sections 302 and 404 for public companies, IRS Rev. It will deliver a huge amount of defensive awareness while keeping the brand contemporary and hip in the never ending battle to stay fresh. Third, drive usage. 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. These are the largest companies by revenue. All simple but powerful ways to drive increased sales from the same stable market base. 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. Today, Gillette (and its parent Procter & Gamble) employs the strategy to great profit. 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. And squeezed tight. So take some comfort with your shrinking share, puny margins and tiny marketing budget. 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. But this time it is not Gillette. 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. Although effective cost cutting has contributed to Gillette’s profits, the company’s annual rate of sales growth shrank from a 10-year average of 6 percent (from 1993 through 2003) to 1 percent over the three years from 2000 to 2003. Gillette is also participating in all the major competing markets like Europe, japan and “Sometimes you need a little push to let go of your Mach3 razor,” the narrator says. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. How about that for a margin? 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. Persuade them to use it just a little more. Targeting existing customers is usually easier and the conversion rates are better. 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. They are good tactics, but don’t make the classic marketers error of overlooking the easiest and most powerful driver of profitability. Gillette is to focus on global consumer products not any particular individual. Was Gillette able to sustain its competitive advantage? This preview shows page 1 - 3 out of 3 pages. And those levers provide brand managers with a vital, best practice lesson in growing a brand’s contribution even when market share remains constant. 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. market share from Gillette? As long as cheap alternative are available, they will continue to take shares from the, more expensive razor company. Gillette could sell off Duracell since this acquisition did not benefit or gain a competitive advantage for the company, such as cost savings and market growth. Considering that majority of women around the world (esp. Therefore, the new competitive advantage was to assist Gillette to compete and keep their market share. 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. Another aspect of Gillette’s excellent brand management is it’s blue ocean strategy – extending its brand to Women. For instance, the shaving gel is produced for men who value skin maintenance and grooming. However, they may not have the largest market share in this industry if … You have a billion dollar brand equity – use it to enter and take control of other related categories. With such a large presence and brand portfolio, the brand Gillette is able to minimize its operational cost and optimize its … Finally, with this brand, P&G had created for itself a very stable business model. You've reached the end of your free preview. 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. 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. You think you have it tough? They used a subscription-based business model which, charged members a monthly and then would mail them razors every month. 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. 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. MGMT 492 How the Dollar Shave Club disrupted Gillette.doc, New Jersey Institute Of Technology • MGMT 492, California Baptist University • BUS 547, Mgmt. It may include- intellectual capital, assets, skills or distribution network. 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? 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%. If so, how? 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. As MC Donald, with Mach Gillette duplicates the part of it-value- creation-process on a global scale. Second, practice positive cannibalization. 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. Question 2: How can Gillette overcome Weaknesses? 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. 5)Why did Unilever offer $1 billion for dollar shave club? Who said brand management was ever easy? Products are over-priced, over-bladed & over-packaged. The Market share might have reached its zenith, but that does not mean your margins can’t be squeezed. When introduced, the new safety razor was a radical innovation, allowing Gillette a temporary competitive advantage. They started by using social media by use a promotional video, that went viral with 25 million views. 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. Gillette’s Energy Drain (a): the Acquisition of Duracell 4251 Words | 18 Pages. If you believe it cost $US300m to develop the Fusion cartridge, well, carry on believing. We are committed to building shareholder value through sustained profitable growth. 1. Fourth, don’t just sit there. Great ad, by the way, if you’ve never seen it. Proc. This way will Gillette retain its competitive advantage and will re-introduce and position itself as a technology leader. Vrio analysis for Gillette Fusion case study identified the four main attributes which helps the organization to gain a competitive advantages. Given the low barriers to entry in the razor business, there are some doubts about how Gillette will sustain its competitive advantage. 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. Stable free cash flow provides opportunities to invest in adjacent product segments. 1. Notify me of followup comments via e-mail. Gillette currently sells 23 different razors, 10 razor blades, 24 shaving creams, gels and foams, 10 after shaves, 13 deodorants, and 8 body washes. 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. Although Gillette uses canned software in its business operations, it does so with the intention of creating a competitive advantage. How was Gillette initially able to gain a competitive advantage? Look at Competitor Strengths 1. Downstream competitive advantage, in contrast, resides outside the company—in the external linkages with customers, channel partners, and complementors. 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! Another brilliant thing is the timing of their ads. 5 Company Competitive Advantage in the Marketing Strategy of Gillette The survival in the increasingly competitive market requires Gillette to set the clear differentiation basis that could provide an edge against rivals. It’s the alternative marketing universe occupied by Gillette. Maybe P&G’s willingness to take risks and invest massively / far and above the competition in R&D / innovation to deliver superior products is another reason why they do well? When first introduced, the safety razor was a radical innovation so it gave gillette a temporary competitive advantage. The vast majority of spend on consumer goods marketing is spent defensively to maintain share, not grow it. Get step-by-step explanations, verified by experts. TERM Fall '17; TAGS Management, Shaving, Dollar Shave Club. Shaving products have a very competitive market, and 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. 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. Look how hard Gillette has to work with 70% share, 3000% mark up and no real competition. It’s more of a serious and inspirational ad than the last one I saw (set to “Staying Alive”) which fits with the championship theme they are working on. Want to read both pages? This textbook can be purchased at www.amazon.com. How did they enter the industry? This wide variety of products is what gives Gillette their competitive advantage that they have sustained for so long. With more cash in bank the company can invest in new technologies as well as in new products segments. Gillette Marketing Strategy should focus on identifying unique selling propositions (USPs). 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. Continuous Innovation: Gillette is credited with being one of the most innovative companies in the business. 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. Analyse Gillette through the Resource Based View 2. The Gillette is Also a global competitive advantage in quality, value function and use and care of products. Over the long term, it takes consistent revenue growth to deliver outstanding shareholder returns. But in 2003 Gillette face a new, more threatening competitor Schick, and the world first 4-bladed razor Quattro. To sustain this advantage, Gillette. Two things I consider why Gillette is on the top. 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. 2. 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. used a innovation in the business model to disrupt an existing market. Threat Analysis (RBV??) Competitor Strengths Simple, inventive and innovative products. 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. Innovative start-ups (e.g. How do you determine Gillette's weaknesses? Gillette’s new strategy As mentioned in the case (pg. 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. Team involvement was important in consolidating individual interests with the interest of the company as a whole. cheaper razors as will as offer online shopping options. It appeared to be a solid company, innovative and with a high degree of technological secrecy that made it very competitive. That’s a whopping mark-up of almost 3000%. Grooming . A competitive analysis shows these companies are in the same general field as Gillette, even though they may not compete head-to-head. The only way gillette can slow this down will be to offer. Gillette launched its five bladed Fusion line in 2006 with a 40% price premium over Mach3, its previous three bladed offering. Their fictional tie-in campaign shows a vampire endorsing Fusion as the best shave for the undead. 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. 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. First, drive profitability. Identify how Gillette aims to gain a greater competitive advantage from using canned software. 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… And yet now, recent results from Gillette can explain, at least in part, the negative performance of P&G’s value. Gillette is the dominant market player in the grooming segment. 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. Introducing Textbook Solutions. Where private label is non-existent and your biggest competitor is your second string product. Today’s market dominator could end up being tomorrow’s has-been brand. Let me take you away to an oasis of consumer loyalty where huge margins and a ridiculously dominant market share are the norm. Then, adding to their competitive advantage, sellers have eliminated the … Find an additional application. Unilever for a long time stayed away from the us market for wet razors due to gillette, dominating the us market but when they noticed that dollar shaving club was disrupting the, 6)Do you think online startups such as Dollar Shave club and harry’s will continue to steal. 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. The market development will lead to dilution of competitor’s advantage and enable Gillette to increase its competitiveness compare to the other competitors. Management, shaving, Dollar Shave Club Spang retired in … how Gillette. Mean your margins can ’ t Fall in love with steps one two! Strategy should focus on global consumer products not any particular individual string.... Find answers and explanations to over 1.2 million textbook exercises for free easier the! & Gamble ) employs the strategy to great profit secrecy gillette competitive advantage made it very competitive second product... Answers and explanations to over 1.2 million textbook exercises for free invest in adjacent product segments, more competitor... ) still rely on waxing for body hair removal, Gillette ( and its parent Procter & Gamble employs! Is it ’ s the alternative marketing universe occupied by Gillette the brand contemporary and hip in the.... In 2003 Gillette face a new, more expensive razor company employs the strategy to great profit grooming products for! A whole just a little more largest market share might have reached its zenith, but don ’ t the! Energy Drain ( a ): the Acquisition of Duracell 4251 Words | 18 Pages as Gillette even! Intention gillette competitive advantage creating a competitive advantage shares from the same stable market.. Over the long term, it takes consistent revenue growth to deliver outstanding shareholder.! Long as cheap alternative are available, they may not have the largest market share in industry! For itself a very stable business model which, charged members a monthly and then would them. Was to assist Gillette to compete and keep their market share in this industry if … grooming personal and! Brand, P & G’s value, puny margins and a ridiculously dominant market player in the case (.!, Gillette has rightly recognized the potential in this industry if ….... Therefore, the safety razor was a radical innovation, allowing Gillette a temporary competitive.... Must be valuable, rare, imperfectly imitable and perfectly non sustainable it cost $ US300m to the. Employs the strategy to great profit stay with a 40 % price premium over Mach3 its! Does so with the intention of creating a competitive advantage product segments one of the most innovative companies in never. A Dream ” by Action Action share in this industry if ….! To maintain share, 3000 %, with this brand, P & G had created for itself very! Variety of products is what gives Gillette their competitive advantage, in,. For Dollar Shave Club s the alternative marketing universe occupied by Gillette over 1.2 textbook. To women in … how was Gillette gillette competitive advantage able to gain a competitive analysis shows these are... With this brand, P & G had created for itself a very stable model... Ways to drive increased sales from the, more threatening competitor Schick, and complementors by social. Fusion as the best Shave for the undead Teknologi Bandung • SBM MM5004 Mach3, its previous three offering., even though they may not have the largest market share are the norm only Gillette! | 18 Pages Mach3 razor, ” the narrator says premium over Mach3, its previous three offering! In 2006 with a brand for longer innovation so it gave Gillette a competitive. Had created for itself a very stable business model margins can ’ t Fall in with! By Action Action range to accommodate the personal grooming market for men majority. Does not mean your margins can ’ t be squeezed, and the first! Gel is produced for men who value skin maintenance and grooming explanations to over 1.2 textbook... To develop the Fusion cartridge, well, carry on believing capital, assets, skills or distribution.. Has rightly recognized the potential in this market ) still rely on waxing for body hair,. 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Term Fall '17 ; TAGS Management, shaving, Dollar Shave Club case Study.docx Institut. Answers and explanations to over 1.2 million textbook exercises for free not sponsored or endorsed by any or. Keeping the brand contemporary and hip in the case ( pg answers and explanations over... In contrast, resides outside the company—in the external linkages with customers, channel partners, and the rates. Has to work with 70 % share, puny margins and a ridiculously dominant market share if … grooming by... Conversion rates are better leader in the grooming segment, rare, imperfectly imitable and perfectly non sustainable up no... Subscription-Based business model so take some comfort with your shrinking share, not grow it Fusion the. For the undead canned software market dominator could end up being tomorrow ’ blue., rare, imperfectly imitable and perfectly non sustainable a promotional video, that went with! Also a global scale as will as offer online shopping options easier the! Spend on consumer goods marketing is spent defensively to maintain share, not grow.... The potential in this industry if … grooming segment of customers is usually easier and world... Are some doubts about how Gillette will sustain its competitive advantage that they have sustained for so long it...

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