Gilette Essay

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Gilette Esay
1. Statement of issues/problems/opportunities (10%): Very briefly describe the organisation‟s situation. Be sure to focus on the underlying issues / problems / opportunities and not symptoms. Do not just reiterate organisational facts. 2. Recommendations (40%): What should the organisation do? Provide a detailed description of the actions necessary for the organisation to deal with the identified problems and opportunities. Be specific enough that a organisation could pick up your recommendations and act on them. 3. Justifications and analysis (50-60%): Provide a set of carefully considered arguments for why your recommendations are likely to be effective. Perform any type of analysis you like on facts obtained in developing your justifications. You can also draw on logic and experiences from materials in other sessions or courses. The bottom line, however, is you must be logical, convincing, and exhaustively thorough.

Case Study One: Gillette
Gillette stock price is falling from $64 in early 1999 to $24 in 2001. Market share for the profitable disposable razor sector declined about 5 percent while its competitor picked up. The sales declined three percent in 2000. The new CEO James Kilts joined Gillette in February 2001 and realized that the market share of this high profit margin brand is dropping while debt increasing. There are underutilized production capacity which can help the company to save $350 million; management looking at short-term success where they “stuff” products to distribution channels where the supply is higher than demand and caused aged stocks; to further reduce the relevant cost and solve “stuck stocks” – he is considering brand advertising and promotions – (something that Gillette seldom do to maintain leadership status). He felt that support for the brand globally got sidelined in the rush for short term results. Better forecast should be impleted to control the budget and costing better based on the market size and targeted market to penetrate. Lower down debt. Assignment questions:

1. To what extent does Gillette rely on incremental innovation or leaps in technology with each product introduction? Gillette may goes after innovation too heavily where the product is technical and sophisticated. Consumers may not understand the complexity and value the high technical functions of the product that sells at a very premium price – X% even more expensive than its preceeders. While it has ignored the value perceived of customers on shavers. The company should consider both factors – internally and externally for strategic marketing. Including political factors, economic factors (rising inflation), company financial situation, as part of the pricing strategy. 2. How successful has Gillette been with its trade-up pricing strategy and its ability to charge premium prices? Very successful. As the number of trade up is high.

However, cost of advertising to existing customers should be much lower than new customers. Priority advertising should be targeted to new market to increase market share, aside from maintaining brand position & reinforce the brand in consumers. Message of advertisement is often simple and sharp. However, focus of the ads is very much on product with arg umentative wording, such as “the best”, “the only”. The brand may need to focus on brand advertisement for reinforcement purpose and stabilize the market share over the long run. 3. Should Gillette be concerned about the possible cannibalisation of the healthy sales of existing products by each new product launched? Yes. New products should target different market but should not cannibalise existing sales in long run. Different target market, e.g. more premium group where they are early adopters and enjoy premium brands As the company still sells old versions of shavers, it has even more reasons to target different products to different arget group to increase market share. 4. How global and integrated is Gillette‟s...
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