Gillete Indonesia

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GILLETE INDONESIA: MARKETING STRATEGY AND ROADMAP FOR FUTURE GROWTH SUMMARY STATEMENT
Income levels are rising steadily in Indonesia and since Gillette is the preferred brand for the urban affluent segment of population, Gillette should focus on encouraging its current users to move up the value chain to premium and upper segment offerings of the Company. LTVC of customers using premium products is $127 as compared to $59 and $34 for customers using disposables and double edged blades. (Refer annexure VI). Accordingly, Gillette Indonesia should focus on the premium market segment and should also encourage such users to adopt shaving more frequently as a lifestyle enhancing attitude. Focussed advertising on these segments of the population will yield such desired results. Additionally, the Company should focus on improving penetration into smaller cities and rural markets so as to have a first mover advantage in this underexploited market. The current non user market should be penetrated by greater spends on focussed advertising on these segments using appropriate advertising media and specific promotion strategies like providing free samples to non users. Finally, the distribution channels of the Company should be strengthened to increase reach of products to all markets. SITUATION ANALYSIS

Context: - Indonesia is an under developed market for Gillette products and the blades market is growing slower than other Asian economies. Gillette Indonesia is faced with the challenge of increasing the market demand for its products and consolidate its position as the biggest player in the shaving market in Indonesia. Demand for the company’s products are currently concentrated in certain urban areas and larger tracts of outlying rural areas are still untapped. Company: - Gillette is the world leader in razor and blades market and enjoys dominant position in the Indonesian market as well. However, rate of growth of the market is not satisfactory and migrating customers from lower end products to premium product offerings of Gillette has also been slow to take off. Collaborators: - Gillette has 23 distributors spread across Indonesia to push sales of its products and ensure adequate inventories and timely delivery to retailers. The national sales manager and his team work closely with the 23 distributors to fulfil all needs of the customers and markets. Although Gillette achieved 60% improvement in sales in the first year after changing from single to multiple distributor strategy, there are still inefficiencies in the distribution process. Competition: - Though Gillette is a dominant market player in the Indonesian market it is facing competition from cheap East European and Chinese blades in the low end double edged blades segment. The prices of comparable Gillette products are around four times those of competing brands as Tatra, Super Nacet and Tiger. Consumers: - The Indonesian consumer market can be clearly segregated into two segments namely Top 5 cities and other small cities and rural areas. Urban centres are the key growth drivers, and Top 5 cities constitute about 60% of Gillette’s total blades sales in 1995. Owing to rising incomes and demographic changes, the overall blades market is poised for growth and Gillette should attempt to capture as much of this expanded market as possible. MARKET SIZE

Our analysis reveals that the blades market in Indonesia will increase from 240 to 285 million units in 1996 out of which Gillette Indonesia’s share is expected to be approximately 148 million units.(For details refer to Annexure -2). The overall growth in the market size has been estimated by taking into account the fact that income levels are rising by 10% among the current user base, incidence levels are rising every year by about 20% and a population increase of 1.7% every year which has been assumed. This accounts to an overall increase in the market size by 31.1% which is much more than Allan’s estimation of 19%. An...
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