Gillette Case Analysis

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Case Analysis for Gillette: Product and Marketing Innovation

9/11/2012

Abstract
Gillette is seeking means to retain dominance in market share they have lead for the last century. Along with sustaining market share Gillette has continued focus on expanding worldwide into less saturated markets. In this analysis multiple alternatives will be explored in order to make a recommendation on steps that would favor Gillette’s organization in meeting their aspirations.

Situation Analysis
Product quality and efficient marketing are the core value propositions that set the pace for Gillette’s success. With continued innovation in both product development and marketing strategies Gillette has been able to retain a commanding worldwide market share in a highly competitive, but mature, razor and blade market. Strong market share allowed Gillette to sustain profits even through economic droughts in recent years. On the flip side, Gillette’s innovation success also posed challenges. In order to maintain their market share, a dependency on continuous product improvement formed over time. Now Gillette will need to determine how to balance investment in research and development along with other areas of the organization. At times their own innovation of new product lines impacted their leading product lines in the market. During the 1990s Gillette found themselves cannibalizing their own successful products when trying to out due the competition. Even though internal competition shifted sales from one product line to another, Gillette’s sales were able to re-coop development costs. Expanding market share around the world also revealed challenges with varying religious and culture beliefs. Western influences have started to generate growth with European woman as younger generations watch American movies and television that depict women with sleek underarms and legs. Gillette’s latest innovation, the Fusion 5(+1) blade, was back in 2006. Since then Schick, Gillette’s leading competitor has not responded with their own break through. Gillette should be wondering what Schick might do next.

Problem
As the market Gillette has lead for so long became mature, their growth ultimately declined due to market saturation and increase competition. Fluctuations occurred only when newer, more innovative products were introduced. This put more pressure on development advancements and marketing tactics. Many analysts believe that Gillette and Schick, leaders in razors and blades, have reached the end of meaningful product innovation [1]. In 2006 when the Fusion 5(+1) blade was introduced, it exploded off the shelves. Gillette sold more than 4 billion Fusion razors with in the first two months. The Fusion’s initial success was quickly fleeting as sales reports showed that razors were outselling the cartridge refills. This was very concerning to Gillette as it is well-known that razor manufacturers earn most of their profits from refills, not the initial razor purchase. Critics also questioned why five blades were needed to get the best shave when Gillette had touted its three-bladed Mach3 as ”the best a man can get.” “Consumer reports conclude that there were no additional performance benefits provided by the five-bladed Fusion, especially when compared to the Mach3” [1 pg391]. Economic recession also impacted sales as Gillette’s products went up in price due to a need to re-coop development costs. How can Gillette continue to maintain or grow market share in a mature market and keep future strategies aligned with customer wants? Alternatives

Continue product line and marketing without major change. No additional research and development costs would need to be spent, which in return reduces the need to raise prices for maintaining their profit margin. However the risk looming would be competitor innovation impacting current market share. Schick may produce a new innovative product that would sway consumers from...
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