Gillette Case Study

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Name: Dhananjay Sethi
Gillette Case Study:
In 1985, Gillete entered in the Indian shaving blade market through a joint venture company called ISPL with the House of Poddars. The Malhotras were the market leaders and shrewdly implemented the stock push strategy and thus, enjoyed around 80% of the share. The primary product was the carbon steel blade which was very cheap and was of an inferior quality as compared to stainless-steel blades. The other competitor was Wiltech which was facing heavy losses. Gillette believed that blade, being a low value product, the consumer would not mind paying a price premium for a distinctly better product, especially if it is backed by the well-known brand 7’O Clock. It outsourced distribution through Lipton. However, after 2 years of market-presence it failed to make its mark. Important data:

-ISPL’s price: 1.5 to 1.8 times that of Wiltech’s price or 2.3 to 2.7 times the price of Malhotras’s - Lipton’s commission: 5% (a low-cost deal for Gillette)
-Margin for Lipton stockists: 6% (a high margin)
-Indian shaving blade market: Rs. 250 cr
-Male shaving population: 15-20 cr
-avergae no. of shaves per carbon steel blade: 5 to 8
-twin blade segment: 2% of total market = Rs. 5 cr
-Malhotra’s market share: 80% = Rs. 200 cr
-Wiltech twin blade market share: 50% = Rs. 2.5 cr
-Market share of Gillette: 3% = Rs. 7.5 cr
Direction of solution:
The distribution needs to be taken in the hands of Gillette itself. It though is costly but considering the fact that it’s paying a 5% commission to Lipton, it could use the same amount to increase the margin of distributors (even more than 6%) and retailers i.e. implementing the stock-push strategy like the Malhotras’.
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