TO: Edward “Cutting Edge” Barber, Head of Gillette Shaving Division RE: Rejuvenating the strategy of Gillette’s razor business
Gillette has grown to be a power brand in the shaving industry. Its products are seen as premium quality and are thus sold at a premium price. Gillette’s current business model consists of high spending in marketing and product development (R&D). Gillette’s traditional competitive strategy for razors is to focus technology and marketing on increasingly sophisticated blades. In other words, Gillette strengthens their position by introducing new products or services that make existing ones obsolete. By utilizing this tactic, Gillette is remaining competitive by cannibalizing its own brand and sacrificing short-term profits. Although this strategy is risky, it has served to protect Gillette’s market share, making them a very competitive brand. Because consumers grow weary of consuming the same product year after year, this broad differentiation strategy has been successful for Gillette. However, Gillette has not used this to the best of their abilities. Currently, Gillette is only utilizing strong innovation and high spending in marketing/advertising.
Although this strategy has worked in the past, it is beginning to show signs of age and needs to be rethought. With the implementation of a new strategy, a clear vision of the industry should be drawn out (see exhibit 1). As you can see from Porter’s model, Gillette has a nice niche because of their strong brand name. However, Gillette’s end consumers have large bargaining power based on the option of rivals and the state of the current economy.
Gillette needs to implement a new strategy. The idea of adding new features to Gillette’s products to market to consumers and then ridding the old products off the shelves is costly to the consumer, the company and is beginning to hinder Gillette’s bottom line. Thus, the...