Gillette Indonesia Case Study
Gillette has been the world’s leader in blades and razors for more than one hundred years. Chester Allan, country manager in Indonesia, predicts the 1996 sales and growth of the company in his marketing plan. He expects growth of 19 % in the blade sales-from 115 million in 1995 to 136 million in 1996. However, Rigoberto Effio, Gillette Business Director Asia-Pacific, sees more potential in Indonesian market. He knows the growth rates in the other countries in the region, so he believes that in Indonesia the company should look for 25-30% growth. In this case study the Gillette Indonesia will be analyzed in detail, outlining the key issue, providing various options and recommendation and the necessary steps the company should undertake in order to generate a higher growth percentage. Analysis
Gillette was founded in Boston in 1901. They are recognized world-renowned leader in blade and razors as well as in nine different categories like writing instruments, correction products, men’s electric razors, shaving preparations, oral care appliances, toothbrushes, pistol-grip hair dryers, hair epilators and hand blenders. The company utilizes differentiated marketing strategies by offering distinct products to different people. Manufacturing of Gillette products is prevalent at 50 facilities in 24 countries. In 1971 they made a market penetration in Indonesia, hoping to boost sales among the local population. The following year Gillette introduced a factory, manufacturing its products, near Jakarta. Indonesia is situated in south-east Asia, with population of nearly 200 million people, with the majority leaving outside the big towns in rural areas-around 65%. The country has had a stable economic growth of around 7% for the past twenty year. The government is trying to keep the economic progress and growth as well as increasing the incomes of the population, by increasing the foreign investments and the private sector. However, there are some areas that improve much faster and others that remain poor. Indonesian market is a key element in Gillette’s Market strategy in the Asia-Pacific region. A few challenges exist in the acquisition of more market share and they are the following: Regulation – inadequate infrastructure and government restrictions on foreign corporations equates to lower sales and poor distribution.
Affordability- only 20% of the population earns more than $10,000 per annum;
Shaving rate- In comparison to other industrialized countries like Hong Kong and United States, the occurrence of shaving in Indonesia is much lower(5.5 times per month in Indonesia and 26 times in US)
The external environment, surrounding the company, is where Gillette faces its biggest challenges. Parts of them are based on the specific Indonesian demographics- big country, poor infrastructure connecting the main cities. In addition to that there are government restrictions into foreign imports and distributions. Companies are forced to use only local distributors. Gillette Indonesia must consider these issues in its business plans and marketing strategies. Gillette holds around 90% of the premium brand segment. As a whole the vision of the Indonesian people about the company is that Gillette is high-quality, but luxury brand, and people cannot afford buying their products. However they are trying to be competitive in every segment of the market. Their biggest rivals are focused in the low-end, blades, double-edged and disposables. All of them have in common the fact that offer low-quality very cheap products, which some of the people prefer, because of their low-incomes. Strengths
48% Market share
High quality brand
Population of nearly 200 million.
Competition with cheaper brands
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