THE CASE METHOD: Société BIC

1. THE CASE METHOD:Société BIC • Define the problem • Formulate alternative courses of action • Evaluate the alternatives • Choose and recommend a course of action

2. Economic Social Political Legal Technological OPPORTUNITIES THREATS Trends in disposables Hygenic Private Globalization Technological advances Analyze Environment

3. Competitors New Entrants Substitutes Strong Suppliers Strong Buyers BIC vs the industry BIC within the industry Analyze Industry

4. Price Advertising Sales Promotion New Products Service Strategies STRENGTHS WEAKNESSES Gillette Double price “Gillette Daisy” Without guard Small ad budget Not aggressive Innovative Good brand equity Market leader Analyze Industry: Competitors

5. Price Advertising Sales Promotion New Products Service Strategies STRENGTHS WEAKNESSES American Safety Razor Higher price “Flicker” Without guard Small ad budget Not aggressive Not well known Analyze Industry: Competitors

6. Financial Requirements Brand Equity Economies of Scale Not likely because Financial requirements BIC & Gillette names BIC & Gillette’s size Analyze Industry: New Entrants

7. Brand Industry Form Generic Strong brand substitutes Strong industry substitutes No generic substitutes Analyze Industry: Substitutes

8. Strong Suppliers: Forward Integration Strong Buyers: Backward Integration No strong suppliers (no apparent sign of integration) Some strong buyers (intermediaries) (no apparent sign of integration) Analyze Industry: Suppliers & Buyers

9. Quantitative Qualitative Management Philosophy Finances Organization Culture STRENGTHS WEAKNESSES Société BIC Marcel Bich Growing fast Extending line Worldwide Strong finances Dedicated business philosophy Analyze Company

10. Société BIC Story: Facts & Figures • Founded in France by Marcel Bich Salesman (office supplies) • Branded after his name • Still CEO; in Paris • Growing (1976 vs 1975) • Non US: sales 40%, earnings 100% • US: sales - 50% of non US; • earnings - 80% of non US; growing at 45%

11. Société BIC Story: Facts & Figures • Sales in 90 countries • Plants in 4 countries • Mass producer/seller • produces 9 million pens/day (33% of world market) • sells 800 thousand lighters/day (20% market share) • 50% market share in pantyhose in France

12. Société BIC Story: Business Philosophy • Cheaply made • Briefly used • Disposable • 1953 – 1976: • Pen, lighters, pantyhose, razor

13. Société BIC Story: Business Philosophy • No interest in inventing • Strong capacity to improve • Strong capacity to make things worldwide • Extreme interest in quality • Never promote unless equal to #1 in market • Finance until beating competition in quality • “Even disposables cannot sell unless their quality ishigh” Marcel Bich

14. BIC Lady Shaver: Facts • To be launched in April 1978 • BIC Pen US invests $11 million promoting shavers • Wet shave market: $350 million • Gillette dominates • BIC has 5% • BIC aims 10%

15. BIC Lady Shaver: Facts • BIC Lady: 2 for $0.49 ($0.245 each) • Gillette Daisy: 2 for $1.19 ($0.595 each) • American Safety Razor Flicker: 5 for $1.69 ($0.338 each) • Work on brand name - BIC Lady! (Silky Touch!) • First lady’s product at a “good price” • High safety features

16. BIC Lady Shaver: Promotion • Magazine ads • No TV to protect BIC Shaver • Will emphasize use • Close-up pictures • “Office Legs”, “Beach Legs”, “Bedroom Legs” • Very large budget • Couponing, sampling, premiums • Shampoo and roll-on premiums not relevant

17. Fit with Corporate Strategy Competitive Advantage Segments & Targets Total Marketing Mix BIC Lady Shaver Perfect with corporate strategy Advantages: Guard Price Aggressiveness Consistent mix Analyze Marketing Strategy:Facts, Opinions & Assumptions

18. DON’T REPEAT THE CASE STORY! Case Material Synthesis Generalizations Implications BIC story & shaver story Justification of strategy Mix decisions Suggestions Analyze Problems & Their Core Elements

19. List Alternatives Evaluate Each Alternative Choose the Best Alternative Detail the Implementation BIC Lady Shaver Formulate & Evaluate Alternative Courses of Action

20. Generate 3-7 alternatives. Don’t enter Enter: penetrate Enter: skim Formulate & Evaluate Alternative Courses of Action: List Alternatives

21. Alternative Strategies • Innovation • Skim creaming • Prestige pricing • Broad product line

22. Costs Time Money Resources Opportunity Cost Product is ready R&D incurred Will consume promotion budget Can spend more on other products Formulate & Evaluate Alternative Courses of Action: Evaluate Alternatives

23. Benefits Sales Profit Customer Satisfaction Goodwill Good sales potential Good profits potential Will ride on current success Will help existing success Favorable customer satisfaction Favorable goodwill Formulate & Evaluate Alternative Courses of Action: Evaluate Alternatives

24. Making Decisions Under Uncertainity Developing Assumptions Enter: penetrate Assume: competition skimming Assume: competition not aggressive Assume: lighter competition in lady’s market Formulate & Evaluate Alternative Courses of Action: Choose Alternative

25. Mass consumption Disposability Elastic demand Universal usage Convenience Ease of loss Entry through emulation (imitation with development) Penetration pricing Saturated markets Heavy advertising Strategy: Marketing vs Corporate

26. Basic Strategy! How Important Is A Basic Strategy for Success? • Société BIC’s “reason for being. • Main success factor. • All enterprises need a basic strategy. • Basic strategy is subject to review.