GILLETTE’S Razor Sharp Edge Over Its Competition

1. GILLETTE’S Razor Sharp Edge Over Its Competition

2. Overview • Background info on Gillette • Problems/Solutions company faced • Current info/issues

3. Background Information • Founded in 1901 • Flagship product—safety razor • Company’s strengths: • Focus on scientific knowledge/studies • Innovative products • Large-scale manufacturing capability • Useful products sold at fair price • Sales in 2000: $9.3 billion

4. Global Company • Strategy: “To manage its business with a long-term, global perspective” • Over 1 billion people interact with a Gillette product every day • Manufacturing operations located in 23 countries • Distribution in 200+ countries • 40,000+ employees

5. Manufacturing Locations United States: -Andover, MA -Chicago, IL -Cleveland, TN -Iowa City, IA -La Grange, GA -Lancaster, SC -Lexington, NC -South Boston, MA

6. European Locations Manufacturing Sites: -Belgium -Czech Republic -France -Germany -Ireland -Poland -Russia -Spain -England R & D Facilities: Germany, Spain, England

7. Vision Statement • “To build TOTAL BRAND VALUE by innovating to deliver consumer value and customer leadership faster, better, and more completely than our competition.” • Fundamental Principles: • Organizational Excellence • Superior performance at every level • Core Values • Achievement, Integrity, Collaboration

8. Products Overview: • Worldwide leader in 12 major consumer product categories • Focus on continual development of new products • Currently introduces 20+ new products per year

9. Three Core Businesses Gillette is the undisputed global leader in: • Grooming • Portable Power • Oral Care

10. Grooming Products • World leader in male and female grooming products • Blades, razors • Wet, dry • 700 million consumers use Gillette razor blades • Shaving preparations and after-shaves

11. Portable Power • Duracell-most popular brand of alkaline batteries in the world • Offers strategic power-consulting services to leading electronic device manufacturers

12. Oral Care • Company’s fastest growing business • Oral-B brand holds #1 position globally in manual and power toothbrushes

13. Facts • 3 core businesses provide: • 80% sales • 90% profits • These core brands are the strength of Gillette Co. • Gillette Mach3 • Gillette for Women Venus • Right Guard • Duracell CopperTop • Oral-B • Braun Oral-B • Braun

14. Problem Background • 1980s: Consumers chose inexpensive disposable razors • Gillette helped to foster trend: • Focus on price, not quality • Results: • Disposable razor market inc. by 60% • Loss of quality image, loss of profits • *Gillette taught consumers the best razor was the cheapest one!

15. Use of Marketing Research • Focus groups and surveys revealed: • Gillette must reform its approach by: • Emphasizing quality and brand equity • Discontinuing use of disposable razor ads • Developing new products

16. Results of MR • Inc. investments in research and development • Sensor, Sensor Excel, Mach III, Venus • Direct mail campaigns—free razors • Catchphrase: “The best a man can get.” • Able to reverse the trend—SUCCESS!

17. Role of Marketing Research • Told Gillette that it could change its former price approach to the market by emphasizing quality and brand equity as well as introducing new products.

18. Management Decision Problem • What should Gillette do to change the trend of our decreasing equity in the market? • What should Gillette do to increase consumer’s opinions of our brand image?

19. Marketing Research Problem • To determine the consumer’s opinions regarding the quality of products over their prices. • To determine the impact of Gillette’s competition on its sales. • To determine the wants and needs of consumers using Gillette’s various shaving products.

20. Research Question and Hypotheses • Are consumers more price conscious or brand loyal? H1: Price is most important to consumers. H2: Price is not most important to consumers. H3: Brand loyalty is most important to consumers. H4: Brand loyalty is not most important to consumers.

21. Current Issues facing Gillette • Razor Wars • Feb. 24, 2003 • Gillette, Bic, Schick • Launch new razors in men and women’s disposable lines • Ex. Schick razor-dispenses shave gel for women • Ex. Gillette-Pink Passion Venus • Marketing efforts total $120 million combined • Ad campaigns launched this month

22. Note • Increased attention for disposable razors again—RISK • Caution: resulted in loss of market share in the 1980s for Gillette

23. Gillette Marketing Spending • Jan. 30, 2003 • 24% increase in ad spending (fourth quarter) • 2002: Global ad spending rose 12%--$650 million

24. New Challenges • Jan. 30, 2003 • Battery rival Energizer to acquire Schick brand of razors • Energizer to invest $930 million • Result: Aggressive marketing wars?

25. Renegade Web Site • Freerazor.com via mass e-mails offers free Gillette Mach3 Turbo and Venus razors • Also automatically enrolls customers to receive 8 replacement blades every two months (Misleading) • Uses photos of Gillette products and copy similar to Gillette’s ads • Gillette uncertain of legal implications (all terms spelled out) • Feb. 11, 2003

26. Duracell • Jan. 13, 2003 • Cut price of AA and AAA batteries by 13% • Prompted to reduce price gap with competitors • Energizer, Rayovac • Concerned with competitor’s heavy promotional activity

27. Ethics • April 14, 2003 • Gillette exec (Gino Deluca) arrested on 15 counts of mail and wire fraud and 1 count of money laundering • pleaded not guilty • Scheme: demanded kickbacks from 5 promotional and marketing vendors • Allegedly received $600,000 in kickbacks • $260,000 Arizona condo, $32,000 home addition, vacations and cruises, $225,000 wired to a Swiss bank account • Ordered his staff to select certain vendors despite their quality problems

28. Questions and Answers The End