Case OF GilletteChoosing the right distribution channel

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Introductiony Indian Shaving Products Limited(ISPL)- Gillette and Poddar y Gillette- 70% worldwide market share y Sales in 1987-88 Rs 4 crores y Accumulated losses Rs 7.24 crores y Stainless steel blades Priced its blades about 50%-80% over Wiltechs Brands like 7 O'clock Ejtek, 7 O'clock Super Stainless

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Indian Shaving Markety Worlds largest market in volume

( 2.4 billion blades annually)y Small in value terms

( Rs 250 cr vs. USs $800 million )y Low tech carbon steel blades

prominent y Stainless steel blades market small y Technologically latest Twin blades segment(less than 2%)

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Competitiony House of Malhotrasy Market leaders ( 80%-90% of market) y Best selling brands like Topaz, Panama, Laser etc y 7 manufacturing units; largest in Calcutta with a capacity of

1500 million blades per year y Highly street smart ( imitation products etc) y Distributed products through network of very large wholesalers to semi wholesalers and retailers y Special promotions and stock push strategies

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Competitiony Wiltechy RP Goenka group and Wilkinson Sword Ltd of UK y Capacity of 120 million blades per year and 80% capacity

utilisation y Brand like Wilman I, Wilman II y 50% market share in twin blade ( by value) y Priced its blade about 50% over Malhotras brands y Accumulated losses of Rs 2 cr

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ISPLs Distribution Channely Two options:y Build own distribution network y Tie-up to use Liptons network at 5% margin

y Advantages of the tie-up with Liptony Low cost solution(5% commission) y Well established sales network y For Lipton, better utilization and profit without extra

investment

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Problemy After 2 years, less than 3% market share y Accumulated losses of Rs 7.24 crores y According to customer surveys, no serious problem in

product, prices, positioning. y Problem in distribution strategy.

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Marketing Mix Analysis

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Producty Low tech carbon steel blades making the bulk of the market y Stainless steel blades, present only in urban market y Latest Technology Twin Blades-market less than 2% y ISPL believed there was big opportunity at upper market. y Created Stainless Steel Blades

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Pricey ISPL believed that consumer is ready to pay higher price for

a better product y ISPL priced 50%-80% above Wiltechs brands, while Wiltech was priced 50% above Malhotras brands. y ISPL priced 125%-170% above the main competitor Malhotras price.

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Promotiony Gillete and House of Poddars paid 5 Crores each. (5 y y y y

Crores=24 %) The joint venture raised 20.83 Crores Investment on Plant- Over 20 Crores Presumably, small budget on Promotion New Product- 7O Clock Launched at Higher Price- Poor Sales

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Place-Proper Distribution Channely Combination of Push and Pull strategy y More Emphasis on Pull Strategy through promotions y Simultaneously, start building its own distribution network y Variable Sales Margin To Distributors & Stockists

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Market: People who want to shaveTarget Market Segment

Target Segment

People who want to have a clean and smooth shaving experience

Income: Low, medium, high Geographic location: rural, urban, semi-urban Age: Psychographic: Lifestyle, personality:

Income: Medium, High Location: Urban, semiurban All age groups(15+)

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Strengths & Opportunities1. Global Presence 2. Experience in shaving needs 3. Latest technology and innovative products

Weakness & Threats1. Lack of distribution channel 2. Low product variety 3. Price

1. Growing stainless steel blades market 2. Worlds largest shaving blades market14

1. Established rivals 2. Low value market

Proposed solutiony Combination of Push and Pull strategy should be used y Provide stainless steel blades to barbers all across the country

at discounted rates y Simultaneously, start building its own distribution network y Target first time users, by promoting in high schools and colleges

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Proposed Solutiony Promotion of the advantages of stainless steel blades

produced by ISPL y Extensive market research to exactly know the future of stainless steel blades market y Look for other tie-ups as part of horizontal marketing system y Target based commission to Lipton 5% for sales upto Rs 5 crore 7% for sales between 5 and 10 crore

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What actually happened?y It merged Wilkinson Sword Pvt. Ltd. y y y

y

with itself 97% of todays Inidan market is double edged blades ISPL focusing only on premium products Strategy: Move people towards twin blades segment and gradually move them towards premium products Segmented the market with offerings at different price points 7O Clock, Sensor and Mach III

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