STRATEGY & MARKETING MANAGEMENT
“GILLETTE IS THE GLOBAL LEADER IN MALE TOILETRIES PRODUCTS”
Data Monitor Research, Oct. 1999
19th December 2001
Course Tutors : Professor Patrick McNamee Doctor Kate Stewart
PRESENTATION SUMMARY
•EDEL TONER - INTRODUCTION
•COLIN SYKES - ORGANISATION AND PRODUCTS
•ORLA OKUNAIYA - STRATEGY
•SARAH SHAW - FINANCIAL PERFORMANCE
•JIM McCALLUM - INDUSTRY AND MARKETS
•NILE SMITH - STRATEGY AND COMPETITORS
•PADDY McKIBBIN - CONCLUSIONS
THE GILLETTE COMPANY100 YEARS 1901-2001
•1901 Founded by King C Gillette with William Nickerson in Boston.
•1902 1st Product – Double edged, T shape disposable razors.
•1905 Develops new markets by opening London Offices.
•1914 Gillette brokers deal with US Army (3.5 Million razors, 36 Million
blades)
•1950 Spends $6 Million for TV rights to Baseball World series for 6 years.
•1964 Gillette splits into 2 SBUs, for grooming, the other for all other products.
•1973 Net Sales exceed $1Billion.
•1980 Net Sales exceed $2 Billion.
•2001 Gillette has 61 Facilities in 25 Countries, and employs 40,000 people
NORTHAMERICA
SOUTHAMERICA
UK
EUROPE
AFRICA
ASIA
AUSTRALIA
GILLETTE WORLDWIDE MANUFACTURING SUBSIDIARIES
ORGANISATIONAL CHART
Oral Care(Oral B Brand)
Braun(Electrical Appliances)
Portable Power(Duracell)
Grooming(Blades & Razors)
Global Business Management
Latin America
North America
AsiaPacific
AfricaMiddle East
Eastern Europe
Western Europe
Eastern Hemisphere
Commercial Operations
Gillette Company
Western Hemisphere
GILLETTE PRODUCT RANGE
PRODUCT MARKET PORTFOLIO
RMS
MA
RK
ET G
RO
WTH
(%
)
1.0
Oral-B
Toiletries
Blades & Razors
Duracell
Braun
GLOBAL STRATEGY
• Corporate Objective
– global focus on consumer products
– global competitive advantage in quality, value added personal care/use products
• Global Market– competing in the triad markets (Europe, Japan, North and South
America)
– industry concentration (SWOT Analysis)
– global market leadership in male and female grooming products
THE GILLETTE STRATEGY
• Global resources organised and deployed to achieve market leadership in all their products
• to maintain and increase existing market share in male and female grooming products
• Corporate Strategy
– aggressive research and advertising
– strategic diversification e g mergers & acquisitions
– new product developments (invest in technology and product innovation)
– focus on core competencies
– maximise e-commerce opportunities
– build strong product portfolio
MERGER & ACQUISITION STRATEGY
• Diversification - make or buy decisions
• Stainless steel blade controversy and the multi-product market strategy
• String of multiple acquisitions - some successful and some unsuccessful
• Moderation of Diversification due to failed acquisitions
GILLETTE MARKET STRATEGY
• Strategic Market Objectives
– Achieve a well integrated programme of marketing mix elements.
– To enter the direct sell market via the Internet.
• Target Market Analysis– early entry into the UK market by the FDI mode
– presence in the UK as a strategy for European Common Market
– high industry concentration ratio (SWOT Analysis)
– market leadership in men’s shaving products
SALES BY PRODUCT
• Sales of Blades & Razors up 8% 1999-2000
• Sales of toiletries and Duracell products are both down from 1999 - 2000
• Oral B products have had the largest increase of sales of 10% from 1999 - 2000
• Braun has recovered from 1999 where its sales dropped by 9% from1998 and has increased by 3% in year 2000
Gillette Sales by Product ($ Millions)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2000 1999 1998
Year
Sal
es
Braun Products
Oral-B Products
Duracell Products
Toiletries
Blades & Razors
GILLETTE'S PROFIT BY PRODUCT
• Blade and Razor profits up 11% in 2000, due mainly to sales of Mach 3
• Profits for Toiletries and Duracell are both down but this is in line with Sales
• Oral B’s profit only increased by 3% even though sales increased by 10%, this was due to higher marketing expenses
• Braun’s profits increased by 41%, this reflects sales growth/improved mix and lower overheads
Gillette Profits by Product
0
500
1000
1500
2000
2500
y2000 y1999 y1998
Year
Pro
fit
$Mil
lio
ns
Braun Products
Oral-B Products
Duracell Products
Toiletries
Blades & Razors
COMPANY SWOT ANALYSIS
Strengths
Threats
Weaknesses
Opportunities
Market LeaderStrong Brand ImageGlobal PresenceAggressive AdvertisingQuality & InnovationPortfolio Range (Mach 3 etc)
Long Development CyclesRelatively Static Market GrowthHeavy Dependence on High Street Retail OutletsExpensive Brand Maintenance
Demographic ChangesChanging Societal AttitudesConsumer Brand PreferenceDemand for High QualityUse of JIT and ICT (e-com)New Production TechnologyIncreased Grooming Sophistication
New CompetitorsCloning of Successful brandsIncreasing Buyer Power(Inventory De-stocking)Growth in SubstitutesOwn Label FitsEconomic Downturn
BLADES & RAZORS SEGMENT
DisposableRazors
ShavingSystems
ReplacementBlades
Blades &Razors
ElectricShavers
Shaving Products
Pre-Shave Post-Shave Deodorants
Toiletries
GroomingMale & Female
TOTAL UK BLADES & RAZORS MARKET
Replacement Blades
Disposables
Systems
£m
%
•Systems 102 64
•Disposable 39 25
•Replacement Blades 17 11
Source: Mintel Report, 1998
WET SHAVING PRODUCTS
•Mach3
•Sensor & SensorExcel
•Atra
•Trac II
•Custom Plus
•Good News
•SensorExcel for Women
•Sensor for Women
•Agility
•Gillette for Women Venus
BiC Products
• Sensitive
• Twin Select Sensitive Skin
• Twin Lady Shaver
• Twin Select Silky Touch
• Softwin
• Softwin for Women
Wilkinson SwordProducts
• Extra II
• FX Diamond
• Lady Protector+
• Protector 3D Diamond
• Xtreme 3
COMPETITOR SHAVING PRODUCTS
UK MARKET SHARE FOR BLADES & RAZOR (1998)
55%25%
9%11%
GilletteWilkinson Sword
BiCOwn Label
Source: Mintel Report, 1998
MARKET POSITIONING
Price
Quality
WilkinsonGillette
BiC
Own Labels
BLADES & RAZORS STRATEGY
• Innovation through Research & Development
• Premium Brand - Premium Price
• Build Global Product Branding
• Build Strong Brand Loyalty
• Greater Efficiency at Lower Cost.
• Maintain Superior Growth in Market Share
• Build Shaving Systems Sub-Segment
• Invest in technology and product innovation
RAZORWARS
v
• The Defender
• Product Development
• Consumer Research
• Elevate the “Psychology of Shaving”
• Captive Systems mean High Margins
• Women Shavers are Growth Area
• Razors are a Commodity
• Shaving is a Chore
• Price
• Positioning
• Innovation
• Short Product Life Cycles
• Disposables
UK BLADES & RAZORS
0
50
100
150
200
250
1994
1995
1996
1997
1998
1999
2000
*
2001
*
2002
*
2003
*
Market by Value (£m)
Source: Mintel Report, 1998
UK BLADES & RAZORS
0
2000
4000
6000
8000
1000019
94
1995
1996
1997
1998
1999
Monitored Advertising Expenditure (£000)
GilletteWilkinson SwordBiC
Source: Mintel Report, 1998
SALES / PROFITABILITY RAZORS & BLADES
• Increase in sales from 1998 - 2000 is 13%
– 5% 1999 and 8% 2000
• Increase in profit from 1998 - 2000 is 16%
– 5% 1999 and 11% 2000
• Gillette attributes the increase in sales and profits primarily to the sales growth of the Mach 3 in North America, Europe and Latin America.
Razors & Blades - Profitability
0500
1000150020002500300035004000
y1998 y1999 y2000
Year
Val
ue £
000
sales
profit
PORTERS FIVE FORCES MODELBlades & Razors
Industry CompetitorsStrong image, Brand Loyalty, and Innovative R&D.
Potential EntrantsBarrier to entry - customer loyalty, high set-up costs.
BuyersRetailers power increasing.
SubstitutesElectric razors - Gillette already competitive (Braun).Clever marketing - not socially acceptable not to shave.
SuppliersGlobal economies of scale keep suppliers priceslow.
Source: Porter, 1978
MACH3 TURBO
“As the undisputed leader in men’s grooming, Gillette is committed to innovation and to developing products which will provide men with a superior shaving performance. MACH3Turbo and the new Gillette Series fulfil that promise”
Peter K. Hoffman, President,Gillette Grooming Products 30 October 2001
FUTURE GILLETTE STRATEGIES
• High Branding/Quality - Premium Price
• Develop New Market Segments & Niches through R&D
• Maintain/Promote Strong Brand Loyalty
• Tailoring Demographic Targeting (E.g. US vs Europe)
• Reduction in Product Unit Costs
• Grow Razor Systems Segment
• Strategic Alliances (Suppliers and Distributors)
• Shedding Non-Core Businesses (E.g. Papermate)
CONCLUSIONS
• Diversifying capital, investment, products and other resources to maintain and expand position as market leader.
• Strategically positioned as leader, and regularly reorganising its structures to respond quickly to changes in business and competitive trends.
• Developing and maintaining a high profile for its brand names through marketing.
• Continuing to maximise efficiency in production and distribution, rather than focusing on direct retailing.
• Likely to remain as the market leader of Grooming sector products for the foreseeable future.
STRATEGY & MARKETING MANAGEMENT
GILLETTE STILL THE GLOBAL LEADER IN MALE
TOILETRIES PRODUCTS
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