Marketing: Case

Study
GILLETE INDIA

Gillette is a brand of Procter & Gamble currently

used for safety razors, among other personal
hygiene products. Based in Boston,
Massachusetts, it is one of several brands
originally owned by The Gillette Company, a
leading global supplier of products under
various brands, which was acquired by P&G in
2005. Their slogan is, "The Best a Man Can Get".

KHUSHBOO.D.
DILLOUD
1/1/2009
 INTRODUCTION:
Gillette India is primarily a FMCG (Fast Moving Consumer Goods) company dealing with
items of personal grooming specially for men.

In 2005, Gillette was acquired by Procter and Gamble (P & G) which is the largest consumer
goods company in the United States. The deal was sealed at nearly US $ 55 billion which
created the world's largest consumer product business. The takeover was later approved by
the European Union.

However this did not result in a direct merger between Gillette India and P & G India,
although it was decided to restructure the operations of Gillette India in line with the policies
and practices of P & G. Finally, on 10th June, 2006, Gillette India was acquired by P & G.

Activities

Gillette India Limited operates in three segments:

Grooming – Manufactures blades, razors and toiletries.
Oral Care – Manufactures toothbrushes and oral care products
Portable Power - Manufactures batteries, torches and lamps some of the renowned
popular razors from Gillette used in India include:
Gillette Presto “Ready shaver” - Priced lowly thus targeting the low-income group of
consumers.
Gillette Sensor Excel – Targeted for the middle-income group
Gillette Mach 3 – Targeted for the high-income group

Performance

Being the market leader in shaving products for men, Gillette India has reported a 12.25 %
increase in net profit. In terms of absolute figures, net profit was INR 6.87 billion or Rs
21.09 per share, for the financial year ended December, 2005 as compared to INR 6.12
billion, or Rs18.79 per share, for the previous year. Total revenues for the year recorded an
increase of 10.76 % from INR 4.252 billion to INR 4.709 billion in the respective years.

Infrastructure

Gillette India has its plants located in the states of Rajasthan, Haryana and Karnataka.

Organization

Gillette India Ltd. is headed by its Chairman, Mr. Saroj K. Poddar.

Although Gillette India previously had its headquarters in Gurgaon, but after the its takeover
by P & G in the US, its Indian counterpart decided to shift its office to Mumbai.
Q1: To what extent the strategy adopted by Gillette India is different
from Gillette Global? Is this strategy sustainable in the long run?
Ans: Gillette Global: The Gillette Company is a globally focused
consumer products marketer that seeks competitive advantage in quality,
value-added personal care and personal use products. We are committed
to building shareholder value through sustained profitable growth. While
Gillette India: Gillette India Limited (GIL) is one of India's well-known
FMCG Companies that has in its portfolio GILLETTE MACH 3
TURBO, ORAL-B and DURACELL - world's leading brands and has
carved a reputation for delivering high quality, value-added products to
meet the needs of consumers.
Presence of Gillette worldwide:
Founded in 1901, Gillette Company, US (which was acquired by P&G,
US) is the global market leader of shaving products,
including blades and razors having presence across many countries. Its
portfolio includes grooming products, alkaline
batteries, oral care products and personal care products. The global
company, unlike its Indian arm GIL, has presence also in
hair care & body wash. Also, besides Mach 3, it has brands like five-
blade Fusion line (launched in 2006), which is at 30%
price premium over Mach 3.
presence in India
Gillette is tapping the large Indian consumer base to establish a strong
presence in the country. The market for shaving blades
in India is the largest in the world. The market for oral care
(toothbrushes) is the second largest in the world, while that of
batteries is the third largest in the world (all in volume terms). Apart
from this, the increasing consumer-spending capacity and
the increase in retail activity are also some factors, which attract Gillette
to expand its business in India. Going forward, Gillette’s products like
Business Segment Products Brands
Personal Grooming Razors, Blades, Shaving Mach3 Turbo, Vector Plus,
Brushes, Shaving Gel, After
Sensor Excel, 7 o’clock,
Shave gel
Gillette Presto, Wilkinson
Portable Power Alkaline Batteries Duracell
Oral Care Toothbrushes, other oral care Oral-B
products
hair care & body wash along with new generation five-blade shaving
system (premium product sold
under brand name Fusion), which at present do not form part of GIL’s
portfolio, can also be brought to India.
Gillette’s products like hair care & body wash along with new
generation five-blade shaving system (premium product sold
under brand name Fusion), which at present do not form part of GIL’s
portfolio, can also be brought to India.
The Government’s continued focus on liberalization, trade friendly
policies and improvement in infrastructure have resulted in
a steady inflow of global investments into the Indian market. This, in
turn, has translated into immense employment
opportunities and a sustained economic boom. The disposable income
has gone up and as a result people working in old
manufacturing sector as well as new emerging sectors such as BPOs, IT,
ITES, retail etc. are open to invest in their grooming
needs. Organized retailing continues to make progress in India and is
expected to continue to strengthen in years to come.
Cable television has penetrated in to the smallest of Indian towns and
has taken with it awareness of latest lifestyle trends and
brands, which have become an aspiration for many consumers. This
increased awareness has translated into a desire to
upgrade lifestyles through owning and using better quality brands.
The personal grooming market in India is worth $800 mn (as on October
2008). The market has a 15-20% rate of growth
overall. The premium segment is growing at a higher rate, of 35-40%. It
is a fragmented industry and is getting consolidated.
Coming to blades & razors, the Indian blades and razors market
continues to be dominated by the double edge blade segment
(more than 90%). However, factors such as increased purchasing power
of the Indian consumers, a high level of interest in
personal grooming amongst Indian men and a strong focus by
companies under this segment to create awareness of
technologically advanced products have resulted in very encouraging
signs of growth in the triple blade and twin blade
systems. In double edge blade system there is a lot of competition from
organized and unorganized players as the technology
requirement is low and pricing of these blades is also quite low.
Manual toothbrushes continue to dominate the Oral Care market in
India. As per the reports, the number of people visiting
dentists is increasing everyday and today there is greater awareness of
the importance of oral hygiene. With right brand
endorsement & distribution strategies, companies under this segment
could make a very strong progress going forward.
India is the third largest battery market in the world after the US and
China. The size of the Indian batteries market is over 2 bn
cells, which is dominated by local low priced battery manufacturers.
Alkaline Batteries segment is not yet matured and thus
represents a huge opportunity to upgrade consumers from zinc to better
performing alkaline batteries, as the usage of high
drain devices like digital cameras grows. Alkaline batteries are
comparable to zinc-carbon batteries, but the difference is that
alkaline batteries use potassium hydroxide (KOH) as an electrolyte
rather than ammonium chloride or zinc chloride. Alkaline
batteries have a higher energy density and longer shelf-life. For example,
the purchase of Duracell brand battery (provided by
GIL) is a great value proposition for consumers as it lasts upto 10 times
longer at approximately three times the price of an
ordinary zinc carbon battery.
 Q3: Draw out the relative position of Gillette visa-a-visa its competitors
using appropriate mapping techniques?
Ans: Competitive Profile:
GIL is the largest MNC branded player with no significant MNC / local
organised competition in personal grooming segment. However, among
the listed entities, it could be compared to Godrej Consumer Products,
which has a small presence in the personal grooming space. Some
competition is also from unlisted local & overseas entities like American
Razor Company (based in US, selling brands like Glide & Personna) &
Malhotra (based in India, selling brands like Topaz & Supermax). In the
oral care category, it faces competition from Colgate Palmolive. At
CMP, GIL trades at 21.1xFY June 10E EPS, which is at a discount to its
peers, which are quoting at 24-25x. This discount could be due to
smaller sized business. However, with market leadership in personal
grooming & decent presence in oral care segment, the company is well
placed to capitalise on the growing opportunities in the respective
segments. Also, the company has presence in the portable power
segment, which provides alkaline batteries. The segment is not yet
matured and thus represents huge opportunity to upgrade consumers
from zinc to better performing alkaline batteries, as the usage of high
drain devices like digital cameras grows. Looking at future growth
prospects we feel that this discount in valuation to its peers could narrow
down.
Company Name FY09

OPM NPM EPS CMP PE Mark. Sales Mk.

(%) (%) Cap Cap/Sales
(Rs.) (Rs.) (Rs. In
(Rs. In Mn)
Mn)
GIL (Y.E. June) 23.9 17.1 34.7 912.0 26.3 29722.1 6615.1 4.5
Godrej Consumer 14.8 12.4 6.7 235.3 35.1 60472.1 13994.0 4.3
Products (Y.E.
March)*
Colgate Palmolive 16.8 16.8 21.0 609.7 29.0 82919.2 19987.1 4.9
(Y.E. March)*
Company Name FY10

OPM (%) NPM EPS CMP PE Mark. Sales Mk.

(%) Cap Cap/Sales
(Rs.) (Rs.) (Rs. In
(Rs. In Mn)
Mn)
GIL (Y.E. June) 27.3 19.2 19.2 43.2 912.0 21.1 29722.1 7328.8 4.1

Godrej Consumer 18.3 15.5 15.5 9.5 235.3 235.3 24.8 60472.1 16020.0 3.8
Products (Y.E.
March)*
Colgate Palmolive 20.5 17.5 25.0 609.7 24.4 82919.2 19400.0 4.3
(Y.E. March)*