Case OF Gillette

Choosing the right distribution channel

Introduction
Indian Shaving Products Limited(ISPL)- Gillette and

Poddar Gillette- 70% worldwide market share Sales in 1987-88 Rs 4 crores Accumulated losses Rs 7.24 crores Stainless steel blades Priced its blades about 50%-80% over Wiltechs Brands like 7 O'clock Ejtek, 7 O'clock Super Stainless

Indian Shaving Market

Worlds largest market in volume

( 2.4 billion blades annually)

Small in value terms

( Rs 250 cr vs. USs $800 million ) Low tech carbon steel blades prominent Stainless steel blades market small Technologically latest Twin blades segment(less than 2%)
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Competition
House of Malhotras
Market leaders ( 80%-90% of market) Best selling brands like Topaz, Panama, Laser etc 7 manufacturing units; largest in Calcutta with a

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

Competition
Wiltech
RP Goenka group and Wilkinson Sword Ltd of UK Capacity of 120 million blades per year and 80%

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

ISPLs Distribution Channel

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

Advantages of the tie-up with Lipton

Low cost solution(5% commission)

Well established sales network

For Lipton, better utilization and profit without extra

investment

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

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

Marketing Mix Analysis

Product
Low tech carbon steel blades making the bulk of

the market Stainless steel blades, present only in urban market Latest Technology Twin Blades-market less than 2% ISPL believed there was big opportunity at upper market. Created Stainless Steel Blades

Price
ISPL believed that consumer is ready to pay

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

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Promotion
Gillete and House of Poddars paid 5 Crores each.

(5 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 Channel

Combination of Push and Pull strategy

More Emphasis on Pull Strategy through

promotions Simultaneously, start building its own distribution network Variable Sales Margin To Distributors & Stockists

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Market: People who want to shave

Target Market Segment

Target Segment

People who want to have a clean and smooth shaving experience

Income: Low, medium, high Income: Medium, High Geographic location: rural, urban, semi-urban Location: Urban, semiurban Age: All age groups(15+) Psychographic: Lifestyle, personality:

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Strengths & Opportunities

1. Global Presence 2. Experience in shaving needs 3. Latest technology and innovative products

Weakness & Threats

1. Lack of distribution channel 2. Low product variety 3. Price

1. Growing stainless steel blades market 2. Worlds largest shaving blades market
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1. Established rivals 2. Low value market

Proposed solution
Combination of Push and Pull strategy should be

used Provide stainless steel blades to barbers all across the country at discounted rates Simultaneously, start building its own distribution network Target first time users, by promoting in high schools and colleges

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Proposed Solution
Promotion of the advantages of stainless steel

blades produced by ISPL Extensive market research to exactly know the future of stainless steel blades market Look for other tie-ups as part of horizontal marketing system 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?

It merged Wilkinson Sword

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Pvt. Ltd. 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