STRATEGY & MARKETING

MANAGEMENT

“GILLETTE IS THE GLOBAL LEADER

IN MALE TOILETRIES PRODUCTS”
Data Monitor Research, Oct. 1999

Course Tutors : Professor Patrick McNamee

Doctor Kate Stewart

19th December 2001

 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 COMPANY
100 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
GILLETTE WORLDWIDE MANUFACTURING
SUBSIDIARIES

UK
EUROPE ASIA
NORTH
AMERICA

SOUTH
AMERICA
AFRICA
AUSTRALIA
ORGANISATIONAL CHART

Gillette Company

Global Business Management Commercial Operations

Grooming Western Hemisphere Eastern Hemisphere

(Blades & Razors)

Portable Power North America Western Europe

(Duracell)

Braun Latin America Africa

(Electrical Appliances) Middle East
Eastern Europe

Oral Care Asia

(Oral B Brand) Pacific
 GILLETTE
PRODUCT RANGE
 PRODUCT MARKET PORTFOLIO

Toiletries
MARKET GROWTH (%)

Blades &
Braun
Razors

Oral-B

Duracell
1.0
RMS
 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 Gillette Sales by Product ($ Millions)

products are both down from 10000

9000
1999 - 2000 8000
7000 Braun Products
• Oral B products have had the 6000 Oral-B Products

Sales
5000 Duracell Products
largest increase of sales of 10% 4000 Toiletries
Blades & Razors
from 1999 - 2000 3000
2000

• Braun has recovered from 1999

1000
0

where its sales dropped by 9% 2000 1999

Year
1998

from1998 and has increased by

3% in year 2000
 GILLETTE'S PROFIT BY PRODUCT

• Blade and Razor profits up 11% in Gillette Profits by Product

2000, due mainly to sales of Mach 3
• Profits for Toiletries and Duracell 2500

are both down but this is in line with

2000
Sales

Profit $Millions
Braun Products
• Oral B’s profit only increased by 3% 1500 Oral-B Products
even though sales increased by 10%, Duracell Products
this was due to higher marketing 1000 Toiletries
expenses Blades & Razors

• Braun’s profits increased by 41%, 500

this reflects sales growth/improved

mix and lower overheads 0
y2000 y1999 y1998
Year
 COMPANY SWOT ANALYSIS
Strengths
Market Leader
Strong Brand Image
Global Presence
Aggressive Advertising
Quality & Innovation
Portfolio Range (Mach 3 etc)
Demographic Changes
Changing Societal Attitudes
Consumer Brand Preference
Demand for High Quality
Use of JIT and ICT (e-com)
New Production Technology
Increased Grooming
Sophistication
Opportunities
Weaknesses
Long Development Cycles
Relatively Static Market Growth
Heavy Dependence on High
Street Retail Outlets
Expensive Brand Maintenance
New Competitors
Cloning of Successful brands
Increasing Buyer Power
(Inventory De-stocking)
Growth in Substitutes
Own Label Fits
Economic Downturn
Threats
BLADES & RAZORS SEGMENT

Grooming
Male & Female

Shaving Products Toiletries

Blades & Electric Pre-Shave Post-Shave Deodorants

Razors Shavers

Disposable Shaving Replacement

Razors Systems Blades
 TOTAL UK BLADES & RAZORS
MARKET
Disposables

Systems
Replacement
Blades

£m %
•Systems 102 64
•Disposable 39 25
•Replacement Blades 17 11

Source: Mintel Report, 1998

 WET SHAVING PRODUCTS

•Mach3 •SensorExcel for Women

•Sensor & SensorExcel •Sensor for Women
•Atra •Agility
•Trac II •Gillette for Women Venus
•Custom Plus
•Good News
 COMPETITOR SHAVING PRODUCTS

BiC Products Wilkinson Sword

Products

• Sensitive • Extra II
• Twin Select Sensitive Skin • FX Diamond
• Twin Lady Shaver • Lady Protector+
• Twin Select Silky Touch • Protector 3D Diamond
• Softwin • Xtreme 3
• Softwin for Women
 UK MARKET SHARE FOR
BLADES & RAZOR (1998)

11%
9% Gillette
Wilkinson Sword
55% BiC
25% Own Label

Source: Mintel Report, 1998

MARKET POSITIONING

Price

Wilkinson
Gillette
BiC

Own Labels

Quality
 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

 RAZOR
WARS
v

• The Defender • Razors are a Commodity

• Product Development • Shaving is a Chore
• Consumer Research • Price
• Elevate the “Psychology of • Positioning
Shaving” • Innovation
• Captive Systems mean High • Short Product Life Cycles
Margins
• Disposables
• Women Shavers are Growth
Area
 UK BLADES & RAZORS
Market by Value (£m)

250

200
150

100

50
0
1994
1995
1996

1998
1999
2000*
2001*
2002*
2003*
1997

Source: Mintel Report, 1998

 UK BLADES & RAZORS
Monitored Advertising Expenditure
(£000)

10000
8000
6000 Gillette
4000 Wilkinson Sword
2000 BiC

0
1994
1995
1996
1997
1998
1999

Source: Mintel Report, 1998

 SALES / PROFITABILITY
RAZORS & BLADES
• Increase in sales from 1998 -
2000 is 13%
R azors & B lades - P rofitability
– 5% 1999 and 8% 2000
4000
3500
• Increase in profit from 1998 - 3000

Value £000
2500
2000 is 16% 2000
sales
1500 profit
– 5% 1999 and 11% 2000 1000
500
0
• Gillette attributes the increase y1998 y1999 y2000
in sales and profits primarily to Year
the sales growth of the Mach 3
in North America, Europe and
Latin America.
PORTERS FIVE FORCES MODEL
Blades & Razors

Potential Entrants
Barrier to entry -
customer loyalty,
high set-up costs.

Suppliers Industry Competitors Buyers

Global economies Strong image, Brand Retailers power
of scale keep Loyalty, and increasing.
suppliers prices Innovative R&D.
low.

Substitutes
Electric razors - Gillette already
competitive (Braun).
Clever marketing - not socially
acceptable not to shave.

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