MKTA - 015

Gillette: Managing Product Innovation

There are few companies with more powerful global brands than Gillette, and there are even fewer companies
that have so successfully used innovation to increase the market strength and consumer appeal of their brands.
-James M Kilts, Chairman and CEO1

Gillette presents the classic example of innovation as product extension. Gillette used to make razors with one
blade, then it made them with two blades, and now it has razors with three blades. That is the all-too-typical
view of innovation. And there is nothing wrong with it, except at some point adding another blade is not going to
make a substantial difference to how customers perceive the product. More important, this narrow view of
innovation is very unlikely to create new markets and new wealth. In today's economy, it is only radical
innovation that will lead to significant growth.
-Gary Hamel2
Introduction
In early 2003, Boston (US) based Gillette was the world’s leading producer of shaving products. Gillette’s
product line also included toothbrushes, toiletries, cosmetics and other household appliances. With the purchase

y
of Duracell batteries in 1996, Gillette was also a leading player in the alkaline battery market (See Exhibit I for
Gillette’s product line). In fiscal 2002, Gillette’s sales were $8.45 billion and net income was $1.22 billion (See

op
Exhibit II for past financial performance and Exhibit III for segment wise revenue split-up). Gillette earned
more than a third of its sales and more than half of its profits from razors and blades.
C
Over the years, Gillette had established a formidable reputation for combining sophisticated technology and
savvy advertising to launch innovative products. The company’s corporate mantra was “Innovation is Gillette.”
Gillette had spent millions of dollars each year on R&D in its seven laboratories located in the US, UK,
Germany and Spain. The R&D investments had resulted in such successful products as Mach3, Mach3 Turbo,
ot

Sensor, SensorExcel, Gillette for Women Venus, Oral-B CrossAction Toothbrush, etc. Mach3 and Sensor were
considered to be Gillette’s most successful product launches. Gillette’s stated goal was to achieve 40% of its
sales from products launched in the previous five years. Gillette estimated that to achieve this goal it needed to
N

launch 20 new products every year.

Exhibit: I
Gillette: Product Line and Product Mix
Width of the Product line
o

Blades and Razors Toiletries Batteries

Depth Shaving system (Men) Shave Preparations Duracell
D

of the Mach3, SensorExcel, Sensor, Atra, Trac II. Gillette Series, Satin Care Ultra batteries, Copper Black
Product Disposable Razor Brands Shave gel, Soft & Dri, Dry idea batteries, EasyTab.
line Mach3 Turbo Razor, Custom Plus, Good brands.
News Deodorants
Women Shaving Products Right Guard Deodorants
SensorExcel for Women, Sensor for Oral-B Products
Women, Agility, Venus brands. Kids power brushes, battery
Braun Products Segment toothbrushes, CrossAction,
Foil electric shaver for men, electric Vitalizer, Brush plus, Power
epilators for women. stripe.

Source: www.gillette.com

1
Letter to Shareholders, 2000 Annual Report.
2
Leader to Leader, No: 27, Winter 2003, Leader to Leader Institute (formerly Drucker Foundation).
 2003, ICFAI Knowledge Center. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet,
or transmitted in any form or by any means – electronic or mechanical, without permission.

To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500
082, India or email icmr@icfai.org. Website: www.icmrindia.org
 2

Exhibit: II
Gillette: Eight Year Revenue and Income Summary
Revenue and Income Chart
12 9.7 10.06 10.06 9.9
8.83 9.3 8.96
10 8.45
8
in $ bn

6
4
1.07 0.95 1.43 1.08 1.26 0.91 1.22
2 0.392
0
1995 1996 1997 1998 1999 2000 2001 2002
Year

Revenues Income

Source: www.gillette.com

Exhibit: III

y
Gillette: Segment Wise Revenue Split-up
Net sales (by each business segment)

$4,000
$3,500
op
C
Year ended December 31
$3,000
Sales (in $ mn)

2002 2001 2000

$2,500
Blades & razors $3,435 $3,200 $3,177
$2,000 Personal Care 1,898 1,953 2,137
ot

$1,500 Duracell 1,248 1,149 1,079

$1,000 Oral Care 1,056 981 1,042
Braun 816 801 875
$500
N

$0
2002 2001 2000
Year
Blades & razors Personal Care Duracell
o

Oral Care Braun

D

Source: www.gillette.com

Background Note
Gillette’s history dated back to King Gillette (King), who had established his career as a product salesman. In
1895, while working for the Baltimore Seal Company, King arrived at the idea of a disposable razor blade, that
men interested in shaving on their own would find convenient. He also discovered that men would pay as much
as $5.00 for a home shaving kit. King reasoned that, as the blades were cheap, the cost of shaving at home
would slowly decrease and more and more men would pickup the daily shaving habit.

In 1901, William Nickerson, a MIT graduate and a successful mechanical engineer, joined King. Together they
formed the Gillette Safety Razor Company in Boston (The name was changed to Gillette Company in 1952).
They quickly developed the machinery for the low cost production of the blade. A razor plus one blade was
priced at $5, and 20 blades at $1. In the first year of launch (1903) only 51 razors and 168 blades were sold. The
following year, an US patent was awarded to the product. Soon the sales increased to 90,844 razors and 123,648
blades. Within two years, Gillette had captured 80% of the US market for razors and blades.
 3
As the business grew, Gillette established its first overseas operation in London in 1905. The same year
manufacturing operations were set up in Paris. Gillette soon opened sales offices in Germany, Canada and
France. During the next 20 years, Gillette spread out to Belgium, Denmark and Italy and established branch
offices in Madrid, Kolkata (India), Geneva, Sydney, Singapore, Buenos Aires and Tokyo. By 1925, international
operations accounted for about 30% of the company’s revenues.

During World War I, Gillette hit upon the idea of giving away free razors and boxes of Wrigley’s gum through
such outlets as banks (the “shave” and “save” plan). This attracted thousands of potential customers to self-
shaving. Gillette’s products soon caught the attention of the US government, which ordered 3.5 million razors
and 36 million blades for soldiers who started shaving on their own. When the war was over, Gillette used
advertisements to make sure that the soldiers did not lose the habit. The company’s advertisements slowly built
the brand image and established a clear association between shaving and Gillette.

After the war, Gillette’s competitor, the Auto Strop Safety Razor Company developed a razor into which
Gillette blades could fit in. The company also developed a blade, called Probak that could fit into both Gillette
and Auto Strop razors. Since there were many synergies in product design and production between the two
companies, Gillette and Auto Strop decided to merge in 1930. The Great Depression put tremendous pressure on
Gillette’s profitability. Gillette resorted to price-cutting to boost sales. As a part of its promotional strategy,

y
Gillette also began sponsoring major football and baseball events.

op
During the mid-1930s, Gillette decided to diversify. Gillette introduced the Brushless Shaving Cream (1936)
and the Kumpakt electric razor (1938, later withdrawn in 1940). In 1940, Gillette launched its line of lather
shaving cream. However, these products were not a commercial success. This prompted the company to look
beyond shaving products. In 1943, Gillette entered into an agreement with Bendix Aviation to produce
C
carburetor fuel control units. In 1948, Gillette purchased Toni Company, a US manufacturer of home permanent
kits for women. In 1955, it bought the PaperMate Company, a manufacturer of ballpoint pens, for $15 million.
In 1962, Gillette acquired Sterilon Corporation, a manufacturer of disposable supplies for hospitals. Following
these acquisitions, Gillette organized itself into five operating divisions: The Gillette Safety Razor Company,
ot

The Toni Company, The Paper Mate Company, The Eastern Hemisphere Division and the Western Hemisphere
Division3. In 1967, Gillette acquired Braun (West Germany), which manufactured electric razors, hair dryers,
high fidelity speakers and cameras.
N

Gillette’s diversification continued during the 1970s with the acquisition of La Giulla, a small Italian chewing
gum and candy manufacturer and several small household plant and potting soil companies. In 1971, Gillette
o

acquired a 48% stake in ST Dupont Company, a French manufacturer of luxury writing instruments and
disposable lighters. The following year, it took over Buxton, a producer of personal leather goods (sold it by
D

1977). In 1973, the company acquired Jafra, a cosmetics company. In 1979, Gillette purchased Liquid Paper, a
company that had developed a unique fluid for making typing corrections. In 1984, Gillette branched into dental
care products with the purchase of Oral-B Laboratories for $188.5 million. The Oral-B brand had a 25% share of
the US toothbrush market.

By the mid-1980s, Gillette had five major lines of business: blades and razors, toiletries and cosmetics,
stationery products, Braun appliances, and Oral-B dental products. Blades and razors contributed over 60% of
Gillette’s profits through most of the 1970s and 1980s even though they accounted for only one-third of the
company’s total sales. In 1987, Gillette acquired Waterman Pen Company, a leading manufacturer and marketer
of premium writing instruments, based in France.

In the late 1980s, Gillette’s sales suffered due to increased competition. As the sales and share price languished,
Gillette faced several takeover attempts, mainly from Ronald Perelman of Revlon and Coniston Partners, a New
York based investment firm. Gillette came under pressure not only to improve its performance but also to bring
new products to the market faster. Warren Buffet bailed the company by offering to purchase $600 million of
convertible preferred stock at $1000 a share.

3
Eastern and Western divisions were later consolidated into Gillette International in 1968.
 4
In January 1990, Gillette launched an advanced twin blade shaving system called Sensor. It was designed to
have a pivoting head and independently mounted moving blades that would adjust to facial contours. Sensor,
launched in 16 countries simultaneously, turned out to be an outstanding success and accounted for $200 million
of the company’s $1.6 billion in shaving revenues for 1990. Within no time, Sensor captured 15% of the razor
and blade market.

Alfred Zeien, who was appointed the Chairman and CEO of Gillette in 1991, announced the company would
invest 50% of its operating profit in three areas: R&D, capital spending and advertising. Like his predecessors,
Zeien also believed in diversifying beyond the blade and razor business. He instructed his executives to look out
for new businesses. In 1993, Gillette acquired Parker Pen Holding Limited (writing products), a British
company for $423 million. The deal made Gillette, already the world’s largest razor maker, also the biggest pen
maker and gave the company 41% of the US writing instruments market. In 1994, Gillette launched
SensorExcel, an improved version of its Sensor. In 1996, Gillette bought Duracell Batteries for $7.6 billion.

In April 1998, Gillette introduced the triple- blade Mach3 razor, which quickly became the largest selling razor
in the world. Mach3 offered a number of important design features and benefits- forward pivot for a closer and
more comfortable shave, single-point cartridge docking for easy loading, indicator lubricating strip that let the
user know when they were no longer experiencing the optimal Mach3 shave, etc. In case of Sensor, Gillette had

y
taken 18 months to introduce the product in all parts of the world. For Mach3, this was achieved in less than a
year. In the US, Mach3 razors generated sales of $60 million during the first six months.

op
In 1998, Gillette also introduced the Duracell Ultra, a line of high-tech alkaline batteries for devices like cellular
phones, digital & flash cameras and camcorders. During the year, Gillette launched the Braun Oral-B 3D plaque
C
remover (electric toothbrush). It was hailed as the first product to combine two distinct brushing motions
(pulsations and oscillations) to create a unique three-dimensional brushing action. Also that year, the Oral-B
CrossAction toothbrush, with criss-cross bristles, was introduced.
ot

In 2000, Gillette sold its hair care business (Toni) to health and household products company, Diamond
Products. In 2001, Gillette sold its stationery products business (PaperMate, Parker, Waterman and Liquid
Paper) to Newell Rubbermaid. In October 2001, Gillette’s oral care division launched Oral-B Stages, a new
N

children’s toothbrush category. In late 2001, Gillette introduced the Mach3 Turbo and Venus shaving systems
(for women) to strengthen its position in the blade and razor business. In October 2002, Gillette launched two
new oral care products: Oral-B CrossAction Power, a battery-powered toothbrush and Oral-B CrossAction
o

Vitalizer. The following month, the company introduced Sensor 3, a disposable razor with three independent
spring-mounted blades.
D
 5

Exhibit: IV
Gillette: Key Products

Gillette Mach3 (1998) Gillette for Women Venus (2001)

y
op
C
ot
N
o

Gillette SensorExcel (1994)

Gillette SensorExcel for Women (1996)
D

Gillette Sensor 3 (2002)

Oral-B Stages (2001)
 6

Gillette Mach3 Turbo (2001) Oral-B CrossAction (1998)

Source: www.gillette.com

Innovation at Gillette

y
Gillette had very early on developed the belief that continuous product development was necessary to

op
differentiate itself from the rest of the competition. Gillette’s policy was to generate 40% of its sales from
products that were launched in the previous five years. One reason for Gillette’s strong focus on new product
development was that the competition had successfully learned to imitate its products very quickly. For
example, Schick (part of Warner Lambert and later taken over by Pfizer, known as Wilkinson Sword in many
C
parts of the world) had imitated Gillette’s Trac II twin blade razor within five months of the product’s launch.
Similarly it had imitated Atra razor (with a pivoting head) within 18 months and Gillette’s Atra Plus razor (with
a lubricating strip) within seven months. In addition, other leading competitors like Bic (France) had introduced
ot

low priced blades and disposable razors that for many years had commoditized the shaving razor industry,
putting tremendous pressure on Gillette’s profitability.

King Gillette laid the foundation for a culture driven by innovation. Though he was a salesman, King had a
N

strong desire to launch innovative products. In 1895, after several years of considering and rejecting possible
inventions, King chanced on the idea of a razor with a disposable blade (single edged). During this time, most
men shaved with a Star Safety Razor, which was a heavy wedge-shaped blade fitted perpendicularly into its
o

handle. These blades needed to be sharpened frequently on a leather strop until they became too worn to
sharpen. Gillette realized the tremendous potential for a disposable blade that would greatly simplify the shaving
D

process. Gillette spent the next six years conceiving the product. But all the while many metallurgists suggested
that it was impossible to produce steel that was hard, thin, and inexpensive enough for a commercially feasible
disposable razor blade. In 1901, with the help of MIT graduate William Nickerson, Gillette designed a machine
that made mass production of inexpensive blades economically possible. In 1903, for the first time, razor blades
were sold in multiple packages, with the razor handle as a one-time purchase. Gillette won a patent for this
product the next year.

The very day his products were launched, competition started imitating King’s razors. King was forced to look
for ways to upgrade its product. In 1904, Gillette introduced the double-edged blade, which became immensely
popular. Men could use the other side of the blade if the first one wore out, giving the blade more longevity.

Gillette’s investment in R&D led to the creation of many new products such as the Brushless shaving cream
(1937), an electric shaver and Gillette Thin Blade (1938) and the Tech three-piece razor (1939). The Brushless
shaving cream led the way to the lather shaving cream in 1940. In 1946, Gillette launched the Blue Blade
dispenser, eliminating the need for unwrapping blades. In 1957, Gillette introduced an adjustable razor with
three settings- light, medium, and heavy, designed for men who wanted to match the angle of their blades with
the toughness of their beards. In 1960, Gillette applied a silicone coating to the blade edge to improve the
quality, safety and comfort of the shave. The new coated blade was called the Super Blue blade and was
considered the most significant breakthrough in shaving since the safety razor.
 7
During the 1960s, customer preferences gradually changed from double-edged blades to twin-bladed systems. In
1970, Gillette’s R&D staff began working on a system where the two blades were in tandem. This system,
however, encountered clogging. To eliminate this problem, Gillette tested a hair-like device that used sharpened
wires instead of blades, but the wires were not rigid enough to deliver a good shave. Finally, Gillette came up
with an ingenious new slotted-blade design and through the process of “hysteresis.” As a whisker was cut by a
blade, it was also lifted out slightly from the hair follicle and did not recede into the follicle until a fraction of a
second after it was cut. The researchers concluded that a second blade, in tandem with the first one, could cut a
whisker a second time and closer to its base before it retracted into the follicle. The result was Trac II, the first
twin blade shaving system in the world, introduced in 1971. Later Gillette developed Trac II for women. For
more than five years, Trac II remained the fastest growing product in the market, despite competition from
products like Schick Super I (1972), Wilkinson Bonded (1973), Bic Disposable (1974) and the Schick Super II
(1976).

Following the success of the Trac II, Gillette started working on a new product, Atra that sought to further
improve the twin-blade shaving experience. Gillette discovered that a better shave could be produced, if instead
of the shaver moving the hand and face to produce the best shaving angle, the razor head positioned itself to
maintain the most effective angle. Once the pivoting head was shown to produce a better shave, research
continued on product design and consumer testing. The name Atra was selected after two years of intensive

y
consumer testing- Atra stood for Automatic Tracking Razor Action and was introduced in mid-1977. Within a
year of launch, Atra razors replaced Trac II as the leading razor in the market.

op
During this time, the razor market was segmented into razors with replaceable blades called cartridges (or
systems razors) and disposable razors, which could be thrown out when the blades had worn out. Customers
C
who cared a great deal about closeness tended to favor cartridges, while price sensitive customers preferred the
disposables. In 1974, Bic Corporation, a publicly traded company partly owned by the French company Societe,
launched the disposable razor. The company quickly captured a 9% market share in the US. Bic’s success
prompted other players to offer cheap throw away razors. After being slow to catch on, Gillette realized its
ot

mistake and launched the disposable version of Trac II. In 1977, Gillette introduced Daisy, a disposable razor
targeted at women. The low cost of the disposable razors soon caught the attention of many men and women. By
the late 1970s, the market share for disposable razors had grown to 30%. This increased to 50% by the mid-
N

1980s.

The Sensor
o

Following the launch of the Atra in 1977, Gillette began working on an improved shaving system that would
D

steer customers away from low priced disposables. With disposables, the razor had become a commodity, and
the buying decision was based solely on price and convenience. For Gillette, the situation was not encouraging.
The company needed a product that would differentiate itself from the rest of the competition and also recreate
the interest and demand for system razors. From years of experience in product development and testing,
Gillette had found out that shaving evoked certain typical reactions in men: it was time- consuming, irritating
and often unpleasant. Research studies showed that most men made between 100 and 500 strokes when they
shaved, often going over the same area again and again. This resulted in a close shave but left the skin bruised.
What men wanted was a close, clean and comfortable shave without nicks and cuts. Thus the idea of a new twin-
blade shaving system was born.

Codenamed Project Flag, the new razor was designed to have a pivoting head and independently mounted
moving blades that would adjust to facial contours. Between 1977 and 1983, Gillette secured five patents for
this razor. Gillette screened 15 plastics before it found one resilient enough to be used as the skin guard (which
stretched the skin in preparation for the blades). In 1983, the prototype was completed and tested on 500 men.
The results were encouraging and Gillette continued with its R&D efforts and conducted various additional
tests, over the next three years. The new razor seemed to outperform both Atra and Trac II in closeness, comfort
and physical appearance. By 1988, the razor design was further improved to include a ribbed stainless steel
handle. An organizer was also designed that could hold a pack of five cartridges and secure the razor to a pivot.
 8
Gillette was in a dilemma whether to introduce Flag as a disposable or cartridge razor. Though the idea of Flag
was to lure customers away from disposables, its product design had been very flexible and at any point of time,
could be launched either as a cartridge or as a disposable razor. The senior management was divided on this
issue. Disposables in general had been doing very well in the market and were considered to be the future trend.
Moreover, Gillette’s disposable razors, launched in retaliation to Bic, were doing better than the Trac II and
Atra. After careful deliberations, the company arrived at a unanimous decision in 1988 to launch Flag as a
cartridge razor. The product was named “Gillette Sensor.”

Gillette priced the razor at $3.75, less than that of some cartridge razors but higher than that of disposables, to
project a premium image. Blades were priced at $0.75, a 25% premium over Atra and about 100% premium
over disposables. Gillette decided on its pricing strategy on the basis of cost per shave. Disposable blades cost
$0.035 per shave and for Sensor it was $0.06 (after taking into account that disposables tended to provide fewer
shaves than cartridge blades)4. The company decided to launch Sensor in January 1990, with a budget of $175
million for advertisement and promotions.

For the launch, Gillette had two options. The first was to launch Sensor in selected markets to gauge consumer
reaction, adjust its marketing campaign accordingly and gradually build awareness of the new product. The
other option was to launch Sensor throughout America and Europe in a single blaze of publicity. Many

y
executives preferred the first option, as it would give Gillette some time to take corrective action if the
immediate results were not satisfactory. Also they felt that Sensor would cannibalize the sales of Atra. However,

op
after careful cost benefit analysis, Gillette chose the riskier strategy with an advertising and promotional blitz
featuring identical television commercials in every market. The $175 million advertising campaign had a
positive effect. Customers in the US and Europe started clamoring for the product even before it was launched.
C
Advertising campaigns had to be removed off the air as the company found it hard to meet the demand. Sensor
turned out to be an outstanding success and accounted for $200 million of the company’s revenues of $1.6
billion generated by shaving products in 1990. Analysis revealed that, of Sensor’s sales, 64% came from former
users of other non-disposable shavers (52% from Gillette and 12% from competitors) and 29% from
ot

disposables. More encouraging was the sales trend of disposables in Europe and America, which remained flat.
This trend continued and soon Sensor’s share of the blade market touched 15%. Sensor sold more than 8 million
razors and 400 million blades within 3 years of its launch, resulting in total revenues of $6.5 billion. Sensor
N

became the most successful consumer product launch in decades.

Following the success of the Sensor, Gillette launched the women’s version in 1992, but with a flat, wafer-
o

shaped handle crafted by a female industrial designer to give women better control while shaving. It was sold in
white and green colors and became an instant hit. The company extended the product line with SensorExcel in
D

1994, which featured an innovative skin guard consisting of five soft, flexible microfins, which preceded the
blades. The microfins gently stretched the skin, causing beard hairs to spring upward so they could be cut more
closely, with greater comfort. By the end of 1997, SensorExcel was the leading product in the US (See Exhibit
V). Later SensorExcel for Women was also launched. Gillette followed this up with a high-end disposable razor
called Agility.

4
Pankaj Ghemawat and Benjamin Esty, “Gillette’s Launch of Sensor,” Harvard Business School Publishing, 12th
November 1997.
 9

Exhibit: V
The 10 Top Razor Brands in The US*
Brand Sales (in $ Million) % Change from prior $ Share
year
Gillette SensorExcel 30.2 12.6 31.6
Schick Silk Effects 11.7 -9.3 12.2
Gillette Silk Effects 10.1 -2.9 10.6
Schick Tracer FX 9.2 19.6 9.7
Gillette Sensor for Women 8.0 -36.9 8.3
Gillette Atra Plus 5.6 5.5 5.9
Gillette Trac II 5.6 0.8 5.9
Personal Touch 4.3 8.9 4.5
Schick Tracer 3.7 -20.9 3.9
Gillette SensorExcel for Women 3.1 N/A 3.3
*For 52-week period ending October 12, 1997.
Source: Information Resources, Inc.

y
The Mach3

op
In May 1994, even before SensorExcel was first sold, Gillette started making plans for Sensor’s successor. This
product was to be an improved version of the Sensor. Gillette’s R&D department worked for five years under
great secrecy. Even Warren Buffet, one of Gillette's major shareholders, was not allowed to know anything
about the project.
C
The naming process for the product began in 1995 when several potential names like Vector, Synchro, Triad and
Mach3 were identified. Gillette wanted a name that would universally appeal to all men across the world. After
ot

thousands of one-on-one interviews around the world with consumers, the Mach3 name was finalized. Mach3
initially faced increased internal resistance, as the cost of the project ran into millions. Also many executives felt
that the company should first launch a three bladed version of the SensorExcel, before introducing an altogether
N

new shaving system.

Mach3 was designed as the first and only shaving system with three progressively aligned blades that provided
men with a closer shave in fewer strokes and with less irritation (See Exhibit: IV). The product’s features
o

included forward pivot for a closer and more comfortable shave, single point cartridge docking for easy loading,
D

open cartridge architecture for easy rinsing and ergonomic handle design for improved handling. Gillette’s
consumer tests indicated that men preferred Mach3 nearly 2-to-1 to SensorExcel, and by a bigger margin over
rival products. Pricing was tested at 45% above that of SensorExcel and met little consumer resistance.

With the Atra razor, men used an average 30 to 32 blades a year. This number had dropped to the high 20s with
the launch of Sensor and SensorExcel. In case of Mach3, this number was expected to drop even further. Taking
into account these factors and also the success of the Sensor, which had been priced at a 25% premium to Atra,
Gillette priced Mach3 35% higher than SensorExcel– at $6.49 to $6.99 for the razor. To further reinforce
Mach3’s premium image, Gillette marketed Mach3 blades (cartridges) in packs of four and eight, compared
with five and ten for SensorExcel. The four-pack cartridge was priced between $6.29 and $6.79.

At the time of its launch in April 1998, Gillette visualized Mach3 as a product that would have a mass appeal.
Hence everything from packaging to point-of-sale displays to retail sales guidelines was created with a single
audience in mind rather than individual geographic markets. Mach3 packaging for the US, Australia, Germany,
France or India were identical except for the language on the package. Gillette decided on a uniform number of
words on the packages to minimize the need for design alterations to the packaging. The television and the radio
advertising were also identical in all countries. Due to its single look and feel, Mach3 established a global brand
image almost instantaneously.
 10
Between 1994 and 1998, Gillette spent more than $750 million to bring Mach3 to market, nearly four times
what it had spent on the launch of Sensor. Mach3 became the most expensive consumer product launch in the
world. Of the total budget of $300 million, about $100 million was spent in the US and the remaining overseas.
In keeping with the Mach3 name, advertisements featured macho imagery to convey high-tech attributes to a
male audience. One TV advertisement started off with a fighter jet breaking through the sound barrier Mach 1
and beginning to disintegrate after it crossed Mach 2. As the jet passed the Mach 3 mark, the pilot morphed into
a man standing in a futuristic bathroom, with a Mach3 razor flying into his hand.

Gillette had taken 18 months to introduce Sensor in all parts of the world. For Mach3, this was achieved in less
than a year. Mach3 was introduced in North America in July 1998, in Europe and Russia in September 1998, in
Japan in February 1999 and in the rest of the Asia, Latin America and Australia by mid 1999. By the time
Mach3 was launched throughout the world, it had become an even bigger success than the Sensor. In the US,
Mach3 razors outsold Sensor 4-to-1 compared with Sensor’s first six months on the market and outsold Sensor
blades 3-to-1. Mach3 razors generated revenues of $60 million during the first six months, compared to $15
million in the case of Sensor. During the same period, Mach3 blades generated sales of $68 million compared to
Sensor’s $20 million. Within a year, Mach3 razors attained a 15% unit market share in the US, while Sensor had
taken two years to reach that figure (See Exhibit VI). By the end of 2001, Mach3 had recorded worldwide sales
of $3 billion and a global market share of 23%. By December 2002, Mach3 had become a $1 billion per year

y
product, used by over 70 million men.

Exhibit: VI op
The Twelve Top Razor Brands in The US*
C
52 Weeks Ending October Sales ($ % Change $ Share Unit Sales % Change Unit
11, 1998 Million) from prior in millions from prior Share
year year
ot

1 Total Razors 137.5 40.0 100.0 30.5 24.7 100.0

2 Mach3 34.0 N/A 24.7 5.1 N/A 16.6
N

3 SensorExcel 17.0 -8.9 12.3 4.0 -10.1 13.2

4 SensorExcel for Women 14.7 -5.9 10.7 3.6 -6.6 11.8
5 Schick Silk Effect 11.3 -6.8 8.2 2.8 -9.5 9.3
6 Schick Tracer FX 10.5 11.5 7.6 2.6 6.5 8.4
o

7 Sensor 9.5 -9.0 6.9 2.2 -14.9 7.2

8 Sensor for Women 8.9 8.4 6.5 2.4 19.9 8.0
D

9 Schick Protector 8.6 N/A 6.2 2.4 N/A 6.5

10 Atra Plus 5.6 -3.2 4.1 1.0 -9.0 3.4
11 Trac II Plus 5.5 -4.9 4.0 1.0 -10.4 3.3
12 Personal Touch 4.6 5.5 3.3 1.5 8.4 4.9
*For 52-week period ending October 11, 1998.
Source: Greg Masters, “Women grab an edge,” Discount Merchandiser, January 1999.

Gillette For Women Venus

Following the success of Mach3, Gillette launched an advanced shaving system for women, called Gillette for
Women Venus, in early 2001. Gillette believed the product had strategic significance. The women’s shaving
market was growing rapidly and Gillette had not introduced a women’s product since the SensorExcel version in
1996. Venus was important to the company for two reasons: It was Gillette’s first-ever global launch, hitting 29
countries simultaneously (Sensor for Women took two years to go global). The product was also a stand-alone
brand, not “Mach3 for Women” as was Gillette’s usual practice of extending men’s brands to women. Gillette
hoped that Venus would generate sales of $1 billion by 2004.
 11
A unique triple blade razor, Venus combined several proprietary features like an oval shaped cartridge,
ergonomically superior handle and convenient storage compact with individually sealed refill cartridges (See
Exhibit IV). Venus was expected to increase significantly the size of the female shaving business by attracting
new users and persuading others to upgrade from existing products. Gillette had spent close to $300 million on
the development of Venus. Consumer testing among thousands of women established that Venus gave women a
superior shaving experience, significantly outperforming SensorExcel for Women by a 3-to-1 margin. Venus
was also preferred to the leading competitive product by a margin of 6-to-1. The razor system, which included
the razor, one additional cartridge and storage compact, was sold for approximately $7.49 to $7.99. A package
of four refill cartridges was priced between $7.49 and $7.99.

To promote the product, Gillette opened a new website, GilletteVenus.com. The website used a promotion
campaign called “Celebrate the Goddess,” that offered trips and one-on-one lessons from “goddesses” of sports,
cooking, fashion, music, TV, print, etc. To counter the notion of Venus as a male version of Mach3 among its
sales personnel, Gillette spoofed Mach3’s advertisements. The Mach3 spots had featured jets breaking the sound
barrier, so the spoof video showed a woman flying a pink fighter jet (“Machette”) with her scarf blowing in her
face. At the end, she got approval from a male pilot who said, “Super shave fly girl.” This spoof was mainly
used for sales presentation and not meant for TV audiences. Gillette earmarked $150 million for global
advertising, with $40 million aimed at the US market. When Gillette launched Sensor for Women in 1992, its

y
product and advertisements were meant to be pretty. Venus, on the other hand, was seen as promoting skincare.
TV spots showed a cadre of suntanned women reclining on the beach with legs crossed and their backs to the

goddess in you.” (See Exhibit VII).

op
camera, tapping their toes to Bananarama’s lively version of the song “Venus.” The tagline read: “Reveal the

Venus quickly became the leader in the non-disposable razor segment (women’s) in less than a year, with sales
C
of $45 million through October 20015. Its refill blade sales of $35 million far exceeded those of its biggest
competitor, Schick Silk Effects Plus ($19 million in refill sales for 52 weeks). Sales of Venus also surpassed that
of other Gillette female brands.
ot

Other Products

In 2001, Gillette introduced Mach3 Turbo, an advanced triple- blade shaving system, with added features like an
N

anti friction blade that reduced the cutting force needed to slice through hair, to result in a much closer and
comfortable shave with less drag and pull. Mach3 Turbo also featured thinner, more flexible microfins that
stretched the skin more effectively, resulting in even greater comfort. An enhanced lubricating strip increased
o

lubrication and improved the razor glide. Priced at $9.00, 20% higher than the earlier version, Mach3 Turbo
became the top-selling razor in the US with 33% of industry sales in the 4th quarter of 2002. In 2002, Gillette
D

introduced a disposable razor called Sensor 3, which incorporated several proprietary features like three
independently spring mounted Sensor blades, protected microfins and a uniquely styled ergonomic handle.
Gillette believed Sensor 3 could be a perfect complement to Gillette’s cartridge razor products like Mach3,
Mach3 Turbo, SensorExcel and Venus.

Gillette frequently used miniature cameras to observe how its products performed on a customer. Gillette
videotaped men and women brushing teeth and observed the interaction of brush and tooth. For example, in the
development of the Oral-B CrossAction toothbrush, a miniature high-speed video camera was placed inside a
model of a mouth that included one transparent tooth. Gillette had 50 different prototypes of bristle designs and
the action (as the brush moved across the teeth) of each design was videotaped through the clear tooth. From the
videotapes, Gillette learned that cleaning took place most effectively when the bristles changed direction as the
brush moved across the teeth. Gillette also learned that this effect could be multiplied if the bristles were angled
in a criss-cross fashion. This research led to the popular design of the Oral-B CrossAction toothbrush. This
technique was also used in the research of shaving products, with cameras focusing on facial hairs. As the razor
went across the hair, researchers noted how the blades cut them and how the skin reacted. This process resulted
in the development of razors from Trac II to Sensor 3.

5
Christine Bittar, “Cutting Edge,” Brandweek, 4th February 2002.
 12
Working on the CrossAction toothbrush for adults gave Gillette an idea for a new series of toothbrushes for
children. Called Oral-B Stages, this new line was designed to meet the special needs of children at different
stages of dental development- from infancy to preteen years. Until this time, most children’s toothbrushes were
just miniature versions of adult models with kid friendly designs. Gillette was quick to realize that oral care
needs for kids varied depending on their age and growth. Differences in the development of teeth and gums, in
motor skills and coordination were some of the issues that Gillette started concentrating on. With inputs from
hundreds of pediatric dental professionals, parents and children, Oral-B Stages was launched in October 2001.
The toothbrush was designed for children in four key stages: four to 24 months (Stage 1), two to four years
(Stage 2), five to seven years (Stage 3) and eight years and up (Stage 4). Each Oral-B Stages toothbrush
addressed the “3D’s” of children’s oral care:

• Dentition: The specific characteristics of a child’s jaw and teeth. For example, soft bristles were
used for children with baby teeth.
• Dexterity: The ability to effectively reach and clean different areas of his or her mouth.
Accordingly, handle sizes were designed to meet the child’s hands.
• Development: The factors that motivated children to brush- brush colors, shapes and designs.

Oral-B Stages toothbrushes shared several innovative features- a cushioned head to help protect tender gums

y
during brushing and indicator bristles that signaled when to replace the toothbrush for optimal cleaning. A

op
handle stabilizer was also incorporated in each brush to keep it steady. This helped to eliminate bristle contact
with countertop surfaces and made it convenient for the children to apply toothpaste. Consumer research
conducted after the launch indicated favorable responses. Over 90%6 of the children who tried an Oral-B Stages
toothbrush were positive about the product, and almost every mother claimed that she would purchase Oral-B
C
Stages for her kids.

The Future Agenda

ot

In the $6 billion7 worldwide razor and blade industry, Gillette had established a strong reputation for being an
innovator. Gillette had been the first in introducing several new features- the first twin blade shaving system
N

(Trac II), the first twin blade disposable razor (Good News!), the first twin blade shaving system with a pivoting
head (Atra), the first twin blade shaving cartridge incorporating a moisturizing lubrastrip (Atra Plus), the first
shaving cartridge with independent spring-mounted twin blades (Sensor), the first shaving cartridge with
flexible microfins (SensorExcel) and the first three-bladed shaving system (Mach3). Gillette had invested about
o

2% of its yearly sales on R&D every year8. The commercial success of Sensor, SensorExcel, Mach3, Gillette for
D

Women Venus, Mach3 Turbo, etc., highlighted the company’s ability to launch innovative products regularly.

At the end of 2002, Gillette’s blade and razors segment attained a global dollar market share of 72%, the
company’s highest share ever9. Mach3 and Venus accounted for 32% of the global dollar market share and 40%
of the US share. In North America, 33% of male shavers used Mach3, 75% higher than the second popular
brand, SensorExcel. Venus had 32% of the world wide female shaving market. Women preferred Venus 3-to-1
and 6-to-1 over the top two competitive products. In oral care, Gillette’s share stood at 30.5%.

In spite of this commanding market share position, Gillette was not without problems. When James Kilts took
over as the CEO in February 2001, the company had missed its earnings for 14 consecutive quarters. Neither
sales nor earnings had grown in the past five years. Two-thirds of Gillette’s products were losing market share.
One reason was that Gillette derived 60% of its sales from international markets and the strong US dollar
affected sales. Another reason was that the company had aggressively followed a premium pricing strategy in all

6
“Gillette Redefines Children's Toothbrush Category With the Introduction of Oral-B Stages,” Press Release, 2nd October
2001.
7
Peter Gumbel, “A Cutthroat Business,” Time Europe, 28th April 2003.
8
Gillette’s R&D spending is approximately twice the consumer products industry’s average.
9
Press Room, www.gillette.com.
 13
products, including batteries. Batteries were generally considered commodities and not many customers
preferred the high priced Duracell Ultra. In the mass market for alkaline batteries, competitors Energizer and
Rayovac held a dominant position. Both these companies were involved in aggressive price-cutting. For 21
consecutive months during the 1999 – 2001 period, Duracell’s market share eroded. Moreover, the price wars
resulted in a 55% drop in operating profits for Duracell in 2001. Gillette had to counter the situation by resorting
to price promotions on its own. Moreover the acquisition of Schick by battery maker Energizer in January 2003,
for $930 million was expected to compound Gillette’s problem. This acquisition was expected to consolidate
Energizer’s position (33% share of the US market for alkaline batteries, compared to Gillette’s 47%) against
Gillette, both in the battery and the shaving segments. As of 2002, Schick had an estimated 16 to 18% of the
razor market, with annual sales of $650 million.

In the razor and blades segment, the demand for disposables was on the rise again. Disposables accounted for
70%10 of the wet-shave market in volume terms and 30% in value terms. In the US alone, 40% of men still used
disposables. In 2001, Schick had launched Xtreme 3, a triple-blade disposable razor. By combining the benefits
of the latest razor technology and the convenience of a disposable, Schick had expected to draw some of the
price conscious Mach3 users to Xtreme 3. In response, Bic launched its own triple-blade disposable version
called Comfort 3, in early 2003. Gillette had to follow suit and announced the launch of Sensor 3, clubbed with
a massive advertising campaign. Many industry experts felt that this renewed concentration on disposables

y
could prove risky for the company’s top-line. When Gillette last put major marketing support behind disposables
in the 1980s, it began to erode market share for the more profitable cartridge business. Adding to Gillette’s woes

op
was Schick’s proposed launch of a four-blade product in September 2003 and a new shaving system to compete
against Venus.
C
Kilts’s greatest challenge was to fuel the top-line growth by consistently improving on existing products and
also introducing breakthrough technologies. One step towards developing a new shaving product was the use of
laser technology. In February 2003, Gillette announced a development deal with Palomar Medical Technologies,
a company that was working on an in-home, laser-based hair-removal product, aimed initially at the female
ot

market11. However, it was too early to comment on the commercial viability of such a product, as it would mean
reduced sales on its traditional shaving products. For the traditional razor market, Gillette had reportedly started
working on the successor to Mach3. Many reports suggested that the product was due for launch in 2006.
N
o
D

10
Peter Gumbel, “A Cutthroat Business,” Time Europe, 28th April 2003.
11
Laser-based removal used light at a frequency and wavelength that was absorbed readily by hair follicles but not by
surrounding skin and tissue. The energy heated up the follicles and stunted hair growth, and patients generally reported
that it was painless.
 14

Exhibit: VII
Gillette: Advertisements

y
Gillette Mach3 Turbo (Print ad)

op Mach3 (TV ad)

C
ot
N
o
D

Fashion Collection: SensorExcel

Razors and Satin Care Shave Gels
(Print ad)

Gillette for Women Venus (Print Ad)

 15

Oral-B CrossAction Bristles (TV ad)

Braun Oral-B- “Brush Like A Dentist” (TV ad)

y
op
C
ot
N
o

Mach3 (TV Ad)

D

Gillette for Women Venus (TV Ad)

Gillette for Women Venus (Print Ad) Mach3- Father’s Day (TV Ad)
Source: www.gillette.com
 16

Exhibit: VIII
The Top 10 Cosmetics and Toiletries Companies in 2001 by Market Share
S.No Company % Share
1 L’Oreal 9.1
2 Unilever 9.0
3 Procter & Gamble 8.4
4 Colgate Palmolive 4.2
5 Estee Lauder Cos. 3.7
6 Gillette 3.7
7 Avon Products 2.8
8 Beiersdorf 2.7
9 Shiseido 2.5
10 Johnson & Johnson 2.2
Source: Euromonitor

Exhibit: IX

y
Market Shares of Leading Players in The Wet - Shave Market

Gillette
Company
op
Sales (in $
Millions)#
Market share (%)*
C
Razors 105.0 71.0
Blades 743.4 81.4
Disposables 234.4 43.3
ot

Schick (Warner-Lambert)
Razors 35.0 23.6
Blades 124.1 13.6
N

Disposables 102.4 18.9

Bic
o

Disposables 69.8 12.9

D

American Safety Razor

Razors 3.7 2.5
Blades 14.1 1.5

Private Label
Razors 1.2 0.8
Blades 29.0 3.2
Disposables 33.0 0.5
#
Dollar sales for food, drug, mass merchandise outlets for 52 weeks ended Dec. 31, 2000.
* Market share by segment (razors, disposables, or blades), not total industry.

Source: Information Resources, Inc.

 17

Exhibit: X
Some Facts about The Shaving Market

Men and Shaving: The United States

• 94 million men (90% of the US male population) age 15 years and older remove hair.
• 68 million men (72% of men who shave) shave with a blade and razor.
• 26 million men (28% of men who shave) shave with an electric shaver.
• On average, men in the US shave 5.33 times/week, 24 times/month.
• Men spend, on average, $22.00 for blades, razors and shave preparations per year.
• In 2000, the US blade and razor industry (male and female blades and razors) was a $1.8 billion
business.
• In 2000, the US male shaving industry (male-positioned blades, razors and shaving creams/gels)
accounted for more than $1.7 billion in sales.
• In 2000, male-positioned blades and razors accounted for more than $1.4 billion in sales.
• In 2000, male-positioned shaving creams/gels accounted for more than $250 million in sales.

y
Men and Shaving: Around the World

•
•
•
•
op
More than 1.6 billion men age 15 years and older remove hair.
1.3 billion men shave with a blade and razor.
360 million men shave with an electric shaver.
In 2000, the global blade and razor industry (male and female blades and razors) was a $6.4
C
billion business.
• In 2000, the global male shaving industry (male-positioned blades, razors and shaving
creams/gels) accounted for more than $7.1 billion in sales.
ot

• In 2000, male-positioned blades and razors accounted for $5.8 billion in sales.
• In 2000, male-positioned shaving creams/gels accounted for more than $1.3 billion in sales
N

Source: www.gillette.com
o
D
 18

Bibliography

Books

1. Gordon McKibben, “Cutting Edge: Gillette’s Journey to Global Leadership,” Harvard Business School
Press, January 1998.

Magazines/Journals/Newspapers

1. Levine J, “Global lather,” Forbes, 5th February 1990.

2. “What price a close shave,” Consumer Reports, August 1990.
3. SN Chakravarty, “We had to change the playing field,” Forbes, 4th February 1991.
4. “The best a plan can get,” The Economist, 15th August 1992.
5. “Blade runner,” The Economist, 10th April 1993.

y
6. William Miller, “Gillette’s secret to sharpness,” Industry Week, 3rd January 1994.

op
7. Rita Koselka, “It’s my favorite statistic,” Forbes, 12th September 1994.
8. Pam Wiesz, “The razor’s edge,” Brandweek, 24th April 1995.
9. Linda Grant, “Gillette knows shaving and how to turn out new products,” Fortune, 14th October 1996.
C
10. Pankaj Ghemawat and Benjamin Esty, “Gillette’s Launch of Sensor,” Harvard Business School
Publishing, 12th November 1997.
ot

11. Renee Kruger, “Razor Sharp,” Discount Merchandiser, January 1998.

12. William Symonds and Carol Matlock, “Gillette’s Edge,” Business Week, 19th January 1998.
N

13. “Taking it on the chin,” The Economist, 18th April 1998.

14. William Symonds, “Would you spend $1.50 for a razor blade,” Business Week, 27th April 1998.
o

15. Joel Stein, “Breaking Mach3,” Time Canada, 11th May 1998.
16. Andrea Grossman, “Gillette launches new positioning for women’s shave line,” Drug Store News, 25th
D

May 1998.
17. “Hair today, gone tomorrow,” Discount Merchandiser, June 1998.
18. “A cut above,” Discount Store News, 7th September 1998.
19. “The Mach3 razor vs. the rest,” Consumer Reports, October 1998.
20. William Symonds, “Gillette takes a shave and a big haircut,” Business Week, 12th October 1998.
21. “Innovation MiniSeries,” Industry Week Magazine, 19th July 1999.
22. Simon Lloyd, “Gillette’s Mach3 is brought back to earth,” BRW, 27th August 1999.
23. William Symonds, “The big trim at Gillette,” Business Week, 8th November 1999.
24. Jeremy Kahn, “Gillette loses face,” Fortune, 8th November 1999.
25. William Symonds, “Can Gillette regain its voltage,” Business Week, 16th October 2000.
26. William Symonds, “A fresh face could do wonders for Gillette,” Business Week, 6th November 2000.
27. Andy Serwer, “An about-face for Gillette? It’s about time,” Fortune, 30th April 2001.
 19
28. William Symonds, “Razor burn at Gillette,” Business Week, 18th June 2001.
29. Amy Tsao, “Gillette’s five-o’clock shadow,” Business Week, 30th October 2001.
30. Christine Bittar, “Cutting Edge,” Brandweek, 4th February 2002.
31. Gene Marcial, “Gillette’s New Edge,” Business Week, 29th April 2002.
32. Charles Forelle, “Gillette Unveils Disposable Razor in Bid for Bigger Slice of Market,” Wall Street
Journal, 8th November 2002.
33. Katrina Brooker, “Jim Kilts is an old-School curmudgeon,” Fortune (Asia), 30th December 2002.
34. Robert Barker, “Will Energizer give Schick a new edge?” Business Week, 17th March 2003.
35. Maggie Overfelt, “Gillette,” FSB: Fortune Small Business, April 2003.
36. Peter Gumbel, “A Cutthroat Business,” Time Europe, 28th April 2003.
37. Mary Bellis, “Inventors,” http://inventors.about.com.

y
Websites

1. www.gillette.com.
2. www.businessweek.com op
C
3. www.cnnfn.com
4. www.economist.com
5. www.forbes.com
ot

6. www.fortune.com
7. www.hoovers.com
N

8. www.multexinvestor.com.
9. http://finance.yahoo.com.
o

10. www.time.com
D