Product and Marketing Innovation CASE Synopsis: Gillette has long been known for innovation in both product development and marketing strategy. In the highly competitive, but mature, razor and blade market, Gillette holds a commanding worldwide market share. The peak of its innovation occurred in 2006 with the introduction of the Fusion 5-bladed razor. Today, innovation in razors and blades is thwarted by a lack of new technology and increasing consumer reluctance to pay for the “latest and greatest” in shaving technology.
Gillette must decide how to put the razor wars behind them and maintain or increase its share of the global razor market. Themes: Product leadership, product innovation, pricing strategy, integrated marketing communication, segmentation, sports marketing, global marketing, SOOT analysis, strategic focus s nice its inception in 1901, Gillette has always prided itself on providing the best shaving care products for men and women. In fact, the company was so visionary that it didn’t have any serious competition until 1962, when Wilkinson Sword introduced its stainless steel blade.
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Since that time, the Wilkinson Sword-Chick Company has evolved into Toilette’s primary competitor. Through the years, Gillette has striver to stay on the cutting edge of shaving technology in a market that thrives on innovation. This focus has led to a game of one-musicianship with Chick as each company introduced 3-bladed (Toilette’s Mach), 4-bladed (Chick’s Equator), and 5- bladed (Toilette’s Fusion) razors in rapid succession.
Now, under the ownership and guidance of Procter & Gamble, Gillette faces a saturated U. S. Market that fluctuates only when newer, more innovative products are introduced. However, many analysts live that Gillette and Chick have reached the end of meaningful product innovation. Given this, Gillette faces the challenge of further expanding its already dominant market share around the world.
And in a market that thrives on innovation, Gillette must determine how to balance the continued investment of resources in research and development, searching for “the next big thing” in the global shaving market, with capturing more of Elaine Davis, Florida State University MBA Class of 2010, prepared this case for classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation. This is a revised version of the case developed by Don Roy, Middle Tennessee State University, and Michael D. Hairline, Florida State University. 87 Copyright 2010 Coinage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Gillette: Product and Marketing Innovation their loyal consumers through product-line expansions and inspiring marketing campaigns. The History of Innovation at Gillette Born in Fond du Lack, Wisconsin in 1855, King Camp Gillette learned from an early age the importance of self-sufficiency, innovation, and invention. After his family home was destroyed in the Chicago Fire of 1871, Gillette left home at 16 years of age to become a traveling salesman.
His experiences in his position led him to William Painter, the inventor of the disposable Crown Cork bottle cap, who assured him that a successful invention was one that was purchased over and over again by a satisfied customer. In 1895, after several years of considering and rejecting possible inventions, Gillette suddenly had a brilliant idea while shaving one morning. It was an entirely new razor and blade that flashed in his mind-??a razor with a safe, inexpensive, and disposable blade.
According to reports, Toilette’s idea wasn’t immediately successful, as technical experts said it would be impossible to produce steel that was hard, thin, and inexpensive enough for commercial development of the disposable razor blade. However, in 1901, with the technical partnership of MIT graduate William Nickering, Gillette produced the original Gillette safety razor and blade, establishing the foundation for the Gillette Safety Razor Company. Since 1901 , the Gillette Company has led the personal care and grooming industry through manufacturing efficiency and exceptional marketing.
By offering “consumers high- laity shaving products that would satisfy basic grooming needs at a fair price,” Gillette effectively captured more than half of the entire razor and blades market across the globe. In fact, in the sass Gillette said the following of his razor product: “There is no other article for individual use so universally known or widely distributed. In my travels, I have found it in the most northern town in Norway and in the heart of the Sahara Desert. Toilette’s success in this market carried the company through economic droughts in the sass and sass, as well as allowed it to weather the storm brought on by World War II. In 1948, Gillette set its all-time performance record with profits per share of $6. 80. Encouraged by the successful development of his razor products, Gillette felt inclined to challenge his entrepreneurial spirit with the acquisition of two unrelated ventures: the Toni Company, maker of do-it-yourself home permanent-wave kits, and the Paper Mate Pen company, producer of retractable, refillable ballpoint pens.
Although seemingly profitable at first, both acquisitions proved to be unsuccessful as sales and revenue waned due to declining demand and innovative competitors, such s Bib’s low-priced disposable (nonrefundable) pens from France. As a result, Toilette’s unblemished track record for success became tarnished as net profits slumped to $1. 33 per share in 1964. Despite this fact, Gillette reigned as a visionary monopoly in the personal shaving market until 1962, when English firm Wilkinson Sword introduced its stainless-steel blade.
Distracted by its experimental ventures with the Toni Company and Paper Mate, Gillette neglected to foresee the impact this small company could have on its core business of razors and blades and began to lose a substantial portion of market share. Although Gillette retained 70 percent, the arrival of Wilkinson Sword’s stainless-steel blade initiated a transition in niche markets. For the first time, Gillette executives were unsure how to respond. Should they introduce their own stainlessness blade or ignore the rival and hope that its market niche would remain small?
Fortunately for Gillette, Wilkinson Sword lacked the resources necessary to exploit the niche markets it had penetrated and where it competed with Gillette. Eventually, Wilkinson Sword sold much of its blade business to Gillette. Unfortunately, by this time Gillette had already begun to feel the impact of intention as its market share had dipped to an all-time low of 49 percent. To revive Toilette’s market share and bounce back from unsuccessful product ventures into do-it-yourself permanent-wave kits and refillable ballpoint pens, Toilette’s new CEO Vincent Ziegler spearheaded an acquisition and product development campaign.
Ziegler was often described as aggressive, marketing oriented, and ambitious for the company, believing in diversification through the acquisition of companies in other business segments. Under Giggler’s leadership, Gillette purchased the following companies: Braun GAG (German manufacturer of mall appliances), S. T. Dupont (French maker of luxury lighters), Eve of Aroma (high- fashion perfume), Buxton Leather goods, Welcome Wagon, Inc. , Sterile hospital razors, and Safer Cosmetics (home sales).
Unfortunately, four of these acquisitions proved to be unprofitable or unsuitable and were divested, and the other three yielded low profits by Toilette’s standards. These ill ventures exposed the company to competitive pressures, especially in the form of Bib’s disposable razors and lighters. In addition, Bib’s 19-cent disposable stick pens particularly affected the Paper Mate nine of refillable pens and drove Paper Mate’s share of the retail ballpoint pen market from more than 50 percent down to 13 percent.
In 1975, Gillette retaliated with the introduction of its new Write Brothers line of disposable pens and salvaged a good portion of the lost market share with heavy price promotions. Despite these pressures, Gillette experienced moderate successes under the leadership of Ziegler with the introduction of Cricket disposable lighters and Soft & Dir antiperspirant (until the industry experienced a sharp decline in sales of the spray product due to the belief that aerosols destroy the ozone layer). Furthermore, the introduction of the Tract II razor was deemed a “great success” and thus continued Toilette’s dominance in this market.
Other successful product developments came under the leadership of Coalman Mocker, Toilette’s next CEO, whose strategy was to “cut costs dramatically and pour the money saved into ad and product development budgets. ” Under Mocker, Gillette experienced some of its greatest successes including memorable innovations such as the Tetra razor, the Good News! Disposable razor, and the Daisy razor for women. After these product additions, Gillette held slough 75 percent of the global market in razors and blades, including a majority of the U. S. Having market (razors, blades, and the leading shaving cream). By the end of 1980, Toilette’s sales rose above $2 billion for the first time in the company’s history. The foundation of this success was the introduction of new products for the razor and blade market developed in Toilette’s home laboratories. As previously mentioned, 389 390 Toilette’s Tetra-Plus shaving system, which featured a refillable Tetra cartridge with a lubricating strip, overtook the Tract II as the number one selling razor. In addition, to directly compete with Big and other razor companies, Gillette updated its Good News! nine to include a disposable razor with a lubricating strip. Furthermore, in the personal care segment, Gillette made several introductions, including Pair facial care products, Dry Idea deodorant, Bare Elegance body lotion, Mink Difference hair spray, White Rain hair care products, and Salience shampoo and moisturizer. These additions had mixed results and left Gillette still searching for the keys to success in this business segment. In the writing instruments segment, Gillette achieved iterate success with the development of Eraser Mate erasable, disposable pens.
Also, the steady sales of Paper Mate pens and Liquid Paper correction fluids helped to maintain company performance. The Razor Wars Begin By 1990, Gillette found itself in the interesting position of cannibalizing its own successful products with the launch of the Sensor razor. The Sensor soared in sales globally and quickly dominated the market, only to be succeeded by the Sensor Excel in 1993. This was not the first competing product produced by Gillette; however, it represented the first product that was able to effectively shift consumer demand and ales away from the Tetra and Tract II-??Toilette’s leading products.
A similar effect occurred in the women’s razor market with the development of the Sensor for Women in 1992 and the Sensor Excel for Women in 1996. As to be expected, the continued success of the Sensor family of shaving systems led to the gradual decline of the Tetra and Tract II twin-blade shaving systems. However, despite this decline, the Tetra and Tract II razors continued to hold decent market share positions worldwide. In addition, holding steady since 1976, Toilette’s Good News! Brand maintained its session as the best-selling disposable razor in its product category worldwide.
Toilette’s internal competition heated up with the introduction of the Mach razor in 1998. Touting three thin blades designed to provide a closer shave with fewer strokes and less irritation, the Mach became Toilette’s most successful new product ever as sales rose to $1 billion in the first 18 months. Recognized for its innovative design (blades on tiny springs), the Mach was named winner of the American Marketing Association’s Grand Edison Award for the best new product of 1998.
Similar to the racketing strategy employed for the Sensor and Sensor Excel products, Gillette sequentially produced the Mach Turbo for men and the Venus system for women in an attempt to further expand the reach of Mach technology and market share. In 2003, the razor wars got ugly as Gillette faced a new, more threatening competitor: Chick and the Equator-??the world’s first four-bladed razor. Before Chick introduced the Equator to the market, Gillette sued Energize holdings and its Chick division, arguing that the Equator illegally used the same “progressive geometry’ technology as the Mach.
However, despite the lawsuit, Chick was allowed to launch the Equator. To combat the suit, Chick countersunk Gillette, claiming that Toilette’s advertisements stating “the world’s best shave” and “the best a man can get” were Toilette’s Recent Marketing Strategies misleading. While Gillette and Chick engaged in a legal ping-pong match, consumer preferences and purchases were changing. In addition to Chick’s Equator for men, its Intuition for women began to encroach upon Toilette’s hold of the women’s shaving market. Chick’s total share of the U.
S. Market had risen 2. 9 percent to 17 recent, while Toilette’s total share of the razor and blades market had fallen 4. 3 percent to 63 percent. To fight back, Gillette aggressively established a twofold plan of attack for recapturing market share. This strategy included converting consumers to whispered razors and blades, such as the Sensor, Sensor Excel, and Mach lines, from the single- and twin-blade razors, and geographically expanding into the areas of Romania and the former Yugoslavia, the Soviet Union, and the Czech Republic.
At the forefront of Toilette’s strategy sat its secret weapon: the Fusion-??the world’s first 5 (+1) blade Azores, introduced in 2006. Using a unique five-blade design with a single blade on the back of the cartridge for use in trimming mustaches and sideburns, the Fusion exploded off the shelves and sold more than 4 billion razors within the first two months. Furthermore, the Fusion razor represented the first product introduction since Proctor & Gamble finalized its purchase of The Gillette Company and its subsidiaries, including Braun, Durable, and Oral-B.
Although the Fusion represented a victory for Gillette and P, the hype surrounding its initial success was quickly fleeting. Other than being more expensive than the Mach (each cartridge costing 75 cents to $1 more than the Mach cartridge), critics questioned why five blades were needed to get the best shave when Gillette had touted its three-bladed Mach as “the best a man can get” since the late sass. In addition, Consumer Reports concluded that there were no additional performance benefits provided by the five-bladed Fusion, especially when compared to the Mach.
However, what was the most concerning for Gillette was the fact that sales reports indicated that the razors were outselling the cartridge refills. This translated to a consumer perception akin to a “novelty’ product with a lack of staying power and product loyalty. Further, from a financial standpoint, Gillette feared not reaching the sales potential for the product combination, because it is well-known that razor manufacturers earn most of their profits from refills, not the initial razor purchase.
Despite these concerns, the Fusion line continues to be a successful revenue generator for Gillette and its top-selling razor to date. Rather than continue the razor wars by producing a six- or seven-blade razor, Gillette soused on releasing complementary products, enhancing its existing product lines and expanding its intensely successful marketing strategy. To complement its already successful razor and blades division, Gillette sought to expand its product portfolio inside the shower doors to create the full “shower experience. For example, the launch of Gillette Hair Care and Body Wash for men, as well as its Clinical Strength deodorant, represented the most significant Gillette brand extensions outside of the razor and blades division, and aimed to reinforce the brand’s standing as the world’s 391 392 leading male-grooming authority. We’ve earned the trust of the more than 600 million men who start their day with a Gillette razor,” said Chip Berg, group president, Global Personal Care, Procter & Gamble. By offering superior deodorant, body washes, and shampoos, we are able to reward that trust by giving guys what they want and need in other areas of their grooming routines. ” Because Gillette is in the maturity stage of its product life cycle, focusing on these complementary products allows the company to increase its share of customer. Defined, share of customer refers to the percentage of each customer’s needs in a reticular area met by the firm and is exploited when a company with brand loyalty effectively capitalizes on that preference to market other products.
Toilette’s ability to increase its share of customer is greatly enhanced due to the resources available at Proctor & Gamble. According to Clayton C. Daley, Jar. , vice chairman and chief financial officer of P&G, “One of the objectives of the Gillette integration has been to leverage the strengths and technologies of both companies to develop new products. We’re generating revenue synergies by combining our superior science and meliorating expertise to introduce these adjacent Gillette-branded products. In addition to complementary products, Toilette’s primary focus has been on the extension of its core business and the marketing programs that support it. Going beyond simple brand advertising, many of the initiatives and activities introduced by Gillette created a synergy between product development and marketing strategy. For example, building off the success of the Fusion and Fusion Power razor and blades, Gillette released the Fusion Power Phantom (Stealth in the United Kingdom) in February 2007. The Phantom razor featured a redesigned handle and a darker color scheme than the original Fusion Power.
In addition, in February 2008, Gillette released another revision, the Fusion Power Phenol, redesigned with a metallic blue and silver satin chrome handles color scheme. Most recently, Gillette launched the gaming-inspired Fusion Power Gamer razor at the EAI SPORTS Champions of Gaming Tournament in early 2009. Sports Marketing Activities Toilette’s lethal combination of marketing and product development stemmed from the fact that when it came to blades and razors, Gillette was not content with merely avian an innovative product.
The company virtually turned its marketing into a quantitative science, pouring time and resources into marketing plans that were almost military in their precision and implementation. Toilette’s stellar marketing strategies date back to the Sensor and Senor Excel products and can be attributed, in large part, to the success of its current market position and yearly sales volume. Focused heavily on male-dominated sports marketing activities, Toilette’s marketing atlas included the following elements: On a grand scale, the company’s most visible promotion was and still is Gillette
Stadium – home to the Neff’s New England Patriots and soccer’s New England Revolution. The facility, which seats nearly 70,000 fans, hosted the 2002 ML Cup, 2003 AFC Championship game, and four games of the 2003 FIFE Women’s World Cup. By sponsoring these types of athletic activities, Gillette is able to reach a worldwide audience, as soccer is tremendously popular in Latin America and European countries. It is particularly important to note that 60 percent of Toilette’s sales are generated outside the United States, so worldwide appeal is critical in its marketing strategies.
Case in point: The company’s image and reputation more than doubled in popularity after it signed soccer superstar David Beckman as its worldwide spokesman in 2004. Launched in February 2007, Gillette heavily marketed the Gillette Champions program centered on the athletic and personal accomplishments of three of the world’s greatest athletes-??Tiger Woods, Roger Feeder, and Thither Henry. According to Gillette, each of these athletes personifies the essence of Toilette’s brand: on and off the field, and “the best a man can get. As a group, the Gillette Champions blurred he lines of ethnicity, nationality, and language, making them attractive in the global arena. As part of the Champions program, Gillette featured numerous MultiMate, targeted promotions based on the type of sport played by each of its champions. For example, as part of the “Look Like a Champion Sweepstakes,” customers were offered a “once in a lifetime opportunity to learn how to look and play like a like real champion with a private training session from legendary golf coach, Hank Haney. Other sports-themed marketing programs include the heavily invested MASCARA marketing program and the Gillette Young Guns program. Aimed at racing fans with the purpose of driving sales for Toilette’s premium razors and shave care products, MASCARA and Gillette promoted the fast and furious life of men though television, print, online, public relations, and event marketing tactics. Example promotions included Toilette’s consumer program coordinated with Mascara’s Chase for the Sprint Cup, and the Daytona 500 Flip Card Stunt.
In the Case for the Sprint Cup promotion, 10 lucky sweepstakes finalists from all over the country had the opportunity to experience “a race fan’s dream” as they zipped up their fire suits and raced actual stockers in a five-lap race. In addition to winning trophies, each finalist was coached by one of the six Gillette Young Guns, Mascara’s top drivers (Kurt Busch, Dale Reinhardt, Jar. , Carl Edwards, Jimmie Johnson, Jamie McCarty, and Ryan Newman). Other MASCARA/Gillette marketing partnerships included the largest ever- attempted Daytona 500 Flip Card Stunt.
Prior to the start of the race, more than 118,000 fans seated along the front stretch and backstretch of the racetrack participated in the stunt, which promoted the Fusion and Fusion Power shaving line. During the National Anthem, the fans held up the front of the cards, which displayed patriotic design. Following the Anthem, participants flipped the cards over and revealed the Gillette Fusion logo. These and other promotions earned Gillette the 2008 MASCARA Marketing Achievement Award, racing top sponsor award.
Gillette continues to foster its relationship with Major League Baseball, a partnership that dates back to 1910, when Gillette featured baseball greats like Hones Wagner in ads for the original Gillette Safety Razor. In 2008, Gillette and ML 393 394 created the “ML Rookie of the Month Award presented by Gillette” that encouraged NAS to go online to the Gillette website and vote for their favorite player. This proved to be mutually beneficial for Gillette and ML as it drove Internet traffic to Toilette’s website as well as encouraged fans to become more engaged and involved in the sport of baseball. Major League Baseball and Gillette have a long standing and successful business relationship, so it is a great pleasure to announce this new program that allows fans greater access to Major League Baseball,” said John Broody, Senior Vice President, Corporate Sales & Marketing, Major League Baseball. “The ‘ML Rookie of the Month Award presented by Gillette’ will honor the finest young talent in the game, and our fans will play an integral role in selecting the top performing rookie in both the American and National League each month. Capitalizing on one of the most fanatic audiences available, Gillette also partnered with the NCAA to promote a clean, shaven “game face” with the Gillette “Game Face” college football promotion. This is a truly a one-of-a-kind contest for the ultimate college football fan,” said Michelle Pothooks, Associate Marketing Director, Gillette Male Blades and Razors. We’re looking to find the college football fan who can best display their favorite school’s pride in the most unique way. We are looking to college football fans to prove their pride. Winners received the opportunity to be on a Gillette television commercial, take home an Oxbow 360, and be crowned the 2008 National “Game Face” Champion. Gaming has also become a Gillette-sponsored pastime. Reaching out to this previously untargeted market group opened up a whole new ocean of customers who may not have been as attracted to Toilette’s prior sports-heavy marketing strategy. By reiterating with EAI Sports and launching the Fusion Power Gamer razor, Gillette was able to tap into this market by launching the world’s largest multistory gaming competition.
Giving gamers the attention they frequently lack in worldwide marketing schemes has been beneficial to both Toilette’s image and their market share. According to Gillette Champion Tiger Woods, “This program will give guys the chance to play games at the highest level possible, which is always exciting. To be the best at anything is an amazing feat. ” Audience marketing strategies include targeting alternative audience groups such as nouns adults, the gay and lesbian market, and WE wrestling fans.
For example, current promotions include shipping a promotional Fusion razor to males in the United States around the time of their 18th birthday, as well as providing free razors to college campuses and national gym franchises. In Europe, Gillette has also attempted to reach the gay and lesbian market by placing ads in media such as the United Kingdom’s Gay Times. Furthermore, in light of the depressed economy and decline in consumer spending, Gillette added an additional layer to its traditional sports-themed marketing concerning pricing strategy.