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Product Profile

Gillette India Ltd.

PREPARED BY

Harsha.B.Namburi

PGDM-2009-11

MODULE-2ND

SUBMITTED To:

SYRYADATTA GROUP OF INSITUTES

SIMMC, Pune.


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Index

No. Contents Page No.

1 IntroductionMethodology & Objectives

3

2 Introduction of the

company & Product

4

3 Business Profile 5

4 Product Details 6

5 Industry Analysis 66 Gillettes Strategy in India 7

7 Share Holding Pattern 8

8 Product Details 9

9 Product life cycle 11

10 Satisfaction Index 1311 Sales 13

12 Financial Analysis 14

13 Profit & Loss Analysis 15

14 Strategic Priorities 19

15 SWOT Analysis 20

16 Competitors Analysis 2417 R & D 29

18 Future Plan 30

19 Conclusion & Learning 31


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Introduction

Methodology

Market audit survey.

Survey of consumer behavior.

Compiling of the data obtained.

Analyzing the required data.

Conducting a detailed study.

Preparing the report.

Objectives

To understand customers life style habits.

To gain greater insight of market behaviours.

To assess customer-purchasing habits.

To understand how to position new products.

To identify the best way to reach the customer.


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Introduction of the Company & Product

Gillette was incorporated on 9th

February 1984 at Rajasthan, house of

Poddar enterprise(HOPE) and Gillette company, U.S.A promoted it.

Gillette has been a leading brand in mens grooming industry in India and

across the globe. Gillette with its wide range of products caters to the premium

segment of the mens grooming market.

Gillette is a brand of Procter & Gamble currently used for safety razors,

among other personal hygiene products. Based in Boston, Massachusetts, it is oneof 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". The original Gillette Company was

founded by King C. Gillette in 1901 as a safety razor manufacturer.

On October 1, 2005, Procter & Gamble finalized its purchase of The Gillette

Company. As a result of this merger, the Gillette Company no longer exists. Its last

day of market trading - symbol G on the New York Stock Exchange - was

September 30, 2005. The merger created the world's largest personal care and

household products company. In addition to Gillette, the company marketed under

Braun, Duracell and Oral-B, among others, which have also been maintained by

P&G.

The Gillette Company's assets were initially incorporated into a P&G unit

known internally as "Global Gillette". In July 2007, Global Gillette was dissolved

and incorporated into Procter & Gamble's other two main divisions, Procter &

Gamble Beauty and Procter & Gamble Household Care.


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BUSINESS PROFILE:

Gillette India Limited operates in three segments:

y Grooming Manufactures blades, razors and toiletries.

y Oral Care Manufactures toothbrushes and oral care products

y Portable Power - Manufactures batteries, torches and lamps

Some of the renowned popular razors from Gillette used in India include:

y Gillette Presto Readyshaver - Priced lowly thus targeting the low-income

group of consumers.

y Gillette Sensor Excel Targeted for the middle-income group

y Gillette Mach 3 Targeted for the high-income group


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PRODUCT DETAILS:

Company manufacturers stainless steel razor blades. Gillette India has a wider

portfolio of core businesses of shaving products sold under Gillette, 7O clock and

Wilkinson brands, battery and flashlights business and oral care products(Oral B)).

Company has a strong presence in shaving razor blades market. Blades

manufactured by the Company were of two types, the premium 7 Oclock, Ejtek

Super Platinum and the stainless brand 7 Oclock Ejtek Super Stainless. Company

took over Sharp edge Ltd., by acquiring the entire share capital of that company.

Company also merged Duracell (India) Pvt. Ltd. and Wilkinson Sword India Ltd.with the company.

INDUSTRY ANALYSIS:

Due to increased awareness and rising income levels, the industry is expected to

undergo a major shift from traditional double-edged razors segment to twin and

triple blades razors segment. Razor blade market has tripled from Rs 2 billion in

1986 to Rs 6 billion in 2006. In value terms, in 2003, double-edged blades

comprised 78%, systems 15% and disposables 7%. As per AC Nielsen/ORG's

estimates, the domestic shaving preparations market in 2003 was pegged at Rs 1.5

billion. Within the industry, cosmetics and personal care industry has been growing

at an average rate of 20 per cent for the last few years. However, current

consumption is still below many countries in Asia which shows that there are

further growth opportunities. In 2004, market size of men's personal care segment


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is estimated at approximately Rs 750 crores, with Gillette having the largest market

share.

Thus, the industry is growing at a decent rate but still is at an infant stage and this

offers great opportunities to players like Gillette and Colgate Palmolive to expandtheir customer base to include higher number of lower middle class people and

thereby increase their revenues and profitability.

GILLETTESSTRATEGY ININDIA:

The Indian shaving products market is characterized by a 97% share of double-

edged blades - a business dominated by the Malhotras, with brands like Topaz

and Panama. Instead of going head-on against them in this highly price-sensitive

market, ISPL has chosen to focus on premium products. The strategy has been to

bring more people into the twin-edged segment, and then gradually move them

towards even more premium products. Also, by segmenting the market with

offerings at different price points - 7 Oclock, Sensor and Mach III, ISPL offers a

continuing upgrade path for users.


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SHARE HOLDING PATTERN:

There has been a great shift in the shareholding pattern of the company since its

entry into Indian market in 1984. Gillette entered India through a joint venture as a

minority shareholder. Its share increased to around 75% in 2002. In 2006, almost

88% of the company was owned by the promoters (foreign and Indian). Out of the

remaining 12%, 10% is owned by non-institutional investors and thus, only 2% lies

in the hands of institutional investors.


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Product Details

GILLETTE SERIES:

GILLETTE SHAVING GEL - ANINSIGHT :

The Gillette shaving gel/foam series has been developed as a technologically

superior product. Gillette is the only company to have 10 product variants in this

category. No other competitor has even more than 5 variants. So, Gillette has the

deepest product line and the widest product width. Gillette Series has many firsts

to its credit in the Indian market:

First to introduce Shaving gel in the Indian market

First to include ingredients like Aloe vera and Vitamin E in its gels and foams.

First to introduce foams with no fragrance in Pure and Sensitive


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1

Gillette Series Shave Gel

Sensitive SkinFormulated with aloe to gently soothe, this Anti-Friction gel enhances razor glide

for a close, smooth, comfortable shave and delivers the protection and comfort you

need for healthy looking skin.

Gillette Classic Shave Foam

Sensitive Skin

Gillette Foam Sensitive Skin has a thick, extra rich, creamy lather for a close,

comfortable shave. Contains special lubricants to help protect sensitive skin.

Spreads easily, rinses clean, leaving skin feeling soft and smooth.


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1

Product Life Cycle

A new product progresses through a sequence of stages from introduction to growth,maturity, and decline. This sequence is known as the product life cycle and is

associated with changes in the marketing situation, thus impacting the marketingstrategy and the marketing mix.

The product revenue and profits can be plotted as a function of the life-cycle stages asshown in the graph below:

Product Life Cycle Diagram

Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop amarket for the product.

y Product branding and quality level is established and intellectual propertyprotection such as patents and trademarks are obtained.

y Pricing may be low penetration pricing to build market share rapidly, or high

skim pricing to recover development costs.y Distribution is selective until consumers show acceptance of the product.y Promotion is aimed at innovators and early adopters. Marketing

communications seeks to build product awareness and to educate potential

consumers about the product.

Growth Stage

In the growth stage, the brabd ge getting popularity and market share is continuouslyincreasing.


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y Product quality is maintained and additional features and support services maybe added.

y Pricing is maintained as the firm enjoys increasing demand with littlecompetition.

y Distribution channels are added as demand increases and customers accept

the product.y Promotion is aimed at a broader audience.

Maturity Stage

Competition with similar products.

The primary objective at this point is to defend market share while maximizing profit.

y

P

roduct features may be enhanced to differentiate the product from that ofcompetitors.y Pricing may be lower because of the new competition.y Distribution becomes more intensive and incentives may be offered to

encourage preference over competing products.y Promotion emphasizes product differentiation.

Decline Stage

As the product demand is continuously growing the decline stage has not yet came butif it does then marketing mix decicions and new technology will be introduced.


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Satisfaction Index

A questionnaire was prepared and a group of 100 people were asked various

questions regarding the products. According to that survey following index was

prepared.

Attributes Rating /100 People Voted

Looks 80 100

Ease of use 85 100

SALES

Gillette India's sales jumped 106 per cent to Rs 516.80 crores after the

addition of new businesses from the merged companies. But operating profit

margins of the merged entity has dropped to 12.9 per cent in 2000, from 19.3 per

cent in 1999. As a result, Gillette India's operating profits rose by a lower 38 per

cent to Rs 67.16 crores. This suggests that the merging companies have far lower

levels of profitability than Gillette India. Gillette India Ltd announced 36.6 per

cent higher net profit at Rs 61.22 crores for the 12 months ended December 31,

2004 on 9.73 per cent growth in sales at Rs 446.57 crores.


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1

FINANCIAL ANALYSIS

Since its entry into India market in 1984, Gillette has been following a strategy of

inorganic growth by acquiring domestic companies in oral care, battery, blades

and razors and stationery business. The company witnessed tremendous growth

during the later half of 1990s. Net sales increased from Rs 107 crores in 1997 to

Rs 477 crores in 2000 representing a growth rate (CAGR) of 45 %. Similarly, CAGR

for net profits over the same period was over 50%. However, operating margin

declined from 19.8% in 1997 to 14.0% in 2000. This further declined to less than

1% in the year 2001. Further, negative sales growth and increased expenses led to

a net loss of Rs 28 crores in 2001. This poor financial performance forced the

company to undertake a major restructuring program. Over the next 2 years,

Gillette concentrated on reducing overheads and better working capital

management to increase profitability. As a result of its restructuring program, the

company reported net profit of Rs 44.82 crores in 2003. Since then, company has

been growing at a steady rate which has resulted in increased valuation of the

company

The company is also focusing on exploring ways to capture the expanding oral

care segment in the near future. Oral care segment contributed approximately

13% of companys revenues in 2006 as against only 7% a year ago.


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PROFIT & LOSSANALYSIS

Net sales of the company grew at a CAGR of 45% during the period 1997-

2000. After that there was a downfall in the company and for the first time, Gillette

India ended the year with a net loss of around Rs 28 crores. This was primarily due

to significant increase in employee cost and other miscellaneous expenses. In 2001,

revenues declined to Rs 453 crores from Rs 477 crores a year earlier. Revenue

figures further reduced by around 18% in 2002 to approximately Rs 385 crores.

Although due to IIM Indore Group 6 Section B

restructuring, the damage was controlled to some extent in 2003, yet there

was a further fall of 3% in the revenue figures. Since its restructuring in 2003,

company has recorded double digit growth rate in revenues. However, the

growth rate was moderate in 2005 as compared to the figures in 2004.


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Chart showing Revenue growth over last 5 years

Despite higher revenue growth in late1990s, operating margin of the

company declined from 20% in 1997 to 14% in 2000. Similarly, net profit margin

almost remained constant at around 5% over the time period. The situation

worsened further in 2001, and company reported a net loss of 6%.

In 2002, Gillette undertook restructuring initiatives and it took the company

two years to revive its operations. In 2003, company recorded a net profit of Rs

44.82 crores. It entered into contracts with new suppliers for better raw material

prices and also brought about a significant reduction in wastages. As a result of

which, raw material cost as percentage of net sales declined from 46% in 2001 to

31% in 2003. Further, miscellaneous expenses reduced to just Rs 15.57 crores in


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2003 from Rs 82.68 crores in 2001. The net profit margin increased to 12.45% in

2003 and the operating margins stood at 25.90%. Improved financial performance

led to an increase of almost 120% increase in share prices over the year 2003.

Chart showing profitability margins over last 6 years

The market capitalization of the company has increased from Rs 845 crores in

2001 to Rs 2695 crores in 2007.


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STRATEGIC PRIORITIES:

This step involves portfolio analysis of companys products in the market.

Company derives almost 80% of its revenues and 90% of its profits from Personal

Grooming division. Within this particular division, majority of the sales come from

its razors division. Gillette is an undisputed leader in this sub segment. Similarly,

company leads in the market for gel and foam products. Thus, Todays business is

driven by this two sub segments.

In the future, Gillette still needs to concentrate on its two major sub segments for

regular cash flows. However, the new product in the shavings cream market can

also become tomorrow s breadwinner for the company. Oral Care business has

shown volatile performance over the years and thereby, has led to irregular cash

flows. Gillettes portable power business has been facing stiff competition from

the alkaline batteries in the market. This division grew by only 4% in terms of

revenues in the year 2005-06. And in fact, there was decline in the profit figuresfrom this division by approximately 60%. The company can consider divesting this

segment to direct its investments to Oral Care and the new shavings cream

product.


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2

SWOT ANALYSIS

STRENGTHS:

STRONG BRAND EQUITY:

Gillettes portfolio contains well establish brands such as Gillette and

Braun, oral-B line and Duracell. It eases the introduction of new products, as

consumers are already well acquired with the names and more receptive to

promises of improved user experiences. The strength and quality image of these

brands allows the company to charge higher process and achieve high margins.

MARKET LEADERSHIP:

The companys product are well known with a reputation of quality are also

market leader in their perspective segment.

Strong parental support in advertising and promotion:

y During the 2002 FIFA World Cup, Gillette India announced apromotion scheme offering a unique opportunity to win a trip toYokohama, Japan, to see the finals, live.

y To promote its products directly to consumers, Gillette India Limitedhas launched Gillette Grooming Centres along with 50 salons.These centres provide specific tips on shaving etc. and also help inpromotion of company products.

y Gillette has localised its advertisements as perIndian culture. Forexample the promotion campaign for Vector was related to anIndian marriage party.


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WELL DIVERSIFIED PROTFOLIO:

Gillette has a well diversified portfolio in terms of product diversification andmarket diversification. Diversification of this nature helps the company avoid the

risk of overdependence on any one source for its revenue stream.

BRAND ENDORSEMENT:

Gillette India is investing heavily in advertisement in order to create awarenessamong Indian rural and urban population. They are also endorsing their brands

through champions or role models of different sports.

STRONG R&D TEAM:

WEAKNESS:

PROFITABILTY HIGHLY DEPENDENT ON CORE BUSINESS:

Gillette profitability is highly reliant on the performance of its razors and blades

business. A substantial portion of its revenues come from this sector. Any

downturn in the sector or in Gillettes competitive position within it could have a

serious negative effect on the company.


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OPPORTUNITIES:

NEW PRODUCT LAUNCHES:

Gillette is known for constantly introducing new products in the market with

better technology and performance. This new product launches will help the

company to gain competitive advantage over its competitors.

GROWING DISPOSABLE INCOME:

INCREASED AWARENESS:

Cable television has penetrated into the smallest of Indian towns and has taken

with it awareness of latest lifestyle trends and trends.

PRICE INCREASES IN PREMIUM SHAVING SEGMENTS:

Gillette has been increasing the price of its razors and blades at an average rate of

around 4% per year over the last ten years. This price increase will help the

company to accumulate more profits from the present level of sales.


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THREATS:

LIMITATIONS/DISPOSABLES ARE A THREAT TO THE MACH3 OFFERING:

Gillette ability to sustain a price premium and earn an attractive return on its

extensive investment three-blade platform is threatened by the numerous

imitators of the mach3/mach3 turbo franchise, including disposables and private

label systems and even including Gillettes own three-blade disposable. This

numerous imitations are threat to the company in the long term as they are going

to reduce the sales of the original products.

PRESSURE ON PRICING POWER:

Gillette pricing power is being further eroded by channel migration and increasing

consumer resistance to paying significantly higher prices for innovation. Pricing

power is hey to revenue growth in a mature category especially when Gillettes

strategy has historically been to drive revenue growth per consumer and not

volume growth.

COMPETITIVER ENVIRONMENT:

Gillette faces intense competition in most markets. Its products compete with

widely advertised, well known, branded products, as well as private label

products, which typically are sold at lower prices. The companys survival depends

upon its ability to adopt itself in this kind of competitive environment.


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COMPETITOR ANALYSIS:

COLGATE PALMOLIVE :

Colgate-Palmolive has three products in the shaving cream/gel/foam segment.

Palmolive shaving creams are enriched with revitalizing sea minerals, this rich

formula refreshes skin and protects against razor irritation.

They are formulated with soothing Aloe-Vera, this rich foam is mild on skin and

helps guard against irritation.

One variant is a creamy formula featuring palm extract to hydrate and moisturizeskin. This cream in a long thin tube is very easy to use. As you just put onto your

face and use your shaver and it will get all your stubbles of your face leaving it

nice and smooth

The Price of each of these products is mentioned with size of the pack in the table below


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HINDUSTAN LEVER LIMITED (HLL ):

Hindustan Lever Limited is the biggest player in the Indian FMCG market. It has

two brands in the shaving cream segment. Axe and Denim.

HLL has extended its brand Axe which is a success in the deodorant market to

the shaving creams.

The Axe shaving cream has very good awareness scores among the consumers. It

comes in various fragrances, colors and its packaging also has many variants.

Denim is another shaving cream from the house of HLL. This is almost in the same

segent as that of Axe in terms of price and product attributes.


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The pricing of shaving products by HLL for both Axe and Denim is almost same.

It is also very similar to that of Old Spice shaving cream. But HLL does not have

any product in the gel or foam category to compete brands like Old Spice and

Gillette


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2

GODREJ:

Godrej is the domestic brand of shaving cream for Indian market. Recently Godrej

has invested heavily for the expansion in this market.

The shaving cream from Godrej is among the lowest priced shaving cream in the

market. It is targeting the price sensitive customer in the Indian market. But the

quality of the product is satisfactory in spite of its near about half the price than its

competitors.

Although, variants are few in terms of size, fragrance and packaging, it is still in

the shopping list of many consumers.

Godrej is a domestic brand of shaving cream and now it is looking to expand in

the global.


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STRENGTHS (S):

S1: STRONG BRAND EQUITY:

S2:MARKET LEADERSHIP

S3:Investing heavily in

Advertisement and Promotion

schemes

WEAKNESSES (W):

PROFITABILTY HIGHLY

DEPENDENT ON COREBUSINESS

OPPORTUNITIES (O):

O1: GROWING DISPOSABLE

INCOME

O3:INCREASED AWARENESS

SO STRATEGIES:

Use S1, S2 & S3 to capture O1

y Gillettee India should focus

on producing shaving

products like shaving cream

for the middle class of India

as their disposable income

is growing.

WO STRATEGIES:

y They should focus more on

R&D, aesthetic, design and

packaging in order to explore

new segments of the market.

y They should also focus on

marketing concept in order to

meet the needs of different

segments of market.

y They should make their

distribution system more

effective by attracting mega

dealers and retailers by giving

them special promotions and

THREATS (T):

T1: COMPETITIVER

ENVIRONMENT

ST STRATEGIES:

Use S2 to cater T1:

y They should use

competitive edge of theirbrand name and image to

take the lead from their

competitors.

y As they have good industrial

relations so they should go

for joint venture with an

established partner which is

capable of providing good

leadership and direction to

the company.

WT STRATEGIES:

y Various designs, distinct

features and products with the

touch of some innovation

should be made available tothe consumer market in order

to cope-up with the

competition.


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Research & Development

Packaging & Looks

The company will change its current packaging and looks to suit the newrequirements of customers as to attract them within the upcoming

quarter.

TechnologyExtensive research is being carried out for the betterment of current

formula

Future Plans

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)


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Conclusion & Learning

While making this product profile I understood what all problems the

company faces while introducing a product into the market and what all steps

they take to overcome those problems. Different types of strategies are adopted

by the companies to make their product successful in the market i.e. the new

product introduction and market testing, their financial arrangements, their

marketing strategy, their research and development operations etc. what are the

main benefits of a product and also how the quality standard of a product is to be

maintained so as to keep the companies goodwill in the market.From the product

profile I learned how to design a product and provide a good service. By the

product profile ,I got the complete information about a particular product,its

features and even deficiencies. It was a real learning process where I was able to

explore my theoretical knowledge in analyzing and studying the detailed process

of developing and introducing the product in the market.

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