Gillette Indonesia

Strategic Market PlanningFor Product Success

Factors Determining Demand for Blades

• Incidence of beards• Speed of beard growth• Acceptability of Stubble• Women’s shaving practices• Urbanization• Adoption of ‘western’ business practices• Disposable income• Availability of product• Affordable pricing• Advertising and promotion

How to Increase Demand for Blades

Blade sales depend on • No of shavers, their frequency of shaving and

the average shave per blade: Increase in first two and a decrease in the last will raise primary demand for the blade.

• Strategies can revolve around: Persuading Non-shavers to shave; Persuading shavers to use store bought blades; Persuading store bought blade users to shave more often; and Persuading shavers to reduce their number of uses per blade

Gillette in Indonesia: Doing Well?

It has built its market share up to 48% with a full product line that has not had to be locally adopted

It holds 90% of the premium price segmentGillette, after a false start, now has an

excellent distribution and sales organization in place

It has taken the Indonesian opportunity seriously, investing in a production plant

Gillette in Indonesia: Doing Well?? Sales of the Indonesian subsidiary reached $23

million in 1995, but this represented only 4% of Gillette’s $600 million in blade and razor sales in Asia-pacific

? Effio believes the country manager’s 1996 19% sales growth objective is too conservative and that 25-30% growth could be achieved.

? Exhibit 5 indicates limited brand awareness on all expect the basic Gil Goal red blade.

? Despite the plant manager’s best efforts, output will fall short of demand, assuming exports are maintained at the current rate. Capital Investment for plant expansion appears to have been postponed.

Gillette: First Mover Advantage Gillette has set up a manufacturing plant in

Indonesia so that it can offer low-priced entry-level double-edge blades to build primary demand.

Brand awareness can be built in an emerging market when advertising rates are very low.

Distribution outlets can be locked up because small kiosks and mom-n-pop stores probably stock only a single brand – and they will tend to stock the highest share brand.

Gil can offer low-priced entry-level blades along with higher-priced shaving systems to which users can be shifted overtime.

How should the market be developed?

Two Questions are Critical!• How much emphasis should be placed on

educating customers to build primary demand and secondly how much emphasis on promoting the higher end systems to trade-up existing users.

New User Education!

• There is still an opportunity to build primary demand through attracting new users (40% do not use blades)

• Most Indonesians are still too poor to trade up to systems.

• Most blade distribution outlets are not capable of stocking and merchandising systems.

For Emphasizing Systems

• Builds Gillette’s Image, especially in Urban areas

• Gillette’s systems are differentiated, its double-edge blades are not

• Enhances Gillette Indonesia’s profitability as percent of sales

• Trades up consumers who are already loyal to Gillette.