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A

Research ReportOn

A comprehensive study assessment of market share and users perception towardFour specified saving creams.

Gautam Buddh Technical University, LucknowBatch (2010-12)

UNDER THE GUIDENSE OF SUBMITTED BY

Himanshu Dargan Nagendra bhushanshukla

Asst. Professoer Roll No. 10016700

SUBMITTED TORAKASHPAL BAHADUR MANAGEMENT INSTITUTE

BAREILLY (U.P.)


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R.B.M.I. BAREILLY MBA IV SEM

1. EXECUTIVE SUMMARY 6

2. INTRODUCTION OF PROJECT 7

3. HISTORY OF GILLETTE 8

3.1. F G I 8OUNDATION OFILLETTENDIA

3.2. G S I 9ILLETTES TRATEGY INNDIA

3.3. S 9ALES

3.4. S 9TRUCTURE

3.5. P D 10RODUCT ETAILS

4. ANALYSIS OF GILLETTE 11

4.1. F A 11INANCIALNALYSIS

4.2. V F G 11ISION ANDUTURE ROWTH

4.3. E F 12XTERNALORCES

PERSONAL GROOMING INDUSTRYAN OUTLOOK 14

5.1. I ANDUSTRYNALYSIS

5.2. C 14OMPETITOR ANALYSIS

5.2.1. C -P 14OLGATEALMOLIVE

5.2.2. P & G 15ROCTOR AMBLE

5.3. HLL 17

5.4. G 18ODREJ

5.5. F 18A

5.6. O B 19THERRANDS

6. GILLETTE SHAVING CREAM DIVISION 20


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6.1. P 20RODUCT

6.1.1. G / / 20ILLETTE PRODUCTS IN THE SHAVING CREAMGELFOAM DEPARTMENT

6.1.2. G 20ILLETTES RANGE OF SHAVING GELS AND FOAMS

6.2. G S G - 22ILLETTEHAVING ELAN INSIGHT

6.3. P 24RICE

6.4. P 25LACE

6.5. P 26ROMOTION

7. MARKET RESEARCH 28

7.1. R P 28ESEARCHURPOSE

7.1.1. P 28ROBLEM OR OPPORTUNITY

7.2. R O 28ESEARCHBJECTIVE

7.2.1. R Q 28ESEARCH UESTION

7.2.2. R B 28ESEARCHOUNDARIES

7.3. R D 29ESEARCHESIGN7.3.1. R A 29ESEARCHPPROACH

7.3.2. R T 31ESEARCHACTICS

7.4. I 31MPLEMENTATION

7.4.1. D C - P 1: 31ATA OLLECTION HASE

7.4.2. P 2: F S 32HASE INALURVEY

7.4.3. D P 32ATA ROCESSING

7.5. R A C 36ECOMMENDATIONND ONCLUSION

7.5.1. PLAYING WITHTHEPLC: 36

7.5.2. LAUNCH GILLETTESHAVINGCREAM 37

7.5.3. PROMOTION 37

7.5.4. SALES ANDMARKETING 38

7.5.5. CONTINUE WITHUPGRADATION 38

8. FUTURE CHALLENGES 40

9. MARKETING PLAN FOR SHAVING CREAM 41


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9.1. M A 41ARKETINGUDIT

9.1.1. I O 41NDUSTRYUTLOOK

9.1.2. G (W ??) 41ILLETTES CURRENT POSITION HERE WE ARE AND WHERE WE ARE HEADING

9.1.3. F O (W ?) 42UTURE UTLOOK WITH SHAVING CREAMHERE WE WILL HEAD

9.2. M M 42ARKETINGISSION

9.2.1. T C 42ARGET USTOMERS AND THEIR NEEDS

9.2.2. M O 42ARKETINGBJECTIVES

9.3. S P 42TRATEGICRIORITIES

9.4. M S 43ARKETINGTRATEGY

9.4.1. S 43EGMENTATION

9.4.2. P 44OSITIONING

9.4.3. R P 46EAL OSITIONING

9.4.4. P P 46SYCHOLOGICALOSITIONING

9.5. M M 46ARKETINGIX

9.5.1. P S 46RODUCT ANDERVICE

9.5.2. P 48RICING

9.5.3. P 48ROMOTION

10. APPENDIX 50

10.1. G -T 50ILLETTEIMELINE

10.2. SWOTANALYSIS 52

10.3. O S 54RGANIZATIONALTRUCTURE

10.4. P P 56RODUCTORTFOLIO

10.5. F A 57INANCIALNALYSIS

10.5.1. S 57HARE HOLDING PATTERN

10.5.2. P & L A 57ROFIT OSS NALYSIS

10.5.3. B S A 61ALANCEHEET NALYSIS

10.5.4. C F A 63ASH LOW NALYSIS

10.5.5. C A 64OMPARATIVENALYSIS

10.5.6. V 65ALUATION

10.6. C A 67OMPETITORS NALYSIS


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10.6.1. C P 67OLGATEALMOLIVE

10.6.2. P & G 67ROCTOR AMBLE

10.6.3. HLL 68

10.6.4. G 68ODREJ

10.6.5. O C 69THER OMPETITORS

10.7. C S Q 70USTOMERURVEY UESTIONNAIRE

10.8. F G D F 75OCUS ROUP ISCUSSIONORMAT

10.9. A P S P 79GE ROFILE OFAMPLEOPULATION

10.10. S P P 79HAVING RODUCTREFERENCE

10.11. P B 80LACE OFUYING

10.12. R P 80ECALLATTERN

10.13. U P 81SER REFERENCE

10.14. B S G 81RAND ATISFACTION OFILLETTE

10.15. B L S C /G /F M 81RANDOYALTY INHAVINGREAM EL OAM ARKET

10.16. P S S C /G /F M 82RICEENSITIVITY INHAVING REAM EL OAM ARKET

10.17. F A 83ISHBEINNALYSIS

10.18. B P I A 83RAND REFERENCE BASED ONNDIVIDUALTTITUDE SCORE

10.19. A 84VERAGE ATTITUDE PERCEPTION SCORE OF EACH BRAND

10.20. F A 84ACTOR NALYSIS

10.21. P 87ERCEPTUAL MAPPING

10.22. C A 90LUSTERNALYSIS


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1. Executive Summary

Gillette has been the leading brand in men s grooming industry in India and across the

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

men s grooming market. Gillette faces intense competition in the shaving preparations

market (shaving gel/foam/cream) whereas the competition in the razor market is not

that intense. With the intense competition Gillette has to cater to the various needs of

the consumers.

This project aims at identifying the problems faced by Gillette in the shaving preparation

market. Through the project we have found an opportunity for Gillette India in the

shaving cream segment which is the biggest segment in Indian shaving preparation

market and Gillette has no presence in it. The research we conducted also supports this

fact. We have suggested a marketing plan for Gillette Shaving Cream along with other

suggestions for Gillette to face the competition in the near future and the long run.


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2. Introduction of project

The objective of the study is to understand the consumer attitude and buying behavior

for Gillette Shaving Gel And Foam. To understand the former part, we created a

focused group questionnaire and conducted a focused Group Discussion (FGD) on

Shaving Cream, gel and foam . We analyzed the questionnaire and the FGD to create

an extensive questionnaire understanding the buying behavior of consumers of GilletteShaving gel/foam and other brands. We had a Fishbein analysis done on the 84

respondents from Indore to identify how much of buying intension is due to attributes

and how much due to influence by referrals. We fur ther extended the study to

understand the perceptual mapping of brands. Our analysis has revealed that the

consumer is satisfied with the brand Gillette and its attributes. However Gillette has not

performed well with the customers who are slightly price sensitive. This following

detailed analysis is presented in our assignment.


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3. History of Gillette

3.1. Foundation of Gillette India

Gillette India was incorporated on 9th February 1984 at Rajasthan. House of Poddar

Enterprise (HOPE) and Gillette Company, U.S.A. (Gillette), promoted it. Gillette India

manufactures and markets Gillette Grooming Products and distributes Oral B and

Duracell products. More than 60 % of the products sold in India are locally

manufactured by Gillette India. Parent company Gillette (Refer Time Line, section 10.1)

owns a majority stake in Gillette India.

Company entered into a foreign collaboration agreement with HOPE for setting up of a

company for the manufacture of stainless steel razor blades in which Gillette agreed to

subscribe 24% of the equity capital. This agreement provided technical collaboration by

Gillette over the full range of technical know-how and technical assistance for the

manufacture of razor blades, razors and shaving systems. In 1985, the company came

out with an IPO for raising Rs 26 million to fund the setting up of its plant at Bhiwadi in

Rajasthan. Company placed a plant for the manufacture in the first phase, 200 million

stainless steel razor blades per annum in the starting. Blades manufactured by the

Company were of two types, the premium 7 O'Clock, Ejtek Super Platinum and the

stainless brand 7 O'Clock Ejtek Super Stainless. Company took over Sharpedge 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. Company introduced

new twin blade shaving system called 7 O'Clock Ejtek P II with platinum enriched edges

in 1987 and changed the shaving system in the India. Sabre Pens Ltd., Sheen Dental

Products Ltd., Klosershav Products Ltd., and Vanity Cosmetic Ltd., are wholly owned

subsidiaries of the Company. During the mid-nineties, the company's product range

widened with new products being introduced in the market namely, Gillette Presto ready

shaver, 7O'Clock Ready-II shaver, Gillette Sensor Excel shaving system, Gillette shave

gel, conditioners, deodorants, etc. It also started distributing Oral B toothbrushes,

Duracell range of batteries and Luxor and Parker pens. Gillette enhanced its range in

men s shaving pr oducts, it has also entered the women's shaving product segment. In


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1998, the company decided that it would use Gillette as its pre-eminent brand placing it

ahead of the 7O'Clock brand.

3.2. Gillettes Strategy in India

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

O'Clock, Sensor and Mach III, ISPL offers a continuing upgrade path for users.

3.3. 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 1 9.3 per cent in 1999. As a result,

Gillette India's operating profits rose by a lower 38 per cent to Rs 67.16 crore. This

suggests that the merging companies have far lower levels of profitability than Gillette

India. Presently Gillette India Ltd today 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.

3.4. Structure

Post Gillette P&G merger, Gillette has adopted the organisation structure of P&G 2006

onwards and effective July 1,06 relocated its headquarters from Gurgaon to P&G Plaza

in Mumbai, which will house all P&G subsidiaries in India. P&Gs organizational structure

is broadly divided into three heads: GBU(Global Business Unit), MDO(Market

Development Organization)and GBS(Global Business Services).Gillette moved from

business units based on geographic regions to GBUs based on product lines. MDOs

develop market strategies to build business based on local knowledge and GBS bring


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together business activities such as accounting, hum an resource systems, order

management and information technology, thus making it cost-effective. The present

structure of P&G is shown in the section 10.3.

3.5. Product Details

Company Manufacture stainless steel razor blades. Gillette India has a wider portfolio of

core business of shaving products sold under Gillette, 7 0 Clock and Wilkinson brands,

Battery and flashlights business and oral care products (Oral B). Company has strong

presence in shaving razor blades market. It has the premium quality 7 O'Clock Ejtek

shaving brush, 7 O'Clock Ejtek P II shaving system with a metal spine and a shave

cream in three variants, Gillette Presto Readyshaver, Readyshaver under the Brand 7

O'Clock Ready II, tooth brushes under the well known international brand name Oral-B,

Gillette Sensor & Sensor Excel shaving systems which met with an excellent consumer

and trade response, Gillette Shave Foam, Gillette Aerosol" shaving cream, new

generation triple blade shaving system Mach3Turbo etc. Company also entered into

ladies personal care segment with the launch of the Gillette Sensor Excel for women.

Company has strong diversified portfolio to increase its m ale personal products

coverage. Company has tied up with Rediff-on-the-Net e-commerce to market its

product and increase its customer base.(Section 10.4 for product line)


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4. Analysis of Gillette

4.1. 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 trem endous 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.

4.2. Vision and Future Growth

The company s vision is to build total brand value by innovating to deliver consumer

value and customer relationship faster, better and more effectively than its competitors.

This vision statement has led to the development and introduction of various newerproducts especially in male grooming division and adoption of a more customer oriented

approach.

Restructuring in 2002-03 brought about a major shift in the future strategy of the

company. The company decided to disassociate itself from non-profitable and non-

strategic businesses to focus on profitable businesses. It started focusing on the


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grooming and oral care business and exited the battery (except Duracell) and

household appliances activities.

Gillette currently, is the market leader in the male grooming division a nd is expanding

very aggressively into female grooming business through introduction of products such

as wet shaving products and hair expiation devices. 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 company s revenues in 2006 as against only

7% a year ago. (Section 10.5 for Financial Analysis)

4.3. External Forces

The external environmental factors in terms of increasing purchasing power of the

Indian consumers and a high level of interest in personal grooming amongst Indian men

and a strong focus of the company to create awareness for technologically advanced

products have resulted in signs of growth in the triple blade and twin blade systems. In

2004, Gillette came up with new and improved products like Mach3 Turbo and New

Vector Plus to cater to the increasing needs of this section of the market.

Further, penetration of cable television into the smallest of Indian towns has led to an

increased awareness of latest lifestyle trends and brands, which have become an

aspiration for many consumers. This increased awareness coupled with the increase in

disposable incom es has led to a desire to upgrade lifestyles through owning and using

better quality brands. This increased demand has led to higher sales growth especially

in personal grooming division.

The Government's continued focus on liberalization; trade friendly policies and

improvement in infrastructure have resulted in a steady inflow of global in vestm ents into

the Indian m arket which has again resulted in higher income levels due to increased

employment opportunities and sustained economic boom.

Thus, it can be said that due to higher income elasticity of dem and, demand for

personal grooming products are expected to grow at a rate higher than the rise in

income levels of people. However, since the market is still driven largely by price and


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not quality (typically in rural markets and smaller towns), consumers might not value the

potential benefit of paying higher prices for better and safer products.


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5. Personal Grooming IndustryAn Outlook

5.1. 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 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 expand their

customer base to include higher num ber of lower middle class people and thereby

increase their revenues and profitability.

5.2. Competitor analysis

5.2.1. Colgate-Palmolive

Colgate-Palmolive is one of the largest companies in the FMCG sector. The Company

has launch of its International Palmolive Shave Gel and Palmolive Shave Foam in the

year 2000, in response to growing consumer interest in skin conditioning benefits. The

Chairman of Indian Operations mentioned that the company s strategy for Personal

Care is to remain in top niches. Every year, they intended to take 3-4 initiatives.

Colpal has shaving products under the brand name Palmolive shaving cream. It has

three variants in the shaving cream/gel/foam category. They are shown below:


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Colgate-Palmolive s Shaving Cream /Gel/Foam :

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

below

Product Weight (gms) Price (Rs.)

Palmolive Lime 70 37

Palmolive Moisturizer 70 39

Palmolive Delux 70 39

(Section 10.6.1)

5.2.2. Proctor & Gamble

Proctor & Gamble, USA operates in India through three entities. 65% subsidiary -

Procter & Gamble Hygiene & Healthcare (PGHH), which is focused on Anticold (Vicks),

and Feminine Hygiene (Whisper). In the shaving cream/gel/foam category it has a ver y

strong brand in the market, Old Spice.


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Old Spice has products in each of the cream, gel and foam category. These three

categories are shown in the form of a tree below.

Proctor & Gamble s Shaving Cream /Gel/Foam :

The prices of Old Spice shaving cream, gel and foam products are m entioned in the

table below:

Product Quantity Price (Rs.)

Old Spice Foam 200 ml 110

Old Spice Gel 60 gm 50

Old Spice Cream 70 gm 45

It can be observed from the table that even the Old Spice Cream is priced higher than

the premium products of other competitive brands.(Section 10.6.2)


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5.3. HLL

Hindustan Lever Limited, which is now called as Hindustan Unilever Limited, is a

subsidiary of Unilever (USA). It is the largest FMCG company in India. It is also reputed

to be the largest exporter of India. It s distribution network is very strong. It has over

2000 suppliers and associates and about 7000 redistribution stockists. With this

massive distribution network in place, HLL enjoys commanding position in many FMCG

products in Indian market.

In the Shaving Cream/Gel/Foam category also HLL has two brands. Both of them are

very strong brands in the Indian market. With the help of the its distribution system

these brands have a deeper reach to the Indian consumers. These brands are shown in

the tree below:

HLL s Shaving Cream/Gel/Foam:

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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Product Weight (gms) Price (Rs.)

Axe Shaving Cream 70 45

Denim Xclusive 70 43

(Section 10.6.3)

5.4. Godrej

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

global market for hair color and shaving creams. It has two variants in the shaving

cream category. They are Godrej Shaving Cream and Godr ej Premium Shaving Cream.

The price of these two is shown in the table below. One observation is that even the

premium shaving cream from Godrej is priced quite below (44%) below the competitors

products of same quantity.

Product Quantity Price (Rs.)

Godrej Shaving Cream 100 gms 25

Godrej Premium Shaving Cream 70 gms 25

(Section 10.6.4)

5.5. Fa

Fa has two shaving cream products in the market. Fa is offering 30% extra shaving

cream (21gms) with 70 gms pack. Both of its products are priced exactly the same.

Product Quantity (gms) Price (Rs.)

Fa Oceanic 70+21 40

Fa Dynamic 70+21 40

(Section 10.6.5)


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5.6. Other Brands

Other competitive brands like Dettol and Park Avenue are also there in the market

scene. The price for their shaving cream product is mentioned below. These are not

premium segment brands and were priced accordingly.

Dettol cream which comes in 70 gms pack is currently offering 40% extra in its regular

product for Rs. 37. Whereas Park Avenues shaving cream is sold in 70gms pack for theprice of Rs 36. (Section 10.6.5)


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6. Gillette Shaving Cream Division

6.1. Product

Introduction

Gillette has always remained the technological, market leader in the razor division of the

men s grooming segment. Its high brand awareness, market acceptance as a

technological leader for hi-performance razors and high brand equity were compelling

reasons to penetrate and develop the entire value chain of the men s groom ing industry

(razors, after shave and shaving gel/foam).

6.1.1. Gillette products in the shaving cream/gel/foam department

Gillette has a range of shaving products for different types of skins and user

requirements. However, Gillette has consciously not chosen to have shaving cream in

its product line.

Gillette worldwide and Gillette India have cited the following reasons for not launching ashaving cream and restricting itself to only shaving gel and foam:

Technically speaking, gels offer more lubrication than that of creams. This

means that gels have more anti-friction properties than creams. This

enhances the effectiveness of the razor s glide on the skin.

Weight-to-weight, gels are cheaper than creams.

Gel, being a solid in a liquid, can include any additional ingredients like

moisturizer, aloe vera, vitamin E etc.

Foams have been pre-perfected with the optimum lather required for shaving

and Gillette was already a market leader in the foam segment. The demandfor foams was on the rise due to minimal effort required on the part of the

consumer.

6.1.2. Gillettes range of shaving gels and foams

All of Gillette s shaving gel/foam products come under the brand name Gillette

. All the 10 variants are in the premium segment. Gillette has virtually no Series

presence in the basic and core product categories. Our analysis has shown us that


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shaving gel/foam is more commoditized in India and that 81% of the Indian consumers

use cream and not gels or foam.

Gillette in the customer value hierarchy: Green Gillette Gel, YellowGillette Foam

Moisturizer

POTENTIAL

ConditioningPRODUCT

Moisturizing gel

Sensitive

EXPECTED

PRODUCTDeep

Cleansing

BASICDeep

PRODUCTCleeansing

Gel

CORE

PRODUCT

UltraPure &

comfortSensitive

Lemon

Godrej V JohnDettol

Old Spice Denim


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The customer value hierarchy shows us clearly that Gillette has no product in the basic

or core category which is dominated by the creams. This segment accounts for more

than half the entire market.

Following are the variants in the product width:

GILLETTE SERIES

S. NO. FOAM GEL

1 Foam Conditioning Gel Moisturizing

2 Foam Deep cleansing Gel Sensitive Skin

3 Foam Pure and Sensitive Gel Ultra Comfort

4 Foam Moisturizer

5 Foam Senitive skin

6 Foam Lemon

6.2. Gillette Shaving Gel - an insight

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

Brand Development Index and Category Development Index

Gillette has the highest brand equity in the men s grooming industry. The brand Gillette

is more of a life style product than just a grooming product.


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High

Category

Developme

nt

Index

Low

Gillette Shaving gel/foam

Low High

Brand Development Index

Packaging

With shaving cream/gel perceived as a commodity by the majority

in India, the packaging, Point of purchase plat an important role in

the consumer s mind while deciding which product to buy.

The Gillette Series has been designed and

packaged with a futuristic theme to

communicate to the consumer the subtle

message that only Gillette offers you the most

advanced in shaving products. Gillette was

the first in India to introduce gels in tubes.

The shaving tube for GEL is very different in

design. It is glossy and can rest on its cap

unlike the competitor s tubes. The FOAM

series comes in metallic cylinders.


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6.3. Price

Gillette has 10 product variants of shaving gel/foam for the Indian market. All the 10

products are in the premium category ranging from Rs 53 to Rs 210 for the minimum

and maximum SKUs.

Gillette has priced its shaving gel and foam s well above the industry average. For

instance, Gillette foam priced at Rs. 210 costs 60% more than OLD SPICE foam though

Old Spice has the one of the best brand perceptions (and was the best in our survey).

The pricing strategy suggests that Gillette is leveraging its customer loyalty ( i.e. the

consumers who are brand loyal to Gillette razors).

The following table shows the Gillette Series price for all the 10 product variants. We

shall see the competitor s prices in detail in the com petitor analysis.

FOAM VARIANTS QUANTITY (ml) PRICE (Rs)

Conditioning 250 210

Deep cleansing 250 210

Pure and 250 210

Sensitive

Moisturizer 200 120

Senitive skin 200 120

Lemon 200 120

GEL VARIANTS QUANTITY (gms) PRICE (Rs)

Moisturizing 60 + 20 53

Sensitive Skin 60 + 20 53

Ultra Comfort 60 + 20 53


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6.4. Place

The distribution network of Gillette is very robust. They have P&G s distribution network

in addition to Gillette India s existing one. The distribution network is a com bination of

own network and that of a franchisee. As of now, Gillette India has the same distributors

in the 20 cities that P&G operates with. The distribution network follows a hub and

spoke model. The hubs are the 20 cities. The spokes are the various Tier 2 and Tier 3

cities and towns around the major hub. These cities are managed by the exclusive

distributors in those cities. Every city has only one franchisee distributor. These tier 2

and 3 cities (spokes)thus serve as a feeder market to the hubs.

Each franchisee distributor has his own set of employees working for him. The

distributor also manages his own fleet costs to supply to the retailers. There are no

wholesalers.

As told to us by the distributor in Indore, this is the hub and spoke model for the Mumbai

hub:

Indore

Dadra and Nagar Haveli

Aurangabad

MUMBAI (HUB)

Pune

Panaji

The distribution network in Indore:

Indore is a feeder market getting its feed from Mumbai. We went to the exclusive

(franchisee)distributor in Indore. Indore s distributor is called Life Science Corporation

near ADLABS Mall. This is their distribution network for Indore:


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Distributor (1)

Area Sales Manager (2)

Sales Representatives (4)

Fleet Drivers(4)

The sales representatives go with the drivers to the various Retailers under their

geographic span and take orders every week. The credit

period offered is one week. So, for every week the order is

taken and supplied, the amounts due for the previous week

would be collected. The two sales managers have split the

city into two parts for their span of control. They are in charge

of the big retailers, super markets etc.

6.5. Promotion

Gillette has made extensive promotion campaign for its razors

in the Indian market and the world market. Roger Federer,

Tiger Woods, David Beckham and Thierry Henry are a few of

Gillette s global ambassadors called Gillette Champions. But

for India Gillette does not have any brand ambassador as of yet though Irfan Pathan

has done a couple of ads for Sensor Excel.

But, for the shaving gel/foam there has not been much of advertisements. In fact, there

is only one ad for Gillette Series Shaving Gel shown not too prominently. For the

shaving gel/products, Gillette has co-advertised with its razors.

Bundling

Bundling has always been the norm for Shaving cream/gel products. This is mostly due

to the fact that shaving creams/gels are generally purchased together with


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razors/aftershaves. There is always at least one trade promotion across the 10 product

variants of Gillette throughout the year. The trade promotions include 33% extra on

many variants. When we went to Big Bazaar for price survey, we found that 4 of the 10

variants had the 33% free trade promotion. In addition to this, Shaving gels/foams have

been bundled with Mach 3 Razors for a slightly higher price. The foams(the ones priced

at Rs 210) bundle a Gillette Sensor Excel with them occasionally.


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7. Market Research

7.1. Research Purpose

7.1.1. Problem or opportunity

Gauge brand recall for various shaving cream/gel/foam brands, specifically Gillette.

Map the shaving cream/gel/foam market and competitive positioning within it.

To understand the buying intention of Gillette shaving gel and foam users and analyze

the effect of non-attribute factors

To understand the brand loyalty of customers towards shaving cream/foam/gel

Identify the parameters that play the most im portant role in a consumer s choice of

buying shaving cream/gel/foam using Factor and Cluster analysis.

7.2. Research Objective

7.2.1. Research Question

What is the inter-brand recall of shaving cream/gel/foam brands and their existing image

in the consumer s mind?

What is the effect of non-attribute factors on the purchasing decision of Gillette shaving

gel/foam?

How strong is the brand loyalty of customers towards shaving cream/gel/foam?

What are the factors that play the most important role in a consumer s choice of buying

shaving cream/gel/foam?

7.2.2. Research Boundaries

The research was conducted in Indore and the respondents were chosen on the basis

of their usage of shaving cream/gel/foam.


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7.3. Research Design

7.3.1. Research Approach

Exploratory

Problem Research

Causes of the Descriptive

problem research

Causes of the

problem

Phase One -> Secondary Data

The group in the initial phase of the project focused on secondary data collection. The

data collection primarily focused on

history of Gillette

the financial results of Gillette,

products of Gillette

organizational structure

the competitors in the market

the strategy adopted by Gillette and its competitors in the market.


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The secondary data collected in the first phase of the project helped the

group in getting better understanding of the shaving cream/gel/foam market

and the various brands competing in this market.

Phase Two -> FGD

After the secondary data collection was complete, two focused group discussions were

done. A group of 3 people and a group of 6 people were used for the two FGDs.

Through these FGDs, the various attributes that a person looks for in the shaving

cream/gel/foam were listed down. FGDs also helped the group in understanding the

buying behavior, the consumption pattern, the influencers etc which further helped in

preparation of the questionnaire.

Phase Three -> Questionnaire

From the results of FGDs, a pilot questionnaire was formed. The purpose here was to

get an accurate snapshot of particular aspect of the market environment hence the pilot

study was a descriptive research that identified all possible problems and factors

influencing buyer behavior.

An analysis of the pilot questionnaire was done. From the analysis, the redundant

variables, hard to analyze variables etc were removed so that people could easily fill in

the questionnaire.

After the pilot test, the final questionnaire was formed. The questionnaire was designed

to capture both quantitative and qualitative information. The overall design of

questionnaire has tried to capture data in the following areas:

To answer the question of what are the predominant constituents of shaving

cream/gel/foam consumers in terms of:

Profile and age

Buying Behavior and Decision-making process and to answer how Gillette

compares with competition and what should it be targeting to be able to grow

Relative importance of different attributes

Brand awareness and preference

Brand switching behavior/ Brand Loyalty


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7.3.2. Research Tactics

Questionnaire (Refer section 10.7.)

Sampling Plan

The theoretical population: All people aged 16-80 in Indore who have purchased

shaving cream/gel/foam.

Sampling Frame: Residential areas, malls, parlors, Restaurants are places where the

respondents where drew our respondents were interviewed.

Relevant Sample Size: 84

7.4. Implementation

7.4.1. Data Collection - Phase 1:

FGDs

The FGDs were aimed at helping us to

Define the target segments better

Identify the important attributes that add in the target customers shaving

experience

The FGD questionnaire is given in section 10.8

A preliminary definition of main two segments is:

Experimenters and Adopters (EA):

This category of consumer comprises of males from the age group 16-30 years. These

are the people who are willing to try new brands. These people are generally found to

be taking more care than others in terms of grooming. These people want to make a

style statement through the products they are using and hence are generally found

using highly advertized products. They tend to prefer shopping centers with a wide

variety. MHI: Rs 10,000/- to Rs 20,000/-.


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Suspicious Traditionalists (ST):

These are men who are more traditional and not very much willing to try new brands.

They are a slightly older age group (33-50 years) whose main concern is the safety and

health of their skin. They also show a preference for herbal products or brands that

have been present in the market place for many years and which they have already tried and tested. MHI criteria: Rs 5,000/- to Rs 20,000/-.

7.4.2. Phase 2: Final Survey

The Final Survey helped us to collect data on

Main influencers towards the purchase of Shaving Cream/Gel/Foam,

Benefits that are most important for each segment of customers,

Comparative brand and benefit perceptions,

Trade-offs between price and quality,

Preferred point of purchase,

Consumer s position within the Needs Hierarchy Model (Awareness,

Knowledge, Liking, Preference, Commitment and Conviction) with respect to

own and competitive brands and consumer satisfaction.

7.4.3. Data Processing

Age profile, product preference and place of purchase of the surveyed sample are

mentioned in section 10.9, 10.10 and 10.11 respectively.

Data Analysis

Brand Recall:

A sample of customers, which is representative of the Indore population, was surveyed

and the first unaided recall of the Shaving Cream/Gel/Foam brands by these customers

was recorded. (Refer section 10.12)


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It was observed that Gillette Shaving Gel/ Foam had the highest brand recall amongst

all the competing brand of shaving cream/gel/foam. This can be attributed to various

reasons like brand perception, usage pattern, advertisement expenditure etc. some of

which would be analyzed in the subsequent sections.

Buying Intention

The survey administered had questions which m easured the importance of various

attributes like price, brand image, fragrance, offers & discounts of various shaving

cream/gel/foam and specifically for Gillette shaving gel/foam.

Fishbein Analysis

The survey also measured the attribute scores for other competing brands like Old

Spice, Denim, Godrej, V-John and Dettol. Along with the data for Gillette, an average

attribute score was computed across the 84 samples for each attribute for each of the

shampoo brands. Fishbein analysis was performed by converting the Likert scale from 1

to 5 to -2 to 2. Consumer s attitude about each brand was calculated and plotted as

shown below. (Section 10.17, 10.18, 10.19, 10.20)

Chart: Consumer attitude about each brand


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Clearly Old Spice had the highest consumer perception score followed by Gillette and

Denim. But taking a look at individual consumer attitude score, we found that Gillette

was prefferred by almost 40% of the people surveyed and Old Spice by 30%.

Factor Analysis

A factor analysis was carried out to obtain the group of attributes which can be grouped

together. Hence 4 factors were obtained as follows

Factor 1 Product attributes (Fragrance, Brand Name, Foam Formation,

Antiseptic Attributes and Ease of Use)

Factor 2 Price Sensitivity (Price, It keeps my Skin Soft And

Offers/Discounts)

Factor 3 Point of Purchase (Availability in Stores and Stylish Package

Design)

Factor 4 Additional Features (Color of Shaving cream/gel/foam and

Ingredients)

Perceptual Maps

Attribute scores were averaged under each factor for each of the Shaving

cream/gel/foam. Then graphs were plotted ( Refer section 10.21) for the perceptual map

along the dimensions as shown.

Observations:

In Indore, the surveyed samples perceive that Gillette primarily targetsconsumers which are more focused on the product attributes like brand, foam

formation, ease of use etc whereas the perception of price sensitive

consumer towards Gillette was found to be of an over priced brand.

For price sensitive customers products like V-John, Godrej and Dettol were

more satisfying than Gillette.

The surveyed sample considered Gillette to have the best packaging among

all the brands. This feature highlights the fact that point of purchase is an


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important selling point for the shaving cream/gel/foam market and Gillette has

been outperforming the competitors.

High satisfaction in the availability in stores further shows the robust

distribution system that Gillette has put into place to cater to diversified

markets.

Although not much differentiation can be introduced in the product per se (low

satisfaction scores for all brands), still Gillette is found to be seen as a brand

which brings out products with new features like lemon, conditioner etc.

Distance matrix analysis shows that the consumers are most satisfied with

Gillette in all the cases except when the purchasing decision is based on

price along with additional features.

Brand Loyalty

The questionnaire had specific questions to measure the brand loyalty for the brand that

the consumer was using at that point of time. From the graphs shown, it can be concluded that the Brand loyalty in the Shaving cream/gel/foam segment is only 57%

where customers would stick to it irrespective of the availability in the place where they

are accustom ed to shop. This figure says that 57% of the customers would rather go to

some other retailer in search for their preferred shaving cream/gel/foam brand than to

buy som e other brand from the same shop. Price sensitivity measured along the lines of

a hypothetical price increase in their preferred shaving cream/gel/foam brand was

around 43%. This figure indicates that 57% of the customers do not shift from their

preferred brand to some other brand because of a price hike in their preferred brand,

provided it s a reasonable price hike whereas 43% would move to some other brand.

(Refer section 10.15.)

Cluster Analysis

On the basis of the four factors identified through factor analysis, the group performed

Cluster analysis for two, three and four clusters separately. This was done to identify a


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market segment which Gillette should focus on in the near future especially if it decides

to launch a product in shaving cream category.

55% of the sample used shaving cream. Considering this to be a reasonable estimation

of the real usage, the decision to enter the shaving cream market seems to be a

lucrative option to explore.

The output of cluster analysis is shown in section 10.22.

Out of the three analysis performed the one with three clusters was giving the best

representation of the segments in which the market can be divided. (Refer section

10.22)

The population can be segmented into three segments on the basis of factors.

Cluster 1 is most price sensitive and values additional features the least. This

cluster comprised of one third of our sample size. As Gillette is a premium

brand which focuses on differentiating its products from the competitors and

upgrading the customers in the value chain. So targeting this cluster will not

be a strategically appropriate decision.

Cluster 2 is more influenced by attributes of the products and is not a price

sensitive segment. Gillette through its shaving gel and foam series is currently

catering to this segment. This segment comprised of more than one fourth of

the survey sample.

Cluster 3 is concerned about the attributes, additional features as well as

price. This segment comprised of more than forty percent of the survey

sample. Gillette can target this segment with the introduction of shaving

cream which will be dealt with in the marketing plan of the report.

7.5. Recommendation And Conclusion

7.5.1. PLAYING WITH THE PLC:

Gillette has the widest product range and the deepest product line in the men s

grooming market. This is a double edged sword because of the variety Gillette can offer

and the cannibalization that can occur.


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Gillette ,with its 9 existing product variants and the new shaving cr eam, has to see that

it can extend the product life cycle and the individual stages of each of the 10 products.

For example, the regular foam and Gillette 7 o clock regular razor are on the

maturity/decline stagein the metropolitan cities. Without much effort, these products can

be promoted aggressively in neighbouring countries like Bangladesh, Srilanka and

states like Orissa, Bihar and the North East and can have a revitalization and an

extended maturity phase .

Having so many product variants would be an unbeatable advantage in upgrading the

consumer throughout his lifetime and also making him brand loyal in the process

7.5.2. LAUNCH GILLETTE SHAVING CREAM

This has been the main finding of our project. Our Fishbein analysis, perception

mapping ,cluster and factor analyses support the idea. The potential is h uge and the

shaving cream can also be launched in other similar market demographies like

Bangladesh, Pakistan, Nepal and Srilanka. By launching Gillette shaving Cream,

Gillette would have a brand leader or a fighter brand in every stage of the customer

value hierarchy.

The shaving cream would have slightly stripped down attributes of the gel and foam

variants. This is because we should entice only the existing cream consumers and not

the gel/foam users.

7.5.3. PROMOTION

One important finding of our FGDs and Consumer Survey was that not a single consumer was aware of the fact that Gillette has 9 variants in the shaving gel/foam

category alone.

This can be attributed to one or more of the following reasons:

The brand equity of Gillette is very high (57% TOMR in our study). But the

category development is pretty low.


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The consumers have low involvement and do not search for information. This

implies that shaving cream/gel/foam is more of a commodity.

Gillette has spent on advertisements only for the razors and not on shaving

gel/foam or aftershaves. Hence the information available to public is limited.

To decommoditize the category, to increase customer loyalty and repeat purchase,

promotions have to be done on a bigger scale than what is currently been done.

The promotions should have more of a pull effect in the advertisements that

communicate not just the price and offers/discounts but also the values, attributes which

the consumer can relate to. In short, more information has to be communicated to the

consumer through ads, trade promotions etc.

Some initiatives by Gillette:

ADVANTAGE GILLETTE: Three Gillette winners from India were sent to the

finals of the 2006 Wimbledon

GILLETTE GULLY CRICKET: Gillette cleverly combined cricket and youth in this

version of street cricket in which the winners were awarded Rs 1 lakh.

7.5.4. SALES AND MARKETING

Currently, Gillette India uses only the distribution network of P&G. P&G s sales and

marketing knowledge can be utilized by Gillette to great extent in the future, especially

in Srilanka, Bangladesh and Nepal.

7.5.5. CONTINUE WITH UPGRADATION

Gillette has been very successful in its strategy of upgrading the consumer in the razor

segment. Gillette has made sure that it m akes its consumers move up the product chain

by introducing new, technologically superior products and phasing their PLC very well.

But sadly, this approach is missing in the shaving gel/foam segment. Though there are

9 variants, there has been no effort made to communicate to the consumer of the

superior quality and attributes.


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Hence, we suggest that Gillette adopt its upgrading the consumer strategy for the

shaving preparation segment also. This upgradation has 2 main advantages:

We can fully leverage the Product life cycle and the individual phases of the

products in different markets

We can make the consumer loyal to the brand over his lifetime.


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8. Future challenges

Introduce a product which would be designed specifically for Indian consumer

and satisfy aspiration of youths.

To match the increased demand patterns in the country.

Launching of innovative products in regular and short intervals

First and foremost, shaving cream accounts for roughly 80% of the market

and Gillette has a very weak presence in the cream segment. It s only cream

product 7 o Clock Shavin g cream has been a big flop.

Gillette s products are descending the customer value hierarchy from that of

a potential product towards an expected product. Competitors like Denim,

Axe are moving up the hierarchy. So, Gillette will find it tough to charge the

premium it has till now charged.

It is also highly likely that Gillette may not fully absorb the consumers who

upgrade from shaving cream to gel or foam. Hence, Gillette s market share

might not grow as good as their competitor HLL and Old Spice.

Gillette s major challenge lies in entering the mass market through a shaving

cream the way it successfully did with razors.


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9. Marketing Plan for Shaving Cream

After conducting industry and competitor analysis of personal grooming industry and

understanding the product portfolio of Gillette, the group came to the conclusion that

Gillette should enter the shaving cream market more aggressively with a new brand

immediately. Suggested below is the marketing plan for the introduction of the new

product.

9.1. Marketing Audit

9.1.1. Industry Outlook

Shaving preparations and after-shaves market stood at Rs 125 crores in 2003.

Considering a YOY growth of around 7%, the current market size is Rs 163 crores. In

2003, shaving creams constituted 81% of the market i.e. Rs 101 crores. Since, the

market share of gel and foam products is increasing at a very rapid pace (from 10% in

2000 to 19% in 2003), we can say that the share of shaving cream in the entire market

has fallen down to approximately 70%. Thus, the current market size of shaving cr eam

in 2007 is around Rs 114 crores.

9.1.2. Gillettes current position (Where we are and where we are

heading??)

In 2003, Gillette had 17% market share in the shaving preparations market which gives

a turnover of approximately Rs 21 crores. Most of these sales were driven by gel and

foam products. 7 O clock, Gillette s only brand in the shaving cream market was not

very successful and therefore, we can say that Rs 101 crores market remained tapped

by the company.

Even in 2003, the situation has not changed much. Although Gillette has been able to

increase its share in gel and foam products, shaving cream market worth Rs 114 crores

remain more or less untapped. Thus, to become a market leader in the entire shaving

preparations market, Gillette can not continue to ignore the shaving creams market.


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9.1.3. Future Outlook with shaving cream (Where we will head?)

The introduction of a shaving cream with improved attributes will directly compete with

current products like Axe, Denim etc. This will enable the company to establish its hold

over the Rs 114 crores shaving preparations market.

9.2. Marketing Mission

9.2.1. Target Customers and their needs

The primary customers of the company will be those belonging to cluster 3 (Refer

Cluster Analysis for details). This cluster accounts for almost 40% of the entire market.

These customers are concerned about the attribute and additional features besides

price. The brands like Axe and Denim can be said to be catering to the needs of this

cluster.

9.2.2. Marketing Objectives

Gillette should target to capture around 6-8% of the entire shavings cream market which

means revenue of approximately Rs 7-9 crores in the first year. There will not be any

product cannibalization (with 7 O clock) as both cater to different segm ents within the

shaving preparations market.

9.3. Strategic Priorities

This step involves portfolio analysis of company s 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

Todays businessin the market for gel and foam products. Thus, is driven by this two

sub segments.


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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.

Gillette s 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 figures from 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.

9.4. Marketing Strategy

9.4.1. Segmentation

In the shaving cream/foam/gel market there exist different categories of customers who

have different needs and are willing to pay different amount for the product that meets

their demand. Introduction of shaving cream would help Gillette identify the needs of

the customers and take advantage of the segment which has not yet been targeted by

the company.

Price sensitivity, importance of attributes, point of purchase decision makers and

customers influenced by additional features are the factors on which we will segment

the shaving cream market.

Segment One -> is most price sensitive and values additional features theleast. This segment has one third of our sample size. As Gillette is a prem ium

brand which focuses on differentiating its products from the competitors and

upgrading the customers in the value chain, targeting this segm ent will not be

a strategically appropriate decision.

Segment Two -> is more influenced by attributes of the products and is not a

price sensitive segment. Gillette through its shaving gel and foam series is


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currently catering to this segment. This segment has more than one fourth of

the survey sample.

Segment three -> is concerned about the attributes, additional features as

well as price. This segment comprised of more than forty percent of the

survey sample. Gillette through its shaving cream can enter this segment.

9.4.2. Positioning

Market research

Market research results have been analyzed in section 7 of the report. The

following conclusions from the survey helps us in identifying the positioning of

the Gillette shaving cream:

Target market :- The target market has been identified as the customers who

are concerned about the attributes of the shaving cream but are not willing to

shift from the current price band to a higher price band.

Competitor Brands :- The competitor brands have been discussed in section

5. The Gillette Shaving Cream will be competing with brands like Old Spice

and Denim.

Choice Criteria :- As per our findings (Section 7.4.3) the 4 factors on grouping

attributes post factor analysis that contribute to the shaving cream/foam/gel

purchase decision are:

Factor 1 Product attributes (Fragrance, Brand Name, Foam Formation,

Antiseptic Attributes and Ease of Use)

Factor 2 Price Sensitivity (Price, It keeps m y Skin Soft And

Offers/Discounts)

Factor 3 Point of Purchase (Availability in Stores and Stylish Package

Design)

Factor 4 Additional Features (Color of Shaving cream/gel/foam and

Ingredients)

Customer Evaluation:- Perceptual maps in the section 10.21 shows how the

customers evaluate Gillette with respect to com petitive brands.


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The customers surveyed in Indore found Gillette to be significant along both

factor 1 and factor 3 giving it an image of high quality brand with attractive

packaging and best availability.

Old Spice and Denim are its closest competitors in factor one and two

respectively.

Gillette lags behind all its competitors in factor 2 which includes price and

offers.

In factor 3, additional features, all companies have below satisfaction level

performance which implies that the variants introduced in the market for

shaving cream/gel/foam are not able to satisfy the demand of the consumers.

Positioning Strategy

The present perception of the brands between factors one and two is shown below.

Gillette shaving cream needs to position itself above Old Spice and Denim in order to

attract the target segment.


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9.4.3. Real Positioning

In the survey conducted, Gillette had the top of the mind recall of 57%. This shows that

Gillette has an excellent real positioning in the men s grooming market and Gillette

shaving cream can leverage this positioning in the target market.

9.4.4. Psychological Positioning

Gillette shaving cream will primarily alter the attributes importance in the target segment

by increasing the importance of attributes like brand name, foam formation etc and

decreasing the importance of price. This will be consistent with its strategy of moving

the customers up the value chain.

9.5. Marketing Mix

9.5.1. Product and Service

Customer value hierarchy chart in the 4 P s analysis shows that Gillette products (7 O

clock) is currently fulfilling only the core and basic needs to some extent. Further, it also


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shows that Gillette does not have any product fulfilling the basic needs and expected

needs of the consumers. Thus, our new product will cater to these needs.

Further, since, our new product will target the third cluster; it has to be very strong on

attributes. Again, additional features need to be there to satisfy the basic and expected

needs of the people. Our new product will have superior fragrance and higher antiseptic

attributes. Further, initially, the product shall be launched with variants like lemon and

musk.

The new Gillette Cream would target the basic and core product consum ers where

Gillette has no presence so far. So, the customer values prom ised and delivered would

also be different from that of the premium segment. The focus would be to indianise the

product. This is important because we have to reach a larger, price sensitive, not so

loyal segment of the market. So far, Gillette has only followed a dumping strategy in

India with very little customization. For our new product, this strategy would not work

well.

The customer values to be promised and delivered by the new GILLETTE Shaving Cream are:

Functional value:

The utilitarian/functional promise would be The best possible shave from the best

Shaving cream. The existing price range in the market for a 70 g shaving cream is Rs

25 (Godrej) to Rs 45 (Old Spice). We would price our Cream at Rs 40 which is below

that of Old Spice and Denim (Rs 43). We would also promise the basic attributes ( soft

on skin, lather etc.) .

Social Value:

The espoused social value would be from the angle that everyone in the family and

society have an instant respect and admiration for the clean shaven Gillette man.

Emotional value:

The emotional value promised is of great importance for a commoditized product like a

shaving cream. The espoused value would be the charming yet masculine Gillette man

who is attractive to all the people including women.

Epistemic value:


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The novelty value should be such that it must entice only the cream users, not our

gel/foam users. Hence, we must tell about how good a cream it is and the active

ingredients involved in the product.

Conditional Value:

The best possible start for the day would be the conditional value. The value

communicated should be of a confident, satisfied, charged up young Indian for the day s

grind.

COMMUNICATION OF VALUE:

We would adopt a push cum pull strategy to communicate the above values. Our ads

would involve a sturdy, tough, smart Indian and project him as the Gillette man (much

like the Marlboro man). The focus would be on the shaving cream though we will also

co-advertise Gillette Razors.

9.5.2. Pricing

The customers in the target cluster are not very price sensitive. The customers in the

cluster prefer brands like Axe and Denim which lie in the price range of Rs 43-45 for a

70m l pack. However, since Gillette is perceived as an expensive brand as compared to

its competitors, we plan to price our new product slightly cheaper than these brands. As

per our analysis, Gillette should charge a price of Rs 42 for 70ml pack.

9.5.3. Promotion

Since we see a great opportunity for Gillette in the Shaving cream category, we

recommend an aggressive promotional campaign for the new product. Our promotion

would adopt a push cum pull strategy.


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Push Approach:

The product would be pilot tested in Indore itself where we have performed our market

research. We would offer a 20g tube of the Gillette Shaving Cream free with every

Gillette Presto( Priced at Rs 17) and 30g with Gillette Vector ( Priced slightly at above

Rs 50). The selling price of the tube being Rs 40 and the margin at 25%, we would incur

around Rs 8for the 20g tube and Rs 12 for the 30gtube.

The increase in sales of the razors would be a good indication of the interest shown by

the consumers in the new shaving cream . This promotional strategy might also give

Gillette consumers who want to upgrade themselves to the premium shaving cream

category from the regular category. The level of success of the pilot project would help

us in modifying the product for the national launch.

Pull Approach:

So far, Gillette has always shown ads which are futuristic in nature ( Shaving with Mach

3 on a space shuttle is an example). But the advertisements for the shaving cream have

to be Indianised. This is the biggest challenge for Gillette which has so far treated the

Indian market as a dumping ground for its outdated products in the US.

Our advertisement has to entice the target consumer - the aspiring consumer who

comes from the middle and lower middle class and gives importance to attributes but is

also price sensitive. Our target consumer is widespread throughout the country- rural,

urban(including Tier 2 and Tier 3 cities) and rurban. The ads have to appeal to the

customer values mentioned above.


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10. Appendix

10.1. Gillette- Timeline

1895-In the United States, KING CAMP GILLETTE, a salesman for the Baltimore Seal

Company, originates the idea for a new disposable razor blade. For the next six years,

he will prom ote and sell this idea to backers and toolmakers in order to make his dream

shaver a reality.

1901 - GILLETTE teams up with MIT engineer and machinist WILLIAM NICKERSON in

Boston, Massachusetts. Together, they modify the safety razor by manufacturing a

double-edged blade that is disposable and replaceable; it receives a U.S. patent this

same year. This is a T-shaped razor which opens at the top so the user can insert a

new blade after tossing out its dull, used predecessor. These blades are cut from a

template, rather than forged

1903 - GILLETTE begins his legendary climb to the top as king of the U.S. shaving

market, thanks to his shaver s high quality, low price affordability, and his keen

approach to marketing. In 1903, his total sales were 51 razors and 168 blades.

1904 - GILLETTE'S total sales for the new state-of-the-art safety razor reach 90,000

razors and 123,000 blades.

1905 - GILLETTE opens his first overseas office, headquartered in London, England to

market products in Europe

1910 - WILLIS G. SHOCKEY receives a U.S. patent for his WIND-UP SAFETY RAZOR,

the forerunner of electric shavers. It has a wind-up-by-hand flywheel that operates for a

limited amount of time.


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1914 - 1918: WORLD WAR I - GILLETTE works out a mega deal with the U.S. Armed

Forces, which provides his safety razor and blades to every enlisted m an or officer on

their way to Europe as a regular part of their standard issue gear. This creates

tremendous worldwide promotion and publicity opportunities for Gillette s company and

products.

1960 - GILLETTE safety razors with long lasting stainless steel blades hit the U.S.

market. Later, other inexpensive injector-type cartridges and disposable razors become

available.

1960s -70s - DISPOSABLE RAZORS, which can neither be sharpened or replaced, hit

the market for both men and women. They are to be used 2-3 tim es, then thrown away.

Numerous manufacturers economically design them in simple shapes, which m ake

them inexpensive to produce and sell.

1971- GILLETTE begins to aggressively market a new twin-blade razor on a wide

scale, even though there have been similar razors available since the 1930s.

1984- Gillette entered Indian market through a joint venture as a minority shareholder.

1986-Launched the 7 o clock bra nd

1993-Launched the Presto readyshaver brand

2000- Launched the Mach-3 and shaving gel, shaving foam and linen series for

women

2002- It gained more shares so that it had three fourth of the shares. During these two

decades Gillette followed inorganic growth by acquiring domestic companies in oral

care, battery, blades and razors and stationery business.

2004-The company launched the next generation triple blade shaving system, Gillette

Mach Turbo, Gillette VectorPlus. Further in personal care segment the company has

launched Storm Force after shave splash and New Ultra Comfort Shaving Gel & Gillette


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Series Tube Shave Gel Variants, namely Sensitive Skin and Moisturising to suit

different skin types.

2005-The company s parent company Gillette, USA was acquired by the Procter &

Gamble Company, USA worldwide through merger in October 2005. In India, the

company while continuing as a separate legal entity, will also, be part of the Procter &

Gamble company, USA. The company has started the process of transition from its

current distributor structure to the P&G Distributors

10.2. SWOT ANALYSIS

Strengths

Strong brand equity

Gillette s portfolio contains well established brands such as Gillette and Braun, Oral-B

line and Duracell. It eases the introduction of new products, as consumers are already

well acquainted with the names and more receptive to prom ises of improved user

experiences. The strength and quality image of these brands allows the company to

charge higher prices and achieve high margins.

Market Leadership

The company s product are well known with a reputation of quality are also market

leader in their respective segment.

Well Diversified portfolio

Gillette has a well-diversified portfolio in terms of product diversification and market

diversification. Diversification of this nature helps the company avoid the risk of

overdependence on any one source for its revenue stream.

Weakness

Profitability highly dependent on core business


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Gillette s profitability is highly reliant on the performance of its ra zors and blades

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

the sector or in Gillette s competitive position within it could have a serious negative

effect on the company.

Over-reliance on a single customer

Wal-Mart Stores is Gillette s major customer. With a large part of its revenues

originating from a single costumer, the company is at risk of adversely affecting its

business, operating results and financial condition if its strategic relationship with Wal-

Mart Stores is terminated for any reason.

Opportunities

New product launches

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

technology and perform ance. This new product launches will help the company to gain

competitive advantage over its competitors.

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.

Growth potential for battery business in China

The Chinese battery market is a large and fast-growing market. Gillette has acquired a

majority interest in the Fujian Nanping Nanfu Battery Company. This has resulted to

significantly improve the performance of the company s overall battery business and will

have its impact on the future performance of the company.

Threats


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Imitations / disposables are a threat to the Mach3 offering

Gillette s 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 Gillette s own three-blade disposable. This numerous imitations are

threat to the company in the long term as they going to reduce the sales of the original

products.

Pressure on pricing power

Gillette s pricing power is being further eroded by channel migration and i ncreasing

consumer resistance to paying significantly higher prices for innovation. Pricing power is

key to revenue growth in a mature category especially when Gillette s strategy has

historically been to drive revenue growth per consumer and not volume growth.

Competitive 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 company s surviva l depends upon its ability to

adopt itself in this kind of competitive environment.

10.3. Organizational Structure

Gillette India now has the organizational structure of P&G worldwide. The key elements

are:

1. Global Business Units (GBU s)- build m ajor global brands with robust business

strategies. P&G moved from four business units based on geographical regions

to seven business units based on global product lines. The various GBUs are:

Baby Care/Family Care

Beauty Care/Feminine Care

Fabric & Home Care


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Snacks & Beverage

Health Care

2. Market Development Organizations (MDO) - build local understanding as a

foundation for marketing campaigns. P&G has eight MDO.

North America

Asia/ India/ Australia

Northeast Asia

Greater China

Central-Eastern Europe/ Middle East/ Africa

Western Europe

Latin America

3. Global Business Service(GBS)- provide business technology and services that

drive business success. Different GBS Centers are:

GBS Americas located in Costa Rica

GBS Asia located in Manila GBS Europe, Middle East & Africa located in Newcastle


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10.4. Product Portfolio

Gillette India has the following product lines:Double edge- 7 o clock and Wilkinson sword

Disposables-Wilkinson sword twin 2, Gillette presto

Systems- PII, Sensor, Vector, Mach3

Shave prep- Gel and foams

Batteries- Duracell

Oral care- Oral B toothbrush


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10.5. Financial Analysis

10.5.1. Share holding pattern

10% 2%

Indian Promoters

47% Foreign Promoters

Non- Institutional Investors

Institutional Investors

41%

Chart 2: Break up of ownership in 2006

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.

10.5.2. Profit & Loss Analysis

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


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

fall of 3% in the revenue figures. Since it s 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.

Revenues

600

500

400

300 Revenues

200

100

02000 2001 2002 2003 2004 2005

Chart showing revenue figures over last 6 years

Revenue Growth

20.00%

15.00%

10.00%

5.00%

0.00% Revenue Growth2001 2002 2003 2004 2005

-5.00%

-10.00%

-15.00%

-20.00%

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%.


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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 m aterial 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 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.

30.00%

25.00%

20.00%

15.00%

Operating Margin10.00%

Net Profit Margin5.00%

0.00%

2000 2001 2002 2003 2004 2005-5.00%

-10.00%

Chart showing profitability margins over last 6 years

Segmental Revenue

Q2, Q2, %

2006 2005 ChangeRevenue by Business

(YOY)Segment

Grooming 113.99 90.63 25.78%

Portable Power 6.97 6.71 3.87%


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Oral Care 18.54 14.75 25.69%

Total 139.5 112.09 24.45%

EBIT by Business

Segment

Grooming 40.39 26.37 53.17%

Portable Power 0.62 1.82 -

65.93%

Oral Care 0.91 4.46 -

79.60%

Total 41.92 32.65 28.39%

EBIT Margins

Grooming 35.43% 29.10%

Portable Power 8.90% 27.12%

Oral Care 4.91% 30.24%

Table showing segmental performance

The above table clearly shows that major chunk of company s revenues and profits

come from Personal Grooming segment. In Q2 2005, almost 80% of company s

revenues and profits came from grooming division. Oral care contributed around 12% of

the revenues and remaining came from portable power division (Duracell).

In Q2 2006, although oral care division witnessed a growth of 26% in terms of revenues,

but the profit figures declined by almost 80%. This was prim arily due to increased


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competition leading to higher selling expenses. Thus, in this quarter, groom ing division

contributed more than 90% of operating profits.

10.5.3. Balance Sheet Analysis

Year Debt Equity Ratio Fixed Assets Turnover

Ratio

2000 0.79 3.34

2001 0.45 1.99

2002 0.00 1.74

2003 0.00 1.94

2004 0.00 2.76

2005 0.00 3.42

Table showing key ratios

After restructuring its operations in 2002-03, company has adopted a zero debt policy. It

has become an all equity firm with no reliance on debt. Thus, debt equity ratio of the

company reduced to 0 from 2002 onwards from 0.45 in 2001. All the debt was paid off

with the funds obtained from the parent company as capital grant. This way company

reduced its financial risk to zero.

Fixed Assets turnover ratio has also increased from 1.99 in 2001 to 3.42 in 2005. This

shows that there has been improved and better utilization of company s fixed assets.

Ratios 2000 2001 2002 2003 2004 2005

Net Profit Margin 5.53% -6.13% 1.68% 12.45% 14.99% 15.09%

Assets Turnover ratio 1.12 1.13 1.40 1.26 1.29 1.31

Leverage 1.79 1.45 1.00 1.00 1.00 1.00


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ROE 11.15% - 2.35% 15.63% 19.33% 19.74%

10.07%

Table showing DuPont Analysis

From the table we can observe that, Return on Equity (ROE) of the company has

increased from 10.07 % in 2001 to 19.74% in 2005. If we look at the three individual

components of ROE, we can see that the fall in leverage has been very well

compensated by an increase in profitability. Further, assets turnover ratio has remained

almost constant over the years. This shows that the company is following a policy of

increasing margins to maximize shareholder s wealth.

During restructuring, company concentrated on reducing its working capital

requirements through efficient better inventory management and following a stringent

credit policy. Gillette went for direct distribution model (Gillette- Distributor- Retailer) to

reduce its investment in providing credit to retailers. Thus, the cash conversion cycle of

the company reduced from 36 days in 2001 to almost 0 days in 2003.

Working capital turnover ratio increased from 3.11 in 2001 to 3.93 in 2003 reflecting

better working capital management by the company. However, in the subsequent years

the ratio again declined due to higher cash balance maintained by the company.

Further, reduced investment in debtors was compensated by an increase in loans &

advances to suppliers. Thus, Gillette could not build on the benefits of restructuring in

terms of better utilization of working capital.

Year Working Current Debtors Creditors Inventory Cash

Capital Ratio Collection Payment Holding Conversion

Turnover Period Period Period Cycle

Ratio

2000

4.89 2.23 56 52 49 53


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2001

3.11 1.99 66 95 65 36

2002

3.75 1.71 41 111 57 (13)

2003 0

3.93 2.02 24 71 47

2004

2.66 2.15 24 70 41 (5)

2005

2.33 2.02 24 68 32 (12)

Table showing Working Capital Management and Liquidity of Gillette

10.5.4. Cash Flow Analysis

Cash flows in a company can be broadly divided into three areas:

Cash Flow from Operating Activities

Cash flows from this segment have not seen any improved over the past four years

despite a rise in revenues. In fact, cash flows have declined to Rs 76.58 crores in 2005

from a high of 124.44 crores in 2001.

Cash from Financing Activities

Company has not issued any new equity over the last five years. During 2001, company

paid off most its debt which has resulted in negative cash flows from this segment.

Majority of the cash flows in this segment comprise of dividends paid by the company.

Cash from Investing Activities


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Gillette has consistently incurred capital expenditure to purchase its fixed assets.

Further, company has been consistently earning interests on its loans & advances

which has resulted in positive cash flows in few of the years.

10.5.5. Comparative Analysis

In the personal care segment, HLL is by far the largest player in the industry. But P&G

Hygiene enjoys highest net profit margin of approximately 24% on a turnover of around

Rs 520 crores. Gillette also has the reputation of high margin company in the industry.

In the latest quarterly results, Gillette reported a margin of around 21% in this segment.

It is followed by Colgate Palmolive (15%) and HLL (12%) and Reckitt Benckisire (11%).

Companies Current Ratio Fixed Assets ROCE (%)

Turnover Ratio

Hind. Lever 0.82 5.1 56.62

Gillette India 1.91 1.82 32.93

Johnson & Johns. 1.04 6.21 164.01

P & G Hygiene 1.6 4.24 74.91

Colgate Palmolive 0.97 3.32 71.69

Industry Average 0.97 4.31 52.86

Table showing key ratios of Gillette and its competitors

The above table clearly shows that Gillette has a better short term solvency ascompared to its competitors. It has a current ratio of 1.91 as against the industry

average of 0.97. However, company has not been able to make the best utilization of its

fixed assets. Therefore, it has fixed assets turnover ratio of 1.82 as against the industry

average of 4.31. Similarly, Gillette has lower returns on its capital employed in the

business.


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10.5.6. Valuatio n

The sh

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