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Market Applications And Practices
Gillette is a brand of Procter & Gamble currently used for safety razors, among
other personal hygiene products. Based in Boston, Massachusetts, it is one of
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
Camp Gillette in 1895 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 householdproducts 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.
Company History:
Key Dates:
1901: American Safety Razor is founded by King C. Gillette.
1904: King Gillette's safety razor is patented.
1918: Gillette Manufacturers razors and blades for soldiers during World War
I.
1942: The Cavalcade of Sports program is formed to oversee the company's
various advertising and promotional activities in athletics.
1967: Braun AG is acquired.
1971: Company is organized into four domestic divisions: the Safety Razor
Division; the Toiletries Division (featuring Right Guard antiperspirant); the
Personal Care Division; and the Paper Mate division.
1991: Gillette ranks 20th among the Fortune 500.
1996: The Company acquires battery manufacturer Duracell.
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The Gillette Company is the world leader in the men's grooming product
category as well as in certain women's grooming products. Although more
than half of company profits are still derived from shaving equipment--the
area in which the company started--Gillette has also attained the top spots
worldwide in writing instruments (Paper Mate, Parker, and Waterman brands)
and correction products (Liquid Paper), toothbrushes and other oral care
products (Oral-B), and alkaline batteries (Duracell products, which generate
almost one-fourth of company profits). Gillette maintains 64 manufacturing
facilities in 27 countries, and its products are sold in more than 200 countries
and territories, with more than 60 percent of sales occurring outside the
United States.
Postwar Diversification
During the 1960s Gillette faced a threat to its bread-and-butter product, the
double-edged blade. Wilkinson had developed a polymer coating that made it
possible to put an edge on stainless steel, which resists corrosion, increasing
the number of shaves from a blade.
Two of Gillette's domestic competitors--Ever sharp, which made Schick
blades, and American Safety Razor--rushed versions of the stainless-steel
blade onto the market. Gillette, the market leader, was left behind without a
stainless-steel blade of its own to compete, and profits slumped in 1963 and
1964. Gillette recovered much of its market share through a simple strategy:
developing a better blade and initiating an aggressive advertising campaign
that emphasized quality. After its own blade hit the market, Gillette's market
share stabilized at 60-65 percent, compared to 70-75 percent before the
challenge.
During the later 1960s Gillette pursued this strategy actively, but with mixed
results..
Gillette did have some successes. The Trac II twin-blade shaving system
introduced in 1971 was a success, and the 1970 acquisition of the French S.T.
DuPont gave Gillette the disposable Cricket lighter, which Gillette introduced
to the U.S. market.
Diversification Moderated Starting in the Mid-1970s
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Mockler also increased Gillette's advertising budget and undertook
companywide cost-cutting measures in all other divisions. Before the results
of those policies could be seen, Mockler faced other problems. Growing fear
of fluorocarbons, which deplete the earth's ozone layer, affected sales of
products in aerosol cans during the 1970s.
Gillette faced a more serious threat from BicIn the 1970s Bic attacked
Gillette's Cricket disposable lighter with its own disposable lighter. Since the
Cricket was more expensive to make--it had more moving parts than the Bic--
Gillette was losing the price war. Lighters and pens, however, produced only
15 percent of Gillette's pretax profits; razor blades accounted for 71 percent
of profits Gillette countered by competing with Bic on price while
emphasizing the higher quality of its products.
Takeover Threats in the 1980s
In 1986 Ronald O. Perelman, head of Revlon, offered $4.1 billion for Gillette.
He was attracted by Gillette's well-known personal-care brands
In response to the takeover threats, Gillette reorganized top management;
thinned out its workforce through layoffs; modernized its plants while shifting
some production capacity to lower-cost locations; and sold many smaller andless profitable divisions.
With takeover threats behind it and restructuring completed, Gillette returned
to emphasizing its powerful brand names and its bread and butter, shaving
products.
Principal Operating Units
Blades & Razors; Duracell; Oral Care; Braun; Personal Care.
Early Gillette product
The first safety razor using the new disposable blade, were introduced around
1902.
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Gillette maintained a limited range of models of this new type razor until
1934 and the introduction of the 'Aristocrat'. The great innovation of this new
model was the 'Twist to Open', or TTO design, which made blade changing
much easier than previously, wherein the razor head had to be detached
from the handle.
1947 saw the introduction of the new 'Super Speed' model, also a TTO
design. This was updated in 1954, with different versions being produced to
shave more closely - the degree of closeness being marked by the color of
the handle tip.
In 1958, the first 'adjustable' razor was produced. This allowed for an
adjustment of the blade to increase the closeness of the shave. The model, in
various versions, remained in production until 1986.
The Super Speed razor was again redesigned in 1966 and given a black
plastic handle. It remained in production until 1986. A companion model, 'The
Knack', with a longer plastic handle, was produced from 1966 to 1976.
Older Gillette products
Trac II, the world's first two-blade razor, debuting in 1971. Gillette claimed
that the second blade cut the number of strokes required and reduced facial
irritation. The Trac II Plus is an identical model but adds a lubricating strip at
the top of the blade. The blades and handles are interchangeable.
Atra was introduced in 1977 and was the first razor to feature a pivoting
head, which Gillette claimed made it easier for men to shave their necks.
The Atra Plusfeatured a lubricating strip, dubbed lubra soft.
Gillette Sensor debuted in 1990, and was the first razor to have spring-loaded
blades. Gillette claimed that the blades receded into the cartridge head,
when they make contact with skin, helping to prevent cuts and allowing for a
closer shave.
The Sensor for Women was released around the same time and is nearly
identical, but has a wider cartridge head.
In 1995, an improved version, the Sensor Excel was released. This featured
"Micro fins," a piece of rubber with slits at the top of the cartridge and Gillette
claimed this helped to raise facial hairs, making for a closer shave. Another
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version, the Sensor 3, has three blades instead of two. All Sensor handles can
use all Sensor cartridge
Current Gillette products
Mach 3 The first three-blade razor introduced in 1998, which Gillette claims
reduces irritation and requires fewer strokes. It claimed five improved micro
fins, improved spring blades, and a pivoting head with greater flexibility than
previous Gillette products. It used a blue lubrication strip that faded as the
razor was used to encourage users to change their blades more frequently.
The Mach3 handle was also redesigned. Venus was designed for women and
is a Mach 3 variant.
Mach 3 Turbo had ten micro fins (as opposed to five on the original), a new
grip and claims improved lubrication and "anti-friction" blades. All Mach3
blades are interchangeable between the three products in the range, so it is
possible to use the Mach3 Turbo blades on a Mach3 razor. The Mach3 Turbo
Champion has a slightly different handle design. The Venus Divine is the
Venus version of the Mach3 Turbo.
M3Power is a battery-powered version of the Mach3 Turbo razor which can
also be used with the power switched off. The blades differ from Mach3 Turbo
in having what Gillette says is a new blade coating which it describes as
"Power Glide". The lubrication and micro fins are identical to Mach3Turbo.
The Mach 3 Power Nitro has a slightly different handle design. The Venus
Vibrance is the Venus variant of the M3Power. Venus blades are
interchangeable across the line.
The Gillette Fusion is a five-bladed razor released in 2006. There are two
different versions of the Fusion available: the Gillette Fusion, and the Gillette
Fusion Power. All share the characteristic five blades on the front, and a
single sixth blade on the rear that Gillette claims acts as a "precision
trimmer". In addition, the Fusion Power is battery powered and emits "micro
pulses" that are claimed to increase razor glide. In February 2007, the Fusion
Power Phantom (Stealth in UK) was released which featured a redesigned
handle and a darker color scheme than the original Fusion Power. In February
2008, Gillette released another revision, the Fusion Power Phenom, with a
new blue and silver color scheme.
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The Venus Embrace is the Venus variant for women and is also marketed
towards cyclists.
The desire to release ever more expensive products, each claiming to be
the best ever, has led Gillette to make disputed claims for its products. In
2005 an injunction was brought by rival Wilkinson Sword which was granted
by the Connecticut District Courtwho determined that Gillette's claims were
both "unsubstantiated and inaccurate" and that the product demonstrations
in Gillette's advertising were "greatly exaggerated" and "literally false." While
advertising in the United States now had to be rewritten, the court's ruling
does not apply in other countries.
Procter & Gamble shaving products are currently under investigation by
the Office of Fair Trading in an inquiry into alleged collusion between
manufacturers and retailers in setting prices. An industry insider has revealed
that the Fusion range of blades, which cost 5p ($0.08) each to manufacture,
sell with a mark-up of more than 4,750 per cent.
Brand worth
Some of Gillettes profit and sales may not have been due to the direct worth
of the product, but due to it being presented to the public from a well-known
company.
In 2008 Gillette, as a company, was worth US$57 billion and it was estimated
that the brand value of Gillette was worth US$20 billion. This equated to 37%
of the companys value, which was the same as DaimlerChrysler, one of the
world's largest car manufacturers at the time.
Promotions
Gillette has a long history of promotions for its products, especially towards
young men. Current promotions include sponsorship of sports events such as
the Rugby League Tri-nations and shipping their then-flagship product
(currently the Fusion) to males in the United States around the time of their
18th birthday.
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Athletes such as Roger Federer,Tiger Woods, Derek Jeter,Thierry
Henry, Park, Michael, Shoaib Malik and Rahul Dravid are sponsored by the
company.
There were calls to boycott Gillette products given their association
with Thierry Henry, after a handball by Henry went undetected by referees
and allowed France to knock Ireland out of a major football competition.
Marketing experts have highlighted "the curse of Gillette", given the mishaps
that happen to sports stars associated with the brand.
Presently active
North America
Central America
Asia
Western Europe
Eastern Europe
South America
Oceania
Africa
Mass market swipe
The `world premier' of the `product of the century', as Gillette India chooses
to describe its latest introduction, is one of the largest investments made by
the Gillette Company for the India market since the company began
operations here, and it is across all functions from product development,
R&D and product testing, to marketing, distribution and advertising.
Company Perspectives :
The Gillette Company is a globally focused consumer products marketer that
seeks competitive advantage in quality, value-added personal care and
personal use products. We are committed to building shareholder value
through sustained profitable growth.
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Principal Competitors:
Colgate-Palmolive Company; the Proctor & Gamble Company; Societe BIC;
American Safety Razor Company.
Market share:
Gillette has a market share of above 75% in almost all countries where it has
a presence in, except India and a few other third world countries while in
some places like Latin America it is almost 90%.
SWOT ANALYSIS:
Strengths :
Gillette's brands are category-defining icons.
They possess leading market shares in each of the Company's core
categories.
And historically, these are premium, high-growth categories.
In this age of increasing globalization, Gillette already has a very strong
global presence and a very broad network for distributing and merchandising
our products. Innovation is the lifeblood of consumer products, and no company has a
better historic track record than Gillette in using innovation to improve the
value and strengthen the market position of our products.
Innovation differentiates products marketing drives awareness and closes
the sale. Gillettes strengths in innovation and sales.
Weaknesses :
Gillette's advertising spending lags behind most of its competitorsHas never had the reputation of a first-rate sales and marketing
company
Lack of a clear and coherent vision for the future and lack of a clear
growth strategy resulted in a decline in the effectiveness of operations
and sales
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Failure to effectively utilize Gillette's asset base
Poor relations with retailers (such as no relationship with Wal-Mart
and other globally dominant chains)
Poor management of several of Gillette's strong brand names.
Continuous growth through diversification and expanding product lines
has resulted in a decrease in net sales
2008= sales decreased by 1.58% as a result of weakened foreign
markets combined with foreign exchange rate fluctuations
Low quick ratio of .4 and low current ratio of .8 indicating that the
company might have trouble meeting its financial obligations
Receivable turnover, inventory turnover, and asset turnover lag
behind competitors signifying that Gillette is inefficient in its
operations
Sources
http://www.thehindubusinessline.com/catalyst/2003/11/06/stories/200311060
0040100.htm
http://www.fundinguniverse.com/company-histories/The-Gillette-Company-
Company- History.html Wikipedia
http://www.gillette.com
http://deadpresident.blogspot.com/2005/04/gillette-india-vs-usa.html
http://www.essaytrader.net/Essays-View-37777
http://case14.blogspot.com/2006/12/w-is-for-weaknesses.html
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http://www.thehindubusinessline.com/catalyst/2003/11/06/stories/2003110600040100.htmhttp://www.thehindubusinessline.com/catalyst/2003/11/06/stories/2003110600040100.htmhttp://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-%20%20%20%20%20%20%20%20History.htmlhttp://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-%20%20%20%20%20%20%20%20History.htmlhttp://www.gillette.com/http://deadpresident.blogspot.com/2005/04/gillette-india-vs-usa.htmlhttp://deadpresident.blogspot.com/2005/04/gillette-india-vs-usa.htmlhttp://www.essaytrader.net/Essays-View-37777http://case14.blogspot.com/2006/12/w-is-for-weaknesses.htmlhttp://case14.blogspot.com/2006/12/w-is-for-weaknesses.htmlhttp://www.thehindubusinessline.com/catalyst/2003/11/06/stories/2003110600040100.htmhttp://www.thehindubusinessline.com/catalyst/2003/11/06/stories/2003110600040100.htmhttp://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-%20%20%20%20%20%20%20%20History.htmlhttp://www.fundinguniverse.com/company-histories/The-Gillette-Company-Company-%20%20%20%20%20%20%20%20History.htmlhttp://www.gillette.com/http://deadpresident.blogspot.com/2005/04/gillette-india-vs-usa.htmlhttp://www.essaytrader.net/Essays-View-37777http://case14.blogspot.com/2006/12/w-is-for-weaknesses.htmlRecommended