Running Head: MARKETING RESEARCH-GILLETTE 1

GILLETTE Mach-3

Marketing Research

By Irfan Iftekhar

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Introduction

Gillette was founded by King Gillette in 1901, and its headquarter is in Boston, Mass, U.S.A. It

has long been known for innovation in both product development and marketing strategy. In the

highly competitive, but mature, razor and blade market, Gillette holds a commanding worldwide

market share. Gillette is the world leader in male grooming products, alkaline batteries and oral

care appliances like tooth brush. Gillette was acquired by Proctor & Gamble (P&G) with $57

billion in stock, its combined market capitalization is of more than 184 billion.

The peak of its innovation occurred in 2006 with the introduction of the Fusion 5-bladed razor.

Today, innovation in razors and blades is thwarted by a lack of new technology and increasing

consumer reluctance to pay for the ‘‘latest and greatest’’ in shaving technology. Gillette relied on

extensive research and development to create a single product for global distribution. The

product was supported by a marketing premise that it would be equally valuable to customers

globally.

Mach 3-the product

Mach is defined as the ratio of the speed of an object to the speed of sound in the surrounding

medium. Gillette Mach 3 has been particularly produced for close shave and for higher income

consumers. Income segmentation has been the main factor when Gillette decided to segment the

market. Mach 3 has also been successful in those countries where the major segment of the

population considers shaving to be a desirable activity and the means to look clean and

sophisticated for example India and America. Thus, this type of international segmentation has

also benefited Mach 3. Another interesting to note is that, Gillette after seeing the success of the

Mach 3, decided to offer a similar product for women. Thus, Venus Power came into existence.

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So, Gillette also gender segmentation. Gillette Mach 3 market segment has proved to be

extremely attractive and profitable for the company. The segment size is increasing at a rapid

pace globally. Furthermore, the segment is made more attractive because of the fact that there are

no strong and popular competitors of Mach 3 . This has provided Mach 3 with a lot of market

power.

Due to clever marketing by Gillette (and not the actual cost of producing the blades), the Mach3

is more expensive than many other razors, as consumers are willing to pay more for it. The

recent release of the Gillette Fusion with 5 blades is more expensive still, continuing the Razor

and blades business model, or a "loss leader" model, pioneered by Gillette in the early 20th

century. Since the increased price of the newer cartridges creates slower consumer adoption of

each new model, Gillette has heavily discounted the newer models through newspaper and in-

store coupons and in many cases mailed free copies to individuals on purchased mailing lists.

While this practice has accelerated adoption of both, Gillette still has a strong customer base

using their two-bladed razors as evidenced by their wide availability and high sales volume. The

blades used by Mach3 only cost a few cents to produce, but can sell for over $2 each. This shows

that profit margins on Gillette razor blades are typically over 4500%.

Segmentation, targeting and positioning

Market Segmentation

Gillette Mach 3 has been particularly produced for higher income consumers. Thus, we see that

income segmentation has been the main factor when Gillette decided to segment the market.

Mach 3 has also been successful in those countries where the major segment of the population

considers shaving to be a desirable activity and the means to look clean and sophisticated for

example India and America. Thus, this type of international segmentation has also benefited

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Mach 3. Another interesting to note is that, Gillette after seeing the success of the Mach 3,

decided to offer a similar product for women. Thus, Venus Power came into existence. So,

Gillette also gender segmentation.

Target Marketing

Gillette Mach 3 market segment has proved to be extremely attractive and profitable for the

company. The segment size is increasing at a rapid pace in India and America. Furthermore, the

segment is made more attractive because of the fact that there are no strong and popular

competitors of Mach 3. This has provided Mach 3 with a lot of market power.

Selecting Target Segments

Mach 3 marketing strategy was differentiated marketing from the beginning. Gillette wanted to

differentiate it from other shaving products and to target several market segments. Some

segments purchased Mach 3 because of the income factor. Some did because of their preferences

and particular lifestyles. Gillette converted Mach 3 into Venus Power just in order to cater to the

segment of women users. So, Gillette designed separate offers for different market segments.

Positioning

Mach 3 position in the market place is extremely strong and secure. Consumers definitely

consider it a superior shaving product compared to other products. One can definitely say that it

occupies a unique position in the minds of those consumers who want to have an extremely close

and smooth shave.

As far as luxury and performance are concerned, Mach 3 is more inclined towards performance

due to its three blades and other product features. These product features have provided Mach 3

with a strong competitive advantage. The value proposition of Mach 3 is definitely “more for

more”. Extra product features have prompted Gillette to charge a higher price.

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SWOT Analysis

Strengths

Market Leader

Fortified Brand Image

International Presence

Competitive price

Integrated marketing

Branded stores in emerging markets

Successful and strategic promotions, In U.S the Celebrity promoters – David Beckham

Very competitively priced hence maintains market share.

To customers, this brand provide direction and reassurance

Weaknesses

Deterioting income levels making the power of purchase weaker

Recent trend of job cuts

Not evenly priced in most parts of Asia due to volatile dollar rates

Gillette only sells premium razors while competitors hit high and low-tier segments

Market share at already 70 percent, it is very difficult to exceed market share anymore, hence

little room for growth

Profitability comes mainly from Mach3

Gillette’s current pricing disqualifies Mach3 from variety of other channels of distribution

Opportunities

Quality & Innovation

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No.1 in quality, more innovative products always expected

Highly diversified geographically with strong position in most countries

High capacity manufacturing

Realigned manufacturing processes to reduce costs

Threats

Mediocre position in rapidly growing markets like Bangladesh, India etc.

Rapid increase in the price of raw materials

Uncertainty in oil prices

Political instability in various emerging market

Currency fluctuations

Patents protect brands, greater sunk costs for protecting brands and spend on legal battles

Competitors

Gillette’s three main competitors are Wilkinson Sword, Feather, and Bic razors. Using a series of

Hall’s Primary Message Systems and Hofstede’s Dimensions. When it comes to men’s shaving

products, there are four competitors: Wilkinson Sword and Feather razors, as well as Bic and

Philips-Nivea razors. Considering all four companies, Bic, Wilkinson Sword, and Feather are the

main competition for Gillette in the disposable-heads razors category. Bic originated in France in

1945 and has the competitive advantage of being the first company to introduce disposable

razors in 1975. In addition. According to Bic, they sell over ten million shavers every day, and

are a world market leader for razors. The company specializes in disposable razors and offers

many different types to meet diverse consumer needs such as single-blade , twin-blade, and

triple-blade razors. Furthermore, Wilkinson Sword has the competitive advantage of being a

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European company that originated in England in 1772. Its headquarters are currently. One of the

company’s main strengths is that its razors are very sharp and keep their edge

for an unbelievable long time.

Xtreme 3. This razor is designed with a dual comfort system that has lubrication strips lined with

aloe-vera and jojoba oils for an ultra-smooth shave. In addition, the Xtreme 3 has flexible blades

for a close shave on the various contours of one’s face. Wilkinson Sword also offers women’s

razors, gels, foams, soaps, and brushes. On the other hand, Feather is a Japanese company with a

competitive advantage of extreme innovation The company has been around for 70 years and has

produced razor blades, surgical precision blades, gardening tools, etc. Feather's shaving system is

a Japanese product at its best: precision, quality and thoughtful details.37 Its products are a real

alternative to the shaving systems used today. The most recent innovative razor they have is the

Feather MR3 Neo, but they also have women's razors and single blade disposable razors as well.

Gillette’s Recent Marketing Strategies

Rather than continue the razor wars by producing a six- or seven-blade razor, Gillette focused on

releasing complementary products, enhancing its existing product lines and expanding its

intensely successful marketing strategy. To complement its already successful razor and blades

division, Gillette sought to expand its product portfolio inside the shower doors to create the full

‘‘shower experience.’’ For example, the launch of Gillette Hair Care and Body Wash for men, as

well as its Clinical Strength deodorant, represented the most significant Gillette brand extensions

outside of the razor and blades division, and aimed to reinforce the brand’s standing as the

world’s leading male-grooming authority. Because Gillette is in the maturity stage of its product

life cycle, focusing on these complementary products allows the company to increase its share of

customer which was made possible by Proctor & Gamble. In addition to complementary

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products, Gillette’s primary focus has been on the extension of its core business and the

marketing programs that support it. Going beyond simple brand advertising, many of the

initiatives and activities introduced by Gillette created a synergy between product development

and marketing strategy.

Consumer reach

When consumers like a product or service, and in our case Gillette Mach3, it can be said the

brand resonates. The ways through which an individual gathers, processes, and interprets

information from the environment, is perception (Jaju el al., 2006; Machado et al., 2012).

Consumer perception has two views. the Sensory perception and the Gestalt theory of perception

The Sensory perception is governed by the five human senses: sight, smell, sound, touch, and

taste. While the Gestalt perception theory is based on the principle that 'the whole adds up to

more than the sum of its parts'. People perceive “form” above all else. In the case of Gillette

Mach3, it is the consumers' sensory perception which plays its role in making this product, ‘the

product of choice' (McDonald et al., 2001), because a perceptual outcome generated from

processing Gillette Mach3 quality, durability, ease of use, versatility and prestige. It is this

perception by the five human senses that leads to consumers':

Learning

Cognitive Theory of learning states:

Emphasis is on thinking rather than the doing aspects of learning.

It has four stages:

Formulation of hypotheses (specific testable assumptions) about products or brands

Exposure to evidence (passive or active)

Encoding of the evidence

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Integration of earlier hypotheses with new information into beliefs.

The relationship between marketers and consumers often resembles a negotiation

Several behavior modification principles (BMPs) are used by marketers to induce consumers to

buy their products and services. Pavlov and his salivating dogs: a conditioned stimulus (the

ringing bell before each feeding) results in a conditioned response (salivation)

Marketing applications

Higher order conditioning and celebrity advertising

Strength of the unconditioned stimulus

Number of pairings

Forward versus backward versus simultaneous conditioning

New versus existing products.

Generalization – the tendency to respond in similar ways to similar stimuli.

Discrimination – the process through which consumers restrict their range of responses and

attach themselves to a particular brand.

Modeling – the process through which an individual learns a behavior by observing the behavior

of others and the consequences of this behavior.

Memory

Two sources of product information:

External environment: packaging, labels, POS displays, prices, other marketing information

Memory: past experiences, word-of-mouth, family preferences

Associative network of nodes (concepts) and links (connections)

Scripts: information organized in memory around different types of events or episodes (e.g., a

restaurant script).

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Retention

It refers to the amount of material previously learned that is remembered

Forgetting – the loss in retention of material previously learned

Retention affected by:

Incoming information

The person receiving the information

Cognitive Theory and Marketing

This theory states: Strategies for market leaders (top dogs)

Reinforcement

Blocking

Explaining

Strategies for market underdogs

Disruption

Facilitating trial

Familiarity, ambiguity, motivation

Motivation, which gives birth to an attitude

Product value, which leads to decision making

Perception

It is created when all five senses act in unison due to some motivation. Gillette has left no corner

abandoned when it comes to promotion and advertising. Mach3 has been well equipped with

strong and sustained advertisement all throughout.

Gillette brand has high recognition

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Strong influence, recall and salience

Successful MACH3 advertising campaigns

Focus on brand values, innovation

AIM- to educate consumer on product advancements

No hypothesis can claim to be as powerful as the five human senses which lead to all decision

making process. Every aspect of consumer behavior and attitude is dependent on his five senses.

Above all the value proposition for Mach3 is very compelling, and it took two years for the

company to create this. Asking the consumer to try a new product and offering a "reason to

believe" has been a melody for Gillette, well-orchestrated.

Promotion

Gillette product promotions usually consist of a number of strategies. First, Gillette promotes

experimentation and trial. Therefore, for the first six months, Gillette was seen giving away

Fusion Power Razors, free of charge after consumers register their information on the Gillette

website. This approach gives the consumer the shaft of the razor and one free razor head. Then,

the consumer has the option of purchasing future replacement heads as needed. In order to

facilitate this promotion, Gillette promoted its Fusion Power on the Internet. One of Gillette’s

main online advertisers that targets a similar market is Facebook.com. This website employs

Gillette Fusion Power banner ads that illustrate the details of the promotion. The Banner ads

contain a link to the Gillette website where the consumer can order a free razor after registration.

Recommendations

Earlier Gillette used a character, now also it would be more fitting as it could be designed in

alignment with the brand’s personality which is transferable through future growth of this brand.

The use of a character would have been a contributing factor in the brand's success

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Gillette URL has not been put to use. Only the bloggers share their views, which is not enough,

the URL should be made interactive and should be promoted

Gillette Mach 3 is a high end user product, with incomes either stagnant or going down even in

the white collar jobs, with Barclays announcing the cutting of 20,000 of its work force by 2016 it

would be better to reduce prices, this is a shaving razor not an Rolls Royce.

References

Jaju, A., Joiner, C., & Reddy, S. K. (2006). Consumer evaluations of corporate brand redeployments. Journal of the Academy of Marketing Science, 34(2), 206-215

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McDonald, M. H. B., Chernatony, L., & Harris, F. (2001). Corporate marketing and service brands: Moving beyond the fast-moving consumer goods model. European Journal of Marketing, 35(3/4), 335-352.

Machado, J. C., Lencastre, P., Carvalho, L. V., & Costa, P. (2012). Rebranding mergers: How attitudes influence consumer choices? Journal of Brand Management, 19(6), 513-524.