Gillette

A. CASE ANALYSIS

I. Statement of the Problem

How can Gillette Company maintain and improve its profitability?

II. Objective

1. To reinvigorate the blade-and-razor system market while keeping the lead in the disposable razor market.

2. To develop strategies that will continue to sustain and increase the market share.

3. To maximize the profitability of the company.

III. Analysis of Case Facts/SWOT Analysis

Strengths

1. Gillette invented the blade-and-razor system.

2. Has always been an industry innovator, with ample budget allocation for Research & Development.

3. Gillette has cartridge systems, electric razors, and disposable blades.

4. The company has strong international capabilities.

5. Gillette’s sponsorship of sports gets good response from the market.

6. Gillette introduced its product to the US military which created a big market of self-shaving individuals.

7. Gillette has ventured in overall personal grooming.

8. Products of Gillette are known for its “good quality”.

9. Paul Hankins and Jim Pear impose a strong leadership in the company with strict control over product costs, overhead expenses, and working capital.

Weakness

1. Gillette’s market share is shifting to disposable razors from its cartridge system.

2. Gillette’s electric razors are produced by Braun.

3. Gillette has multiple blade-and-razor systems but their cartridges are not interchangeable with their other models.

4. Gillette’s effort in 1980’s was not synchronized with its goal. It introduced more new disposable razors and product enhancements while it wants to regain its market for blade-and-razor system where it can get three times more profit than disposable razor.

5. Spending on Blade and Razor advertising has drastically decreased over the years.

6. There is a low morale inside the company.

7. Gillette’s global team is not well-coordinated.

8. System razor is heavier than disposable razor.

Opportunity

1. There is a continuous increase in awareness of self-shaving.

2. The sale for personal care products would continue to grow.

3. Personal grooming in beauty parlors or barber shops is still expensive.

4. Retailers prefer to sell blade-and-razor system than disposable razor.

5. The market for women-shaving is not yet fully tapped and it commands a strong consumer market.

Threats

1. The inevitability of the disposable razor to gain more & more market share.

2. Electric razor is the new razor technology.

3. Emergence of new players in the razor industry such as Schick and BIC.

4. Consumer’s preference for a low-priced product such as products offered by BIC.

5. Though Gillette is constantly innovating, the vulnerability to copying by the competitors is very high.

6. Over-all US economy is slowing in the late 1980’s.

7. Susceptibility to unfriendly take-over created lost in focus on the management side and increases the debt-to-equity ratio.

IV. Alternative Courses of Action

1. Segment the market and offer value to those segments willing to pay for the higher quality products; at the same time reinforce the advertising strategy emphasizing the excellence and the reason why should consumer will choose the system razor over disposable ones.

Pros

a. Different target markets will be classified according to consumer preference