Overview of the situation
In the world of men’s personal care, brands do not come any bigger than Gillette. The American company has been a global leader in the market ever since it was founded in 1903.
The company has been renowned for launching innovative and leading global brands over the years, hence its dominance in the global wet shaving industry. Such brands have over the years included Trac II, Atra, Sensor, SensorExcel, and Mach 3.
Despite its position as a market leader, Gillette has had to deal with very high competition from other industry players such as Schick. Strong competition from competitors has always been a strong motivation for Gillette to continue coming up with innovative solutions.
Statement of the main problem
Gillette was already a market leader when Procter & Gamble took over the company. It had the Gillette Mach 3 as its flagship product and it was performing well in the market. However, in a bid to stay at the top, Gillette proceeded to launch a new five blade razor named Gillette Fusion.
Achieving a $1 billion sales target from the new Gillette Fusion brand proved more difficult than had been anticipated. The main problem was that despite the anticipated record sales, the product was still not performing to the expected level (Bateson & Hoffman, 1999).
Industry issues
Allegations have always been rife that Gillette’s competitors were copying many of the company’s models and products so as to try and catch up with the market leader. However, Gillette products nearly always managed to stay ahead of the competition. For a long time, the Mach 3 brand had completely taken control of the market, but Gillette being an ambitious company went ahead to launch a five blade razor, the Gillette Fusion.
The company knew that despite the presence of increasingly credible competitors in the market, Gillette had always managed to penetrate the market successfully. Therefore, there were no worries on the part of the company’s management that Fusion would soon follow the steps of Mach 3 and become an industry leader.
Organizational issues
Being the global market leader meant that Gillette had both the knowledge of the market and the technical know-how to continue dominating the market. In addition to Gillette’s competitive advantage, the financial might of the new owners, Procter & Gamble, ensured that Gillette Fusion was destined for market dominance. However, things did not turn out as had been expected, at least not in the short term.
The company lacked an effective marketing strategy to enable the Fusion take over the market (Aaker & Mills, 2005). Outcompeting the market leader, the Gillette Mach 3, proved to be a daunting task, especially in the wake of customers’ preferences still lying with the Mach 3.
In an effort to take over the market, the company had overlooked important marketing strategies that could have laid ground and solidified the market for the Fusion.
For instance, the marketing strategy had failed to explain sufficiently to the potential customers why the five bladed Fusion was better than the three bladed Mach 3. It was foolhardy on the part of the company to expect customer loyalty to the new brand by simply saying it was a better razor without demonstrating the advantages to the customers (Aaker & Mills, 2005).
Discipline issues
Gillette has been able to survive underhand tactics by competitors largely due to its ability to come up with better ideas on a regular basis. This innovative advantage has always been followed by calculated decisions regarding the new products. Such decisions have included slow and protracted marketing of products to specific markets and gradual increase in advertisement coverage (Dann & Dann, 2007).
For the Fusion, however, the company was too quick to abandon time tested methods in favor of quick market penetration.
What the company would have done was to first launch Fusion within the domestic market, and then distribute the product to other markets gradually. Alternatively, the company should have gone slowly on advertising so as to ensure that customers got the gist of what the Fusion exactly stands for (Walker et al. 2012).
List of critical factors
Among the ideas that have always served Gillette well has been rebranding their products so as to achieve more sales. Rebranding has not involved major product redesigns in most cases (Ansoff, 1988), but rather unsophisticated alterations such as changing the color or the shape of the handle (Brown, 1997).
This proven track record of the brand was, thus, enough to convince the Procter & Gamble executives that the new Fusion brand could become successful.
In addition to superior distribution capabilities, Gillette, and by extension the Procter & Gamble group, are giant corporations with capabilities to launch massive marketing initiatives globally (Bateson & Hoffman, 1999).
This is evidenced by Gillette’s previous hit product, Mach 3, for which the company spent over $300 million in marketing in 1999, with $100 million alone spent in the US. Such financial might is indispensable especially when launching an innovative product worldwide, a product which a company has spent billions in research and development and production (Brown, 1997).
Apart from the financial might of the company, Procter & Gamble were also optimistic on the success of the new Fusion razor due to the record of previous and the current Gillette razors. In all their razors, Gillette has always been keen to make the shaving process as comfortable as possible for its clients. The innovative blades were always aligned in such a way that they caused minimum irritation when shaving.
In end user production, the attention to detail paid to the smallest of details can be a major boost in product differentiation, especially for companies selling essentially the same product (Aaker, 2005). This attention to detail in terms of customer comfort was one of the key selling points for Gillette over their competitors.
Alternative Solutions
Marketing strategies
In order to turn the Fusion into a billion dollar brand, the executives at Procter & Gamble had identified five strategies. The aim of these strategies was to ensure that the Gillette Fusion was essentially transformed into Gillette’s flagship brand. The strategies were to focus on enhancing the sales of the Fusion through advertisements, packaging, pricing, and ad hoc marketing of the brand (McMurry, 1978).
One of the major hurdles that the company had to overcome was that of customer preference (Walker et al., 2012). Gillette already had a highly successful product in Mach 3 in the market. However, in order to propel the Fusion into becoming Gillette’s signature product, the company had to sway customers away from Mach 3 (Chopra & Meindl, 2001).
This is a challenge that many multi-product companies face; whereby even with the success of their previous products, they still have to push new brands in the market to compete with their own products (Aaker, 2005).
Pricing strategy
For Procter & Gamble to achieve their target of making the Fusion a billion dollar brand, the company has to sell the product in numbers. Therefore, retailing the new product at larger volumes would require that Fusion is sold at a lower price (Ferrell & Hartline, 2005).
This is, however, not a viable line of action considering that the new product is better in performance, and the producer spent huge sums of money on product development (Jain, 2004).
Gillette finds itself in a problematic situation where it has to attract consumers by favorable pricing, while at the same time ensuring that the product has a positive return on investment. The company must create a balance while ensuring that the ultimate price that it arrives at does not price the product out of the market (Kaplan & Norton, 1996).
Packaging strategy
The way a product is packaged can have a significant bearing on the overall volume that it retails (Kerin et al., 2003). Packaging is a smart marketing strategy in which a company can boost the sales of a product by influencing the thought patterns of the intended consumer (Doyle, 2000). Gillette knew this, and thus opted for innovative ways to sell their Fusion brand.
The unit price of the Gillette Fusion was the highest for any razor brand by the company. In order to boost sales, the producer wanted to increase access to the product.
The Mach 3 was selling as a set of four cartridges per package; therefore, in order to enable more consumers to access the Fusion brand, the package was reduced to 3 cartridges so as to retail at comparable prices. The advantage of such a strategy is that it gives consumers a sense of value for money, while maintaining the unit price of the product (Kotler, 2003).
Recommendation/rationale and justification
The executives at Procter & Gamble should not rush the Gillette Fusion into the market. This is because it is the rush to put the Fusion in the market that revealed the marketing strategy’s fatal flaws.
In order to gain more market share for the Fusion, the company ought to focus more on the basic principle of marketing and advertising, which is educating the consumer (McMurry, 1978). Only after the consumer is educated about the inherent advantages of a new product can marketing have its intended purpose of boosting sales (Kerin et al., 2003).
Fusion is a superior product brand due to its higher performance and design and, therefore, its price is justified. However, quoting performance statistics is not enough for consumers to spend more on a product.
The best solution is to first change the perception of the consumers towards the product, and only then can the consumers be willing to pay the quoted price on account of personally seeing the added utility (Pride & Ferrell, 2000). Consequently, the company should not reduce the units in a pack for the sake of hoodwinking the public into thinking that they are getting value for their money (Kotler, 2003).
Gillette should give the new product time to percolate the market. Too many changes with the aim of boosting sales can end up hurting the product’s market share. The negative impact could come from the fact that the target consumers are not given sufficient time to get used to the product before major changes are enacted over and over again (Pride & Ferrell, 2000).
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