Following the problems that Gillette faces in the Australian market, the company ought to consider carrying out the following solutions: launching a new version of SensorExcel, establishing a R&D division in Australia and reducing the price premium for the Mach3 in Australia. Gillette should launch a new version of SensorExcel because the current situation illustrates that the market was not ready for the development of a three blade razor.
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The Australian market poorly adopted the Mach3 product yet the product was aimed at achieving the upgrade objective for Gillette. Instead of this, a newer version of SensorExcel would have retained the market that had been captured by the older version that was already successful in the market.
Gillette should have built on this prosperity and upgraded that product. Moving to the Mach3 should have come when the SensorExcel product was nearing the decline stage of the product life cycle. This strategy would also ensure that customers are not forced to purchase a product that they do not want. They would be able to stick to their preferences whether it means sticking to the newer version of SensorExcel or upgrading to Mach3 after its release.
The disadvantage of this strategy is that Mach3 was part of Gillette’s global upgrade strategy. Developing a newer version of an older product would not have the same impact as a brand new product. Some Australian consumers would also feel alienated by this move since they would wonder why Mach3 is not being marketed in Australia as in other developed countries. Producing the newer version of SensorExcel would also add unplanned expenses on Gillette.
Alternatively, Gillette can reduce the price premium for the Mach3 in the Australian market. This would be in response to the stagnation in the sales f the product in the region. The price reduction would act as a promotional strategy since it would attract many consumers. Price reduction should be done in the manner of a promotion so that Australian consumers realize what they are saving when they buy the Mach3.
This strategy would be effective in the Australian market given that the 20% price premium is too high for a simple upgrade of three blades up from two. Australian consumers did not buy the idea that Mach3 provided a faster and less irritable shaving effect and so it warrants a higher price. In any case, they already thought they spent excess in their expenditures on razors.
Conversely, lowering the price premium would reduce the profitability of the company. Lowering the prices would also create the notion that the new Mach3 were of lower quality than the previous expensive version.
The best solution however would be to establish a research and development division in Australia. A R&D division in Australia would enable collection of consumer information. Consumer information would improve Gillette’s understanding of their market and consumer needs especially in a market such as Australia where consumers are very particular about what they want.
A R&D division would ensure that future production of new products will be in line with the expectations of consumers since it would only be commissioned after the collection of information and feedback. The only setback of this strategy will be the additional costs of setting up the new division in a location far away from Gillette’s headquarters. It would also be difficult to quantify if the benefits of this new division would outweigh the costs incurred in setting up and running it.