Gillette Fusion Case Study

1456 words (6 pages) Essay

9th May 2017 Marketing Reference this

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Introduction

Gillette holds leadership market share which is 70% within the razors market (P&G 2008). The company’s success has been created by regular product innovations and prestigious campaigns in order to boost the sales. However, one product namely Fusion, which is the first five bladed razor has captured 55% of all new razor sales in the US just four weeks after launch (Datamonitor, 2008). What is more, Fusion was expected to be Procter and Gamble’s fastest ever product to reach a US$1 billion in sales (Datamonitor, 2008). This paper will focus on why it is so important to move customers to Fusion and how to attain and promote this migration.

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Why Gillette is so desperate to move all customers to Fusion

The Boston Consulting Group matrix provides a framework for allocating resources among different products. This technique is useful for multi-divisional and multi-product companies such as Gillette since it allows them to compare different products and decide where to invest the money.

As can be seen above single blade razor is a dog which means that this product has a low market share and low growth rate and it do not generate large amount of cash. However, dogs can turn out to be a cash trap since Gillette’s money can be tied up there with no potential for the future increase.

Furthermore, Mach 2 double blade razor is between being a dog and question mark but due to market saturation and product advancements Mach 2 soon will be a dog with low market share and growth.

Mach 3 triple blade razor on the other hand, is between a question mark position which is low market share but high market growth rate and a star. Star can generate large sums of money because of its strong market share but at the same time can consume a lot of resources due to high growth rate. Mach 3 has the potential to gain market share and become a star however, Gillette found out that when Mach 3 did not become a market leader there was a possibility that it would become a dog with a little market growth. As a result, Gillette focused all its attention on Fusion which is between being a star and a cash cow that gives greater return on assets than the market growth rate. Consequently, Gillette analysed the BCG matrix and decided that the company needs to persuade all the customers to buy Fusion in order to achieve a status of cash cow for this product and bring continued profit with relatively little investment in the future. Furthermore, according to Armstrong and Kotler (2008) the best way for Gillette to achieve that position was to introduce new product in this case Fusion that outdate the existing ones Mach 3 Mach 2 and single blade razors. Therefore, Gillette is using positive cannibalization practice. This means that the company is focusing its marketing resources on switching its own customers from Mach 3 to more profitable Fusion line instead of trying to gain more market share from competitors (Ritson, 2009). In the long run this is more effective strategy as it is cheaper for Gillette to market to existing customers and easier to covert them than anyone else (Holland 2008).

The marketing plan

Marketing mix is a part of marketing plan that involves different techniques to influence perception favorably towards the product (Keller & Kotler, 2006). The main parts of marketing mix are four P’s which are known as Product, Price, Place and Promotion:

Product: Gillette Fusion is the first shaving system for men that combines revolutionary blade technologies on the front and on the back (Gillett, 2008).

Price: The next part of the marketing plan is the pricing strategy as this will indicate what kid of ROI (Return on Investment) the company will have (Dewhurts & Burns, 1989). However, the charge has to be competitive but still allow the company to make a reasonable profit (Barrow et all 2005). In this case ‘reasonable’ will depend on the customer. Gillette charges 40% price premium over Mach 3 and to persuade its customers to switch for a Fusion the company needs better communication. This means by educating existing consumers on product advancements and improved shaving performance, only then higher price can be justified.

Place- Distribution as shown below

Instead of selling directly to the consumer Gillette sells through an intermediary such as a wholesaler and retailer who resell company’s products – Fusion razors.

Promotion

Marketing communication which is a different term for promotion constitutes part of the marketing mix. It is not a single entity but rather, involves a wide range of activities that aim to convey marketing messages to target audiences (Pickton & Broderick, 2001). Those activities can be classified into four overlapping heading.

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To promote the migration from older Gillette’s products to Fusion the company can use sales promotion. That means launch an introductory promotional discount joined with a competition with entry via product purchase. This could grab the attention of male consumers and encourage existing to switch.

Another idea to convince existing consumers to use Gillette fusion is to advertise it for different parts of the body and not only for the face. The advertisement can be supported by online campaign (interactive videos) which will encourage the clients to use Gillette razors to shave for example their armpits.

Finally, new form of public relations should be used to spread the word via blog. Gillette could create a shortlist of influential bloggers that are male between 18 and 35 years of age. Then, the company would send them a gift pack including Fusion razor, shaving gel and aftershave with some background details of the product. Further, Gillette could influence them to use it for a short period of time and write about their experiences on their blogs. As a result, this could promote migration of company’s existing customer base to Fusion from the older razor products.

Conclusion

After detail analysis it can be concluded that Gillette wants to migrate company’s existing customer base to use Fusion. Since Fusion is perceived as a cash cow which brings continuous profits with relatively little investment in the future. Furthermore, the best way to attaining a massive migration to Fusion will be by sales promotion, online advertising and writing blogs. Consequently, massive migration to Fusion will be achieved.

Introduction

Gillette holds leadership market share which is 70% within the razors market (P&G 2008). The company’s success has been created by regular product innovations and prestigious campaigns in order to boost the sales. However, one product namely Fusion, which is the first five bladed razor has captured 55% of all new razor sales in the US just four weeks after launch (Datamonitor, 2008). What is more, Fusion was expected to be Procter and Gamble’s fastest ever product to reach a US$1 billion in sales (Datamonitor, 2008). This paper will focus on why it is so important to move customers to Fusion and how to attain and promote this migration.

Why Gillette is so desperate to move all customers to Fusion

The Boston Consulting Group matrix provides a framework for allocating resources among different products. This technique is useful for multi-divisional and multi-product companies such as Gillette since it allows them to compare different products and decide where to invest the money.

As can be seen above single blade razor is a dog which means that this product has a low market share and low growth rate and it do not generate large amount of cash. However, dogs can turn out to be a cash trap since Gillette’s money can be tied up there with no potential for the future increase.

Furthermore, Mach 2 double blade razor is between being a dog and question mark but due to market saturation and product advancements Mach 2 soon will be a dog with low market share and growth.

Mach 3 triple blade razor on the other hand, is between a question mark position which is low market share but high market growth rate and a star. Star can generate large sums of money because of its strong market share but at the same time can consume a lot of resources due to high growth rate. Mach 3 has the potential to gain market share and become a star however, Gillette found out that when Mach 3 did not become a market leader there was a possibility that it would become a dog with a little market growth. As a result, Gillette focused all its attention on Fusion which is between being a star and a cash cow that gives greater return on assets than the market growth rate. Consequently, Gillette analysed the BCG matrix and decided that the company needs to persuade all the customers to buy Fusion in order to achieve a status of cash cow for this product and bring continued profit with relatively little investment in the future. Furthermore, according to Armstrong and Kotler (2008) the best way for Gillette to achieve that position was to introduce new product in this case Fusion that outdate the existing ones Mach 3 Mach 2 and single blade razors. Therefore, Gillette is using positive cannibalization practice. This means that the company is focusing its marketing resources on switching its own customers from Mach 3 to more profitable Fusion line instead of trying to gain more market share from competitors (Ritson, 2009). In the long run this is more effective strategy as it is cheaper for Gillette to market to existing customers and easier to covert them than anyone else (Holland 2008).

The marketing plan

Marketing mix is a part of marketing plan that involves different techniques to influence perception favorably towards the product (Keller & Kotler, 2006). The main parts of marketing mix are four P’s which are known as Product, Price, Place and Promotion:

Product: Gillette Fusion is the first shaving system for men that combines revolutionary blade technologies on the front and on the back (Gillett, 2008).

Price: The next part of the marketing plan is the pricing strategy as this will indicate what kid of ROI (Return on Investment) the company will have (Dewhurts & Burns, 1989). However, the charge has to be competitive but still allow the company to make a reasonable profit (Barrow et all 2005). In this case ‘reasonable’ will depend on the customer. Gillette charges 40% price premium over Mach 3 and to persuade its customers to switch for a Fusion the company needs better communication. This means by educating existing consumers on product advancements and improved shaving performance, only then higher price can be justified.

Place- Distribution as shown below

Instead of selling directly to the consumer Gillette sells through an intermediary such as a wholesaler and retailer who resell company’s products – Fusion razors.

Promotion

Marketing communication which is a different term for promotion constitutes part of the marketing mix. It is not a single entity but rather, involves a wide range of activities that aim to convey marketing messages to target audiences (Pickton & Broderick, 2001). Those activities can be classified into four overlapping heading.

To promote the migration from older Gillette’s products to Fusion the company can use sales promotion. That means launch an introductory promotional discount joined with a competition with entry via product purchase. This could grab the attention of male consumers and encourage existing to switch.

Another idea to convince existing consumers to use Gillette fusion is to advertise it for different parts of the body and not only for the face. The advertisement can be supported by online campaign (interactive videos) which will encourage the clients to use Gillette razors to shave for example their armpits.

Finally, new form of public relations should be used to spread the word via blog. Gillette could create a shortlist of influential bloggers that are male between 18 and 35 years of age. Then, the company would send them a gift pack including Fusion razor, shaving gel and aftershave with some background details of the product. Further, Gillette could influence them to use it for a short period of time and write about their experiences on their blogs. As a result, this could promote migration of company’s existing customer base to Fusion from the older razor products.

Conclusion

After detail analysis it can be concluded that Gillette wants to migrate company’s existing customer base to use Fusion. Since Fusion is perceived as a cash cow which brings continuous profits with relatively little investment in the future. Furthermore, the best way to attaining a massive migration to Fusion will be by sales promotion, online advertising and writing blogs. Consequently, massive migration to Fusion will be achieved.

References:

  • Armstrong, G. and Kotler, P. (2008) Principles of marketing 13th ed., New Jersey, Pearson Prentice Hall
  • Aaker, D. A. (1995) ‘Strategic Market Management’, 4th ed. John Wiley & Sons, New York.
  • Barksdale H. C. and Harris C. E (1982). Portfolio analysis and the plc Long Range Planning, 15(6): 74- 83.
  • Barrow.C.Barrow.P.,Brown,R.,(2005) The Business Plan Workbook, 5th Ed, Cambrian Printers, Wales.
  • Burns.P. (2007) Entrepreneurship and Small Business, 2nd Ed, Palgraive Macmilla, New York.
  • Datamonitor, (2008) Gillette Fusion case study: developing a US$1 billion brand available from http://www.market-research-report.com/datamonitor/CSCM0171.htm (accessed 2 December)
  • Dewhurts.J.Burns.P.,(1989) Small Business Planning Finance and Control , 2nd Ed, Macmillan Education, London.
  • Gillette (2008) P & G Annual Report available form
  • http://www.scribd.com/doc/5892225/PG-2008-Annual-Report (accessed on 2 December).
  • Holland A. (2008) Sherpa Blog: Quick, Easy Step to Increase Repeat Buyers (&Profits) Real-Life Marketing Story available from http://www.marketingsherpa.com/article.php?ident=30687 (accessed 3 November).
  • Keller K.L. Kotler,P (2006) Marketing Management, 12th Ed, Pearson Education, New Jersey.
  • Kotler P. Armstrong G. Saunders J. and Wong V. (1999) Principles of Marketing, 2nd European edn, London: Prentice Hall Europe.
  • P & G (2008) Annual Report overview 2008 available form http://www.pg.com/annualreport2008/financials/mda-overview.shtml (accessed 3 December)
  • Pickton D. W. and Broderick A. (2001) Integrated Marketing Communications, London, Financial Times Prentice Hall. ch. 1.
  • Ritson M. (2009) 5 Reasons Gillette Is The Best A Brand Can Get available from http://www.brandingstrategyinsider.com/2009/06/5-reasons-gillette-is-the-best-a-brand-can-get.html (accessed 3 December)
  • Shimp T . A (1997). Advertising and Promotion and Supplemental Aspects of Integrated Marketing Communications, 4th ed, Fort Worth: Dryden Press.

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