MARKETING MANAGEMENT

GILLETTE CASE STUDY

15 March 2013

Submitted to: Professor Geoff Lancaster Submitted by: Virginia Rocapor Student # B0013JMJM1112

MY INITIAL RESEARCH Before I embarked on the group work, I did extensive research on the history and functioning of Gillette, with particular emphasis on their association with the world of sport and their branding. This was to give me a good background and understanding of the task in hand. The information I gathered is detailed below: Gillettes History Shaving is a concept which began around 5000 years ago with the invention of the copper razor, and was indeed greatly encouraged firstly in ancient Egyptian culture and later by the Greek military leader Alexander the Great in the 4th century BC, when he declared mens beards to be a disadvantage in hand-to-hand military combat. Improvements in shaving technology have been constantly sought since those early days, but the first major advances took place in the 19th century which has become known as the Golden Era of the straight edge razor. During that time, visits by men to barbers for the careful trimming of moustaches and beards became commonplace, as did the use of seven -day and interchangeable blade-razor sets. The most significant date though is 15th November 1904 when King C. Gillette was granted a patent for his first safety razor which he invented in 1901, and which completely changed the process of shaving. The old straight edge razor no longer needed to be sharpened by the barber, instead being reduced in size and clamped onto a handle, with its increased ease of use resulting in fewer injuries, and the blade simply being replaced when it became too blunt. Since that day, Gillette has been firmly established as one of the leaders in shaving technology, having been formed as a company by King C. Gillette with his famous credo There is a better way to shave and we will find it. This statement still applies in the 21st century, with recent innovations including their Trac II, Sensor, MACH3 and most recently their Fusion and Fusion ProGlide. Gillette currently has 14 P&G facilities for developing its products, including its two dedicated R&D centres in Reading, England (The Reading Innovation Centre) opened in 1959, and Boston, Massachusetts (the South Boston Manufacturing Centre), opened in 1903, and regarded as their world shaving headquarters. Both R&D centres have very high reputations, attracting high-quality scientists and providing first-class training. Gillette and the World of Sports Gillette has had a long and successful association with sports, identifying one of mens key pastimes and linking it to one of their key requirements. This connection has lasted almost as long as their products themselves, beginning in 1910, when it produced a print advertisement showing images of Honus Wagner and other famous baseball players, endorsing the original Gillette Safety Razor. They have continued to link their products with premier sports and sportsmen ever since. In 1938, Gillettes new president Joseph Sprang Jr, introduced full-blown promotion of various sports, beginning with the 1939 World Series

baseball tournament, followed by American football, bringing many of the major stadiums into the fold, including the Rose Bowl, and then arguably their biggest payback came when they became involved with boxing, considered to be the most male-dominated sport in terms of audiences and participation. In 1942, the Gillette Cavalcade of Sports was set up, which was to be the umbrella of all its exclusively sponsored sports events. This presented most of Americas major sports events and was their main method used for television and radio broadcasting for the next quarter of a century. The 1952 World Series introduced their first famous TV Sharp jingle, followed by their equally famous Howre Ya Fixed for Blades advertisement. They also created a famous cartoon character, Sharpie the Parrot, in the 1950s. Since then, other top-level American sports attracting Gillettes interest have included Major League Baseball, NCAA Football, NCAA Basketball, NASCAR, LPGA Tour, Champions Tour, PGA Tour and the National Hockey League. Here in the UK, beginning in 1963, Gillette sponsored the worlds first ever one-day cricket tournament, called the Gillette Cup, which not only greatly raised its profile in this country, but also began to revolutionise the sport itself. This association lasted until 1980. At the start of the 1970s, Gillette went global, sponsoring events such as Formula One racing and the FIFA World Cup. In the 21st century, Gillette began to form partnerships with major sports stars, starting in 2004 with soccer star David Beckham, and later in February 2007, launching the Gillette Champions program involving top golfer Tiger Woods, soccer star Thierry Henry and top tennis player Roger Federer. The latter was the larger than any other previous sportsassociated marketing initiatives for the brand and, eventually appeared in over 150 markets. The purpose of these associations was to have a sports icon (Beckham) promoting their products worldwide, and to link Gillettes brand to the performances of the worlds top sports stars. Gillette continues to be a major supporter of world sports events. Branding It is very important economically for a company to get its branding right. Companies such as Nokia or Starbucks can charge higher prices simply based on the strength of their brands. The car manufacturer Mercedes-Benz has a very loyal customer base which ensures the continuation of future sales. A high value of a company is a reflection of the power of its brand (Simon and Sullivan, 1993). So maintaining the quality of a brand is normally a top priority for the managers of a company. There is plenty of literature available on band management (e.g. Aaker, 1996; Keller 2008) to assist them to develop a brand. However, brand building needs substantial investments in distribution,

communication and other activities. Therefore, it is important for managers to be sure that they do in fact have their priorities right when comparing brand-building activities with other forms of investment, as it is not always the case that brand management is the most important activity of a company. A careful analysis should always be performed first. Gillettes Branding After over a century of product innovation and much investment in advertising and marketing, Gillette has established a share of around 70% of the global razorblade market, which is possibly the highest of any of the major global consumer goods brands. However, being owned by P&G, they are not in a position to just rest on their laurels and let the money continue to roll in, but need to constantly consider all the alternative options of generating shareholder value. And these options give the brand managers important guidelines in improving the brand, even when the market share can no longer be improved. According to Mark Ritson (2009), there are 5 reasons why Gillette is the best a brand can get. 1. Drive profitability Even if the market share has reached its maximum, it is still possible to squeeze your margins as tightly as possible. For example, a pack of four Fusion razor blades retailing at 9.72 costs less that 30p in total to produce, a margin of almost 3000%. 2. Practice positive cannibalization This is the practice of a company competing against itself. Before 2006, one of Gillettes major products was the three-bladed Mach3 razor. It then launched its new five-bladed Fusion line with a 40% price premium over its Mach3. Instead of trying to win more customers from its competitors for this new product, it started a TV campaign to persuade its own customers to upgrade from its Mach3 to its new Fusion product. This campaign, known as Nudging Disciples used adverts arguing that five is better than three, and featured top sports stars Tiger Woods, Derek Jeter and Roger Federer. It is usually easier to target ones own customers, and the success rate is higher. 3. Drive usage One of the easiest and most effective ways to drive profitability is to increase the consumer usage of a brand. Encourage consumers to stay with a brand for longer, to use it more and find an additional use for the product. For example, Gillette currently has a large investment in an on-line campaign to persuade customers to use their razors on other parts of their bodies as well as their faces.

4. Extend the brand With a huge brand equity, comes the ability to enter and dominate other related products. In the case of Gillette, this has been the expansion into the shaving cream market, now achieving a 50% share in many countries, and a growing share in the shampoo and deodorant market too. 5. Stay frosty Avoid becoming yesterdays news. Most spending in consumer goods marketing is defensive in nature, to simply maintain the market share. In 2009, Gillette became involved in the second series of the popular True Blood from HBO, where they showed a vampire using their Fusion product as the best shave for the undead. This ensured that the brand remained cool and not become stale. THE GROUP WORK For the Marketing Management group presentation, our group, with 8 members was assigned to work on a case study about Gillette. Due to time constraints and widespread locations of the members, the group decided to make 4 subgroups composed of 2 people in each subgroup to look and do research for the 4 questions that were assigned to work on and then send the researched work to each member so that all members had an idea regarding that topic and vice versa. It was also agreed that in case a member found some data about the other questions they can also take and share the data to all members. Group meetings were also conducted and a presentation practice was also done before the actual presentation. I can say that the group really worked as a team and learned a lot by exchanging ideas not only about Gillette but also about other companies and the business in a whole. The key areas I personally undertook and contributed to in the group presentation was question number 3 which is about the usefulness of the marketing communication campaigns of Gillette. In doing research and gathering data about Gillette, these are the things Ive learned in the process: Marketing Communication Campaign Gillette uses TV, radio, newspapers, the internet and direct mail as their marketing channels. In these marketing communication campaigns, the company uses famous celebrities endorsers and spokespersons especially in the world of sports where the products market has a high percentage of sales. The companys promotional campaign, with the Gillette Ambassadors called Gillette Champions with the sports icons like Roger Federer in the world of tennis, Tiger Woods in golf, and David Beckham and Thienry Henry in football. Some of Gillettes promotional activities have been sponsoring major sporting

events like the FIFA World Cup, Barclays Premier League and the US Open. This campaign was a success and brought big sales in the company. One of ethical activities of Gillette was a fund raised from Movember campaign wherein the money raised was donated to the Prostate Cancer UK and The Institute of Cancer Research. The outcome of these marketing campaigns of Gillette, especially their sponsorships, has been to increase the public and consumers awareness of their brands and existence of their products; sponsorship is one of the best ways to make the audience or the target market aware that you have these products. It also develops the customers loyalty and improves the image of the companys brand. Another outcome for this marketing campaign is it can also position or reposition the brand by changing the customers perception or attitude and opinion towards the brand, especially when the publicity is good. This communication mix is not only applicable for Gillette, since most companies are using this and the outcome for any company is the same, as long as it has a good marketing strategy and sales department. Indeed, Gillettes marketing communications campaign is very useful since they are able to build their brand successfully. Their emphasis on providing premium service via the best value for money whether they buy the disposable razor or the system razor or any of their other products just proves that they manage to position their products well since they have been well known for over a century now. The other issues that our group presentation covered were about Gillettes first to get it right policy, importance of segmentation, and brand loyalty. First to Get it Right In question number 1, actually, what Gillettes policy first to get it right means is being the first to market in regards to the shaving products. Most of Gillettes products like the 3 bladed disposable and Venus Divine, Sensor and M3Power shavers are manufactured by basing the process on the continual advancement of the current technologies used for this companys products. In the group work, additional research regarding question number 1 about the companys policy, the group and I learned the advantages of being the first mover in terms of media investment and public relation coverage. Gillette has the full ability to capture the customers primary interests by using different advertisement techniques and public relation coverage. Therefore, supporting the products of Gillette with powerful promotional campaigns will result in higher sales of the products in the major retail stores. The companys key features as a first mover are the brand loyalty and brand equity which was acquired by overcoming the possible competitors like the BIC and Wilkinson. By constant research and development of a new product, Gillette always get it right. Generally, new products of Gillette are only launched when it has made a bona fide technical advance. For example, Gillette found a new technique to unite diamond-hard

carbon to slivers of steel when they were creating the Mach 3 which resulted in strengthening the companys market position. Ever since they started Gillette had always been the first mover. The company really worked hard and has always had a dedicated team for doing research on different aspects like the consumers, technological advances, etc. That policy clearly gave them a competitive advantage since they are always up to date and coming up with new technology and improving what they already have. Thus, it has kept their customers loyalty. Theyve kept their curiosity and imagination to continually meet the customers needs and expectations. However, being an innovator, the disadvantage of this is it requires a fast process of innovation that comprises a nonstop development of new technological advances and product research by employing highly qualified expert personnel. Importance of Segmentation Regarding question number 2 in the group course work I will briefly explain the market segmentation stage. Segmentation or the market segmentation stage, is having the overall market divided into different groups of buyers who are likely to respond favourably to various products and services offered together with the marketing mixes. The companies decide the most suitable grounds for segmentation, classify significant qualities of each market segment, and improve the standard for assessing commercial attractiveness and feasibility (Lancaster, et. al. 2002). The importance of market segmentation to Gillette is that it allows the company to know in detail the requirements about each segment and the enhancement that consumers like to see in the products and, with this, this makes the companys marketing mix right for each segment. Through segmentation, identifying the target market helps Gillette to make decisions for each segment about their razor products. The group discussion was about what type of benefits Gillettes potential customers are seeking and how they perceive the various types of product being offered to them. From this, Gillette can identify each segments detailed requirements, together with t he ways that the consumers would like the products to be improved and enhanced. Additionally, it provides the tools required by Gillette to establish each segments correct market mix. By defining correctly all the market segments, Gillette can decide which type of razors to promote in each segment. Such market research enables Gillette to find out the customers requirements in these segments, regarding the benefits and features. They can then produce the products according to each segments marketing mix.

Gillette have identified 3 segments in the male shaving market: Premium shaving systems: MACH3, Sensor Xcel. Super premium disposable: Sensor 3 Disposable Premium disposable: Blue II, Agilite.

Using market research, Gillette have managed to establish the most important needs of their potential customers, which have assisted them to create the best marketing mix for their shaving products these are effectiveness, safety, comfort, speed, no irritation and overall value for money. Within each segment, various trade-offs will be made by the customers, depending on what types of benefits are being sought by them. For instance, in the premium disposable segment, customers regard good value as being defined simply as paying lower prices, whereas in the premium shaving systems segment, good value is determined by the benefits offered by the product justifying the higher price. Other customers requirements such as comfort and absence of irritation will also be built into the trade-off with price. Gillette will probably continue developing new products for the higher end of the market, as this premium segment contains more discerning customers who are constantly demanding a greater range of benefits. Gillettes market research will continue to ident ify the correct products, and their collective innovative skills will continue to lead to the creation of new products. Nevertheless, the different segments will continue to drive the nature of the advertising and price charged within these different segments. Products in the higher end of the market will always be able to be sold at higher prices due to their higher quality and additional features, and this will be reflected in the nature of the advertising. It is significant to all companies like Gillette to know for whom the product was meant to be. It means you have to know your target market then segment or offer something that is specifically made for them. Different people have different needs and wants and knowing those will surely benefit the company. It is very applicable for Gillette because they managed to highlight as to whom this certain product is meant for. Brand Loyalty In this topic in question number 4, the group researched the strategies on how Gillette can maintain brand loyalty. These strategies are not only applicable to Gillette but also to other companies. The first strategy is that the company should continue investing heavily in product innovation, marketing and advertising to make consumers aware that the company is still doing great and still the first to get it right in the shaving industry. The next strategy is that it should continue developing to gain and be the leading business with growth in

possible markets associated with its core operation to increase the organizations range and also strengthen the brand loyalty associated with this. It should also promote the customers loyalty by using social currencies such as Facebook users, subscribers to Youtube, and followers of Twitter because a social currency is also where people share information about the products or brands they use as part of their social lives every day, whether they are at home or at work, further driving brand loyalty. The company should also be sensible and aware of its competitors to help the company react or plan quickly or plan ahead in case competitors might launch for example a new or better product than the latest products they have. It should increase the loyalty of its customers and identify the consumers needs and wants and of course put the quality of service first. Service advisors will achieve this by being friendly, knowledgeable and as well as personable, making consumers feel comfortable. Be courteous, respectful, sincere, and always thankful to customers for doing business with you because they are the ones who keep your company going. The company is able to maintain brand loyalty in spite of the very stiff competition because they are continuously conducting their research, marketing, and technological advances just to name a few. Their aim of always being the first kept them as a first choice for most consumers. They have maintained the trust and loyalty because they dont just come up with any old product but rather a well thought/researched product and they are still improving what they currently offer in the market. SUMMARY To sum it up, this case study and group work, Ive learned that segmentation, marketing mix, and branding are very important when you are doing a business and marketing your products and services. Segmentation helps the company break down its target market and with this the company can create a marketing mix that is appropriate for each segment. Marketing communication is very helpful to make the public or consumers be aware or your company and products. It is also the best way to inform and persuade consumers to influence them in their decision making in purchasing. Most of the marketing campaigns use famous celebrities especially in Gillette, the sports icons because these endorsers and also influence the consumers decision making. For branding and brand loyalty, once the customers are loyal to the product, the products market share in the company will be reliantly strong or stable, letting the company employ more effective use of its resources to achieve the maximum prices. Companies can still compete with their rivals, without increasing their market share, by achieving brand loyalty from their customers, as their advertising costs will be greatly reduced. Overall, I feel that the exercise was a success and we learnt from each other by exchanging ideas and views. I feel that my individual contribution fitted very well into the overall presentation, and successfully complimented the other areas of the case study.

REFERENCES:

Aboulian, S. A. a. L., 2005. A close shave with Gillette- When can global brands be used legitimately by third parties?. Brand Management, 12(6), pp. 475-481. Brassington, F. a. P. S., 2006Printice Hall. Principles of Marketing. 4th ed. s.l.:s.n. Cook, S., 2002. Customer Care Excellence. 4th ed. s.l.:Kogan Page. David Sprott, S. C. a. E. S., 2009. The importance of a general measure of brand engagementvon market behaviour: Development and validation of a scale. Journal of Marketing Research, Volume 46, pp. 92-104. Fill, C., 2002. Marketing Communications: Contexts, Statrategies and Applications. s.l.:Financial Time Press. Lancaster, G. M. L. C., 2011. Essential of Marketing Management. Routledge, London: s.n. Lancaster, G. M. L. C. a. A. R., 2002. Essential of Marketing. 4th ed. s.l.:McGraw Hill. Lucia Malar, H. K. W. H. a. B. N., 2011. Emotional brand attachment and brand personality: The relative importance of the actual and idealself. Journal of Marketing, Volume 75, pp. 3552. Mark Fischer, F. V. a. H. S., 2010. How Important are Brands? A cross-category, crosscountry study. Journal of Marketing Research, Volume 47, pp. 823-839. Pickton, D. a. B. A., 2002. Integrated Marketing Communications. s.l.:Prentice Hall. Sattler, F. V. a. H., 2006. Drivers of Brand Extension Success. Journal of Marketing, Volume 70, pp. 18-34. Tony Conway, M. W. G. L. a. A. B., 2007. Internet crisis potential: The importance of a strategic approach to marketing communications. Journal of Marketing Communications, Volume 13, pp. 213-228.

OTHER WEBSITES: http://www.marketingweek.co.uk/news/gillette-prepares-movembercampaign/4004314.article http://www.marketing.com.au/blogs/the-best-a-brand-can-get-gillette-brandprofile-9183/ http://www.marketingweek.co.uk/news/gillette-kicks-off-olympics-coachingcampaign/4001651.article http://news.gillette.com/about/history http://en.wikipedia.org/wiki/Shaving http://www.123helpme.com/importance-of-branding-and-brand-loyalty-tosuccessful-marketing-view.asp?id=164943 Source: Downloads - Theory - Quizzes - Company Info - Current and Previous Case Studies