Marketing Management – Case Study

Gillete - Indonesia

Introduc
1. What factors determine the demand for blades? How can demand be increased?
Shaving was underdeveloped in Indonesia but incidence of shaving was
increasing. The factors that determine the demand for blades are:

 Awareness of western grooming practice, especially in urban areas due the

presence of MNC’s.
 Only urban adult shaved and the average incidence was 4.5 times a month
(No of times one shaved in the month)
 Trend setting college students who influence others.
 Asian Beards didn’t grow that fast as Caucasian or Latin beards.
 Income level.
 Given the place followed Muslim religious practice, religion could be one of
the factors as cutting beard is considered to be sin.
 Cost of blade itself could be one determining factor (like Parle-G in current
scenario in India)

Ways to increase the demand are as follow:

 Advertisement: Gillete should advertise their products with the benefits that
customers/consumers will get from the product. The advertisement should be
in such a way that it should create urge for people to buy Gillette Products.

 Awareness: Given rural population is unaware of the shaving practice, aware

ness campaign should be run for people to understand the importance of it.

 Incentives: Company can come up with some cashbacks or any other incentive
that will attract customer to buy product.

 Trial Period: Allow customers to try the product before using it permanently.

 Affordability: Make blades affordable for different sections of society based

on their income.

2. How is Gillette doing in Indonesia? Has Gillette leveraged its first mover advantage?

Gillete is doing very well in Indonesia. Gillete Brand name was synonymous
with high quality double-edge blades. Bahasa Indonesian was the name similar to
Gillete.

 Sales - Gillete had a 28% of market share by volume in 1993 and grew
by 48% in 1995. By 1996, the expectation was to have 50% share.
 Capturing half of the market is very significant and helps understand
that it was a market leader in Indonesia.
 Market Penetration – Market research conducted in 1995 showed
that 97% of brand awareness in Indonesia and 55% of them confirmed
to be recently used. 90% premium priced segment.
 Operation – Gillete had a plant in Indonesia which produced 150
million blades, of which 46 million were exported. Gillete manufactured
75 products out of which 65 were shaving items.

With the points above Gillete definitely had a first mover advantage in
penetrating in Indonesian Islands. It gained close to 48% of shares and was
planning to target 50% in the year of 1996.

3. How should Gillette accelerate the development of blade market in Indonesia?

 Indonesia has close to 15000 islands with an estimated population of 196

million (37% living in Urban and 65% living in rural areas). Gillete can start
awareness campaign in some of the islands where they don’t have any
presence.
 Price reduction: Dispone Brands like Tiger and Tara are giving the blades at a
lesser price, if we don’t reduce price, we would end up losing the market, so
Gillete should really think on its pricing for end customer.
 Increase distributors and incentives to distributors.
 Increase plant capacity to produce more.
 Plan promotions to attract customer’s
 Accessibility and availability of product across all regions.

4. Refer the contribution calculations for Allan 1996 (E) growth estimates of 19% in
the excel template, attached. You may calculate the contribution of different
products for Effio 1996 (E) for 27.5% growth. Further, prepare an income expense
statement for 1996 (as in Exhibit 4) based on revised 27.5% growth estimate
of Effio.