Gillette



Gillette

Executive Summary

The purpose of this report is to formulate a strategy that would allow The Gillette Company to improve profitability in the wet shaving market. The enclosed report contains an evaluation of the current situation of Gillette, strategic direction, evaluation of the three alternatives that the company could pursue, and finally the implementation plan for the chosen alternative.

Gillette's profitability has been declining due to the increasing market share of disposables. Three alternatives have been selected that would capitalize on company's competitive advantage of being a global leader and an industry innovator.

The first alternative that Gillette could pursue would be to introduce a new razor system for men; the second alternative would involve focusing on the disposables market and launching an affordable, high quality razor; and the third alternative would be to increase emphasis on women, and start targeting younger consumers and minorities.

After careful analysis of each alternative, it is recommended that Gillette launches a new razor system geared towards men. This alternative would add the most value to the company, while not creating substantial risk. It would also make the best fit with the current strategic direction of Gillette. In order to implement this strategy, the company would have to channel advertising and promotional efforts towards this new razor system. This would attract disposable users as well as those who are currently shaving with a competitor's product. The introduction of this superior product to the market would bring Gillette closer to the achievement of its goal, "sustained profitable growth."

About Gillette

In its long history of 100 years, The Gillette Company has established itself as a global market leader. Today, the company primarily competes in the grooming, portable power and oral care businesses, which generate more than three-quarters of its sales. It became more successful than King C. Gillette, its founder, ever envisioned.

Within its strong businesses of grooming, portable power and oral care, Gillette has a great portfolio of global brands. The primary businesses offer great opportunities for growth as company's products are used by new consumers every day. These leading global brands are a major strength of the Gillette Company. They represent company's global commitment to growth through innovation, which will assure its long-term success as the world leader.

Since the beginning of its operations, Gillette has been known as an industry innovator. Gillette has introduced the first safety razor almost a hundred years ago, long before its competitors. This situation remained unchanged until today. Even though the Gillette encountered difficulties with foreign sales, which hurt profits, the company continues to dominate the market.

Over 40 % of sales come from products, which have been introduced in the previous five years (www.gillette.com). The company dominates the wet-shave market with a 60 % share, while its closest competitor, Schick, has only 16.2% (Case 21). What makes this company stand apart from the rest of the market is its most successful razor system, Sensor Excel. This system reached sales of $15 million during its first six months, making it the most successful product ever introduced

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