Gillette Indonesia Case StudyMarketing Management Unit MKTG1289Group 2 - Alhadi Almusawi, Jeremy Barnett, Angela Collard, Naomi Ebert Smith & Blake Gray

An established household name

Innovator in razor technologies

World leader in personal hygiene products

Promotion by triumvirate of sporting stars (Woods, Fedrer, Henry)

Diversified product range

Company buyouts: product diversification/elimination

Global expansion - new markets

Company Introduction

2005 Proctor & Gamble acquired The Gillete Company

1996 + 5 yrs produce 230 million blades p/year

1996 increase production 168 million blades, 50 million to export

1995 manufactured 150 million blades, 46 million exported

1972 manufacturing plant established

1971 Gillette entered Indonesia

1901 The Gillette Company founded in Boston, Massachussets

History

Has Gillette Enjoyed a First Mover Advantage?Yes, through effective market entry!

Market entry with significant investment

Established manufacturing plant for local and export sales

Brand equals high quality blades

‘Gillette’ used to mean blade in Indonesian

Significant market share

Strengths

✦ Increase Western grooming practices ✦ Large population✦ 48% market share by 1995✦ Effective distribution system✦ Local and export manufacturing ✦ Brand = high quality✦ Rising incomes, more sales revenue✦ Effective marketing campaigns

Weaknesses

✦ Inappropriate global advertisements ✦ High manager turnover✦ Cultural behaviour creates manager/distributor problems✦ Legal system less supportive outside Jakarta✦ Intense competition for supermarket shelf space✦ Antiquated distribution methods✦ Many different languages spoken

SWOT Analysis

Opportunities

✦ Over 7% GDP growth in 20 years✦ Stable political system✦ Economic improvements✦ Increase in per capita income✦ Two million people to enter workforce✦ Population earning income growing✦ Shaving incidents of 5-10 times per month + population + per capita income = increased sales

Threats

✦ Lower quality products by competition (BIC and Bagus)✦ Grooming products a luxury✦ Main competitors are cheaper✦ Low shaving incidents and slow growing beards ✦ Government regulations on direct distribution or direct imports of products

SWOT Analysis

Desire to improve image

Influence of western grooming practices

Trend-setters - college students and graduates

Influences on razor purchase:

Effectiveness (closeness of shave, reduced shaving time, no cuts etc.)

Shelf Life (re-usability without reducing effectiveness)

Affordability (value for money)

What factors determine demand for razor blades?

How is Gillette doing in Indonesia?

Sales Market PenetrationIn country shaving product sales of $19.6 million in 1995

Projected in-country shaving product sales of $27.6 million in 1996

Total sales revenue expected to increase by 40% in 1996

Profit from operatons forecast at 20% in 1996

97% brand awareness

55% of the brands used most often

90% of the premium priced segment

60% rise in sales through implemented distribution methods

Processes & efficiencies reduce production time

Capacity increased

Female razors - customs issues

Production & Supply

How can demand be increased?

Market blade over knife advantages

Inferior quality blades: show disadvantage

Market to women

Consider introduction of budget product

Market complementary products (e.g. shaving creams)

Unfashionable: stubble

Increase customers and frequency of use

Recommendations & Solutions - Top 11

Advertising & Promotion

1. Persuade customers to shave more often2. Upgrade to higher-end products3. Strengthen promotional presence at POS4. Good relationships with supermarket segment5. Incentives for supermarket shelf space6. Gifts, lucky draws, coupons and redemption systems7. Culturally appropriate marketing in local language 8. Promote use of shaving creams and other products9. Targeted promotion to female segment

HR and Training

10. Overcome misunderstandings re: different cultural behaviours

11. Empower sales team to:

Help distributors update distribution methods

Educate distributors and local market about shaving concepts