Marketing, caso gillette

The Gillette Company (A)

limi

Tn the spring of 1986, Joseph A. Marino, vice president oi marketing in Giilette's shaving division, was concerned about the future prospects of his business. With sales of S2.4 bUlion, Gillette was the world's largest blade and razor manufacturer and claimed a remarkable 62 percent share of the S700-million U.S. shaving market.
Growth in razors and blades hadbeen slowing down, however, and competitors were putting a few nicks in Gillette's performance. Revenues had increased just 3 percent over the previous three years (i.e., 1982-65), and during 1985, profits had risen only 1 percent to $160 million. Gillette had to produce a steady stream of new shaving products just to hold its ground in the United States.
More disturbing was that cheapdisposable razors—unknown 12 years ago—now accounted for more than half of U.S. sales. That figure has been growing, and even though Gillette dominated the disposable market, cheaper razors meant lower profits. For a company that received one-third of its sales and two-thirds of its earnings from blades and razors, that was bad news. Foreign business, which accounted for about 57 percent of corporate salesand 61 percent of profits, was a sore spot, too. Although a weaker dollar was expected to boost Gillette's overseas earnings, a weaker dollar would help Gillette only in the short term. Foreign razor and blade markets were also mature.

RAZOR TECHNOLOGY
Ever since an ambitious inventor named King C. Gillette introduced the first safety razor in 1903, men have been accustomed to continual,extensively advertised advances from Gillette in the state of the art of shaving. The company spends more than $20 million a year on shaving research and * development. With the aid of the latest scientific instruments, a staff of 200 explores the fringes of metallurgical technology and biochemical research. They subject the processes of beard growth and shaving to the most rigorous scrutiny.
Everyday, some 10,000 men carefully record the results of their shaves for Gillette on data processing cards, including the precise number of their nicks and cuts. Five hundred of those men shave in 32 special in-plant cubicles under carefully controlled and monitored conditions, including observation by two-way mirrors and videotape cameras. In certain cases, sheared whiskers are collected, weighed,and measured. The results of the tests are fed into a computer and processed by sophisticated statistical programs.
Gillette scientists know, for instance, that a man's beard grows an average of 15/1000 of an inch a day, or 5:/2 inches a year; that it covers about a third of a square foot of his face and contains 15,500 hairs; that shaving removes about 65 milligrams of whiskers daily, whichamounts to a pound of hair every 16 years; that during an average lifetime a man will spend 3,350 hours scraping 27% feet of whiskers from his face
Occasionally, other companies have obtained a technological jump on Gillette. In the early 1960s, a new longer-life stainless steel blade from Wilkinson Sword of Great Britain temporarily stole a big share of the market from Gillette's carbon steel SuperBlue Blade. But Gillette, as it always does, soon introduced its own longer-life version and recaptured much of the lost market.
To fully comprehend Gillette's research and development inroads, one must visit its research facilities in South Boston Displayed there are pictures taken through a field emission scanning electron microscope that can magnify objects 50,000 rimes. The photographs showedtiny sections— 1/10,000 of an inch—of the edges of razor blades

This cas* wis prepared as a basis for class discussion rather than to illustrate cither effective or ineffective handling of an administrative situation.

made by Gillette and some of its competitors. The edges of the competitors' blades looked rough and jagged. Although not exactly Iowa farmland, the edges of the Gillette blade...