Gillette: The Defender

Gillette: The Defender

Gillette dominates the world wet­shave industry with a 61 per cent share. Schiek is second with a 16.2 per cent share, Bic has 9.3 per cent and others, including Wilkinson, account for most of the rest of the market. In 1988 Gillette's blades and razors produced 32 per cent of its $3.5 billion sales and

61 per cent of its $268 million net income.

Case 6: Bic Versus Gillette • 269

Gillette earned its dominant position in the market through large invest­ ments in research and development and through careful consumer research, Every day, about 10,000 men carefully record the results of their shaves for Gillette. Five hundred of these men shave in special in­plant cubicles under carefully controlled and monitored conditions, including observation through two­way mirrors and video cameras. Shavers record the precise number of nicks and cuts. In certain cases, researchers even collect sheared whiskers to weigh and measure. As a result, Gillette scientists know that an average man's beard grows 0.04 cm a day (14 cm per year) and contains 15.500 hairs. During an average lifetime, a man will spend 140 days scraping

8.4 metres of whiskers from his face. Gillette even uses electron micro­ scopes to study blade surfaces and miniature cameras to analyze the actual shaving process.

Armed with its knowledge of shavers and shaving, Gillette prides itself in staying ahead of the competition. As soon as competitors adjust to one shaving system, Gillette introduces another advance. In 1971 Gillette intro­ duced the Trac II, the first razor system featuring two parallel blades mounted in a cartridge. Tn 1977, following $8 million in R & D expenditure, the company introduced Atra, a twin­blade cartridge that swivels during shaving to.follow the face's contours. In 1985 Gillette launched the Atra Plus, which added a lubricating strip to the Atra cartridge to make shaving even smoother.

Although the company's founder, King Gillette, considered developing a disposable product early in the company's life, Gillette's marketing strategy has focused on developing products that use refill blades on a permanent handle. Gillette works to give its blades, and especially its handles, an aura of class and superior performance. By promoting new captive systems, in

which blade cartridges fit only a certain razor handle. Gillette raises price and profit margins with each new technological leap. Atra cartridges do not

fit the TVac II handle, so men had to buy a new handle to allow them to use the Atra blades when Gillette introduced that system.

Gillette has never bothered with the low end of the market ­ cheap, private­label blades. Status­seeking men, it believes, will always buy a classy product. Most men see shaving as a serious business and their appearance as

a matter of some importance. Therefore, most men will not skimp and settle for an ordinary shave when, for a little more money, they can feel confident that Gillette's products give them the best shave.

Bic: The Challenge The rapid rise of the disposable razor has challenged Gillette's view of men's

shaving philosophy. Bic first introduced the disposable shaver in 1975 in Europe and then a year later in Canada. Realizing that the United States

would be next, Gillette introduced the first disposable razor to the US market in 1976 ­ the blue plastic Good News! which used a Trac 11 blade. Despite its defensive reaction, Gillette predicted that men would use the disposable only for trips and in the changing room when they had forgotten their real razor. Disposables would never capture more than 7 per cent of the market, Gillette asserted.

Marcel Bich, Bic's French founder, is devoted to disposability. Rich made his money by developing the familiar ballpoint pen. lie pursues a strategy of turning status products into commodities. Often a product has status because it is difficult to make and must sell at a high price. However, if a manufacturer develops ways to mass produce the product at low cost with little loss of functional quality, its status and allure disappear. Consumers

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will then not fee] embarrassed to buy and be seen using the new, cheaper version of the product. Bich brands his products, strips them of their glamour, distributes them widely and sells them cheaply. His marketing strategy is simple: maximum service; minimum price.

Bic attacks the shaving business in a very different manner from Gillette. It docs not have anyone exploring the fringe of shaving technology; it does not even own an electron microscope; and it does not know or care how many hairs the average man's beard contains. The company maintains only a small shave­lesting panel consisting of about 100 people. The Bic shaver has only one blade mounted on a short, hollow handle. Nevertheless, the Bic disposable razor presents Gillette with its most serious challenge since the company's early days. In 1988 Bie's shaving products achieved $52 million in sales with a net income of $9.4 million and held a 22.4 per cent share of the disposable market.