MARKET ANALYSIS OF GILETTE

QUESTION

Details of task:
Both a product (or a service) and a market set the context of this assignment. Drawing on
your understanding of the relevant international marketing issues, assume you are
responsible for the marketing of a product or a service (select a consumer product/or a
service only to understand the challenges of marketing to international consumers)
to your chosen/allocated international market (the chosen country market MUST be a
‘foreign market’ for every member of the group). You are required to undertake an
in-depth and extensive environmental analysis of the selected country market as
groundwork for your marketing plan in assignment 2.
To ensure you only focus on relevant areas, conduct your analysis in the context of the
impact these environmental forces will have on the key components of your marketing
strategy (e.g. segmenting, selecting potential target markets, positioning strategies and
strategy on four Ps). An analysis of the environmental issue is critical to identify any
possible impact on any aspect of your marketing plan. In fact, it is essential that your
assignment should focus on analysis and interpretation of a piece of environmental
information rather than mere description of it. Make sure you supplement the relevant
chapters of the text and reference books with a rich variety of other relevant sources from
academic journals and web-based up to-date materials dating no further back than 2006.
The following subheadings should provide the structure for your essay. Allocate the 2000
words across these sections in any way you deem fit for your analysis:
1. Introduction;
2. Economic Environment;
3. Cultural Environment;
4. Political and Legal Environment;
5. Conclusion.
Reference list / Bibliography is necessary part of the assignment but will not be
counted for word limit.

SOLUTION

Executive Summary

This Report deals with the relevant International Market issues which might arise while dealing with the international marketing of Gillette in the international market of India. With the help of this case study we will analyse the challenges faced by Gillette while marketing the razors to the international customers in India, which is completely a ‘foreign market’ for the organisation. We have done an in-depth and extensive environmental analysis of the selected country market that is India to develop an international marketing plan. Further we will deal with the impact of environmental forces like economic, cultural , political and legal on the key areas of the marketing strategy like the markets segmentation, selection of potential target markets, market positioning and strategies on Four P’s.

Table of Contents
Executive Summary    2
Introduction    4
Global markets of Gillette    4
Economic Environment    5
Market Segmentation of Gillette    6
Cultural Environment    6
Product positioning    7
Political and Legal Environment    8
Marketing Mix’s Four P’s    8
Conclusion    9
Bibliography    11

Introduction

The current marketing strategy of Gillette, the global leader in male toiletries products is to stay focussed on the core grooming products like the shaving preparations, deodorants or antiperspirants’ along with providing supporting products to the vital markets at the same time (Pride & Ferrell, 2008). The shaving gel/ foam produced by Gillette are the most technically advanced products and the company produces almost 10 variants in this category, whereas not even single other competitor produces more than 5 variants also. Thus we can very well analyse that the product market portfolio of Gillette is quite diverse and varied.

Blades & Razors    Toiletries

Braun

Oral-B

Duracell

MARKET
GROWTH
(%)

1.0 RMS
Fig 1: Product market Portfolio of Gillette (McNamee & Stewart, 2007)

The corporate objective of Gillette is to develop a global focus on the consumer products and it wants to develop global competitive advantage in not just the value added personal care but also in the quality of the products too.

Global markets of Gillette

The company is already competing in the global triad markets which cover the Japan, North and South America and Europe. That is why we have chosen a completely foreign turf that is India for its international venture. In these global markets it already enjoys the market leadership in both female and male grooming products.
The marketing managers have to make marketing decisions be it international or national in a dynamic environment and there are many external factors over which as a manager you do not have any control and these are called the environmental Forces and mainly there are five environmental Forces which are described  in the figure below:

Fig 2: Marketing Environment (Fundamentals of Marketing)

Economic Environment
The surging cross border Merger and Acquisitions transactions third wave started in 2007 where the M&A deals reached 1081 in 2007 from 467 in 2005 (Thornton, 2007). India was the major potential market due to the external economic environment experiencing major change in widespread industrial restructuring and high economic growth in the country. India being the developing country it started liberalisation of its international trade and investment markets. The trade friendly policies and improved infrastructure of Indian government will certainly prove to be a positive signal for Gillette to enter this steady global investment market which has mainly resulted from the enhanced economic conditions. The Indian market has seen rise in the income levels due to sustained economic boom and increasing employment opportunities which has led to the potential development of the Indian market as the global turf for Gillette.
Thus it can be predicted that due to higher income elasticity of demand there will be sharp rise in the demand for personal grooming products at the rate which is expected to grow at much higher rate than the rise in the income levels of the Indians. However it is analysed that that markets are majorly driven by price and quality is not the driving factor in the Indian Market mainly the rural and smaller towns so the consumer will not value the potential benefit of paying higher prices for better and safer products (Anand, Tiwari, jalan, Easwaran, Rizvi, & talasila, 2007).
Market Segmentation of Gillette
Based upon the economic factors that is pricing and demand the Indian Market can be divided into three segments and the major factors influence them are importance of attributes, price sensitivity and influence on customers due to additional features and point of purchase decision makers. The segmentation is begin discussed below , where the differentiated marketing is what needs to be followed and Gillette needs to segments its products and offer different marketing mixes to meet the needs of each of these markets (Marketing Theory: International Marketing, 2012):
•    Segment one: Most price sensitive and the additional features are valued least by them. Thus targeting this segment would not be appropriate because Gillette has always been a premium brand and its main focus has been to create differentiated product from its competitors.
•    Segment Two:  Not price sensitive and influenced more by the product attributes and Gillette can easily cater to this segment and it is more than one fourth of the target customer.
•    Segment three: They are bothered about price, attributes and features as well and Gillette can target this segment also. (Balboul, 2010)

Cultural Environment

The cultural environment focuses on the cultural dimensions of Indian culture like the language, behaviour and the customs followed in the country. The target country’s culture should be studied in depth to understand it in better manner. The cultural environment of the target country will help us in finding the target potential markets in the country for Gillette.
It has been analysed that the identified target market for Gillette shaving products in India are the customers who are really bothered about the attributes of the shaving products but do not want to shift from the price band they are buying right now to the higher price for the Gillette shaving products.
The main internal competitors or domestic competition which Gillette will have to face in India is from the competitive brands like Denim, Old Spice and in razor segment like Topaz and Palmolive etc.
Culturally men still shave on  own or go to small time salons for everyday shaving in India so the major factors which influence their choice criterion are:
•    Factor 1: Product Attributes like foam formation, ease of usage, fragrance, Antiseptic Attributes and Brand Name.
•    Factor 2: Point of Purchase like it should be readily available even in the rural areas and stores in the small towns and the packaging and design of the products should be attractive and stylish as Indian customers do get attracted by the stylish and attractive packaging.
•    Factor 3: Price Sensitivity like the prices should be nominal and other offers and discounts attached with it along with it should keep the skin soft too.
•    Factor 4: Additional features like the ingredients and the colours of the shaving cream or razor or any other products made by Gillette. Culturally Indian males are specific about the ingredients like they get attracted to traditional ingredients like lime, turmeric etc. (Balboul, 2010)

Product positioning

The Gillette products have to position themselves above the Old Spice and Colgate –Palmolive in order to attract their target segment. It has been found in survey that the brand recall value for Gillette is found to be above 57%. This clearly indicates that the people recall it in their mind thus giving it an excellent positioning in the men’s grooming scenario and what Gillette needs to do is to leverage this position using bets positioning strategies in their target markets.
This can be best done by following the psychological position by Gillette where it can definitely alter the importance of attributes in their target segment by enhancing the importance of the attributes like promoting the brand name, foam formation and aroma etc. and decreasing the importance being given to pricing in India.

Political and Legal Environment

It covers the environmental protection laws, antitrust enforcement, extents of regulations an deregulations, tax policy changes, state owned industries and the privatisation of the state monopolies in the developing countries like India. Due to deregulation and increased foreign direct investments Gillette India was acquired by Procter and Gamble on June, 2006 which was an extension of global acquisition strategy of Gillette by P&G (Capasso & Meglio, 2007). Due to strict environmental protection laws prevalent in India Gillette needs to focus on developing a product mix which consists of Four P’s specifically for the Indian customer.

Marketing Mix’s Four P’s

Packaging
The Gillette shaving products being perceived as commodity by major population in India, the packaging plays vital role. The packing has to be eco friendly and should minimise the use of paper based pulp because it will result in cutting of trees. The packing is thus designed with futuristic aspect in mind which conveys that Gillette offers the most technologically and environment friendly products for shaving in India. The foams also comply with the environmental standards and contain least amount of chloro-fluoro carbons in metallic cylinders to minimise the carbon footprints (Iyer, 2008).

Price
The 10 product variants manufactured by Gillette shaving creams for Indian markets  fall in the premium category range ranging from INR 53 to INR 210 for the minimum and maximum SKU’s. The pricing done by Gillette is well above the industry average. This suggests that Gillette is leveraging the brand loyalty of its already existing customers.

Place
The robust and extensive distribution network of Gillette comes from its existing network combine with the P&G’s distribution network in India. The distribution network is formed by the combination of franchisees and own network the company has. The model being followed by Gillette is hub and spoke model where the hubs are the major 20 big towns and spokes are the tier 2 and tier3 cities around these hubs in the country.

Promotion
Gillette has been advertising extensively on global level and has hired big celebrities to promote the brand like Tiger Woods, David Beckham and Roger Federer etc. but there has been no advertising campaign which contains Indian celebrities expects for just one in which there was Indian cricketer Irfan Pathan featured. Gillette follows the bundling strategy for promotion because usually the tendency of men is to buy both razor and shaving creams together.
Gillette does not have any product which fulfils the basic or the core needs of the consumer in the Indian market so they need to innovate such product which could be some kind of shaving cream which caters to the basic needs of the customer which is shaving every day. Furthermore since our target segment is the third one so the product should be very string in its attributes to justify its pricing. The additional features should satisfy the basic needs of the consumer like it can have better antiseptic properties and highly aromatic fragrance which is more appreciated by average Indian male should be the best attribute which the new product should have. The lemon and musk fragrance can be the best one to handle the attribute feature in the Indian market.
Conclusion

Since Gillette has the widest and deepest product line in men’s shaving market so it can act like a double edged sword because Gillette has wide variety to offer and can result in cannibalisation (McKibben, 1998). So the cities where its products are reaching maturity stage in the product lifecycle there it can think of venturing into the neighbouring global markets. Like Gillette can aggressively promote its products in markets like Bangladesh, Sri Lanka, and other state like Orissa etc. This will revitalise the product and extend the maturity phase of the Gillette products too in the market.
Moreover it should plan few advanced International strategies for Indian Market like:
•    Gillette needs to design products specifically for the Indian consumer which should specifically satisfy the youth aspirations.
•    They should be able to match the demand patterns which are increasing in the country.
•    Shaving cream market segment is still lying untapped by Gillette and the only shaving cream which was launched and proved to be a big disaster was “ 7O’clock shaving cream’. Thus Gillette needs to develop a shaving care to tap this segment.
•    Gillette should plan and keep on launching new and innovative products at very short and regular intervals to enhance and maintain their market presence.
•    Another future challenge which Gillette might have to face is that the Indian customer will not want to upgrade from conventional shaving cream to gels or shaving foams, so the dominance of Old Spice and HLL will keep on growing.
•    The major challenge which still lays ahead Gillette in the Indian market is to launch a shaving cream successfully to enter the mass market of men’s shaving products just like it did with the razors.
Thus the main focus of Gillette should be to indianise the product as much as it can so that it can extend its reach to the larger segment which is highly price sensitive and has not been the loyal segment in the market as yet. The new product cannot be based on the earlier dumping strategy rather a new and innovative product should be developed customised as per Indian male market.

Bibliography
Anand, A., Tiwari, A., jalan, N., Easwaran, N., Rizvi, W., & talasila, V. (2007). Gillette India Ltd. -MAK II Project. Indore: Inidian Instotute for amangement Studies.
Balboul, L. (2010, March 13). Gillette Toiletries – Case Study. Retrieved April 3, 2012, from Articles Base: http://www.articlesbase.com/marketing-articles/gillette-toiletries-case-study-1983249.html
Capasso, A., & Meglio, R. (2007). The evolving role of mergers and acquisitions in competitive strategy research. Social Science Research Network.
Fundamentals of Marketing. American Managemnt Association.
Iyer, P. V. (2008, February). A Law With Flaws, The stealthy arrival of the Competition (Amendment) Act 2007 signals an ominous return of draconian laws. Retrieved April 3, 2012, from Business World: http://businessworld.abp.in/content/view/3602/3698
Marketing Theory: International Marketing. (2012). Retrieved APril 3, 2012, from THE TIMES 100 Business Case Studies: http://businesscasestudies.co.uk/business-theory/marketing/international-marketing.html
McKibben, G. (1998). Cutting edge: Gillette’s journey to global leadership. Harvard business Press.
McNamee, P., & Stewart, K. (2007, November 30). Strategy and Marketing management. Retrieved April 3, 2012, from http://www.slideshare.net/rupakfeb7/gillette-final
Pride, W. M., & Ferrell, O. (2008). Foundations of Marketing (3rd edition ed.). Boston, MA: Cenagage learning.
Thornton, G. (2007). Grant Thornton Report.

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