Gillette Case Q\'s Huertas,Juan IBS 3000 PDF

Preview

Summary

Mandatory assignment for a group project/case...

Description

Huertas 1

Juan Huertas IBS 3000 Ali Golzari

Gillette Case Questions 1.Describe the Razor-and-blades business model. The razor-and-blades model started with a concept of disposable blades that were safe and an innovative invention from the old style-straight edge razors that would rust and leave shave bumps. Razors-and-blades model initially began with selling the original product (the razor itself) at a very low promotional price to generate a high demand for the unique product. Later to stimulate great demand and increasing profit margins, the company would sell related products to supplement the loss in profit from the original product (the razor). Related products would be the disposable blades, shaving gels and other after shave products. This strategy would force the consumers to stick with the company and synthesize a constant revenue stream. Cutting the cost of the base product is a strategic idea that attracts many consumers and if the product is good, it is likely to have returning customers. Many companies adopted this business model to their own company and has been referred to the “razor-and-blades model”. 2. How and why do US razor consumers differ from razor consumers in India? A primary reason why US razor consumers differ from razor consumers in India is due to income. United States has a higher standard of living than India which allows Americans to spend more money on aesthetic products. Then, another factor that differs the consumers is the culture of shaving. Preference in razor in the US and India differ from frequency of shaving, cost, safety, features, and if it gets the job done or not. For example, in India consumers bought razors in “Kiranas”, small local shops rather than large retailers. Then, low income Indian consumers generally do not shave every day and when they do it on the floor with a mirror and a bowl of water. Lastly, the first thing Indian consumers seem to look for in razors when purchasing a razor was affordability, then followed with safety and ease of use. Indians used in more lack of terms a more basic razor that would get the job done, was affordable and easy to use. Americans on the other hand had a different shaving process, which entailed shaving more frequent, looked for safety, closer shave (due to more blades), lack of irritability (due to gel strip), and

Huertas 2

reliability. Premium prices did not impede on the consumer’s mentality to purchase the expensive razor. 3. How did Gillette’s product development process differ for the Gillette Guard when compared to its previous product development process? When developing the Gillette Guard, Gillette turned to reverse innovation to develop the Guard. Rather than the traditional path for innovation involves serious capital in developed in wealthy western countries, reverse innovation turned to low income countries for R&D. The Guard was reversely engineered from a premium razor that would be used in western countries. This means instead of having many luxurious features such as several blades, lubrication strips, and comfortability were removed. This reverse engineering used less parts and the reverse innovation could create affordable pricing for Indian consumers. Gillette’s development process differed to its different product because the team had to spend thousands of hours interviewing and analyzing a different type of consumer who have different needs and wants. Product development for western countries asked more for closer shave, safety, less irritability and most importantly the best product on the market. 4. Should Gillette release the Gillette Guard in the US? Should it release the product in other low income countries besides India? Gillette releasing the Gillette Guard in the US is not a productive strategy because it would cannibalize the sale of more advanced products with more features resulting in lower income margins. The Pro-fusion razor the most advanced Gillette product has the largest profit margin which would be disturbed with a substitute product such as the Guard because consumers could see it to save money. This strategy was previously tried by Gillette and the strategy depicted that the introduction of a cheaper product cannibalized the sales of the more innovative product. If Gillette was to release Gillette Guard in the other low income countries beside India I would recommend them to pursue a similar strategy they practiced in India where thy spent thousands of hours interviewing, following consumers and analyzing consumer behavior at home when shaving. The method or culture of the country can lead Gillette to innovate or reverse innovate the product that would be best fit for the host country. I would think many other countries may have a similar thought and shaving process but without researching the market releasing the product may be a fatal mistake....