Case 16 Lecture Notes
Gillette: Why Innovation May Not Be Enough
Case 16 Gillette: Why Innovation May Not Be Enough*
Synopsis: Gillette has long been known for innovation in both product development and
marketing strategy. In the highly competitive, but mature, razor and blade market,
Gillette holds a commanding worldwide market share. The peak of its innovation
occurred in 2006 with the introduction of the Fusion 5-bladed razor. Today,
innovation in razors and blades is thwarted by a lack of new technology and
increasing consumer reluctance to pay for the “latest and greatest” in shaving
technology. Gillette must decide how to put the razor wars behind them and
maintain or increase its share of the global razor market.
Themes: Product leadership, product innovation, pricing strategy, integrated marketing
communication, segmentation, competition, sports marketing, global marketing,
strategic focus
Case Summary
Gillette is the world’s premiere producer of grooming products; best known for its line of razors
and blades. Since its inception in 1901, Gillette has always prided itself on providing the best
shaving care products for men and women. In fact, the company was so visionary that it didn’t
have any serious competition until 1962 when Wilkinson Sword introduced its stainless steel
blade. Since that time, the Wilkinson Sword-Schick Company has evolved into Gillette’s
primary competitor. Through the years, Gillette has strived to stay on the cutting edge of shaving
technology in a market that thrives on innovation. This focus has led to a game of one–
upsmanship with Schick as each company introduced 3–bladed (Gillette’s Mach3), 4-bladed
(Schick’s Quattro), and 5–bladed (Gillette’s Fusion) razors in rapid succession.
Now, under the ownership and guidance of Procter & Gamble, Gillette faces a saturated U.S.
market that fluctuates only when newer, more innovative products are introduced. However,
many analysts believe that Gillette and Schick have reached the end of meaningful product
innovation. Given this, Gillette faces the challenge of further expanding its already dominant
market share around the world. However, Gillette faces a potential vulnerability in its pricing
strategy. Gillette’s own research shows that men try to reduce the cost of shaving by cleaning
their razors with toothbrushes or in the dishwasher to make the blades last longer. The high cost
of shaving has led to a number of start-ups that are attempting to shake up the market. For
example, the Dollar Shave Club (www.dollarshaveclub.com) signed up 12,000 customers in its
first 48 hours of operating online. While Gillette responded with new advertising focusing on the
value and long-lasting attributes of its ProGlide system, early signs show that Gillette’s U.S.
market share has dipped as much as 2 percent. With the trend in online razor purchases, it is clear
that Gillette and P&G will face significant pressure on their premium pricing strategy as more
Case 16 Lecture Notes
Gillette: Why Innovation May Not Be Enough
Teaching Overview
This case can be used for a variety of classroom discussions. First, the case demonstrates how a
firm can grow through both diversification and innovation. Despite its many successes, Gillette
has had several unsuccessful acquisitions and business ventures in its history. The key learning
point here is that Gillette faced difficulties when it ventured away from its main core competence
in the razors and blades business.
SWOT Analysis
Internal Strengths
• Gillette is at the top of the global razors and blades market.
• The Gillette name carries instant recognition and helps with the introduction of new
Internal Weaknesses
• Gillette may have become a victim of its own success. Its rapid innovation in razors and
blades may have left the company little room to pursue new innovations.
Case 16 Lecture Notes
Gillette: Why Innovation May Not Be Enough
External Opportunities
• Consumers like to buy the latest technology. This plays very well into Gillette’s strengths
External Threats
• Most of the industries in which Gillette competes are mature, making continued growth
difficult to achieve.
Problem/Decision Statement
Gillette needs a plan for continued domination in the razors and blades market. This plan might
need to forgo the traditional emphasis on product innovation and instead focus on continued
innovation in the company’s marketing program. Gillette must also find a way to convince
consumers that its premium pricing is truly worth it.
Strategy Alternatives
1. Focus on Global Expansion—Gillette could continue to move aggressively to further its
penetration into global markets. Millions of people worldwide do not use the latest in
shaving technology. Gillette could take steps to reach these customers through innovative
marketing programs.
2. Continue to Pursue Product Innovation—Gillette could continue to push the envelope of
shaving technology. The company could design a more ergonomic handle for its razors,
or perhaps work toward advanced shaving preparations. It is doubtful that the public
would accept a 6-bladed razor.
3. Pursue Niche Markets—Students are usually quick to suggest that Gillette has long
ignored the youth shaving market. Today, young men and women begin shaving at a
much earlier age. Gillette could create shaving systems for these markets, perhaps in
partnership with iconic brands that are popular with younger consumers.
4. Lower Prices—Students will argue that after Gillette recoups its R&D costs, it should
begin to lower prices to compete more favorably with online shaving clubs. This strategy
will depend on how fast these clubs catch on with consumers.
Case 16 Lecture Notes
Gillette: Why Innovation May Not Be Enough
Strategy Recommendations
Gillette has always been positioned as an innovative company that develops high quality
products with outstanding design. Now, with the resources of P&G behind it, Gillette has the
ability to complete its shift from product innovation to marketing innovation. All four of these
alternatives are viable options. However, given the market opportunities that are available, a
stronger case can be made for alternatives 1 and 3.
Implementation Issues
For any of the strategic alternatives selected, implementation considerations will be key. Each of
the four alternatives outlined above will involve consideration of Gillette’s capabilities—both at
home and abroad. Gillette should leverage its connection with P&G to develop world-class
marketing and distribution programs.
Teaching Questions
1. Evaluate product innovation at Gillette throughout its history. Has Gillette been a victim
of its own success? Has product innovation in the wet-shaving market come to an end?
Explain.
Though Gillette is certainly in an enviable position, the company has become a victim of
2. What do you make of the razor wars, first between Gillette and Schick, and now with
online competitors? Does Gillette face a serious threat from competitive inroads?
Explain.
The razors wars have certainly been good for all companies in terms of product
innovation, sales, and notoriety. However, the battle may have hastened the end of
3. What actions would you recommend over the next five years that could help Gillette
maintain its worldwide dominance in the shaving market? What specific marketing
program decisions would you recommend? Should Gillette be worried about its pricing
strategy? Explain.
Case 16 Lecture Notes
Gillette: Why Innovation May Not Be Enough
Students should be encouraged to develop a long-term plan for the company that is based
around the discussion in the Strategy Recommendations and Implementation sections.