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Gillette Company Case Study - AAST Egypt MBA -

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Abdelkader ElHaidary

on 14 October 2016

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Transcript of Gillette Company Case Study - AAST Egypt MBA -

Case Study:
The Gillette Company

design by Dóri Sirály for Prezi
Marketing Strategy
Road Map
II. Market Situation Analysis
II. Market Challenges
Case Study:

I. Company overview
i. Company Profile and Objectives
ii. Products Portfolio

II. Market Challenges

III. Market Situation Analysis
i. PESTEL Analysis
ii. SWOT Analysis
iii. Industry Analysis
iv.Conclusion

IV. Developing Marketing Strategy

V.Hofstede indonesia 5 dimensions

VI. Recommendations
I. Company Overview

Distribution issues

Diversified Population Culture

High Literacy rate

Lifestyle and Shaving Habbits












Prepared By
Abdelkader ElHaidary
Islam Shazly
The Gillette Company has a long history of being the first to market. in its own areas of operation.
There are risks to being the innovator, however. To be successful, the innovation process has to be conducted thoroughly. This usually involves a great deal of research, and in more than one form.
i.Company Profile and Objectives
Gillette’s Indonesian objectives are to increase the Indonesian market for blades, while maintaining profit growth
Objectives
Premium Shaving Systems:
Sensor Excel
Mach 3
Mach 3 Turbo
M3 Power

Standard Shaving Systems:
Contour
GII
Systems Razors
Premium Disposable Systems:
Sensor 3
Vector 3

Standard Disposable Systems:
Blue II
Agilite
Disposable Razors
ii.Products Portofolio
`
Pestel Analysis
Swot Analysis
Industry Analysis
Political / Legal
One President since 1965 with no sign of power change in 1996
No Changes in domestic Polices could not occur without the president's support
All legal reforms and regulations prohibit foreign companies like Gillette from importing or distributing their products
Economical
Indonesia averaged GDP growth of over 7% for the last 20 years, Inflation expected to be 12%
During the current 5 year economic development plan more than 2 million Indonesians were expected to enter the workforce each year, thus increasing the market of men who shave
Between 1992 and 1994 the value of committed foreign directinvestment rose from 10.3 Billion U SD to 23.7 Billion USD. This underscores the growing nature of the Indonesian market and economy
Over two million new Indonesians workers expected each year
Socio-Cultural
Average standard living on Java and Bali is much higher than the rest
The five major urban centres represent 60% of Gillette’s in IndonesiaJakarta, Bandung, Surabaya, Semarang (all located in Java), and Medan(located in Sumatra) expected to be the cities with most of the sales. Alltogether 35 m habitants
College students and graduate entering the workforce were especially important trendsetters
Social Factors: 250 Languages and regional dialects
Reference Factors: Shaving incidence influenced by the increasing awareness of western grooming practices
(especially in urban areas)
Indonesian Shaving Practices
Incidence of shaving was increasing: in 1993 66% of urban men shaved 4.5times per month
In 1995, 80% of urban men who over 18 years shaved, average 5.5 times per month
Hong Kong
12 times / month
Indonesia
5.5 times / month
United States
26 times / month
Shaving incidence was influenced by increasing awareness of Western grooming practices,College students entering the workforce, Grooming products were still as luxury items and also Asian beard did not grow as fast
Environmental
Indonesia Population 196m 35% living in towns and 65% in rural areas
The population was spread over 15,000islands, with the majority of the population 60%, living in major cities in Java and Bali
Java and Bali (7% of the land - 60% of the population & 75% of the GDP –four of the five major urban centres were on Java) rapid growth – Irian Jaya and East Timor not that good (poorer regions)
Technological
The Gillette plant in Indonesia was “highly automated”
Manufacturing Improvements in 1995 saw increases of 57% in productivity reducing the time to produce their Blades
Importance of new equipment and expansion of line capacity needed by 1996 has been delayed to 1997, meaning that more overtime and improved plant productivity will be needed in 1996
Internal
Analysis
Strengths
Large product Mix
48% Market Share for blades
97% Brand Awareness, and 55% brand most used ratings
Manufacturing Plant is highly automated with efficient business process
Wide Product Mix allow Gillette to target different segments of the population
90% of the premium priced segement
Gillett Quality customer perception

Weaknesses
19% volume increase in market that has increased approximately 30%
Inability to meet demand for the coming year, until the new capacity is implemented
Cultural Practices Impacting employee performance
High price products relative to competitors
Weak distribution system and partners
Limited control over distribution channels
Weak communication network
External
Analysis
Opportunities
Large Population 200 m which it means increasing no of prospects
Economic fast Growth rate
Improving of income rose the Purchasing power
The incidence of shaving is increasing ae result of increasing awareness of western grooming practices
College students and graduate entering the workforce were especially important trendsetters
Threats
Affordability
Competition from cheaper brands
Low incidence of shaving
Governmental regulations
Inefficient distribution method
Bargaining Power of Suppliers
- LOW -
Local suppliers provide the Company with basic raw products including ammonia to the Indonesian production plants.
Gillette has had to import cartridges and handles for the razors due to local distribution and transportation difficulties.
Gillette Volume is critical for all local supplier
Barriers to Entry
- Medium -
Gillette Indonesia lead in market share over its competitors
Access to distribution channels
Access to supplier
Capital Requirements
Existing Brands Diversifying into men’s grooming market
Rivalry
- HIGH -
Double-edged Blades -:imported inferior products from Eastern Europe and China.
Tatra, Super Nacet, Tiger.
• Disposables - Bic (US), Bagus (local) - low sales volumes
• Premium - Schick - Gillette has a 90% market share in this product segment
Threats of substitute
- HIGH -
Switching cost is very low as customers can switch easily between brands
Moving towards more expensive wet shaving system with higher prices
Bargaining Power of Customers
- HIGH -
Brand Loyalty is less
Consumers have many Choices
End-users have been focused on as Gillette’s customers
The main customers are urban males over the age of 18 of whom there are 40 million in Indonesia of which 80% shave an average of 5.5 times per month especially College students and graduates entering the workforce.
Gillette BCG
Developing Marketing Strategy
Pestel Analysis Conclusion
250 different language (promotion problems)
Legal regulation shaping the business mode of entry
the income distribution throughout Indonesia was narrowing
The high levels of growth and economic development however came mainly from Java and Bali, as such the standard of living in these areas were higher than the general population, and would make market penetration easier than for rural areas
Market penetration in rural areas may be a challenge (distribution and promotion problems)
High cultural varieties and geographical separation making distribution difficult.
Customer Sociocultural habits needed to be changes
Analysis Conclusion
Gillette Indonesia Grand Strategy are market penetration with differentiation products
Gillette Competitive advantages are
High international Brand awareness
Diversified differentiated men’s grooming and women shaving products
First market mover advantages as it went deep into people
STP
Segmenmtation
Gillette’s primary segment distribution was identified by income
Targeting
Gillette was facing two different target markets within the 18+ male segments:
1-the higher income consumers
2-the lower income segments
Positioning
The Gillette brand has had a perception of a high quality double edge baldes
4 C's

Consumer
Consumer needs a tool that will provide the Western look, and at the same timeaffordable
Cost
Gillette, they use 70% of total revenue from the different products just to market and make the different razors

Convenience
Majority of Indonesians were found to purchase their grooming products from supermarkets
Communication
Gillette being close to the word (BLADE) in Indonesia
Gillette succeeded in this area. With shaving to be considered as a luxury activity
4 P's
Product
Core product :double edge
Objective is to achieve 19% increasing in blades sales in 1996
Gillette used the same product packaging in Indonesia that used in USA (Standardized product)
The number of blades per pack varied by outlet form supermarkets as in the Mom and pop stores
Price
Gillette's prices are relatevly expensive, infact they are 4 times those of competitive products. Gillette is planning to increase its prices of 20%
Gillette adopts different positioning concerning the "Double-Edges" and the "Disposables". The graph explains the price positioning
Place
the Gillette Indonesia were successful in setting up a network of 23 distributors
the Gillette selected the dealers based on their financial background and Political and social relations they had regionally
Gillette gave a boost and support to the dealers to boost the sales
some special incentives and bonus schemes worked out related to the target
Promotion
Gillette faces a competition from the low cost
Gillette was successful in creating a image amongst the Indonesian that using Gillette is a kind of status symbol
Gillette spend 9% of gross sales on advertising
3% on consumers promotion
Media Ads are addressed for urban male consumers
Special promotion is addressed for members of executive clubs or workers
the rural market the low cost blue blade is focused on and to make people understand the cost-effectiveness over the other brands in market
Radio and newspaper are addressed for rural market
Customer Point of view
Companey Point of view
Hofstede Cultural Dimentions
Gillette Arabia
Gillette Indonesia
Gillette Australia
Recommendations
Increasing supermarket penetration
It can be done through applying Incentives for supermarkets for more shelf space and sales volume
Tap the Rural Market
40 % of the Indonesian Population lives in Rural Area’s
A good marketing campaign and good credit policy for the mom – n - pop shops
The target product in rural region should be the cheapest Blue Blade shaver
Increase the current market share and market size
Increase the current market share and market size
focus more on the urban ordeveloped cities which have a relative better paying capacity in stage one andpromote the Blue Blade in the Rural Market
Increasing the number of men not shaving to start shaving
The Company adopts a comprehensive marketing campaigns to persuade consumers to shave for the first time and increasing the incidence of shaving among the existing shavers
The Company should implement a value proposition utilising the 4Ps for all market segments to adapt its product and marketing program to the needs of a specific customer or buying organisation in particular the 15+ age female
HR training for Distributor employee
Overcome employee different cultural effect
Empower sales to help distributor to update their distribution method
Educate distributor about shaving Practices
Create a new perception of gilletet product
Change the promotion strategy by including Indonesia local stylish stars
Thank You
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