Gillette Marketing Report

[2007] Group 6 Section B

Gillette India Ltd MAK – II Project

Abhishek Anand Abhishek Tiwari Nishit Jalan N P Easwaran Venkata Bhargava Talasila Wasi Rizvi Sec B Group 6 IIM Indore

IIM Indore

Group 6 Section B

1. EXECUTIVE SUMMARY

6

2. INTRODUCTION OF PROJECT

7

3. HISTORY OF GILLETTE

8

3.1. FOUNDATION OF GILLETTE INDIA

8

3.2. GILLETTE’S STRATEGY IN INDIA

9

3.3. SALES

9

3.4. STRUCTURE

9

3.5. PRODUCT DETAILS

10

4. ANALYSIS OF GILLETTE

11

4.1. FINANCIAL ANALYSIS

11

4.2. VISION AND FUTURE GROWTH

11

4.3. EXTERNAL FORCES

12

5. PERSONAL GROOMING INDUSTRY – AN OUTLOOK

14

5.1. INDUSTRY ANALYSIS

14

5.2. COMPETITOR ANALYSIS

14

5.2.1. COLGATE-PALMOLIVE

14

5.2.2. PROCTOR & GAMBLE

15

5.3. HLL

17

5.4. GODREJ

18

5.5. FA

18

5.6. OTHER BRANDS

19

6. GILLETTE SHAVING CREAM DIVISION

20

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Group 6 Section B

6.1. PRODUCT

20

6.1.1. GILLETTE PRODUCTS IN THE SHAVING CREAM/GEL/FOAM DEPARTMENT

20

6.1.2. GILLETTE’S RANGE OF SHAVING GELS AND FOAMS

20

6.2. GILLETTE SHAVING GEL - AN INSIGHT

22

6.3. PRICE

24

6.4. PLACE

25

6.5. PROMOTION

26

7. MARKET RESEARCH

28

7.1. RESEARCH PURPOSE

28

7.1.1. PROBLEM OR OPPORTUNITY

28

7.2. RESEARCH OBJECTIVE

28

7.2.1. RESEARCH QUESTION

28

7.2.2. RESEARCH BOUNDARIES

28

7.3. RESEARCH DESIGN

29

7.3.1. RESEARCH APPROACH

29

7.3.2. RESEARCH TACTICS

31

7.4. IMPLEMENTATION

31

7.4.1. DATA COLLECTION - PHASE 1:

31

7.4.2. PHASE 2: FINAL SURVEY

32

7.4.3. DATA PROCESSING

32

7.5. RECOMMENDATION AND CONCLUSION

36

7.5.1. PLAYING WITH THE PLC:

36

7.5.2. LAUNCH GILLETTE SHAVING CREAM

37

7.5.3. PROMOTION

37

7.5.4. SALES AND MARKETING

38

7.5.5. CONTINUE WITH UPGRADATION

38

8. FUTURE CHALLENGES

40

9. MARKETING PLAN FOR SHAVING CREAM

41

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Group 6 Section B

9.1. MARKETING AUDIT

41

9.1.1. INDUSTRY OUTLOOK

41

9.1.2. GILLETTE’S CURRENT POSITION (WHERE WE ARE AND WHERE WE ARE HEADING??)

41

9.1.3. FUTURE OUTLOOK WITH SHAVING CREAM (WHERE WE WILL HEAD?)

42

9.2. MARKETING MISSION

42

9.2.1. TARGET CUSTOMERS AND THEIR NEEDS

42

9.2.2. MARKETING OBJECTIVES

42

9.3. STRATEGIC PRIORITIES

42

9.4. MARKETING STRATEGY

43

9.4.1. SEGMENTATION

43

9.4.2. POSITIONING

44

9.4.3. REAL POSITIONING

46

9.4.4. PSYCHOLOGICAL POSITIONING

46

9.5. MARKETING MIX

46

9.5.1. PRODUCT AND SERVICE

46

9.5.2. PRICING

48

9.5.3. PROMOTION

48

10. APPENDIX

50

10.1. GILLETTE- TIMELINE

50

10.2. SWOT ANALYSIS

52

10.3. ORGANIZATIONAL STRUCTURE

54

10.4. PRODUCT PORTFOLIO

56

10.5. FINANCIAL ANALYSIS

57

10.5.1. SHARE HOLDING PATTERN

57

10.5.2. PROFIT & LOSS ANALYSIS

57

10.5.3. BALANCE SHEET ANALYSIS

61

10.5.4. CASH FLOW ANALYSIS

63

10.5.5. COMPARATIVE ANALYSIS

64

10.5.6. VALUATION

65

10.6. COMPETITOR’S ANALYSIS

67

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10.6.1. COLGATE PALMOLIVE

67

10.6.2. PROCTOR & GAMBLE

67

10.6.3. HLL

68

10.6.4. GODREJ

68

10.6.5. OTHER COMPETITORS

69

10.7. CUSTOMER SURVEY QUESTIONNAIRE

70

10.8. FOCUS GROUP DISCUSSION FORMAT

75

10.9. AGE PROFILE OF SAMPLE POPULATION

79

10.10. SHAVING PRODUCT PREFERENCE

79

10.11. PLACE OF BUYING

80

10.12. RECALL PATTERN

80

10.13. USER PREFERENCE

81

10.14. BRAND SATISFACTION OF GILLETTE

81

10.15. BRAND LOYALTY IN SHAVING CREAM/GEL/FOAM MARKET

81

10.16. PRICE SENSITIVITY IN SHAVING CREAM/GEL/FOAM MARKET

82

10.17. FISHBEIN ANALYSIS

83

10.18. BRAND PREFERENCE BASED ON INDIVIDUAL ATTITUDE SCORE

83

10.19. AVERAGE ATTITUDE PERCEPTION SCORE OF EACH BRAND

84

10.20. FACTOR ANALYSIS

84

10.21. PERCEPTUAL MAPPING

87

10.22. CLUSTER ANALYSIS

90

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1.

Group 6 Section B

Executive Summary

Gillette has been the leading brand in men‟s grooming industry in India and across the globe. Gillette with its wide range of products caters to the premium segment of the men‟s grooming market. Gillette faces intense competition in the shaving preparations market (shaving gel/foam/cream) whereas the competition in the razor market is not that intense. With the intense competition Gillette has to cater to the various needs of the consumers. This project aims at identifying the problems faced by Gillette in the shaving preparation market. Through the project we have found an opportunity for Gillette India in the shaving cream segment which is the biggest segment in Indian shaving preparation market and Gillette has no presence in it. The research we conducted also supports this fact. We have suggested a marketing plan for Gillette Shaving Cream along with other suggestions for Gillette to face the competition in the near future and the long run.

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2.

Group 6 Section B

Introduction of project

The objective of the study is to understand the consumer attitude and buying behavior for Gillette Shaving Gel And Foam. To understand the former part, we created a focused group questionnaire and conducted a focused Group Discussion (FGD) on Shaving Cream, gel and foam. We analyzed the questionnaire and the FGD to create an extensive questionnaire understanding the buying behavior of consumers of Gillette Shaving gel/foam and other brands. We had a Fishbein analysis done on the 84 respondents from Indore to identify how much of buying intension is due to attributes and how much due to influence by referrals. We further extended the study to understand the perceptual mapping of brands. Our analysis has revealed that the consumer is satisfied with the brand Gillette and its attributes. However Gillette has not performed well with the customers who are slightly price sensitive. This following detailed analysis is presented in our assignment.

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3.

History of Gillette

3.1.

Foundation of Gillette India

Group 6 Section B

Gillette India was incorporated on 9th February 1984 at Rajasthan. House of Poddar Enterprise (HOPE) and Gillette Company, U.S.A. (Gillette), promoted it. Gillette India manufactures and markets Gillette Grooming Products and distributes Oral – B and Duracell products. More than 60 % of the products sold in India are locally manufactured by Gillette India. Parent company Gillette (Refer Time Line, section 10.1) owns a majority stake in Gillette India. Company entered into a foreign collaboration agreement with HOPE for setting up of a company for the manufacture of stainless steel razor blades in which Gillette agreed to subscribe 24% of the equity capital. This agreement provided technical collaboration by Gillette over the full range of technical know-how and technical assistance for the manufacture of razor blades, razors and shaving systems. In 1985, the company came out with an IPO for raising Rs 26 million to fund the setting up of its plant at Bhiwadi in Rajasthan. Company placed a plant for the manufacture in the first phase, 200 million stainless steel razor blades per annum in the starting. Blades manufactured by the Company were of two types, the premium 7 O'Clock, Ejtek Super Platinum and the stainless brand 7 O'Clock Ejtek Super Stainless. Company took over Sharpedge Ltd., by acquiring the entire share capital of that company. Company also merged Duracell (India) Pvt. Ltd. and Wilkinson Sword India Ltd. with the company. Company introduced new twin blade shaving system called 7 O'Clock Ejtek P II with platinum enriched edges in 1987 and changed the shaving system in the India. Sabre Pens Ltd., Sheen Dental Products Ltd., Klosershav Products Ltd., and Vanity Cosmetic Ltd., are wholly owned subsidiaries of the Company. During the mid-nineties, the company's product range widened with new products being introduced in the market namely, Gillette Presto ready shaver, 7O'Clock Ready-II shaver, Gillette Sensor Excel shaving system, Gillette shave gel, conditioners, deodorants, etc. It also started distributing Oral B toothbrushes, Duracell range of batteries and Luxor and Parker pens. Gillette enhanced its range in men‟s shaving products, it has also entered the women's shaving product segment. In

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1998, the company decided that it would use Gillette as its pre-eminent brand placing it ahead of the 7O'Clock brand.

3.2.

Gillette’s Strategy in India

The Indian shaving products market is characterized by a 97% share of double-edged blades - a business dominated by the Malhotras, with brands like Topaz and Panama. Instead of going head-on against them in this highly price-sensitive market, ISPL has chosen to focus on premium products. The strategy has been to bring more people into the twin-edged segment, and then gradually move them towards even more premium products. Also, by segmenting the market with offerings at different price points - 7 O'Clock, Sensor and Mach III, ISPL offers a continuing upgrade path for users.

3.3.

Sales

Gillette India's sales jumped 106 per cent to Rs 516.80 crores after the addition of new businesses from the merged companies. But operating profit margins of the merged entity has dropped to 12.9 per cent in 2000, from 19.3 per cent in 1999. As a result, Gillette India's operating profits rose by a lower 38 per cent to Rs 67.16 crore. This suggests that the merging companies have far lower levels of profitability than Gillette India. Presently Gillette India Ltd today announced 36.6 per cent higher net profit at Rs 61.22 crores for the 12 months ended December 31, 2004 on 9.73 per cent growth in sales at Rs 446.57 crores.

3.4.

Structure

Post Gillette P&G merger, Gillette has adopted the organisation structure of P&G 2006 onwards and effective July 1,06 relocated its headquarters from Gurgaon to P&G Plaza in Mumbai, which will house all P&G subsidiaries in India. P&Gs organizational structure is broadly divided into three heads: GBU(Global Business Unit), MDO(Market Development Organization)and GBS(Global Business Services).Gillette moved from business units based on geographic regions to GBUs based on product lines. MDOs develop market strategies to build business based on local knowledge and GBS bring

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together business activities such as accounting, human resource systems, order management and information technology, thus making it cost-effective. The present structure of P&G is shown in the section 10.3.

3.5.

Product Details

Company Manufacture stainless steel razor blades. Gillette India has a wider portfolio of core business of shaving products sold under Gillette, 7‟0 Clock and Wilkinson brands, Battery and flashlights business and oral care products (Oral B). Company has strong presence in shaving razor blades market. It has the premium quality 7 O'Clock Ejtek shaving brush, 7 O'Clock Ejtek P II shaving system with a metal spine and a shave cream in three variants, Gillette Presto Readyshaver, Readyshaver under the Brand 7 O'Clock Ready II, tooth brushes under the well known international brand name Oral-B, Gillette Sensor & Sensor Excel shaving systems which met with an excellent consumer and trade response, Gillette Shave Foam, Gillette Aerosol" shaving cream, new generation triple blade shaving system Mach3Turbo etc. Company also entered into ladies personal care segment with the launch of the Gillette Sensor Excel for women. Company has strong diversified portfolio to increase its male personal products coverage. Company has tied up with Rediff-on-the-Net e-commerce to market its product and increase its customer base.(Section 10.4 for product line)

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4.

Analysis of Gillette

4.1.

Financial Analysis

Group 6 Section B

Since its entry into India market in 1984, Gillette has been following a strategy of inorganic growth by acquiring domestic companies in oral care, battery, blades and razors and stationery business. The company witnessed tremendous growth during the later half of 1990s. Net sales increased from Rs 107 crores in 1997 to Rs 477 crores in 2000 representing a growth rate (CAGR) of 45 %. Similarly, CAGR for net profits over the same period was over 50%. However, operating margin declined from 19.8% in 1997 to 14.0% in 2000. This further declined to less than 1% in the year 2001. Further, negative sales growth and increased expenses led to a net loss of Rs 28 crores in 2001. This poor financial performance forced the company to undertake a major restructuring program. Over the next 2 years, Gillette concentrated on reducing overheads and better working capital management to increase profitability. As a result of its restructuring program, the company reported net profit of Rs 44.82 crores in 2003. Since then, company has been growing at a steady rate which has resulted in increased valuation of the company.

4.2.

Vision and Future Growth

The company‟s vision is to build total brand value by innovating to deliver consumer value and customer relationship faster, better and more effectively than its competitors. This vision statement has led to the development and introduction of various newer products especially in male grooming division and adoption of a more customer oriented approach. Restructuring in 2002-03 brought about a major shift in the future strategy of the company. The company decided to disassociate itself from non-profitable and nonstrategic businesses to focus on profitable businesses. It started focusing on the

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Group 6 Section B

grooming and oral care business and exited the battery (except Duracell) and household appliances activities. Gillette currently, is the market leader in the male grooming division and is expanding very aggressively into female grooming business through introduction of products such as wet shaving products and hair expiation devices. The company is also focusing on exploring ways to capture the expanding oral care segment in the near future. Oral care segment contributed approximately 13% of company‟s revenues in 2006 as against only 7% a year ago. (Section 10.5 for Financial Analysis)

4.3.

External Forces

The external environmental factors in terms of increasing purchasing power of the Indian consumers and a high level of interest in personal grooming amongst Indian men and a strong focus of the company to create awareness for technologically advanced products have resulted in signs of growth in the triple blade and twin blade systems. In 2004, Gillette came up with new and improved products like Mach3 Turbo and New Vector Plus to cater to the increasing needs of this section of the market. Further, penetration of cable television into the smallest of Indian towns has led to an increased awareness of latest lifestyle trends and brands, which have become an aspiration for many consumers. This increased awareness coupled with the increase in disposable incomes has led to a desire to upgrade lifestyles through owning and using better quality brands. This increased demand has led to higher sales growth especially in personal grooming division. The Government's continued focus on liberalization; trade friendly policies and improvement in infrastructure have resulted in a steady inflow of global investments into the Indian market which has again resulted in higher income levels due to increased employment opportunities and sustained economic boom. Thus, it can be said that due to higher income elasticity of demand, demand for personal grooming products are expected to grow at a rate higher than the rise in income levels of people. However, since the market is still driven largely by price and

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Group 6 Section B

not quality (typically in rural markets and smaller towns), consumers might not value the potential benefit of paying higher prices for better and safer products.

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5.

Personal Grooming Industry – An Outlook

5.1.

Industry Analysis

Group 6 Section B

Due to increased awareness and rising income levels, the industry is expected to undergo a major shift from traditional double-edged razors segment to twin and triple blades razors segment. Razor blade market has tripled from Rs 2 billion in 1986 to Rs 6 billion in 2006. In value terms, in 2003, double-edged blades comprised 78%, systems 15% and disposables 7%. As per AC Nielsen/ORG's estimates, the domestic shaving preparations market in 2003 was pegged at Rs 1.5 billion. Within the industry, cosmetics and personal care industry has been growing at an average rate of 20 per cent for the last few years. However, current consumption is still below many countries in Asia which shows that there are further growth opportunities. In 2004, market size of men's personal care segment is estimated at approximately Rs 750 crores, with Gillette having the largest market share. Thus, the industry is growing at a decent rate but still is at an infant stage and this offers great opportunities to players like Gillette and Colgate Palmolive to expand their customer base to include higher number of lower middle class people and thereby increase their revenues and profitability.

5.2.

Competitor analysis

5.2.1. Colgate-Palmolive Colgate-Palmolive is one of the largest companies in the FMCG sector. The Company has launch of its International Palmolive Shave Gel and Palmolive Shave Foam in the year 2000, in response to growing consumer interest in skin conditioning benefits. The Chairman of Indian Operations mentioned that the company‟s strategy for Personal Care is to remain in top niches. Every year, they intended to take 3-4 initiatives. Colpal has shaving products under the brand name Palmolive shaving cream. It has three variants in the shaving cream/gel/foam category. They are shown below:

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Group 6 Section B

Colgate-Palmolive‟s Shaving Cream/Gel/Foam:

The Price of each of these products is mentioned with size of the pack in the table below Product

Weight (gms)

Price (Rs.)

Palmolive Lime

70

37

Palmolive Moisturizer

70

39

Palmolive Delux

70

39

(Section 10.6.1)

5.2.2. Proctor & Gamble Proctor & Gamble, USA operates in India through three entities. 65% subsidiary Procter & Gamble Hygiene & Healthcare (PGHH), which is focused on Anticold (Vicks), and Feminine Hygiene (Whisper). In the shaving cream/gel/foam category it has a very strong brand in the market, Old Spice.

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Old Spice has products in each of the cream, gel and foam category. These three categories are shown in the form of a tree below. Proctor & Gamble‟s Shaving Cream/Gel/Foam:

The prices of Old Spice shaving cream, gel and foam products are mentioned in the table below: Product

Quantity

Price (Rs.)

Old Spice Foam

200 ml

110

Old Spice Gel

60 gm

50

Old Spice Cream

70 gm

45

It can be observed from the table that even the Old Spice Cream is priced higher than the premium products of other competitive brands.(Section 10.6.2)

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5.3.

Group 6 Section B

HLL

Hindustan Lever Limited, which is now called as Hindustan Unilever Limited, is a subsidiary of Unilever (USA). It is the largest FMCG company in India. It is also reputed to be the largest exporter of India. It‟s distribution network is very strong. It has over 2000 suppliers and associates and about 7000 redistribution stockists. With this massive distribution network in place, HLL enjoys commanding position in many FMCG products in Indian market. In the Shaving Cream/Gel/Foam category also HLL has two brands. Both of them are very strong brands in the Indian market. With the help of the its distribution system these brands have a deeper reach to the Indian consumers. These brands are shown in the tree below:

HLL‟s Shaving Cream/Gel/Foam:



The pricing of shaving products by HLL for both Axe and Denim is almost same. It is also very similar to that of Old Spice shaving cream. But HLL does not have any product in the gel or foam category to compete brands like Old Spice and Gillette.

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Group 6 Section B

Product

Weight (gms)

Price (Rs.)

Axe Shaving Cream

70

45

Denim Xclusive

70

43

(Section 10.6.3)

5.4.

Godrej

Godrej is a domestic brand of shaving cream and now it is looking to expand in the global market for hair color and shaving creams. It has two variants in the shaving cream category. They are Godrej Shaving Cream and Godrej Premium Shaving Cream. The price of these two is shown in the table below. One observation is that even the premium shaving cream from Godrej is priced quite below (44%) below the competitors products of same quantity. Product

Quantity

Price (Rs.)

Godrej Shaving Cream

100 gms

25

Godrej Premium Shaving Cream

70 gms

25

(Section 10.6.4)

5.5.

Fa

Fa has two shaving cream products in the market. Fa is offering 30% extra shaving cream (21gms) with 70 gms pack. Both of its products are priced exactly the same. Product

Quantity (gms)

Price (Rs.)

Fa Oceanic

70+21

40

Fa Dynamic

70+21

40

(Section 10.6.5)

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5.6.

Group 6 Section B

Other Brands

Other competitive brands like Dettol and Park Avenue are also there in the market scene. The price for their shaving cream product is mentioned below. These are not premium segment brands and were priced accordingly. Dettol cream which comes in 70 gms pack is currently offering 40% extra in its regular product for Rs. 37. Whereas Park Avenues shaving cream is sold in 70gms pack for the price of Rs 36. (Section 10.6.5)

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Group 6 Section B

6.

Gillette Shaving Cream Division

6.1.

Product

Introduction Gillette has always remained the technological, market leader in the razor division of the men‟s grooming segment.

Its‟ high brand awareness, market acceptance as a

technological leader for hi-performance razors and high brand equity were compelling reasons to penetrate and develop the entire value chain of the men‟s grooming industry (razors, after shave and shaving gel/foam).

6.1.1. Gillette products in the shaving cream/gel/foam department Gillette has a range of shaving products for different types of skins and user requirements. However, Gillette has consciously not chosen to have shaving cream in its product line. Gillette worldwide and Gillette India have cited the following reasons for not launching a shaving cream and restricting itself to only shaving gel and foam: 

Technically speaking, gels offer more lubrication than that of creams. This means that gels have more anti-friction properties than creams. This enhances the effectiveness of the razor‟s glide on the skin.



Weight-to-weight, gels are cheaper than creams.



Gel, being a solid in a liquid, can include any additional ingredients like moisturizer, aloe vera, vitamin E etc.



Foams have been pre-perfected with the optimum lather required for shaving and Gillette was already a market leader in the foam segment. The demand for foams was on the rise due to minimal effort required on the part of the consumer.

6.1.2. Gillette’s range of shaving gels and foams All of Gillette‟s shaving gel/foam products come under the brand name “Gillette Series”. All the 10 variants are in the premium segment. Gillette has virtually no presence in the basic and core product categories. Our analysis has shown us that

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shaving gel/foam is more commoditized in India and that 81% of the Indian consumers use cream and not gels or foam. Gillette in the customer value hierarchy: Green – Gillette Gel,

Yellow – Gillette Foam Moisturizer

POTENTIAL Conditioning

PRODUCT

Moisturizing gel

Sensitive EXPECTED PRODUCT

Deep Cleansing

Deep

BASIC

Cleeansing

PRODUCT

Gel

CORE PRODUCT

Ultra

Pure

comfort

&

Sensitive Lemon Godrej

V John

Dettol Old Spice

Denim

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The customer value hierarchy shows us clearly that Gillette has no product in the basic or core category which is dominated by the creams. This segment accounts for more than half the entire market. Following are the variants in the product width:

GILLETTE SERIES S. NO.

FOAM

GEL

1

Foam Conditioning

Gel Moisturizing

2

Foam Deep cleansing

Gel Sensitive Skin

3

Foam Pure and Sensitive

Gel Ultra Comfort

4

Foam Moisturizer

5

Foam Senitive skin

6

Foam Lemon

6.2.

Gillette Shaving Gel - an insight

The Gillette shaving gel/foam series has been developed as a technologically superior product. Gillette is the only company to have 10 product variants in this category. No other competitor has even more than 5 variants. So, Gillette has the deepest product line and the widest product width. Gillette Series has many firsts to its credit in the Indian market: 

First to introduce Shaving gel in the Indian market



First to include ingredients like Aloe vera and Vitamin E in its gels and foams.



First to introduce foams with no fragrance in “Pure and Sensitive”

Brand Development Index and Category Development Index Gillette has the highest brand equity in the men‟s grooming industry. The brand Gillette is more of a life style product than just a grooming product.

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High

Category Developme nt Index Low

Gillette Shaving gel/foam High

Low Brand Development Index Packaging

With shaving cream/gel perceived as a commodity by the majority in India, the packaging, Point of purchase plat an important role in the consumer‟s mind while deciding which product to buy. The Gillette Series has been designed and packaged

with

a

futuristic

theme

to

communicate to the consumer the subtle message that only Gillette offers you the most advanced in shaving products. Gillette was the first in India to introduce gels in tubes. The shaving tube for GEL is very different in design. It is glossy and can rest on its cap unlike the competitor‟s tubes. The FOAM series comes in metallic cylinders.

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6.3.

Group 6 Section B

Price

Gillette has 10 product variants of shaving gel/foam for the Indian market. All the 10 products are in the premium category ranging from Rs 53 to Rs 210 for the minimum and maximum SKUs. Gillette has priced its shaving gel and foams well above the industry average. For instance, Gillette foam priced at Rs. 210 costs 60% more than OLD SPICE foam though Old Spice has the one of the best brand perceptions (and was the best in our survey). The pricing strategy suggests that Gillette is leveraging its customer loyalty ( i.e. the consumers who are brand loyal to Gillette razors). The following table shows the Gillette Series price for all the 10 product variants. We shall see the competitor‟s prices in detail in the competitor analysis. FOAM VARIANTS

QUANTITY (ml)

PRICE (Rs)



Conditioning

250

210



Deep cleansing

250

210



Pure

and 250

210

Sensitive 

Moisturizer

200

120



Senitive skin

200

120



Lemon

200

120

QUANTITY (gms)

PRICE (Rs)

GEL VARIANTS 

Moisturizing

60 + 20

53



Sensitive Skin

60 + 20

53



Ultra Comfort

60 + 20

53

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6.4.

Group 6 Section B

Place

The distribution network of Gillette is very robust. They have P&G‟s distribution network in addition to Gillette India‟s existing one. The distribution network is a combination of own network and that of a franchisee. As of now, Gillette India has the same distributors in the 20 cities that P&G operates with. The distribution network follows a hub and spoke model. The hubs are the 20 cities. The spokes are the various Tier 2 and Tier 3 cities and towns around the major hub. These cities are managed by the exclusive distributors in those cities. Every city has only one franchisee distributor. These tier 2 and 3 cities (spokes)thus serve as a feeder market to the hubs. Each franchisee distributor has his own set of employees working for him. The distributor also manages his own fleet costs to supply to the retailers. There are no wholesalers. As told to us by the distributor in Indore, this is the hub and spoke model for the Mumbai hub: Indore

Dadra and Nagar Haveli Aurangabad MUMBAI (HUB) Pune Panaji The distribution network in Indore: Indore is a feeder market getting its feed from Mumbai. We went to the exclusive (franchisee)distributor in Indore. Indore‟s distributor is called Life Science Corporation near ADLABS Mall. This is their distribution network for Indore:

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Group 6 Section B Distributor (1)

Area Sales Manager (2)

Sales Representatives (4)

Fleet Drivers(4) The sales representatives go with the drivers to the various Retailers under their geographic span and take orders every week. The credit period offered is one week. So, for every week the order is taken and supplied, the amounts due for the previous week would be collected. The two sales managers have split the city into two parts for their span of control. They are in charge of the big retailers, super markets etc.

6.5.

Promotion

Gillette has made extensive promotion campaign for its razors in the Indian market and the world market. Roger Federer, Tiger Woods, David Beckham and Thierry Henry are a few of Gillette‟s global ambassadors called Gillette Champions. But for India Gillette does not have any brand ambassador as of yet though Irfan Pathan has done a couple of ads for Sensor Excel. But, for the shaving gel/foam there has not been much of advertisements. In fact, there is only one ad for Gillette Series Shaving Gel shown not too prominently. For the shaving gel/products, Gillette has co-advertised with its razors.

Bundling Bundling has always been the norm for Shaving cream/gel products. This is mostly due to the fact that shaving creams/gels are generally purchased together with

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razors/aftershaves. There is always at least one trade promotion across the 10 product variants of Gillette throughout the year. The trade promotions include 33% extra on many variants. When we went to Big Bazaar for price survey, we found that 4 of the 10 variants had the 33% free trade promotion. In addition to this, Shaving gels/foams have been bundled with Mach 3 Razors for a slightly higher price. The foams(the ones priced at Rs 210) bundle a Gillette Sensor Excel with them occasionally.

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7.

Market Research

7.1.

Research Purpose

Group 6 Section B

7.1.1. Problem or opportunity Gauge brand recall for various shaving cream/gel/foam brands, specifically Gillette. Map the shaving cream/gel/foam market and competitive positioning within it. To understand the buying intention of Gillette shaving gel and foam users and analyze the effect of non-attribute factors To understand the brand loyalty of customers towards shaving cream/foam/gel Identify the parameters that play the most important role in a consumer‟s choice of buying shaving cream/gel/foam using Factor and Cluster analysis.

7.2.

Research Objective

7.2.1. Research Question What is the inter-brand recall of shaving cream/gel/foam brands and their existing image in the consumer‟s mind? What is the effect of non-attribute factors on the purchasing decision of Gillette shaving gel/foam? How strong is the brand loyalty of customers towards shaving cream/gel/foam? What are the factors that play the most important role in a consumer‟s choice of buying shaving cream/gel/foam?

7.2.2. Research Boundaries The research was conducted in Indore and the respondents were chosen on the basis of their usage of shaving cream/gel/foam.

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7.3.

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Research Design

7.3.1. Research Approach

Exploratory Problem

Research

Causes of the

Descriptive

problem

research

Causes of the problem Phase One -> Secondary Data The group in the initial phase of the project focused on secondary data collection. The data collection primarily focused on 

history of Gillette



the financial results of Gillette,



products of Gillette



organizational structure



the competitors in the market



the strategy adopted by Gillette and its competitors in the market.

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The secondary data collected in the first phase of the project helped the group in getting better understanding of the shaving cream/gel/foam market and the various brands competing in this market.

Phase Two -> FGD After the secondary data collection was complete, two focused group discussions were done. A group of 3 people and a group of 6 people were used for the two FGDs. Through these FGDs, the various attributes that a person looks for in the shaving cream/gel/foam were listed down. FGDs also helped the group in understanding the buying behavior, the consumption pattern, the influencers etc which further helped in preparation of the questionnaire. Phase Three -> Questionnaire From the results of FGDs, a pilot questionnaire was formed. The purpose here was to get an accurate snapshot of particular aspect of the market environment hence the pilot study was a descriptive research that identified all possible problems and factors influencing buyer behavior. An analysis of the pilot questionnaire was done. From the analysis, the redundant variables, hard to analyze variables etc were removed so that people could easily fill in the questionnaire. After the pilot test, the final questionnaire was formed. The questionnaire was designed to capture both quantitative and qualitative information. The overall design of questionnaire has tried to capture data in the following areas: To answer the question of what are the predominant constituents of shaving cream/gel/foam consumers in terms of: 

Profile and age



Buying Behavior and Decision-making process and to answer how Gillette compares with competition and what should it be targeting to be able to grow



Relative importance of different attributes



Brand awareness and preference



Brand switching behavior/ Brand Loyalty

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Group 6 Section B

7.3.2. Research Tactics 

Questionnaire (Refer section 10.7.)



Sampling Plan

The theoretical population: All people aged 16-80 in Indore who have purchased shaving cream/gel/foam. Sampling Frame: Residential areas, malls, parlors, Restaurants are places where the respondents where drew our respondents were interviewed. Relevant Sample Size: 84

7.4.

Implementation

7.4.1. Data Collection - Phase 1: FGDs The FGDs were aimed at helping us to 

Define the target segments better



Identify the important attributes that add in the target customers shaving experience

The FGD questionnaire is given in section 10.8

A preliminary definition of main two segments is: Experimenters and Adopters (EA): This category of consumer comprises of males from the age group 16-30 years. These are the people who are willing to try new brands. These people are generally found to be taking more care than others in terms of grooming. These people want to make a style statement through the products they are using and hence are generally found using highly advertized products. They tend to prefer shopping centers with a wide variety. MHI: Rs 10,000/- to Rs 20,000/-.

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Group 6 Section B

Suspicious Traditionalists (ST): These are men who are more traditional and not very much willing to try new brands. They are a slightly older age group (33-50 years) whose main concern is the safety and health of their skin. They also show a preference for herbal products or brands that have been present in the market place for many years and which they have already tried and tested. MHI criteria: Rs 5,000/- to Rs 20,000/-.

7.4.2. Phase 2: Final Survey The Final Survey helped us to collect data on 

Main influencers towards the purchase of Shaving Cream/Gel/Foam,



Benefits that are most important for each segment of customers,



Comparative brand and benefit perceptions,



Trade-offs between price and quality,



Preferred point of purchase,



Consumer‟s position within the Needs Hierarchy Model (Awareness, Knowledge, Liking, Preference, Commitment and Conviction) with respect to own and competitive brands and consumer satisfaction.

7.4.3. Data Processing Age profile, product preference and place of purchase of the surveyed sample are mentioned in section 10.9, 10.10 and 10.11 respectively.

Data Analysis Brand Recall: A sample of customers, which is representative of the Indore population, was surveyed and the first unaided recall of the Shaving Cream/Gel/Foam brands by these customers was recorded. (Refer section 10.12)

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It was observed that Gillette Shaving Gel/ Foam had the highest brand recall amongst all the competing brand of shaving cream/gel/foam. This can be attributed to various reasons like brand perception, usage pattern, advertisement expenditure etc. some of which would be analyzed in the subsequent sections.

Buying Intention The survey administered had questions which measured the importance of various attributes like price, brand image, fragrance, offers & discounts of various shaving cream/gel/foam and specifically for Gillette shaving gel/foam.

Fishbein Analysis The survey also measured the attribute scores for other competing brands like Old Spice, Denim, Godrej, V-John and Dettol. Along with the data for Gillette, an average attribute score was computed across the 84 samples for each attribute for each of the shampoo brands. Fishbein analysis was performed by converting the Likert scale from 1 to 5 to -2 to 2. Consumer‟s attitude about each brand was calculated and plotted as shown below. (Section 10.17, 10.18, 10.19, 10.20)

Chart: Consumer attitude about each brand

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Clearly Old Spice had the highest consumer perception score followed by Gillette and Denim. But taking a look at individual consumer attitude score, we found that Gillette was prefferred by almost 40% of the people surveyed and Old Spice by 30%.

Factor Analysis A factor analysis was carried out to obtain the group of attributes which can be grouped together. Hence 4 factors were obtained as follows – 

Factor 1  Product attributes (Fragrance, Brand Name, Foam Formation, Antiseptic Attributes and Ease of Use)



Factor 2  Price Sensitivity (Price, It keeps my Skin Soft And Offers/Discounts)



Factor 3  Point of Purchase (Availability in Stores and Stylish Package Design)



Factor 4  Additional Features (Color of Shaving cream/gel/foam and Ingredients)

Perceptual Maps Attribute scores were averaged under each factor for each of the Shaving cream/gel/foam. Then graphs were plotted (Refer section 10.21) for the perceptual map along the dimensions as shown.

Observations: 

In Indore, the surveyed samples perceive that Gillette primarily targets consumers which are more focused on the product attributes like brand, foam formation, ease of use etc whereas the perception of price sensitive consumer towards Gillette was found to be of an over priced brand.



For price sensitive customers products like V-John, Godrej and Dettol were more satisfying than Gillette.



The surveyed sample considered Gillette to have the best packaging among all the brands. This feature highlights the fact that point of purchase is an

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Group 6 Section B

important selling point for the shaving cream/gel/foam market and Gillette has been outperforming the competitors. 

High satisfaction in the availability in stores further shows the robust distribution system that Gillette has put into place to cater to diversified markets.



Although not much differentiation can be introduced in the product per se (low satisfaction scores for all brands), still Gillette is found to be seen as a brand which brings out products with new features like lemon, conditioner etc.



Distance matrix analysis shows that the consumers are most satisfied with Gillette in all the cases except when the purchasing decision is based on price along with additional features.

Brand Loyalty The questionnaire had specific questions to measure the brand loyalty for the brand that the consumer was using at that point of time. From the graphs shown, it can be concluded that the Brand loyalty in the Shaving cream/gel/foam segment is only 57% where customers would stick to it irrespective of the availability in the place where they are accustomed to shop. This figure says that 57% of the customers would rather go to some other retailer in search for their preferred shaving cream/gel/foam brand than to buy some other brand from the same shop. Price sensitivity measured along the lines of a hypothetical price increase in their preferred shaving cream/gel/foam brand was around 43%. This figure indicates that 57% of the customers do not shift from their preferred brand to some other brand because of a price hike in their preferred brand, provided it‟s a reasonable price hike whereas 43% would move to some other brand. (Refer section 10.15.)

Cluster Analysis On the basis of the four factors identified through factor analysis, the group performed Cluster analysis for two, three and four clusters separately. This was done to identify a

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market segment which Gillette should focus on in the near future especially if it decides to launch a product in shaving cream category. 55% of the sample used shaving cream. Considering this to be a reasonable estimation of the real usage, the decision to enter the shaving cream market seems to be a lucrative option to explore. The output of cluster analysis is shown in section 10.22. Out of the three analysis performed the one with three clusters was giving the best representation of the segments in which the market can be divided. (Refer section 10.22) The population can be segmented into three segments on the basis of factors. 

Cluster 1 is most price sensitive and values additional features the least. This cluster comprised of one third of our sample size. As Gillette is a premium brand which focuses on differentiating its products from the competitors and upgrading the customers in the value chain. So targeting this cluster will not be a strategically appropriate decision.



Cluster 2 is more influenced by attributes of the products and is not a price sensitive segment. Gillette through its shaving gel and foam series is currently catering to this segment. This segment comprised of more than one fourth of the survey sample.



Cluster 3 is concerned about the attributes, additional features as well as price. This segment comprised of more than forty percent of the survey sample. Gillette can target this segment with the introduction of shaving cream which will be dealt with in the marketing plan of the report.

7.5.

Recommendation And Conclusion

7.5.1. PLAYING WITH THE PLC: Gillette has the widest product range and the deepest product line in the men‟s grooming market. This is a double edged sword because of the variety Gillette can offer and the cannibalization that can occur.

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Gillette ,with its 9 existing product variants and the new shaving cream, has to see that it can extend the product life cycle and the individual stages of each of the 10 products. For example, the regular foam and Gillette 7‟o clock regular razor are on the maturity/decline stagein the metropolitan cities. Without much effort, these products can be promoted aggressively in neighbouring countries like Bangladesh, Srilanka and states like Orissa, Bihar and the North East and can have a revitalization and an extended maturity phase. Having so many product variants would be an unbeatable advantage in upgrading the consumer throughout his lifetime and also making him brand loyal in the process

7.5.2. LAUNCH GILLETTE SHAVING CREAM This has been the main finding of our project. Our Fishbein analysis, perception mapping ,cluster and factor analyses support the idea. The potential is huge and the shaving cream can also be launched in other similar market demographies like Bangladesh, Pakistan, Nepal and Srilanka. By launching Gillette shaving Cream, Gillette would have a brand leader or a fighter brand in every stage of the customer value hierarchy. The shaving cream would have slightly stripped down attributes of the gel and foam variants. This is because we should entice only the existing cream consumers and not the gel/foam users.

7.5.3. PROMOTION One important finding of our FGDs and Consumer Survey was that not a single consumer was aware of the fact that Gillette has 9 variants in the shaving gel/foam category alone. This can be attributed to one or more of the following reasons: 

The brand equity of Gillette is very high (57% TOMR in our study). But the category development is pretty low.

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The consumers have low involvement and do not search for information. This implies that shaving cream/gel/foam is more of a commodity.



Gillette has spent on advertisements only for the razors and not on shaving gel/foam or aftershaves. Hence the information available to public is limited.

To decommoditize the category, to increase customer loyalty and repeat purchase, promotions have to be done on a bigger scale than what is currently been done. The promotions should have more of a pull effect in the advertisements that communicate not just the price and offers/discounts but also the values, attributes which the consumer can relate to. In short, more information has to be communicated to the consumer through ads, trade promotions etc. Some initiatives by Gillette: 

ADVANTAGE GILLETTE: Three Gillette winners from India were sent to the finals of the 2006 Wimbledon



GILLETTE GULLY CRICKET: Gillette cleverly combined cricket and youth in this version of street cricket in which the winners were awarded Rs 1 lakh.

7.5.4. SALES AND MARKETING Currently, Gillette India uses only the distribution network of P&G. P&G‟s sales and marketing knowledge can be utilized by Gillette to great extent in the future, especially in Srilanka, Bangladesh and Nepal.

7.5.5. CONTINUE WITH UPGRADATION Gillette has been very successful in its strategy of upgrading the consumer in the razor segment. Gillette has made sure that it makes its consumers move up the product chain by introducing new, technologically superior products and phasing their PLC very well. But sadly, this approach is missing in the shaving gel/foam segment. Though there are 9 variants, there has been no effort made to communicate to the consumer of the superior quality and attributes.

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Hence, we suggest that Gillette adopt its “upgrading the consumer” strategy for the shaving preparation segment also. This upgradation has 2 main advantages: 

We can fully leverage the Product life cycle and the individual phases of the products in different markets



We can make the consumer loyal to the brand over his lifetime.

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8.

Group 6 Section B

Future challenges



Introduce a product which would be designed specifically for Indian consumer and satisfy aspiration of youths.



To match the increased demand patterns in the country.



Launching of innovative products in regular and short intervals



First and foremost, shaving cream accounts for roughly 80% of the market and Gillette has a very weak presence in the cream segment. It‟s only cream product “7‟o Clock Shaving cream” has been a big flop.



Gillette‟s‟ products are descending the customer value hierarchy from that of a potential product towards an expected product. Competitors like Denim, Axe are moving up the hierarchy. So, Gillette will find it tough to charge the premium it has till now charged.



It is also highly likely that Gillette may not fully absorb the consumers who upgrade from shaving cream to gel or foam. Hence, Gillette‟s market share might not grow as good as their competitor HLL and Old Spice.



Gillette‟s major challenge lies in entering the mass market through a shaving cream the way it successfully did with razors.

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9.

Group 6 Section B

Marketing Plan for Shaving Cream

After conducting industry and competitor analysis of personal grooming industry and understanding the product portfolio of Gillette, the group came to the conclusion that Gillette should enter the shaving cream market more aggressively with a new brand immediately. Suggested below is the marketing plan for the introduction of the new product.

9.1.

Marketing Audit

9.1.1. Industry Outlook Shaving preparations and after-shaves market stood at Rs 125 crores in 2003. Considering a YOY growth of around 7%, the current market size is Rs 163 crores. In 2003, shaving creams constituted 81% of the market i.e. Rs 101 crores. Since, the market share of gel and foam products is increasing at a very rapid pace (from 10% in 2000 to 19% in 2003), we can say that the share of shaving cream in the entire market has fallen down to approximately 70%. Thus, the current market size of shaving cream in 2007 is around Rs 114 crores.

9.1.2. Gillette’s current position (Where we are and where we are

heading??) In 2003, Gillette had 17% market share in the shaving preparations market which gives a turnover of approximately Rs 21 crores. Most of these sales were driven by gel and foam products. 7‟ O clock, Gillette‟s only brand in the shaving cream market was not very successful and therefore, we can say that Rs 101 crores market remained tapped by the company. Even in 2003, the situation has not changed much. Although Gillette has been able to increase its share in gel and foam products, shaving cream market worth Rs 114 crores remain more or less untapped. Thus, to become a market leader in the entire shaving preparations market, Gillette can not continue to ignore the shaving creams market.

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9.1.3. Future Outlook with shaving cream (Where we will head?) The introduction of a shaving cream with improved attributes will directly compete with current products like Axe, Denim etc. This will enable the company to establish its hold over the Rs 114 crores shaving preparations market.

9.2.

Marketing Mission

9.2.1. Target Customers and their needs The primary customers of the company will be those belonging to cluster 3 (Refer Cluster Analysis for details). This cluster accounts for almost 40% of the entire market. These customers are concerned about the attribute and additional features besides price. The brands like Axe and Denim can be said to be catering to the needs of this cluster.

9.2.2. Marketing Objectives Gillette should target to capture around 6-8% of the entire shavings cream market which means revenue of approximately Rs 7-9 crores in the first year. There will not be any product cannibalization (with 7‟O clock) as both cater to different segments within the shaving preparations market.

9.3.

Strategic Priorities

This step involves portfolio analysis of company‟s products in the market. Company derives almost 80% of its revenues and 90% of its profits from Personal Grooming division. Within this particular division, majority of the sales come from its razors division. Gillette is an undisputed leader in this sub segment. Similarly, company leads in the market for gel and foam products. Thus, Today’s business is driven by this two sub segments.

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In the future, Gillette still needs to concentrate on its two major sub segments for regular cash flows. However, the new product in the shavings cream market can also become tomorrow‟s breadwinner for the company. Oral Care business has shown volatile performance over the years and thereby, has led to irregular cash flows.

Gillette‟s portable power business has been facing stiff competition from the alkaline batteries in the market. This division grew by only 4% in terms of revenues in the year 2005-06. And in fact, there was decline in the profit figures from this division by approximately 60%. The company can consider divesting this segment to direct its investments to Oral Care and the new shavings cream product.

9.4.

Marketing Strategy

9.4.1. Segmentation In the shaving cream/foam/gel market there exist different categories of customers who have different needs and are willing to pay different amount for the product that meets their demand. Introduction of shaving cream would help Gillette identify the needs of the customers and take advantage of the segment which has not yet been targeted by the company. Price sensitivity, importance of attributes, point of purchase decision makers and customers influenced by additional features are the factors on which we will segment the shaving cream market. 

Segment One-> is most price sensitive and values additional features the least. This segment has one third of our sample size. As Gillette is a premium brand which focuses on differentiating its products from the competitors and upgrading the customers in the value chain, targeting this segment will not be a strategically appropriate decision.



Segment Two-> is more influenced by attributes of the products and is not a price sensitive segment. Gillette through its shaving gel and foam series is

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Group 6 Section B

currently catering to this segment. This segment has more than one fourth of the survey sample. 

Segment three-> is concerned about the attributes, additional features as well as price. This segment comprised of more than forty percent of the survey sample. Gillette through its shaving cream can enter this segment.

9.4.2. Positioning Market research 

Market research results have been analyzed in section 7 of the report. The following conclusions from the survey helps us in identifying the positioning of the Gillette shaving cream:



Target market:- The target market has been identified as the customers who are concerned about the attributes of the shaving cream but are not willing to shift from the current price band to a higher price band.



Competitor Brands:- The competitor brands have been discussed in section 5. The Gillette Shaving Cream will be competing with brands like Old Spice and Denim.



Choice Criteria:- As per our findings (Section 7.4.3) the 4 factors on grouping attributes post factor analysis that contribute to the shaving cream/foam/gel purchase decision are:  Factor 1  Product attributes (Fragrance, Brand Name, Foam Formation, Antiseptic Attributes and Ease of Use)  Factor 2  Price Sensitivity (Price, It keeps my Skin Soft And Offers/Discounts)  Factor 3  Point of Purchase (Availability in Stores and Stylish Package Design)  Factor 4  Additional Features (Color of Shaving cream/gel/foam and Ingredients)



Customer Evaluation:- Perceptual maps in the section 10.21 shows how the customers evaluate Gillette with respect to competitive brands.

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The customers surveyed in Indore found Gillette to be significant along both factor 1 and factor 3 giving it an image of high quality brand with attractive packaging and best availability.



Old Spice and Denim are its closest competitors in factor one and two respectively.



Gillette lags behind all its competitors in factor 2 which includes price and offers.



In factor 3, additional features, all companies have below satisfaction level performance which implies that the variants introduced in the market for shaving cream/gel/foam are not able to satisfy the demand of the consumers.

Positioning Strategy The present perception of the brands between factors one and two is shown below.

Gillette shaving cream needs to position itself above Old Spice and Denim in order to attract the target segment.

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9.4.3. Real Positioning In the survey conducted, Gillette had the top of the mind recall of 57%. This shows that Gillette has an excellent real positioning in the men‟s grooming market and Gillette shaving cream can leverage this positioning in the target market.

9.4.4. Psychological Positioning Gillette shaving cream will primarily alter the attributes importance in the target segment by increasing the importance of attributes like brand name, foam formation etc and decreasing the importance of price. This will be consistent with its strategy of moving the customers up the value chain.

9.5.

Marketing Mix

9.5.1. Product and Service Customer value hierarchy chart in the 4 P‟s analysis shows that Gillette products (7‟ O clock) is currently fulfilling only the core and basic needs to some extent. Further, it also

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shows that Gillette does not have any product fulfilling the basic needs and expected needs of the consumers. Thus, our new product will cater to these needs. Further, since, our new product will target the third cluster; it has to be very strong on attributes. Again, additional features need to be there to satisfy the basic and expected needs of the people. Our new product will have superior fragrance and higher antiseptic attributes. Further, initially, the product shall be launched with variants like lemon and musk. The new Gillette Cream would target the basic and core product consumers where Gillette has no presence so far. So, the customer values promised and delivered would also be different from that of the premium segment. The focus would be to indianise the product. This is important because we have to reach a larger, price sensitive, not so loyal segment of the market. So far, Gillette has only followed a dumping strategy in India with very little customization. For our new product, this strategy would not work well. The customer values to be promised and delivered by the new GILLETTE Shaving Cream are: Functional value: The utilitarian/functional promise would be “ The best possible shave from the best Shaving cream”. The existing price range in the market for a 70 g shaving cream is Rs 25 (Godrej) to Rs 45 (Old Spice). We would price our Cream at Rs 40 which is below that of Old Spice and Denim (Rs 43). We would also promise the basic attributes ( soft on skin, lather etc.) . Social Value: The espoused social value would be from the angle that everyone in the family and society have an instant respect and admiration for the clean shaven Gillette man. Emotional value: The emotional value promised is of great importance for a commoditized product like a shaving cream. The espoused value would be the charming yet masculine Gillette man who is attractive to all the people including women. Epistemic value:

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The novelty value should be such that it must entice only the cream users, not our gel/foam users. Hence, we must tell about how good a cream it is and the active ingredients involved in the product. Conditional Value: The best possible start for the day would be the conditional value. The value communicated should be of a confident, satisfied, charged up young Indian for the day‟s grind. COMMUNICATION OF VALUE: We would adopt a push cum pull strategy to communicate the above values. Our ads would involve a sturdy, tough, smart Indian and project him as the Gillette man (much like the Marlboro man). The focus would be on the shaving cream though we will also co-advertise Gillette Razors.

9.5.2. Pricing The customers in the target cluster are not very price sensitive. The customers in the cluster prefer brands like Axe and Denim which lie in the price range of Rs 43-45 for a 70ml pack. However, since Gillette is perceived as an expensive brand as compared to its competitors, we plan to price our new product slightly cheaper than these brands. As per our analysis, Gillette should charge a price of Rs 42 for 70ml pack.

9.5.3. Promotion Since we see a great opportunity for Gillette in the Shaving cream category, we recommend an aggressive promotional campaign for the new product. Our promotion would adopt a push cum pull strategy.

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Push Approach: The product would be pilot tested in Indore itself where we have performed our market research. We would offer a 20g tube of the Gillette Shaving Cream free with every Gillette Presto( Priced at Rs 17) and 30g with Gillette Vector ( Priced slightly at above Rs 50). The selling price of the tube being Rs 40 and the margin at 25%, we would incur around Rs 8 for the 20g tube and Rs 12 for the 30g tube. The increase in sales of the razors would be a good indication of the interest shown by the consumers in the new shaving cream. This promotional strategy might also give Gillette consumers who want to upgrade themselves to the premium shaving cream category from the regular category. The level of success of the pilot project would help us in modifying the product for the national launch. Pull Approach: So far, Gillette has always shown ads which are futuristic in nature ( Shaving with Mach 3 on a space shuttle is an example). But the advertisements for the shaving cream have to be Indianised. This is the biggest challenge for Gillette which has so far treated the Indian market as a dumping ground for its outdated products in the US. Our advertisement has to entice the target consumer - the aspiring consumer who comes from the middle and lower middle class and gives importance to attributes but is also price sensitive. Our target consumer is widespread throughout the country- rural, urban(including Tier 2 and Tier 3 cities) and rurban. The ads have to appeal to the customer values mentioned above.

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10.

Group 6 Section B

Appendix

10.1. Gillette- Timeline

1895-In the United States, KING CAMP GILLETTE, a salesman for the Baltimore Seal Company, originates the idea for a new disposable razor blade. For the next six years, he will promote and sell this idea to backers and toolmakers in order to make his dream shaver a reality.

1901 -GILLETTE teams up with MIT engineer and machinist WILLIAM NICKERSON in Boston, Massachusetts. Together, they modify the safety razor by manufacturing a double-edged blade that is disposable and replaceable; it receives a U.S. patent this same year. This is a T-shaped razor which opens at the top so the user can insert a new blade after tossing out its dull, used predecessor. These blades are cut from a template, rather than forged

1903 - GILLETTE begins his legendary climb to the top as king of the U.S. shaving market, thanks to his shaver‟s high quality, low price affordability, and his keen approach to marketing. In 1903, his total sales were 51 razors and 168 blades.

1904 - GILLETTE'S total sales for the new state-of-the-art safety razor reach 90,000 razors and 123,000 blades.

1905 - GILLETTE opens his first overseas office, headquartered in London, England to market products in Europe 1910 - WILLIS G. SHOCKEY receives a U.S. patent for his WIND-UP SAFETY RAZOR, the forerunner of electric shavers. It has a wind-up-by-hand flywheel that operates for a limited amount of time.

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1914 - 1918: WORLD WAR I - GILLETTE works out a mega deal with the U.S. Armed Forces, which provides his safety razor and blades to every enlisted man or officer on their way to Europe as a regular part of their standard issue gear. This creates tremendous worldwide promotion and publicity opportunities for Gillette‟s company and products. 1960 - GILLETTE safety razors with long lasting stainless steel blades hit the U.S. market. Later, other inexpensive injector-type cartridges and disposable razors become available. 1960s -70s - DISPOSABLE RAZORS, which can neither be sharpened or replaced, hit the market for both men and women. They are to be used 2-3 times, then thrown away. Numerous manufacturers economically design them in simple shapes, which make them inexpensive to produce and sell. 1971 - GILLETTE begins to aggressively market a new twin-blade razor on a wide scale, even though there have been similar razors available since the 1930s. 1984- Gillette entered Indian market through a joint venture as a minority shareholder. 1986- Launched the 7‟o clock brand 1993- Launched the Presto readyshaver brand 2000- Launched the Mach-3 and

shaving

gel, shaving foam and linen series for

women 2002- It gained more shares so that it had three fourth of the shares. During these two decades Gillette followed inorganic growth by acquiring domestic companies in oral care, battery, blades and razors and stationery business. 2004- The company launched the next generation triple blade shaving system, Gillette Mach Turbo, Gillette VectorPlus. Further in personal care segment the company has launched Storm Force after shave splash and New Ultra Comfort Shaving Gel & Gillette

IIM Indore

Group 6 Section B

Series Tube Shave Gel Variants, namely Sensitive Skin and Moisturising to suit different skin types. 2005- The company‟s parent company Gillette, USA was acquired by the Procter & Gamble Company, USA worldwide through merger in October 2005. In India, the company while continuing as a separate legal entity, will also, be part of the Procter & Gamble company, USA. The company has started the process of transition from its current

distributor

structure

to

the

P&G

Distributors

10.2. SWOT ANALYSIS Strengths Strong brand equity Gillette‟s portfolio contains well established brands such as Gillette and Braun, Oral-B line and Duracell. It eases the introduction of new products, as consumers are already well acquainted with the names and more receptive to promises of improved user experiences. The strength and quality image of these brands allows the company to charge higher prices and achieve high margins.

Market Leadership The company‟s product are well known with a reputation of quality are also market leader in their respective segment.

Well Diversified portfolio Gillette has a well-diversified portfolio in terms of product diversification and market diversification. Diversification of this nature helps the company avoid the risk of overdependence on any one source for its revenue stream.

Weakness Profitability highly dependent on core business

IIM Indore

Group 6 Section B

Gillette‟s profitability is highly reliant on the performance of its razors and blades business. A substantial portion of its revenues come from this sector. Any downturn in the sector or in Gillette‟s competitive position within it could have a serious negative effect on the company.

Over-reliance on a single customer Wal-Mart Stores is Gillette‟s major customer. With a large part of its revenues originating from a single costumer, the company is at risk of adversely affecting its business, operating results and financial condition if its strategic relationship with WalMart Stores is terminated for any reason.

Opportunities New product launches Gillette is known for constantly introducing new products in the market with better technology and performance. This new product launches will help the company to gain competitive advantage over its competitors.

Price increases in premium shaving segments Gillette has been increasing the price of its razors and blades at an average rate of around 4% per year over the last ten years. This price increase will help the company to accumulate more profits from the present level of sales.

Growth potential for battery business in China The Chinese battery market is a large and fast-growing market. Gillette has acquired a majority interest in the Fujian Nanping Nanfu Battery Company. This has resulted to significantly improve the performance of the company‟s overall battery business and will have its impact on the future performance of the company.

Threats

IIM Indore

Group 6 Section B

Imitations / disposables are a threat to the Mach3 offering Gillette‟s ability to sustain a price premium and earn an attractive return on its extensive investment three-blade platform is threatened by the numerous imitators of the Mach3/Mach3 Turbo franchise, including disposables and private label systems, and even including Gillette‟s own three-blade disposable. This numerous imitations are threat to the company in the long term as they going to reduce the sales of the original products.

Pressure on pricing power Gillette‟s pricing power is being further eroded by channel migration and increasing consumer resistance to paying significantly higher prices for innovation. Pricing power is key to revenue growth in a mature category especially when Gillette‟s strategy has historically been to drive revenue growth per consumer and not volume growth.

Competitive environment Gillette faces intense competition in most markets. Its products compete with widely advertised, well-known, branded products, as well as private label products, which typically are sold at lower prices. The company‟s survival depends upon its ability to adopt itself in this kind of competitive environment.

10.3. Organizational Structure Gillette India now has the organizational structure of P&G worldwide. The key elements are: 1. Global Business Units (GBU‟s)- build major global brands with robust business strategies. P&G moved from four business units based on geographical regions to seven business units based on global product lines. The various GBUs are: • Baby Care/Family Care • Beauty Care/Feminine Care • Fabric & Home Care

IIM Indore

Group 6 Section B

• Snacks & Beverage • Health Care 2. Market Development Organizations (MDO) - build local understanding as a foundation for marketing campaigns. P&G has eight MDO. • North America • Asia/ India/ Australia • Northeast Asia • Greater China • Central-Eastern Europe/ Middle East/ Africa • Western Europe • Latin America 3. Global Business Service(GBS)- provide business technology and services that drive business success. Different GBS Centers are: • GBS Americas located in Costa Rica • GBS Asia located in Manila • GBS Europe, Middle East & Africa located in Newcastle

IIM Indore

10.4. Product Portfolio 

Gillette India has the following product lines:



Double edge- 7‟o clock and Wilkinson sword



Disposables-Wilkinson sword twin 2, Gillette presto



Systems- PII, Sensor, Vector, Mach3



Shave prep- Gel and foams



Batteries- Duracell



Oral care- Oral B toothbrush

Group 6 Section B

IIM Indore

Group 6 Section B

10.5. Financial Analysis 10.5.1.

Share holding pattern

10%

2%

Indian Promoters 47%

Foreign Promoters Non- Institutional Investors Institutional Investors

41%

Chart 2: Break up of ownership in 2006

There has been a great shift in the shareholding pattern of the company since its entry into Indian market in 1984. Gillette entered India through a joint venture as a minority shareholder. Its share increased to around 75% in 2002. In 2006, almost 88% of the company was owned by the promoters (foreign and Indian). Out of the remaining 12%, 10% is owned by non-institutional investors and thus, only 2% lies in the hands of institutional investors.

10.5.2.

Profit & Loss Analysis

Net sales of the company grew at a CAGR of 45% during the period 1997-2000. After that there was a downfall in the company and for the first time, Gillette India ended the year with a net loss of around Rs 28 crores. This was primarily due to significant increase in employee cost and other miscellaneous expenses. In 2001, revenues declined to Rs 453 crores from Rs 477 crores a year earlier. Revenue figures further reduced by around 18% in 2002 to approximately Rs 385 crores. Although due to

IIM Indore

Group 6 Section B

restructuring, the damage was controlled to some extent in 2003, yet there was a further fall of 3% in the revenue figures. Since it‟s restructuring in 2003, company has recorded double digit growth rate in revenues. However, the growth rate was moderate in 2005 as compared to the figures in 2004.

Revenues 600 500 400 300

Revenues

200 100 0 2000

2001

2002

2003

2004

2005

Chart showing revenue figures over last 6 years Revenue Growth 20.00% 15.00% 10.00% 5.00% 0.00% -5.00%

Revenue Growth 2001

2002

2003

2004

2005

-10.00% -15.00% -20.00%

Chart showing Revenue growth over last 5 years

Despite higher revenue growth in late1990s, operating margin of the company declined from 20% in 1997 to 14% in 2000. Similarly, net profit margin almost remained constant at around 5% over the time period. The situation worsened further in 2001, and company reported a net loss of 6%.

IIM Indore

Group 6 Section B

In 2002, Gillette undertook restructuring initiatives and it took the company two years to revive its operations. In 2003, company recorded a net profit of Rs 44.82 crores. It entered into contracts with new suppliers for better raw material prices and also brought about a significant reduction in wastages. As a result of which, raw material cost as percentage of net sales declined from 46% in 2001 to 31% in 2003. Further, miscellaneous expenses reduced to just Rs 15.57 crores in 2003 from Rs 82.68 crores in 2001. The net profit margin increased to 12.45% in 2003 and the operating margins stood at 25.90%. Improved financial performance led to an increase of almost 120% increase in share prices over the year 2003. 30.00% 25.00% 20.00% 15.00% Operating Margin

10.00%

Net Profit Margin

5.00% 0.00% -5.00%

2000

2001

2002

2003

2004

2005

-10.00%

Chart showing profitability margins over last 6 years

Segmental Revenue

Revenue

by

Business

Q2,

Q2,

%

2006

2005

Change (YOY)

Segment Grooming

113.99

90.63

25.78%

Portable Power

6.97

6.71

3.87%

IIM Indore

Group 6 Section B Oral Care

18.54

14.75

25.69%

Total

139.5

112.09

24.45%

Grooming

40.39

26.37

53.17%

Portable Power

0.62

1.82

-

EBIT

by

Business

Segment

65.93% Oral Care

0.91

4.46

79.60%

Total

41.92

32.65

Grooming

35.43%

29.10%

Portable Power

8.90%

27.12%

Oral Care

4.91%

30.24%

28.39%

EBIT Margins

Table showing segmental performance

The above table clearly shows that major chunk of company‟s revenues and profits come from Personal Grooming segment. In Q2 2005, almost 80% of company‟s revenues and profits came from grooming division. Oral care contributed around 12% of the revenues and remaining came from portable power division (Duracell).

In Q2 2006, although oral care division witnessed a growth of 26% in terms of revenues, but the profit figures declined by almost 80%. This was primarily due to increased

IIM Indore

Group 6 Section B

competition leading to higher selling expenses. Thus, in this quarter, grooming division contributed more than 90% of operating profits.

10.5.3.

Balance Sheet Analysis

Year

Debt Equity Ratio

Fixed

Assets

Turnover

Ratio 2000

0.79

3.34

2001

0.45

1.99

2002

0.00

1.74

2003

0.00

1.94

2004

0.00

2.76

2005

0.00

3.42

Table showing key ratios After restructuring its operations in 2002-03, company has adopted a zero debt policy. It has become an all equity firm with no reliance on debt. Thus, debt equity ratio of the company reduced to 0 from 2002 onwards from 0.45 in 2001. All the debt was paid off with the funds obtained from the parent company as capital grant. This way company reduced its financial risk to zero. Fixed Assets turnover ratio has also increased from 1.99 in 2001 to 3.42 in 2005. This shows that there has been improved and better utilization of company‟s fixed assets.

Ratios

2000

2001

2002

2003

2004

2005

Net Profit Margin

5.53%

-6.13%

1.68% 12.45% 14.99% 15.09%

Assets Turnover ratio

1.12

1.13

1.40

1.26

1.29

1.31

Leverage

1.79

1.45

1.00

1.00

1.00

1.00

IIM Indore

Group 6 Section B

ROE

11.15% -

2.35% 15.63% 19.33% 19.74%

10.07% Table showing DuPont Analysis

From the table we can observe that, Return on Equity (ROE) of the company has increased from 10.07 % in 2001 to 19.74% in 2005. If we look at the three individual components of ROE, we can see that the fall in leverage has been very well compensated by an increase in profitability. Further, assets turnover ratio has remained almost constant over the years. This shows that the company is following a policy of increasing margins to maximize shareholder‟s wealth. During

restructuring,

company concentrated

on

reducing

its

working

capital

requirements through efficient better inventory management and following a stringent credit policy. Gillette went for direct distribution model (Gillette- Distributor- Retailer) to reduce its investment in providing credit to retailers. Thus, the cash conversion cycle of the company reduced from 36 days in 2001 to almost 0 days in 2003. Working capital turnover ratio increased from 3.11 in 2001 to 3.93 in 2003 reflecting better working capital management by the company. However, in the subsequent years the ratio again declined due to higher cash balance maintained by the company. Further, reduced investment in debtors was compensated by an increase in loans & advances to suppliers. Thus, Gillette could not build on the benefits of restructuring in terms of better utilization of working capital.

Year

Working

Current

Debtors

Creditors

Inventory

Cash

Capital

Ratio

Collection

Payment

Holding

Conversion

Period

Period

Period

Cycle

56

52

49

53

Turnover Ratio 2000 4.89

2.23

IIM Indore

Group 6 Section B

2001 3.11

1.99

66

95

65

36

3.75

1.71

41

111

57

(13)

2002

2003

0 3.93

2.02

24

71

47

2.66

2.15

24

70

41

(5)

2.33

2.02

24

68

32

(12)

2004

2005

Table showing Working Capital Management and Liquidity of Gillette

10.5.4.

Cash Flow Analysis

Cash flows in a company can be broadly divided into three areas:

Cash Flow from Operating Activities Cash flows from this segment have not seen any improved over the past four years despite a rise in revenues. In fact, cash flows have declined to Rs 76.58 crores in 2005 from a high of 124.44 crores in 2001.

Cash from Financing Activities Company has not issued any new equity over the last five years. During 2001, company paid off most its debt which has resulted in negative cash flows from this segment. Majority of the cash flows in this segment comprise of dividends paid by the company.

Cash from Investing Activities

IIM Indore

Group 6 Section B

Gillette has consistently incurred capital expenditure to purchase its fixed assets. Further, company has been consistently earning interests on its loans & advances which has resulted in positive cash flows in few of the years.

10.5.5.

Comparative Analysis

In the personal care segment, HLL is by far the largest player in the industry. But P&G Hygiene enjoys highest net profit margin of approximately 24% on a turnover of around Rs 520 crores. Gillette also has the reputation of high margin company in the industry. In the latest quarterly results, Gillette reported a margin of around 21% in this segment. It is followed by Colgate Palmolive (15%) and HLL (12%) and Reckitt Benckisire (11%). Companies

Current Ratio

Fixed

Assets ROCE (%)

Turnover Ratio Hind. Lever

0.82

5.1

56.62

Gillette India

1.91

1.82

32.93

Johnson & Johns.

1.04

6.21

164.01

P & G Hygiene

1.6

4.24

74.91

Colgate Palmolive 0.97

3.32

71.69

Industry Average

4.31

52.86

0.97

Table showing key ratios of Gillette and its competitors

The above table clearly shows that Gillette has a better short term solvency as compared to its competitors. It has a current ratio of 1.91 as against the industry average of 0.97. However, company has not been able to make the best utilization of its fixed assets. Therefore, it has fixed assets turnover ratio of 1.82 as against the industry average of 4.31. Similarly, Gillette has lower returns on its capital employed in the business.

IIM Indore 10.5.6.

Group 6 Section B

Valuation

The share of the company declined from Rs 700 in 2001 to Rs 317 in 2003 because of poor financial performance in terms of reduced revenue figures and margins. However, in 2003, the share price more than doubled to Rs 713.90 in Jan 2004. This was the result of increased profitability due to restructuring efforts done by the company. In the recent year, share prices have increased by around 20%. The market capitalization of the company has increased from Rs 845 crores in 2001 to Rs 2695 crores in 2007.

Year

Share Price

Market Capitalization (Rs crores)

1-Jan-01 699.95

845.06

269.00

1,022.51

317.00

2,292.22

713.90

2,205.20

699.95

2,392.11

735.00

2,802.74

869.95

2,695.19

1-Jan-02

1-Jan-03

1-Jan-04

1-Jan-05

1-Jan-06

1-Jan-07

Table showing share prices and market capitalization

IIM Indore

Group 6 Section B

Note: All prices are adjusted for bonus and rights issue In the recent years, company has adopted a liberal dividend policy. In 2005, company declared 100% dividends. Dividend Announcements Year

Dividend Dividend

End

(%)

2005

32.59

100

2004

27.7

85

2003

27.7

85

2002

8.96

27.5

2001

7.33

22.5

2000

4.88

15

1999

3.86

30

1998

2.83

22

Table showing Dividend announcement

IIM Indore

Group 6 Section B

10.6. Competitor’s Analysis 10.6.1.

Colgate Palmolive

Colgate-Palmolive has three products in the shaving cream/gel/foam segment. Palmolive shaving creams are enriched with revitalizing sea minerals, this rich formula refreshes and against

skin protects razor

irritation. They are formulated with soothing Aloe-Vera, this rich foam is mild on skin and helps guard against irritation. One variant is a creamy formula featuring palm extract to hydrate and moisturize skin. This cream in a long thin tube is very easy to use. As you just put onto your face and use your shaver and it will get all your stubbles of your face leaving it nice and smooth.

10.6.2.

Proctor & Gamble

Old Spice is one of the top brands across world in the shaving products category. In the shaving cream market it has a good hold over the perception of the consumers. It is recognized by its fragrance and is seen as a macho brand. It is has products in all the three categories (cream, gel and foam). Old Spice is also present in after shave market and its after shave product is very dominant in the market. It has a lot of products in the shaving products market. This also makes the brand much stronger than its competitor.

IIM Indore 10.6.3.

Group 6 Section B

HLL

Hindustan Lever Limited is the biggest player in the Indian FMCG market. It has two brands in the shaving cream segment. Axe and Denim. HLL has extended its brand „Axe‟ which is a success in the deodorant market to the shaving creams. The Axe shaving cream has very good awareness scores among the consumers. It comes in various fragrances, colors and its packaging also has many variants. Denim is another shaving cream from the house of HLL. This is almost in the same segment as that of Axe in terms of price and product attributes.

10.6.4.

Godrej

Godrej is the domestic brand of shaving cream for Indian market. Recently Godrej has invested heavily for the expansion in this market. They have bought a shaving cream manufacturing and marketing company in South Africa and are looking forward to some other alliances for the presence in global market. The shaving cream from Godrej is among the lowest priced shaving cream in the market. It is targeting the price sensitive customer in the Indian market. But the quality of the product is satisfactory in spite of its near about half the price than its competitors. Although, variants are few in terms of size, fragrance and packaging, it is still in the shopping list of many consumers.

IIM Indore 10.6.5.

Group 6 Section B

Other Competitors

Brands like Fa, Dettol and Park Avenue are also present in the market. Although they do not account for a very significant market share but then also the awareness of these brands is fair enough to consider them as competitors. Dettol is associated with antiseptic attributes and is quite popular with health conscious consumer. Other brands like Fa and Park Avenue focus on the regular consumer by portraying themselves as a sporty cool brand by associating with adventurous lifestyles.

IIM Indore

Group 6 Section B

10.7. Customer Survey Questionnaire

Customer Survey: Questionnaire Name: Date: Name of interviewer: 1. What is your age? Less Than 18 18-23 years 23-28 years 28-45 years Greater Than 45

2. What is your occupation? Government Service Private Service Business Self-Employed Student Homemaker Others (please specify) __________

3. How often do you shave? Daily Alternate Days Twice a week Once a week At irregular intervals

IIM Indore 4. What type of shaving product do you prefer to buy? Shaving Cream Shaving Gel Shaving Foam

5. Where do you generally buy the shaving cream/gel/foam? Grocery shop Super market/ Departmental stores Specialty Stores Chemist shop Any shop near by

Group 6 Section B

Group 6 Section B 6. Which brands of shaving cream/foam/gel are you aware of? (Unaided recall) a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

7. Which brands of shaving cream/foam/gel are you aware of? (TOM – tick only one) a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

8. Which brands of shaving cream/foam/gel are you aware of? (Aided recall) a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

9. Which of the following brands do you use personally? (Tick only one) a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

10. Which of the following brands have you bought since the last six months? a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

11. Please rate the following sources of information according to the level of importance of each source (1 – Least Important; 5 – Most Important)

IIM Indore

Group 6 Section B

Friends

___

Family

___

Retailer

___

Advertisements

___

Packaging

___

Magazines or newspapers Saloons

___

Any Other

___

___

12. How satisfied are you with Gillette shaving foam/gel? (if used) Highly Satisfied Moderately Satisfied Neither satisfied nor dissatisfied Moderately Dissatisfied Highly dissatisfied

13. If your FIRST preference is not available then what do you do? Purchase some other brand from the same shop/ store. Purchase the same brand from some other store.

14. If the price of your most preferred brand increases what would you do? Shift to another brand Still buy the same brand

15. If you choose to shift then which Brand will you prefer? Page | 73

IIM Indore

Group 6 Section B

a) Fa

b) Old Spice

c) Palmolive

d) Godrej

e) Axe

f) Denim

g) Gillette

h) Park Avenue

i) Dettol

j) Blue Stratos

k) V-John

l) 7 O‟Clock

m) Nivea

n) Others (Please specify)

16. Please rate the factors given below on scale of 1 – 5 based on the importance they hold for you in purchase decision of a shaving cream/foam/gel. (1 least important to 5 most important)

No Attributes / Benefits a

Price

b

Availability in stores

c

Fragrance

d

Stylish package design

e

Brand name

f

Color of the shaving cream/foam/gel

g

Foam formation

h

Antiseptic attribute

i

Ease of Use

j

It keeps my skin soft

k

Ingredients

l

Offers/Discounts

Ratin g

17. Please rate the following brands on the scale of 1-5 for the attributes mentioned below i.e. write 5 if you feel the attribute is good enough to fully satisfy you and mark 1 if you feel the attribute could not satisfy you. (1 fully dissatisfied to 5 fully satisfied – Show cards with the ratings on them) Page | 74

IIM Indore

Group 6 Section B

Attributes / Benefits

Brands 1

No

Old Spice

a

Price

b

Availability in stores

c

Fragrance

d

Stylish package design

e

Brand name

f

Color of the shaving cream/foam/gel

g

Foam formation

i

Antiseptic attribute

j

Ease of Use

k

It keeps my skin soft

l

Ingredients

M

2

3

4

5

6

Dettol

Godrej

Gillette

Denim

chosen

Brand

Offers/Discounts

10.8. Focus Group Discussion Format 

Introduction



Presentation of the Purpose



Discussion of the procedure

FGD:

Focus Group Discussion Page | 75

in Q 9

IIM Indore

Group 6 Section B

We conducted two FGDs for our product- Gillette Shaving gel/foam. We had also conducted interviews with barbers from the biggest salon in Rau. Focus Group 1: 3 college students from SGSITS Indore (Age : 18-22) Focus Group 2: 6 employees (managerial level) of ICICI Branch at M.G Road (Age : 2545). Following are the questions that helped us in moderating the entire discussion and the answers that majority in the group agreed to: 1) Type of shaving: cream/gel/foam  FG 1: The college students now use gel and were using cream before 

FG 2: The office goers preferred foam for its ease of use and otherwise used cream/gel

2) What product first comes to your mind when I say Shaving cream?  FG 1: The college goers were unanimous – Gillette 

FG 2: The older persons went for Godrej/ Palmolive and the three younger ones said Gillette.

3) Brands you are aware of?  FG 1: came up with many brands, but not only the traditional ones. (Old Spice, Palmolive, Godrej, Axe, Denim, Gillette, Park Avenue, Dettol, V-John) 

FG 2: came up with many national brands ( Old Spice, Palmolive, Godrej, Gillette, Dettol)

4) How often do you shave?  FG 1: Once or twice a week (no social compulsion, limited pocket money) 

FG 2: Every day

5) The reason for shaving?( official/social compulsions, like to be clean shaven)  FG 1: a time for oneself, like shaving 

FG 2: mainly office and personal (read “wife”) compulsions, also do not like to be seen unshaven (amounts to being unclean)

6) Does the brand of the cream/gel really matter for shaving?  FG 1: no. only gets the job done. (The group was loyal to the razor- Gillette)  Page | 76

FG 2: not really. (This group too was loyal to the razor- Gillette)

IIM Indore

Group 6 Section B

7) Self shave or salon? why?  FG 1: Self. Other brands, hygiene, have lots of time for self shave 

FG 2: Self. Hygiene, time factor, it is a time for one self.

8) Have you switched brands?  FG 1: yes, quite frequently. 

FG 2: no. not very recently. (Just one person was into experimenting with new products every time he goes to buy shaving cream/gel/foam)

9) If so, why?  FG 1:just to try out new brands. Offers. (Inference: They haven‟t settled to for a brand) 

FG 2: only sometimes. for a change or unsatisfied. More loyal to brands.

10) Where do you purchase?  FG 1: the nearest place or Big Bazaar 

FG 2: with regular shopping

11) Currently which brand do you use? Are you satisfied?  FG 1: Gillette, Cinthol, one used electric shaver 

FG 2: Gillette, Denim

12) Information search?  FG 1: ads don‟t influence. Decision is made at the point of purchase 

FG 2: ads don‟t influence. Many times decision is made before coming to store.

13) Do you buy the product yourself or your family members buy it for you?  FG 1: brand influenced by brother or father 

FG 2: self purchase

14) Have you seen an ad for shaving cream?  FG 1:no, not really. Creams aren‟t as important as aftershave and razors. 

FG 2: Don‟t have time to watch television, especially ads.

15) What do you expect from a shave? (soft skin/get the job done/fragrance etc.)  FG 1: smoothness, get the job done 

FG 2: get the job done, not harsh on skin

16) The attributes you look for in your shaving cream/gel/foam? Page | 77

IIM Indore

Group 6 Section B

The two groups together came up with 12 attributes after a few minutes. They had 4 attributes that overlapped as shown.

FG 1: Price Stylish package design Antiseptic attribute Color of the cream/foam/gel Lather formation Availability in stores Offers/Discounts Brand name FG 2: Ease of Use Keeps the skin soft Ingredients Fragrance Lather formation Availability in stores Offers/Discounts Brand name COMMON ATTRIBUTES: Lather formation, Availability in stores , Offers/Discounts, Brand name.

17) What do you expect from a shaving cream?  FG 1: smooth shave 

FG 2: good lather, smooth and quick shave

18) Are you aware that weight to weight Gillette is costlier than all other brands? Page | 78

IIM Indore

Group 6 Section B



FG 1:yes



FG 2:yes

19) Do you know the difference in pricing of Gillette?  FG 1:The group wasn‟t surprised with the price catalogue we provided 

FG 2: The group was surprised

20) Would you still keep buying Gillette even if the price was further raised?  FG 1: Depends on the pocket money we get 

FG 2: Yes

21) What do you think of Gillette?  FG 1: The best brand 

FG 2: Better compared to others

22) Why Gillette?  FG 1: Good quality of shave 

FG 2: Better shaving experience, very satisfied.

10.9. Age Profile of Sample Population

10.10.

Page | 79

Shaving Product Preference

IIM Indore

Group 6 Section B

10.11.

Place of Buying

10.12.

Recall Pattern

Unaided Recall of Gillette Brand

77%

Top of Mind Recall of Gillette Brand 56% Page | 80

IIM Indore

Group 6 Section B

Aided Recall of Gillette Brand 89%

10.13.

User Preference

10.14.

Brand Satisfaction of Gillette

10.15.

Brand Loyalty in Shaving Cream/Gel/Foam Market

If your FIRST preference is not available then what do you do? Option 1 Page | 81

Purchase some other brand from the same shop/ store

IIM Indore

Group 6 Section B

Option 2

Purchase the same brand from some other store

10.16.

Price Sensitivity in Shaving Cream/Gel/Foam Market

If the price of your most preferred brand increases what would you do? (Q 14) Option 1

Shift to another brand

Option 2

Still buy the same brand

Page | 82

IIM Indore

10.17.

Group 6 Section B

Fishbein Analysis

Fishbein Attitude Model n



Ao =

biei

i=1

where, Ao = Attitude toward the object (brand) bi = belief about the brand‟s possession of the attribute ei = evaluation of the attribute as being good or bad n = there are a limited number (n) of attributes which the person will consider

10.18.

Page | 83

Brand Preference based on Individual Attitude score

IIM Indore

Group 6 Section B

10.19.

Average attitude perception score of each brand

10.20.

Factor Analysis Total Variance Explained

Total

Initial Eigenvalues

Extraction Sums of Squared Loadings

% of Variance

Cumulative %

Total

% of Variance

Cumulative %

1

2.905

24.208

24.208

2.905

24.208

24.208

2

1.880

15.665

39.873

1.880

15.665

39.873

3

1.501

12.510

52.383

1.501

12.510

52.383

4

1.164

9.699

62.082

1.164

9.699

62.082

5

.963

8.029

70.111

6

.837

6.977

77.088

7

.768

6.403

83.491

8

.574

4.781

88.272

9

.500

4.163

92.435

10

.411

3.426

95.861

11

.266

2.217

98.078

12

.231

1.922

100.000

Extraction Method: Principal Component Analysis.

Page | 84

IIM Indore

Group 6 Section B

Component Matrix(a) Component 1

3

4

Price

-.317

.654

.391

-.048

Availability in stores

-.006

.347

.429

-.049

Fragrance

.549

.086

.455

.203

Stylish package design

.329

-.144

.628

.373

Brand name

.653

-.011

.023

-.448

.390

-.589

.065

.446

Foam formation

.744

-.084

.145

-.310

Antiseptic attribute

.654

-.026

-.197

-.087

Ease of Use

.742

.018

-.302

-.011

It keeps my skin soft

.341

.677

-.230

-.138

Ingredients

.153

.366

-.584

.597

Offers/Discounts

.379

.596

.113

.317

Color of

the shaving

cream/foam/gel

Extraction Method: Principal Component Analysis. a 4 components extracted.

Page | 85

2

IIM Indore

Group 6 Section B

Scree Plot

3.0

2.5

Eigenvalue

2.0

1.5

1.0

0.5

0.0 1

2

3

4

5

6

7

8

Component Number

Page | 86

9

10

11

12

IIM Indore

10.21.

Page | 87

Group 6 Section B

Perceptual mapping

IIM Indore

Page | 88

Group 6 Section B

IIM Indore

Page | 89

Group 6 Section B

IIM Indore

10.22.

Group 6 Section B

Cluster Analysis

Two Cluster Analysis Final Cluster Centers Cluster 1

2

Attributes

4.0

3.2

Price Sensitive

3.4

2.7

3

2

2.8

2.0

Point of Purchase Additional Features

Number of Cases in each Cluster

Cluster

1

36.000

2

48.000

Valid

84.000

Missing

.000

Three Cluster Analysis Final Cluster Centers Cluster 1

3

Attributes

2.9

4.1

3.7

Price Sensitive

3.4

1.8

2.8

2

2

3

1.8

2.3

2.8

Point of Purchase Additional Features

Number of Cases in each Cluster

Page | 90

2

IIM Indore

Group 6 Section B Cluster

1

28.000

2

22.000

3

34.000

Valid

84.000

Missing

.000

Four Cluster Analysis Final Cluster Centers Cluster 1

2

3

Attributes

4.2

2.0

3.6

3.8

Price Sensitive

3.2

2.5

2.5

3.5

3

3

2

3

3.6

2.6

2.2

1.6

Point of Purchase Additional Features

Number of Cases in each Cluster Cluster

Valid Missing

Page | 91

4

1

16.000

2

10.000

3

30.000

4

28.000 84.000 .000