Gillette

Gillette Recommendations for growth in the shaving market in Indonesia

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Recommendations

Rather than focusing solely in increasing the number of men who shave or the incidence of shaving, shift current users to the higher-margin disposable razors and system blades. Justifications for this decision and proposed marketing plan are detailed below. In 2006, these actions should increase unit sales of disposables and system blades while simultaneously increasing profit by over $4.6 million.

Why You Should Shift Users to Higher-Margin Products

Moving users up to disposables and systems is the best way to increase income. The most popular double-edge blades only give a gross margin per unit of 5.5 cents, while systems blades generate up to 28.6 cents per unit. The population of higher income segments in Indonesia is increasing (see Exhibit 3) and these people are more likely to pay for the higher-margin products. There are many competitors in the double-edge market, but few make high-margin products and Gillette currently controls 90% of this segment. Shifting users to higher-margin products will require additional advertising to increase brand awareness, so there could be an increase in the number of people shaving. Users who move up to disposables and systems may also increase the number of times they shave due to the convenience and ease of use of the products.

You Must Increase Brand Awareness to Shift Users to Higher-Margin Products

For users to switch from double-edge blades to disposables and systems, they first must be aware that alternatives exist. System blades have low brand awareness, with only 9% to 12%, compared to 14% to 97% for double-edge blades. The Goal Red Blade has a conversion to use rate of 56%, which is the highest among Gillette product. Many of the users you would want to switch currently buy Goal Red but are not aware of the system blades. Though systems blades have the highest gross...