Gillette Case Study

Question 1:

Gillette has pursued a range of business level strategies – exploiting core competencies in order to gain competitive advantage in the industry - including;

1. Aiming to achieve residual efficiency through maximising global marketing and managerial effectiveness

2. Production techniques used to create innovative products

3. Diversification into other product lines in order to maximise economies of scale.

Marketing and Managerial Effectiveness:

In 1988 Gillette began coordinating its global marketing efforts in order to achieve residual efficiency. While Gillette marketed its products to over 200 countries, several of the same products were marketed under different names, and it was necessary to consolidate its branding and marketing scheme into a more globally focused outlook. (The ‘Atra’ razor was introduced in Europe and was marketed under the name ‘Contour’). While the initial advertising and marketing cost exceeded. $10m US for a new product, Gillette used strategies in order to allow for such a huge initial cost, by decreasing marketing budgets for other existing products. Gillette strategy is to eliminate excess costs and focus on optimal operation on a global scale.

Innovation:

Gillette’s constant research and development of new innovative products has contributed largely to maintaining their advantage over industry competitors. Since Gillette manufactures products that are differentiable both on quality and cost, they are able to capture both ends of the market (capturing price sensitive at one end, and quality concerned at the other). In 1976 Gillette introduced the first disposable razor using both their ‘product design cost advantage’ (same design, just plastic) as well as innovation to ‘contain and switch’ customers from cheap products to quality products within their brand. Their next innovative product ‘Atra’ focused on quality and was not price sensitive.

Achieving economies of scale:

In an attempt to achieve...