Gillette Indonesia Case Study

Marketing Management Unit MKTG1289

Group 2 - Alhadi Almusawi, Jeremy Barnett, Angela Collard, Naomi Ebert Smith & Blake Gray

Company Introduction
An established household name Innovator in razor technologies World leader in personal hygiene products Promotion by triumvirate of sporting stars (Woods, Fedrer, Henry) Diversied product range Company buyouts: product diversication/elimination Global expansion - new markets

History
2005 Proctor & Gamble acquired The Gillete Company 1996 + 5 yrs produce 230 million blades p/year 1996 increase production 168 million blades, 50 million to export 1995 manufactured 150 million blades, 46 million exported 1972 manufacturing plant established 1971 Gillette entered Indonesia 1901 The Gillette Company founded in Boston, Massachussets

Has Gillette Enjoyed a First Mover Advantage?

Yes, through effective market entry!

Market entry with signicant investment Established manufacturing plant for local and export sales Brand equals high quality blades Gillette used to mean blade in Indonesian Signicant market share

SWOT Analysis
Strengths Weaknesses

! Increase Western grooming practices ! Large population ! 48% market share by 1995 ! Effective distribution system ! Local and export manufacturing ! Brand = high quality ! Rising incomes, more sales revenue ! Effective marketing campaigns

! Inappropriate global advertisements ! High manager turnover ! Cultural behaviour creates manager/
distributor problems ! Legal system less supportive outside Jakarta ! Intense competition for supermarket shelf space ! Antiquated distribution methods ! Many different languages spoken

SWOT Analysis
Opportunities Threats

! Over 7% GDP growth in 20 years ! Stable political system ! Economic improvements ! Increase in per capita income ! Two million people to enter workforce ! Population earning income growing ! Shaving incidents of 5-10 times per
month + population + per capita income = increased sales

! Lower quality products by competition

(BIC and Bagus) ! Grooming products a luxury ! Main competitors are cheaper ! Low shaving incidents and slow growing beards ! Government regulations on direct distribution or direct imports of products

What factors determine demand for razor blades?

Desire to improve image Inuence of western grooming practices Trend-setters - college students and graduates Inuences on razor purchase: Effectiveness (closeness of shave, reduced shaving time, no cuts etc.) Shelf Life (re-usability without reducing effectiveness) Affordability (value for money)

How is Gillette doing in Indonesia?

Sales
In country shaving product sales of $19.6 million in 1995 Projected in-country shaving product sales of $27.6 million in 1996 Total sales revenue expected to increase by 40% in 1996 Prot from operatons forecast at 20% in 1996

Market Penetration
97% brand awareness 55% of the brands used most often 90% of the premium priced segment 60% rise in sales through implemented distribution methods

Production & Supply

Processes & efciencies reduce production time Capacity increased Female razors - customs issues

How can demand be increased?

Increase customers and frequency of use
Market blade over knife advantages Inferior quality blades: show disadvantage Market to women Consider introduction of budget product Market complementary products (e.g. shaving creams) Unfashionable: stubble

Recommendations & Solutions - Top 11

Advertising & Promotion
1.! 2.! 3.! 4.! 5.! 6.! 7.! 8.! 9.! Persuade customers to shave more often Upgrade to higher-end products Strengthen promotional presence at POS Good relationships with supermarket segment Incentives for supermarket shelf space Gifts, lucky draws, coupons and redemption systems Culturally appropriate marketing in local language Promote use of shaving creams and other products Targeted promotion to female segment

HR and Training
10.! 11. Overcome misunderstandings re: different cultural behaviours Empower sales team to: Help distributors update distribution methods Educate distributors and local market about shaving concepts