TANUJA Pgp/19/293

GILLETTE INDONESIA
ASSIGNMENT

-CASE

PREPARATION

QUESTIONS

1. What factors determine the demand for blades? How can demand be increased?
The factors that determine the demand for blade are as follows:

Awareness among the population about the advantages of shaving by blades over traditional
equipment.
Income level of the population
Number of times men shave per month
Religious, social and cultural beliefs which many times forbid people from shaving at times.
Many a time it has also been a trend to flaunt long beard even in the first world countries
like during the hippie movement in USA.
Cost of blades and availability of blades.
Rate of beard growth (for examples Asian beards do not grow as fast as the Latino or
Caucasian beards)

The demand of blades can be increased in the following ways:

2.

By educating the people about the advantages of shaving by blades, over shaving by knives.
This can be done through mass advertisement.
By targeting the higher income segment to use sensors and razors over blades and
disposables.

How is Gillette doing in Indonesia? Has Gillette leveraged its first mover advantage?
Gillette was doing well in Indonesia.

Gillette had about 90% of the premium priced segment which they had developed.
Gillettes profit from operations was 20%
Gillettes brand awareness is very high (97 in case of double edge blades), this shows this the
advertising expenses of Gillette did not go in vain.
According to the statistics provided in the case, Gillette was able to successfully leverage the first
movers advantage because Gillette had about 90% of the premium priced segment which they had
developed, Gillettes profit from operations was 20% and Gillettes brand awareness is very high (97
in case of double edge blades), this shows this the advertising expenses of Gillette did not go in vain

3. How should Gillette accelerate the development of blade market in Indonesia?

As 5.1 Cut Costs & Reduce Prices results in both increased profits and increased market
share, it is the alternative that is suggested.

TANUJA Pgp/19/293
It should be noted that the success of this alternative is dependent on the assumption that
the lack of growth experienced by Gillette was primarily caused by the increase in price,
and not be another factor. Fortunately the alternative suggested is not drastic, so its
benchmarking and control can be performed in an environment with reduced risk.
This alternative also involves the reduction of costs, the details of which have not been
outlined in this report, but will need to be executed to ensure the increased profitability of
the alternative.
Gillette should increase its spending on advertisements and promotions to tap a larger and
growing market.
Gillette should target the middle class working and college going youth who are the trend setters in
shaving and are influenced by western grooming techniques. Moreover in the upcoming years a
significant amount of Indonesian people are going to shop in the malls and supermarkets as their per
capita income increases, so Gillette should target this supermarkets as distribution partners and can
directly supply the blades to the supermarkets cutting the distributors, which in a way would help to
decrease the operating and distribution costs.
Gillette should also pay attention to proving better infrastructure to the distributors of rural
Indonesia who supply blades to the mom and pop shops, proving better infrastructure and transport
methods will facilitate faster movement of goods.
3.

Refer the contribution calculations for Allan 1996 (E) growth estimates of 19% in the excel
template, attached. You may calculate the contribution of different products for Effio 1996 (E) for
27.5% growth. Further, prepare an income expense statement for 1996 (as in Exhibit 3/ 4) based on
revised 27.5% growth estimate of Effio. (you may assume the same product mix of Allan 1996 E
for estimating contributions for Effio's growth estimate of 27.5%

Excel file attached.