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Gillette Marketing Report

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Gillette Marketing Report Powered By Docstoc
					        [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
IIM Indore                                                          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
IIM Indore                                                                     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
IIM Indore                                                   Group 6 Section B

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
IIM Indore                                                              Group 6 Section B



1.     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.
IIM Indore                                                             Group 6 Section B

2.    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.
IIM Indore                                                             Group 6 Section B

3.     History of Gillette


3.1.   Foundation of Gillette India
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
IIM Indore                                                            Group 6 Section B

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
IIM Indore                                                            Group 6 Section B

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)
IIM Indore                                                            Group 6 Section B

4.     Analysis of Gillette


4.1.   Financial Analysis
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 non-
strategic businesses to focus on profitable businesses. It started focusing on the
IIM Indore                                                              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
IIM Indore                                                                 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.
IIM Indore                                                                Group 6 Section B

5.     Personal Grooming Industry – An Outlook


5.1.   Industry Analysis
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:
IIM Indore                                                        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.
IIM Indore                                                          Group 6 Section B

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)
IIM Indore                                                             Group 6 Section B

5.3.   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.
IIM Indore                                                          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)
IIM Indore                                                          Group 6 Section B

5.6.   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)
IIM Indore                                                                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
      IIM Indore                                                              Group 6 Section B

      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
IIM Indore                                                              Group 6 Section B

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.
IIM Indore                                                               Group 6 Section B




             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.
IIM Indore                                                                Group 6 Section B




6.3.   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



GEL VARIANTS                   QUANTITY (gms)                  PRICE (Rs)

          Moisturizing        60 + 20                         53

          Sensitive Skin      60 + 20                         53

          Ultra Comfort       60 + 20                         53
IIM Indore                                                             Group 6 Section B

6.4.    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:
IIM Indore                                                          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
IIM Indore                                                          Group 6 Section B

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.
IIM Indore                                                             Group 6 Section B

7.     Market Research


7.1.   Research Purpose


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.
IIM Indore                                                              Group 6 Section B

7.3.   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.
IIM Indore                                                            Group 6 Section B

         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
IIM Indore                                                         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/-.
IIM Indore                                                          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)
IIM Indore                                                         Group 6 Section B

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
IIM Indore                                                           Group 6 Section B

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
IIM Indore                                                              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
IIM Indore                                                              Group 6 Section B

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.
IIM Indore                                                              Group 6 Section B

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.
IIM Indore                                                             Group 6 Section B

      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.
IIM Indore                                                         Group 6 Section B

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.
IIM Indore                                                           Group 6 Section B

8.    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.
IIM Indore                                                           Group 6 Section B

9.     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.
IIM Indore                                                            Group 6 Section B



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.
IIM Indore                                                              Group 6 Section B

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
IIM Indore                                                            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.
IIM Indore                                                           Group 6 Section B

         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.
IIM Indore                                                               Group 6 Section B




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
IIM Indore                                                             Group 6 Section B

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:
IIM Indore                                                             Group 6 Section B

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.
IIM Indore                                                            Group 6 Section B

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.
IIM Indore                                                            Group 6 Section B

10.    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.
IIM Indore                                                            Group 6 Section B

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 Wal-
Mart 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                                                     Group 6 Section B




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
IIM Indore                                                              Group 6 Section B



10.5. Financial Analysis
10.5.1.        Share holding pattern


                                 2%
                           10%




                                                               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%                                                                             Revenue Growth
                         2001          2002          2003          2004          2005
             -5.00%

         -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%
                2000     2001    2002    2003         2004      2005
      -5.00%

     -10.00%


Chart showing profitability margins over last 6 years



               Segmental Revenue

                                               Q2,           Q2,       %
                                               2006          2005      Change
               Revenue      by   Business
                                                                       (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%



              EBIT        by    Business
              Segment



              Grooming                     40.39     26.37     53.17%

              Portable Power               0.62      1.82      -
                                                               65.93%

              Oral Care                    0.91      4.46      -
                                                               79.60%

              Total                        41.92     32.65     28.39%



              EBIT Margins

              Grooming                     35.43%    29.10%

              Portable Power               8.90%     27.12%

              Oral Care                    4.91%     30.24%

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
           Turnover                     Period        Period        Period          Cycle
           Ratio

 2000
           4.89            2.23         56            52            49              53
IIM Indore                                                           Group 6 Section B


 2001
          3.11         1.99           66        95           65           36

 2002
          3.75         1.71           41        111          57           (13)

 2003                                                                       0
          3.93         2.02           24        71           47

 2004
          2.66         2.15           24        70           41           (5)

 2005
          2.33         2.02           24        68           32           (12)

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     0.97                 4.31                 52.86

   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                                                              Group 6 Section B

10.5.6.      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

                   1-Jan-02
                                     269.00            1,022.51

                   1-Jan-03
                                     317.00            2,292.22

                   1-Jan-04
                                     713.90            2,205.20

                   1-Jan-05
                                     699.95            2,392.11

                   1-Jan-06
                                     735.00            2,802.74

                   1-Jan-07
                                     869.95            2,695.19

                   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         skin
                           and           protects
                           against         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                                                              Group 6 Section B

10.6.3.       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                                                               Group 6 Section B

10.6.5.      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                                                     Group 6 Section B

   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


   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)



                                                                              Ratin
           No Attributes / Benefits
                                                                              g

           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



   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        2        3         4         5       6

No                                                                                          Brand
                                               Old
                                                       Dettol   Godrej   Gillette   Denim   chosen
                                               Spice
                                                                                            in Q 9


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        Offers/Discounts



     10.8. Focus Group Discussion Format
           Introduction
           Presentation of the Purpose
           Discussion of the procedure


     FGD:

                                  Focus Group Discussion
     Page | 75
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 : 25-
45).
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)
           FG 2: not really. (This group too was loyal to the razor- Gillette)


Page | 76
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.         Shaving Product Preference



Page | 79
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     Purchase some other brand from the same shop/ store

Page | 81
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                                                        Group 6 Section B

10.17.           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.           Brand Preference based on Individual Attitude score




Page | 83
IIM Indore                                                                                Group 6 Section B



10.19.           Average attitude perception score of each brand




10.20.           Factor Analysis
                                            Total Variance Explained

                                 Initial Eigenvalues              Extraction Sums of Squared Loadings

                      Total      % 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          2               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

                  Color of      the shaving
                                                       .390   -.589               .065       .446
                  cream/foam/gel

                  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

Extraction Method: Principal Component Analysis.

a 4 components extracted.




Page | 85
IIM Indore                                                         Group 6 Section B



                                     Scree Plot


               3.0



               2.5



               2.0
  Eigenvalue




               1.5



               1.0



               0.5



               0.0

                     1   2   3   4   5    6       7   8   9   10      11    12
                                     Component Number




Page | 86
IIM Indore                        Group 6 Section B

10.21.       Perceptual mapping




Page | 87
IIM Indore   Group 6 Section B




Page | 88
IIM Indore   Group 6 Section B




Page | 89
IIM Indore                                                                                                Group 6 Section B

10.22.         Cluster Analysis
Two Cluster Analysis
             Final Cluster Centers

                                                                     Cluster

                                                                 1                    2

                               Attributes                            4.0                  3.2

                               Price Sensitive                       3.4                  2.7

                               Point of Purchase                      3                    2

                               Additional Features                   2.8                  2.0



  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                   2                    3

                        Attributes                         2.9                  4.1                 3.7

                        Price Sensitive                    3.4                  1.8                 2.8

                        Point of Purchase                   2                    2                   3

                        Additional Features                1.8                  2.3                 2.8



  Number of Cases in each Cluster




Page | 90
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         4

                 Attributes                          4.2         2.0              3.6       3.8

                 Price Sensitive                     3.2         2.5              2.5       3.5

                 Point of Purchase                       3        3                2         3

                 Additional Features                 3.6         2.6              2.2       1.6




  Number of Cases in each Cluster

                                       Cluster       1             16.000

                                                     2             10.000

                                                     3             30.000

                                                     4             28.000

                                       Valid                       84.000

                                       Missing                         .000




Page | 91