Brand Management: Gillette

[BRAND MANAGEMENT] Gillette
Introduction:
Gillette is a brand of Procter & Gamble currently used for safety razors, among other personal care products. Based in Boston, Massachusetts, United States, it was one of several brands originally owned by The Gillette Company, a leading global supplier of products under various brands, which was merged into P&G in 2005. The original Gillette Company was founded by King Camp Gillette in 1895 as a safety razor manufacturer. On October 1, 2005, Procter & Gamble finalized its merger with The Gillette Company. As a result of this merger, the Gillette Company no longer exists. Its last day of market tradingsymbol G on the New York Stock Exchangewas September 30, 2005. The merger created the world's largest personal care and household products company. In addition to Gillette, the company marketed under Braun, Duracell and Oral-B, among others, have also been maintained by P&G. The Gillette company slogan is "The Best a Man Can Get". The Gillette Company's assets were initially incorporated into a P&G unit known internally as "Global Gillette". In July 2007, Global Gillette was dissolved and incorporated into Procter & Gamble's other two main divisions, Procter & Gamble

Beauty and Procter & Gamble Household Care. Gillette's brands and products were divided between the two accordingly.
Origins:
On November 15, 1904, patent #775,134 was granted to King C. Gillette for a safety 'razor'. King Camp Gillette was born in Fond du Lac, Wisconsin in 1855. To support himself when the familys home was destroyed in the Chicago Fire of 1871, Gillette became a traveling salesman. This work led him to William Painter, the inventor of the disposable Crown Cork bottle cap, who assured Gillette that a successful invention was one that was purchased over and over again by satisfied customer.
Patent Drawing of the Razor In 1895, after several years of considering and rejecting possible inventions, Gillette suddenly had a brilliant idea while shaving one morning. King Gillette later said that the idea for an entirely new kind of razor, with a disposable blade, flashed into his mind as he looked in irritation at his dull blade. King Gillette had been searching for the right product, one that had to be used--and replaced--regularly, around which to build a business. His innovation in shaving technology was just such a product. Another safety razor, the Star, was already on the market at the time but, like the straight razor it was meant to replace, its blade needed stropping before each use and eventually had to be professionally honed. It was an entirely new razor and blade that flashed in his minda razor with a safe, inexpensive, and disposable blade that could be clamped over a handle, used until it was dull, and then discarded.

It took six years for Gillettes idea to evolve. During that time, technical experts told Gillette that it would be impossible to produce steel that was hard, thin, and inexpensive enough for commercial development of the disposable razor blade. Then in 1901, MIT graduate William Nickerson agreed to try. By 1903, he had succeeded. Production of the Gillette safety razor and blade began as the Gillette Safety Razor Company started operations in South Boston. Sales grew steadily. During World War I, the U.S. Government issued Gillette safety razors to the entire armed forces. By the end of the war, some 3.5 million razors and 32 million blades were put into military hands, thereby converting an entire nation to the Gillette safety razor.
About the Company:

Before the Merger:
The Gillette Company
The Gillette Company is the world leader in the men's grooming product category as well as in certain women's grooming products. Although more than half of company profits are still derived from shaving equipment--the area in which the company started--Gillette has also attained the top spots worldwide in writing instruments (Paper Mate, Parker, and Waterman brands) and correction products (Liquid Paper), toothbrushes and other oral care products (Oral-B), and alkaline batteries (Duracell products, which generate almost one-fourth of company profits). Gillette maintains 64 manufacturing facilities in 27 countries, and its products are sold in more than 200 countries and territories, with more than 60 percent of sales occurring outside the United States. The Gillette Company is a globally focused consumer products marketer that seeks competitive advantage in quality, value-added personal care and personal use products. We are committed to building shareholder value through sustained profitable growth.
Statistics:
Type: Public Company Stock Exchanges: New York London Frankfurt Zurich Industry: Consumer Goods

Found: 1901 as American Safety Razor Company Sales: $9.25 billion (2004) Employees: 29,400
Key Dates:
1901: American Safety Razor is founded by King C. Gillette. 1904: King Gillettes safety razor is patented 1918: Gillette manufacturers razors and blades for soldiers during World War I. 1942: The Cavalcade of Sports program is formed to oversee the company's various advertising and promotional activities in athletics. 1967: Braun AG is acquired. 1971: Company is organized into four domestic divisions: the Safety Razor Division; the Toiletries Division (featuring Right Guard antiperspirant); the Personal Care Division; and the Paper Mate division. 1991: Gillette ranks 20th among the Fortune 500. 1996: The Company acquires battery manufacturer Duracell.
Company History:
Entrepreneurial Beginnings:
With Gillette, Nickerson developed production processes to make Gillette's idea a reality, while Gillette formed the American Safety Razor Company to raise the estimated $5,000 they needed to begin manufacturing the razor. Gillette became president of the company and head of a three-man directorate. Production of the razor began early in 1903. The renamed Gillette Safety Razor Company began advertising its product in October 1903, with the first ad appearing in Systems Magazine. The company sold 51 razor sets at $5 each and an additional 168 blades--originally at 20 for $1--that first year. In 1904 Gillette received a patent on the safety razor; sales rose to 90,884 razors and 123,648 blades that year. The following year the company bought a sixstory building in South Boston. By 1906 the company had paid its first cash dividend. During the years before World War I Gillette steadily increased earnings through print advertisements, emphasizing that with his razor men could shave themselves under any conditions without cutting or irritation. At the same time, Gillette was expanding abroad. He opened his first foreign office, a London sales branch, in 1905. By 1909 he had established manufacturing plants in Paris, Montreal, Berlin, and Leicester, England, and offices in France and Hamburg, Germany. By 1923, foreign business accounted for about 30 percent of Gillette's sales. In 1910 King Gillette decided to sell a substantial portion of his controlling share of the company to the company's major investor, John Joyce. Gillette had

succeeded in fighting off challenges for control of the company from Joyce in the past, but this time he took approximately $900,000 and bowed out. Gillette retained the title of president and frequently visited foreign branches, but he no longer played an active role in company management. Joyce was made vice-president, a position he used to manage day-to-day operations. When Joyce died in 1916, his longtime friend, Edward Aldred, a New York investment banker, bought out the Gillette shares left to Joyce's estate and took control of the company. Aldred remained on Joyce's management team.
Wartime Production:
During World War I the U.S. government ordered 3.5 million razors and 36 million blades to supply all its troops. In order to meet military supply schedules, shifts worked around the clock and Gillette hired over 500 new employees. Gillette thus introduced a huge pool of potential customers to the still-new idea of selfshaving with a safety razor. After the war, ex-servicemen needed blades to fit the razors they had been issued in the service. In 1921 Gillette's patent on the safety razor expired, but the company was ready for the change. It introduced the "new improved" Gillette razor, which sold at the old price, and entered the low-priced end of the market with the old-style razor, renamed the Silver Brownie razor, priced at only $1. Gillette also gave away razor handles as premiums with other products, developing customers for the more profitable blades. Expansion and growth continued. The company also continued to expand abroad. In 1922 Gillette became royal purveyor to the Prince of Wales and in 1924 to King Gustav V of Sweden. More favorable publicity followed when the Paris office gave Charles Lindbergh a Gillette Gold Traveler set the day after he completed the first transatlantic flight. By the end of the decade, Gillette faced its first major setback. Auto Strop Safety Razor Company, owned by Henry J. Gaisman, filed suit for patent infringement after Gillette produced a new blade using a continuous-strip process similar to one originally presented to Gillette by Gaisman. Gillette resolved the suit by merging with Auto Strop, only to face another problem. When Gaisman checked the company's financial records, he found that Gillette had over-reported its earnings for the past five years by about $3 million. Confidence in Gillette fell, as did its stock. From a high of $125 early in 1929, the stock bottomed out after the disclosure, at $18. The crisis led to management reorganization. King Gillette resigned as nominal president, and died 14 months later at age 77. Gaisman became the new chairman of Gillette and Gerard B. Lambert, son of the founder of the Lambert Pharmacal Company--makers of Listerine--and a former manager there, came out of retirement to become president of Gillette. Lambert agreed to work for no salary with the guarantee of company stock if he could bring earnings up $5 per share. Under Lambert, the Gillette Company made a bold advertising move: it admitted that the new blade it had brought out in 1930 was of poor quality. The company then announced what became its most recognizable product, the Gillette

Blue Blade. Made under Gaisman's strip-processing method, the Blue Blade promised uniformly high quality. The Blue Blade kept Gillette the leader in the field, but profits remained disappointing throughout the Great Depression, as men increasingly turned to bargain blades. Lambert resigned in 1934 without meeting his goal of improving earnings and without receiving compensation from the company. He was replaced by a former Auto Strop executive, Samuel C. Stampleman, who had no more success. With profits at their lowest since 1915, the board of directors appointed Joseph P. Spang Jr. president in December 1938 in an effort to invigorate the company. Spang immediately restored the company's advertising budget, which had been cut to save money. Under this policy, Gillette's trademark sports advertising developed. Spang purchased radio broadcast rights to the 1939 World Series for $100,000. Despite a short series, in which the Cincinnati Reds lost four straight games to the New York Yankees, sales of Gillette's World Series Special razor sets were more than four times company estimates. This success encouraged more sports advertising. By 1942 the events Gillette sponsored were grouped together as the "Gillette Cavalcade of Sports." Although it eventually included the Orange Bowl, the Sugar Bowl, and the Kentucky Derby, in addition to the World Series and the All-Star game, the "Cavalcade of Sports" became best known for bringing boxing to American men. Spang attributed Gillette's continuing success to the sports advertising program, and sports programs remained an important vehicle for Gillette advertising. During World War II foreign production and sales declined, but domestic production more than made up for those losses. Almost the entire production of razors and blades went to the military. In addition, Gillette manufactured fuelcontrol units for military-plane carburetors. The backlog of civilian demand after the war led to consecutive record sales until 1957.
Postwar Diversification:
During the profitable postwar period Spang began to broaden Gillette's product line. The company had introduced Gillette Brushless shaving cream, its first, nonrazor, nonblade product, in 1936. In 1948 Spang began to diversify by acquiring other companies when he bought the Toni Company, a firm that made home permanents. In 1955 Spang purchased Paper Mate Company, a manufacturer of ballpoint pens. When Spang retired in 1956, Carl Gilbert became CEO. During the 1960s Gillette faced a threat to its bread-and-butter product, the double-edged blade. In 1962, the English Wilkinson Sword Company began to export stainless-steel blades to the United States. Wilkinson had developed a polymer coating that made it possible to put an edge on stainless steel, which resists corrosion, increasing the number of shaves from a blade.

Two of Gillette's domestic competitors--Eversharp, which made Schick blades, and American Safety Razor--rushed versions of the stainless-steel blade onto the market. Gillette, the market leader, was left behind without a stainless-steel blade of its own to compete, and profits slumped in 1963 and 1964. Gillette recovered much of its market share through a simple strategy: developing a better blade and initiating an aggressive advertising campaign that emphasized quality. After its own blade hit the market, Gillette's market share stabilized at 60-65 percent, compared to 70-75 percent before the challenge. Vincent C. Ziegler, head of the company's North American razor operation, had developed the razor-marketing strategy, and when Gillette reorganized on a product line basis in July 1964, Ziegler was named president. He took over as chairman of the board in 1965. The stainless-steel blade controversy taught Ziegler not to rely on one product. He saw Gillette as "a diversified consumer products company," and promoted both internal development of new product lines and acquisition of other companies. During the later 1960s Gillette pursued this strategy actively, but with mixed results. A new line of Toni hair-coloring products failed, as did Earth Born shampoos, luxury perfumes, and a line of small electronic items such as digital watches, calculators, smoke alarms, and fire extinguishers. Many of the companies Gillette acquired, such as Eve of Roma high-fashion perfume, Buxton leather goods, Welcome Wagon, and Hydroponic Chemical Company--which produced Hyponex plant foods--never found the fit with Gillette comfortable. The acquisitions led to shrinking profit margins. Gillette did have some successes. The Trac II twin-blade shaving system introduced in 1971 was a success, and the 1970 acquisition of the French S.T. Dupont gave Gillette the disposable Cricket lighter, which Gillette introduced to the U.S. market. By 1971 Gillette had four domestic divisions: the Safety Razor Division; the Toiletries Division, which featured Right Guard deodorant and antiperspirant; the Personal Care Division; and the Paper Mate division. By the mid-1970s Ziegler was ready to retire, and began to groom outsider Edward Gelsthorpe to succeed him, but Gelsthorpe left Gillette to join United Brands, now Chiquita Brands, 15 months after his appointment as president. Ziegler next tapped Colman M. Mockler Jr. to replace him when he retired in 1975. Mockler had been at Gillette since 1957 and had an entirely different background and style than Ziegler. He had come up from the financial end of the business rather than through sales. Diversification Moderated Starting in the Mid-1970s Mockler moderated Ziegler's diversification policy. He concentrated on a limited number of promising markets, particularly high-volume, repeat-purchase consumer items, selling Ziegler's least successful acquisitions--including Buxton in 1977, Welcome Wagon in 1978, and Hyponex and the Autopoint mechanical pencil business in 1979--and pumping money into promising companies compatible with already-existing manufacturing or distribution capabilities. Mockler stuck with the Cricket disposable lighter even though high introductory marketing costs and a costly price war with the Bic Pen Corporation, owned by the French Socit Bic, kept it from showing a profit.
Mockler also held on to the West German Braun company. Ziegler had bought the family-owned business in 1967 to gain entry to the European electric-shaver market and for the quality and style of its small-appliance designs. Mockler pared Braun's less profitable lines and rode out a Justice Department antitrust suit against the acquisition. The suit eventually prevented Gillette from introducing Braun shavers in the U.S. market before 1984. Mockler also increased Gillette's advertising budget and undertook companywide cost-cutting measures in all other divisions. Before the results of those policies could be seen, Mockler faced other problems. Growing fear of fluorocarbons, which deplete the earth's ozone layer, affected sales of products in aerosol cans during the 1970s. Gillette eventually developed new product-delivery systems to replace aerosol cans, such as nonaerosol pumps and roll-ons, for Gillette's alreadyestablished product line, and he put advertising dollars behind the products, which included Right Guard and Soft & Dri deodorants and Adorn and White Rain hair sprays. He also started development of a new deodorant product, Dry Idea, which feels dry when applied. Dry Idea was launched in 1978 after two years of development at a cost of $118 million. It quickly recovered a quarter of the deodorant market for Gillette. Gillette faced a more serious threat from Bic. In the 1960s Bic came to the United States with a 19 disposable pen, which made dramatic cuts into sales of Gillette's 98 Paper Mate pens. In the 1970s Bic attacked Gillette's Cricket disposable lighter with its own disposable lighter. Since the Cricket was more expensive to make--it had more moving parts than the Bic--Gillette was losing the price war. Lighters and pens, however, produced only 15 percent of Gillette's pretax profits; razor blades accounted for 71 percent of profits. When Bic began producing disposable razors and purchased American Safety Razor, with its 13 percent of the blade market, from Personna and Gem blades, Gillette had to respond. Gillette countered by competing with Bic on price while emphasizing the higher quality of its products. Gillette brought out the Eraser Mate pen despite marketing studies that questioned demand for an erasable pen, and sales soared. By 1980 Gillette had improved profitability despite the attack by Bic.
Takeover Threats in the 1980s:

Mockler's policies led to a higher profit margin and a surplus of cash. Some of this cash was used in 1984 when Gillette added oral care products to its product mix with the $188.5 million purchase of Oral-B Laboratories, Inc.--the leading maker of toothbrushes in the United States--from Cooper Laboratories, Inc. The excess cash, however, also led to a new threat in the mid-1980s: the threat of takeover. In 1986 Ronald O. Perelman, head of Revlon, offered $4.1 billion for Gillette. He was attracted by Gillette's well-known personal-care brands, the possibility of combining the sales and distribution systems of the two companies, and Gillette's expertise in marketing abroad.

Gillette rejected Revlon's offer of $65 a share and bought back stock from Perelman at $59.50 a share and paid some expenses, for a total of $558 million. Revlon made two other unsolicited requests to buy the company in 1987, both of which were refused by the Gillette board of directors. In response to the takeover threats, Gillette reorganized top management; thinned out its workforce through layoffs; modernized its plants while shifting some production capacity to lower-cost locations; and sold many smaller and less profitable divisions. That was not the end of the takeover threats. In early 1988 Coniston Partners announced that it had acquired approximately 6 percent of the company and was determined to replace four members of Gillette's 12-member board so it could influence company policy. Members of the partnership said they would actively seek offers to sell or dismantle Gillette if they managed to get representation on the board. Coniston Partners' battle to get shareholders' proxy rights was intense, but in 1988 Gillette came out on top with 52 percent of the votes for directors to Coniston's 48 percent. The matter was finally resolved when Gillette instituted a stock repurchase for all shareholders, which included 16 million of Coniston's 112 million shares at $45 a share. Finally, in August 1989, Warren Buffett's Berkshire Hathaway bought $600 million of Gillette convertible preferred shares. The deal potentially placed 11 percent of Gillette's stock with Buffett, who had agreed to give the company the right of first refusal on the block, should he wish to sell it. The friendly agreement decreased the threat of takeover, though it tightened up cash flow at the company. Buffett's dividend was $52.5 million a year. With takeover threats behind it and restructuring completed, Gillette returned to emphasizing its powerful brand names and its bread and butter, shaving products. While toiletries and cosmetics represented low-margin items and profitable stationery products accounted for only 9 percent of the company's total profits, razors and blades still accounted for a little over 70 percent of profits. Gillette brought in a new head of shaving operations, John W. Symons, formerly head of European operations, and developed new ad campaigns to emphasize the more profitable shaving systems over disposable shavers such as its own Good News. In October 1989, Gillette unveiled the Sensor shaving system, which featured thinner blades mounted on springs by lasers so they could follow contours. The blades, to be used in a permanent shaving system, cost close to $200 million to develop and were launched simultaneously in the United States and Europe, backed by a $100 million advertising budget. Sensor's touted superior shave was a huge success with consumers, and the product garnered several awards. The Lady Sensor soon followed in 1992, with sales for both products exceeding $500 million that year.
Early to Mid-1990s:
Gillette made another effort to expand its presence in shaving when it attempted to buy the U.S. and non-European operations of its old competitor,

Wilkinson Sword, early in 1990. The Justice Department blocked the sale of Wilkinson's U.S. interests since Gillette controlled about half the U.S. market and Wilkinson was number-four in the market with about 3 percent. Also in 1990, as part of a realignment of its shaving and personal-care units in North America and Europe, Gillette sold its European skin and hair care operations to Nobel Consumer Goods AB, a division of Nobel Industries of Sweden, for $107 million. Despite the Wilkinson setback, the 1990s proved to be extremely fruitful years for Gillette thanks to an aggressive program of new product development coupled with the pursuit of targeted acquisitions. Mockler, who had had a very successful term as CEO and chairman and who planned to retire at the end of 1991, died unexpectedly in January of that year. Alfred M. Zeien, Mockler's heir apparent who was president and chief operating officer, replaced Mockler in both of his positions. Also in 1991 Gillette launched another award-winning product, the Oral-B Indicator toothbrush, which had bristles that change color to show when a new toothbrush is needed. This popular feature was added to all Oral-B toothbrushes the following year. Significant new product introductions and a major acquisition highlighted 1992. Gillette's personal-care product division launched the Gillette Series line of men's toiletries, which included 14 "high-performance" products in the deodorant/antiperspirant, shaving cream, and aftershave categories. The company announced the acquisition of Parker Pen Holdings Ltd. for 285 million ($484 million), with the deal being consummated in May 1993. The addition of the Parker brand to Gillette's Paper Mate and Waterman brands moved the company into the top position worldwide in writing instruments. Late in 1993 Gillette took an after-tax charge of $164 million for a reorganization of its overseas operations, including the integration of Parker Pen facilities into Gillette's structure. About 2,000 jobs were eliminated as a result of the reorganization. Just four years after the debut of Sensor, Gillette in late 1993 launched in continental Europe and Canada its next-generation shaving system, SensorExcel, which promised even closer and more comfortable shaving based on its skin guard made of "five soft, flexible microfins." After its successful debut, SensorExcel was rolled out in Japan, England, and the United States in 1994. Other 1993 and 1994 product introductions included Braun's FlavorSelect coffeemaker; the Oral-B Advantage toothbrush, which was designed to remove plaque better than other toothbrushes; and Custom Plus men's and women's disposable razors with pivoting heads. Gillette returned to acquisition mode in 1995 and 1996. In late 1995 Oral-B's position in Latin America was bolstered with the purchase of the Pro oral care line. Near the end of the year Gillette acquired Thermoscan Inc., a leader in infrared ear thermometers. Thermoscan promised to provide a base for Gillette to expand into the rapidly growing personal home diagnostic products area. Then in late 1996 the company made its largest acquisition ever when it paid $7.1 billion for Duracell International Inc., the world leader in alkaline batteries. Gillette thus added its first major product line since the purchase of Oral-B; in fact, batteries immediately

became the company's second-leading product line in terms of sales, trailing only razors and blades. Duracell batteries had been under distributed outside the United States, so Gillette planned to achieve sales growth by leveraging its existing marketing channels, which reached more than 200 countries by the mid-1990s. More immediately, the Duracell merger led Gillette to record a fourth quarter 1996 charge to operating expenses of $413 million to eliminate overlap between Gillette and Duracell operations. In 1996 the company also launched more than 20 new products, including SensorExcel for Women. That year, a whopping 41 percent of Gillette sales came from products that debuted during the previous five years, a testament to the company's new product development strength. And an improvement on the SensorExcel was already in the works. Sales neared the $10 billion mark, as 1996 revenues were $9.7 billion, and net income--despite the Duracell charge--was a healthy $949 million.
Razor Wars: Late 1990s and Beyond:

Gillette introduced a significant innovation in shaving technology--the first major innovation in safety razors since the beginning of the 1970s--with the Mach 3 in 1998. The new safety razor system introduced a third blade into the twin-blade system that had dominated the wet-shaving market for the previous quartercentury. The blades were set at an angle so that each blade shaves closer to the skin, allowing shavers to use fewer strokes to get the same close, comfortable shave. The shaving cartridge was set on a pivot, allowing the head of the razor to move with the angle of the jaw and skin. In addition, the cartridge itself was designed to facilitate cleaning, and the handle was ergonomically designed to make the razor more comfortable in the hand. The entire Mach 3 system, protected by 35 patents, cost Gillette $35 billion just to bring to market. As a result, the corporation set the price for replacement cartridges about 35 percent more than its previous best-selling razor, the SensorExcel. Marketing strategy was slanted to persuade current Gillette product users to trade up their previous equipment in favor of the newer, more expensive models because of their improved performance, offering a closer shave with fewer nicks and cuts. Despite (or perhaps because of) the expense of the expense of introducing the new razor, Gillette saw its worst economic performance in almost a decade in 1998. Sales during the third quarter of the year alone dropped 15 percent. In October, Gillette management announced staff cuts of 4,700 jobs, about 11 percent of its total workforce. Lowered sales in key markets such as Brazil, Germany, and Russia also contributed to the loss of income, and share prices dropped by 11 percent virtually overnight. Gillette's underperformance continued in 1999 and 2000, in large part because of currency-exchange differences. Its stationery and small-appliance businesses showed the greatest losses and the battery and toiletries businesses provided most of the profits. In October 2000 Gillette's managing board responded by firing CEO Michael Hawley and announcing a world-wide restructuring effort that would be led by former Nabisco CEO James M. Kilts, who joined the firm during its centennial year, in January 2001. Kilts, who had earned a reputation as a fixer of troubled companies, needed all his skills. Gillette's battery business, which had

dominated the top of the market, lost market share to other brands (Energizer and Rayovac) that offered similar performance at a lower cost. In addition the company lacked fiscal discipline and used an antiquated quarterly tracking system. As a result of these and other expensive practices, Gillette's earnings continued to perform below expectations. Stock prices fell by about 60 percent in the months between early 1999 and late 2001. Gillette's control of the toiletries market was threatened early in 2003 when rival Schick-Wilkinson Sword introduced the Quattro, the world's first four-blade shaving system. Gillette claimed that the Quattro illegally infringed on Gillette's patents for the Mach 3. The violence of the company's reaction was explained in part because the Quattro actually increased Schick's market share from about 14 percent to about 17 percent. At the same time Gillette's market share slipped by a similar amount--although the Boston-based firm still held a commanding 63 percent of the total wet-razor market. Although Gillette lost its attempt to ban sales of the Quattro in court, it nonetheless saw sales of its products increase. By the end of the first quarter of 2004, Gillette was able to report a 43 percent increase in profits, much of which was provided by its mens' and womens' wet razors, the Mach 3 and Venus systems. The company's grasp of its core businesses--toiletries and oral care--remained strong.
Gillette Companys Head Quarters, Massachusetts, Boston
James M. Kilts (Last CEO of Gillette Company)
Merger:
Acquired by Procter & Gamble (P&G) on October 1, 2005. In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place. This added brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable. The acquisition was approved by the European Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping brands. P&G agreed to sell its SpinBrush battery-operated electric toothbrush business to Church & Dwight. It also divested Gillette's oral-care toothpaste line, Rembrandt. The deodorant brands Right Guard, Soft & Dri, and Dry Idea were sold to Dial Corporation.[5] The companies officially merged on October 1, 2005. Liquid Paper, and Gillette's stationery division, Paper Mate were sold to Newell Rubbermaid. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray. As per the P&G and Gillette merger deal, P&G would exchange 0.975 shares of P&G common stock for each share of Gillette. It represented an 18% premium to Gillette shareholders based on the closing prices on January 27, 2005. However, the merger was subject to approval by the shareholders of both Gillette and P&G. The merger was not expected to get regulatory clearance by 2005. P&G planned to buy back $18-22 billion of its common stock immediately after the merger. The buy back process could take around 18 months to complete. This would make the deal structure a 60% stock and 40% cash deal, although on paper it was a pure stockswap. According to marketing guru, Al Ries, "The extra 18% premium paid by P&G for Gillette's stock is going to make it 18% more difficult for the deal to pay dividends to stock holders."P&G would have to borrow funds to finance the planned repurchase of its stock. In light of this move, credit rating agencies put both

companies under a review for a possible downgrade. S&P placed all ratings for P&G on Credit Watch with negative implications based on the likelihood that P&G's leverage would increase significantly due to the merger. As of September 30, 2004, P&G had debts of $21.4 billion and Gillette of $3.1 billion.
Synergy:
Both the companies expected the merger to bring tremendous synergies. According to Lafley, "This combination of two best-in-class companies creates a stronger brand portfolio, opportunities for even more innovation, faster sales growth, and cost savings." Analysts felt that both scale and focus were important in this industry and P&G had attempted to gain both with this acquisition. In the words of Lafley, "P&G and Gillette can grow together at levels that neither could sustain on its own. The reason is that consumer products is, in the end, a scale business. The more scale a company can create, the more opportunities there are to grow margins and invest in brand innovation."
Presently Managed Company:
Proctor & Gamble:
Procter & Gamble (P&G) is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods. In 2011, P&G recorded $82.6 billion dollars in sales. Fortune magazine ranked P&G at fifth place of the "World's Most Admired Companies" list, which was up from sixth place in 2010. Procter & Gamble is the only Fortune 500 Company to issue C Share common stock.
Statistics:
Type: Public Company Traded As: NYSE: PG Industry: Consumer Goods Founded: 1837 Head Quarters: Cincinnati, Ohio, US CEO: Robert McDonald (also President & Chairman) Revenue: US $ 82.56 Billion

Operating Income: US $ 15.818 Billion Net Income: US $ 11.797 Billion Total Assets: US $ 138.354 Billion Total Equity: US $ 68.001 Billion Employees: 127,000 (as of 2010) Website: http://www.pg.com
Business Units:
Beauty segment Grooming segment Health Care segment Snacks & Pet Care segment Fabric Care & Home Care segment Baby Care & Family Home Care segment
Company History:
William Procter, a candle maker, and James Gamble, a soap maker, emigrated from England and Ireland respectively. They settled in Cincinnati initially and met when they married sisters, Olivia and Elizabeth Norris. Alexander Norris, their father-in-law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born. In 18581859, sales reached $1 million. By this point, approximately 80 employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products. In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. William Arnett Procter, William Procter's grandson, began a profit-sharing program for the company's workforce in 1887. By giving the workers a stake in the company, he correctly assumed that they would be less likely to go on strike. The company began to build factories in other locations in the United States because the demand for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began to diversify its products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils rather than animal fats. As radio became more popular in the 1920s and 1930s, the

company sponsored a number of radio programs. As a result, these shows often became commonly known as "soap operas". The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Thomas Hedley Co., based in Newcastle upon Tyne, England. Procter & Gamble maintained a strong link to the North East of England after this acquisition. Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas. The company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1947. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest". Branching out once again in 1957, the company purchased Charmin Paper Mills and began manufacturing toilet paper and other paper products. Once again focusing on laundry, Procter & Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener sheets in 1972. One of the most revolutionary products to come out on the market was the company's "Pampers", first test-marketed in 1961. Prior to this point, disposable diapers were not popular, although Johnson & Johnson had developed a product called "Chux". Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers provided a convenient alternative, albeit at the environmental cost of more waste requiring land filling. Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers of Pepto-Bismol), RichardsonVicks, Noxell (Noxzema), Shulton's Old Spice, Max Factor, and the Iams Company, among others. In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued Bankers Trust for fraud; this placed their management in the unusual position of testifying in court that they had entered into transactions that they were not capable of understanding. In 1996, Procter & Gamble again made headlines when the Food and Drug Administration approved a new product developed by the company, Olestra. Also known by its brand name Olean, Olestra is a lower-calorie substitute for fat in cooking potato chips and other snacks that during its development stages is known to have caused anal leakage and gastrointestinal difficulties in humans. Procter & Gamble has dramatically expanded throughout its history, but its headquarters still remains in Cincinnati. On August 24, 2009, the Ireland-based pharmaceutical company Warner Chilcott announced they had bought P&G's prescription-drug business for $3.1 billion. Procter and Gamble is a tier one sponsor of the London's Olympic Games 2012 and sponsors 150 Athletes.
Head Quarters, Cincinnati, Ohio
Robert McDonald (CEO, President and Chairman)
Time Line:
Product Portfolio:
Razors/Blades Shave Gel & Foam Skin Care Anti Perspirant/Deodorant Body Wash
Razors/Blades:
Older Products:
Double-edged safety razors:
The first safety razor using the new disposable blade, were introduced around 1902.
Gillette First Safety Razor
Gillette Aristocrat:
Gillette maintained a limited range of models of this new type razor until 1934 and the introduction of the "Aristocrat". The great innovation of this new model was the "Twist to open", or TTO design, which made blade changing much easier than it had been previously, wherein the razor head had to be detached from the handle.
Gillette Aristocrat
Gillette Super Speed:

1947 saw the introduction of the new "Super Speed" model, also a TTO design. This was updated in 1954, with different versions being produced to shave more closelythe degree of closeness being marked by the color of the handle tip.
Gillette Super Speed
Gillette Adjustable:
In 1958, the first "adjustable" razor was produced. This allowed for an adjustment of the blade to increase the closeness of the shave. The model, in various versions, remained in production until 1986.
Gillette Adjustable
Gillette Super Speed Redesigned:

The Super Speed razor was again redesigned in 1966 and given a black resin coated metal handle. It remained in production until 1986.
Gillette Super Speed Redesigned
Gillette Knack:
A companion model, "The Knack", with a longer plastic handle, was produced from 1966 to 1976.
Gillette Knack
Newer Products:
Gillette Techmatic:

Techmatic was a single blade razor introduced in the mid-1960s. It featured a disposable cartridge with a razor band which was advanced by means of a lever. This exposed an unused portion the band and was the equivalent of five blades.
Gillette Techmatic
Gillette Adjustable Techmatic:

Adjustable Techmatic is a version of the Techmatic dating from 1970. The adjustable version featured user-selection of shave closeness on the cartridge. The adjustable version was interchangeable with the non-adjustable version. Both versions of the Techmatic and their cartridges have been discontinued.
Gillette Adjustable Techmatic
Gillette Trac II & Trac II Plus:

Trac II was the world's first two-blade razor, debuting in 1971. Gillette claimed that the second blade cut the number of strokes required and reduced facial irritation. Trac II Plus is an identical model but adds a lubricating strip at the top of the blade. The blades and handles are interchangeable. The European versions of the Trac II and Trac II Plus are known as the GII and GII Plus respectively
. Gillette Trac II & Trac II Plus
Gillette Atra:
Atra (known as the Contour, "Slalom" in some markets) was introduced in 1977 and was the first razor to feature a pivoting head, which Gillette claimed made it easier for men to shave their necks.
Gillette Atra
Gillette Atra Plus:

Atra Plus featured a lubricating strip, dubbed Lubra-Soft.
Gillette Atra Plus
Gillette Sensor:
Gillette Sensor debuted in 1990, and was the first razor to have spring-loaded blades. Gillette claimed that the blades receded into the cartridge head, when they make contact with skin, helping to prevent cuts and allowing for a closer shave.
Gillette Sensor
Gillette Sensor for Women:

The Sensor for Women was released around the same time and is nearly identical, but has a wider cartridge head.
Gillette Sensor for Women
Gillette Sensor Excel:

Sensor Excel was released in 1993. This featured "Microfins," a piece of rubber with slits at the bottom of the cartridge and Gillette claimed this helped to raise facial hairs, making for a closer shave.
Gillette Sensor Excel
Gillette Sensor 3:
Sensor 3 has three blades instead of two. All Sensor handles can use all Sensor cartridges.
Gillette Sensor 3
Gillette Good News:

Good News was the first disposable, double-blade razor, released in 1976. The Good News came in three forms: the "original", the "Good News! Plus", which included a lubricating strip, and the "Good News! Pivot Plus", which featured a lubricating, strip as well as a pivoting head.
Gillette Good News
Gillette Blue II:

Blue II is a line of disposable razors. In Latin America, it is marketed as the Prestobarba.
Gillette Blue II
Gillette Blue III:

Blue 3 is a line of three-blade razor, cheaper version of Sensor 3 (Sensor compatible). It is available also in disposable variant.
Gillette Blue III
Gillette Mach 3:
Mach3, the first three-blade razor introduced in 1998, which Gillette claims reduces irritation and requires fewer strokes. The Mach3 featured five improved micro fins and spring blades, a pivoting head with greater flexibility and a blue lubrication strip that faded with usage to encourage users to change their blades more frequently.
Gillette Mach 3
Gillette Mach 3 Disposable:

The above with a different plastic handle.
Gillette Mach 3 Disposable
Gillette Mach 3 Turbo:

Mach3 Turbo had ten micro fins as opposed to the five on the original, a new grip and claims improved lubrication and "anti-friction" blades. All Mach3 blades are interchangeable between the three products in the range, so it is possible to use the Mach3 Turbo blades on a Mach3 razor.
Gillette Mach 3 Turbo
Gillette Mach 3 Turbo Champion:

Mach3 Turbo Champion has a slightly different handle design.
Gillette Mach 3 Turbo Champion
Gillette M3 Power:
M3Power is a battery-powered version of the Mach3 Turbo razor which can also be used with the power switched off. The blades differ from Mach3 Turbo with a new coating which Gillette describes as "Power Glide". The lubrication and micro fins are identical to Mach3Turbo. The Mach3 Power Nitro has a slightly different handle design.
Gillette M3 Power
Gillette Venus:
Venus is a female version of the Mach3. Mach3 blades can attach to a Venus handle and vice versa.
Gillette Venus
Gillette Venus Divine:

Venus Divine is a female version of the Mach3 Turbo.
Gillette Venus Divine
Gillette Venus Vibrance:

Venus Vibrance is a female version of the M3Power. Venus blades are interchangeable across the line.
Gillette Venus Vibrance
Gillette Venus Embrace:

Venus Embrace is a five-bladed razor with a ribbon of moisture surrounding the blades.
Gillette Venus Embrace
Gillette Venus Breeze:

Venus Breeze is a three-blade razor with shave gel bars built into the head of the razor.
Gillette Venus Breeze
Gillette Venus Spa Breeze:

Another version of the Breeze, the Venus Spa Breeze, is essentially the same as the Breeze, but with a white tea scent to the shave gel bars.
Gillette Venus Spa Breeze
Gillette Venus Pro Skin Moisture Rich:

Venus Pro Skin Moisture Rich, launched in January 2011 in the United States, is an updated version of the Breeze, featuring Moisture Rich shave-gel bars that are enhanced with a triple blend of body butters.
Gillette Venus Pro Skin Moisture Rich
Gillette Fusion:
Gillette Fusion is a five-bladed razor released in 2006. The Fusion has five blades on the front, and a single sixth blade on the rear for precision trimming.
Gillette Fusion
Gillette Fusion Power:

Gillette Fusion Power is a motorized version of the Fusion. The Fusion Power is battery powered and emits "micro pulses" that are claimed to increase razor glide.
Gillette Fusion Power
Gillette Fusion Power Phantom:

Fusion Power Phantom (Stealth in UK) was released in February 2007 and features a redesigned handle with a darker color scheme than the original.
Gillette Fusion Power Phantom
Gillette Fusion Power Phenom:

Fusion Power Phenom was released in February 2008. It has a new blue and silver color scheme.
Gillette Fusion Power Phenom
Gillette Fusion Pro Glide & Pro Glide Power:

Fusion Pro Glide and Fusion Pro Glide Power were launched on June 6, 2010 in North America. The Pro Glide series feature re-engineered blades with edges that are thinner than Fusion and are finished with low-resistance coating which allow the blades to glide more easily through hair.
Gillette Fusion Pro Glide
Gillette Fusion Pro Glide Power
Gillette Pro Glide Styler:

The Fusion Pro Glide Styler provides an opportunity for men who style their facial hair to simplify their grooming routines. Instead of multiple products, they can trust a single 3-in-1 tool to get the look they want.
Gillette Pro Glide Styler
Gillette Fusion Power Gamer:

Fusion Power Gamer (also known as "Cool White" in select markets). Gillette Fusion Power harnesses Gillette's advanced shaving technology available with a sophisticated, high-tech design to allow every man to get in the game. With 5 blades spaced together to help reduce pressure with less irritation than MACH3, even when shaving against the grain and a precision trimmer for tricky spots.
Gillette Fusion Power Gamer
Shave Gel & Foam:
Fusion Pro Glide Clear Shave Gel
Fusion Pro Glide Irritation Defense Shave Gel
Fusion Pro Glide Hydra Smooth Shave Gel
Fusion Pro Glide Soothing Shave Gel
Fusion Hydra Gel Moisturizing Shave Gel
Fusion Hydra Gel Clear Skin Shave Gel
Fusion Hydra Gel Tough Beard Shave Gel
Fusion Hydra Gel Ultra Sensitive Shave Gel
Fusion Hydra Gel Clean and Fresh Shave Gel
Fusion Hydra Gel Cooling Shave Gel
Fusion Hydra Gel Pure and Sensitive Shave
Series Sensitive Skin Shave Foam

Gel
Series Cool Cleansing Shave Gel
Series ExtraComfort Shave Gel
Series Moisturizing Shave Gel
Series Pure and Sensitive Shave Gel
Series Protection Shave Gel
Series Sensitive Skin Shave Gel
Series Conditioning Shave Foam
Classic Regular Shave Foam
Classic Sensitive Skin Shave Foam
Classic LemonLime Shave Foam
Market Environment
The environment surrounding all the competition between the market of razors and male grooming kits presents major implications on the actual trends and innovations held by the companies. For instance, the existence of male grooming products provided by Gillette is due to the demand held by the market. In the same regard, the razor wars that exists between the major players in the industry is triggered by the drive towards product differentiation ascendancy in the market.
The Market of Mens Grooming:

Male grooming has become one of the more tackled concepts in recent studies and articles. The days of the unkempt, rugged male image are slowly coming to an end. Nowadays, the notion of male aesthetics is equated with the clean cut, hairless, and odorous image of men. There are articles that associate this scenario with the increasing vanity of men with the emergence of what has been coined as the metro sexual. These are a portion of the male demographic that are a

part of the young professional crowd and places looks, grooming and a rather debonair lifestyle as among their priority. There are other studies that focus on the male preference towards a depilated look. This hairless look apparently dates back to the Egyptian times where a hairless faade is regarded as beautiful. This consequent depilated look has also been manifested in the male body image in Asian countries like Japan. There have been accounts that indicate the preference of the male demographic towards sporting a shaven appearance. This trend shies away from the initially idealized appearance of the bearded male during the renaissance era. In the said period, those that sport such reckless abandon on facial hair are considered as scholars and learned components of society. This is one of the bases of the assumption that it is inherent for males to disregard any effort in grooming. The consequent changes in society which affected the body image of the modern male demographic have considerably taken the necessary steps which are inherently favorable to the male grooming industry.
Players in the Safety Razor Market:

Player Country of Origin Model
Bic
France
Croma
Germany
Dorco
South Korea
Feather
Japanese
Gillette
USA
Iridium
Laser
India
Lion
South Africa
Merkur
Germany
Panda
China
Personna
Racer
Egypt
Schick
USA
Shogun
China
Super-Max
India
Wilkinson
United Kingdom
The Battle for Shaving Supremacy:

The Gillette brand has been one to first introduced safety razors to the public during the 1970s. In the late 90s, a new era of shaving products has emerged. This took place when the brand introduced Mach 3, a safe disposable shaving product that ushered in a third member to the conventional twin blade system that has been present in the market for decades. The third blade provided the consumer the chance to acquire a closer shave and with less strokes. Generally, the brand called this technology as the Mach 3 system which also one of the reasons why the company incurred the worse performance since their creation. The company had to bring out a considerable amount of money to protect the said system, amounting to $35 billion more or less. This is reinforced with the manifestation of economic fluctuations as seen in exchange rates and inflation in the turn of the millennium. To boot, one of the closest rivals of the company, Schick-Wilkinson Sword, ushered in their Quattro. This product is a four-bladed system that took Gillettes Mach 3 head-on. Legal battles emerged between the said companies as Gillette claimed that Schick infringed on their patented system. The courts sided on the latter which made Gillettes attempt to ban the sale of the Quattro a total failure and consequently allowed an increase in the market share of the same. However, the said increase in the sales of Quattro is doubled by the sales acquired by the Mach 3 system. Gillettes product was successful in tapping both male and female demographic with their products.
Competition:
Gillette faces 2 types of competition. Direct competition is from the already established low priced blades available from other companies and indirect from

the traditional methods of shaving. Gillette faced direct competition from local brands, Bic, and Schick. In the double edged blades Gillette faced competition from imported, low-end blades from Eastern Europe and China (Tatra, Super Nacet, and Tiger). In the disposables section Bic, USA and Bagus, a local brand, were its competitors. But since the sales volumes were low the market was not intense. In the higher end products Gillette faced competition from Schick. Gillette has 90% market share in the high end segment.
Major Competitors:
Bic:
Socit Bic is a company based in Clichy, France, founded in 1945, by Baron Marcel Bich known for making disposable products including lighters, magnets, ballpoint pens, shaving razors and water sports products. It competes in most markets against Faber-Castell, Global Gillette, Newell Rubbermaid and Schwan-Stabilo. The Bic pen, more correctly the Bic Cristal, was the company's first product and 50 years later is still synonymous with the name Bic.
Schick :
Schick is a brand of safety razors by Wilkinson Sword, a subsidiary of Energizer Holdings. It was founded in 1926 by Jacob Schick as the Magazine Repeating Razor Company. In 1934, Schick introduced its highly successful single blade safety razor system that stored ten blades in a steel injector. While second in sales to Gillette globally, Schick is the top selling brand of safety razors and blades in Japan. The Schick brand is used in North America, Australia, Asia and Russia. In other markets Wilkinson sells the same products under the Wilkinson Sword brand. Schick also markets shaving gels.
Wilkinson Sword:
Wilkinson Sword is a brand name for companies that make gardening tools and razors. Wilkinson Sword's origins are in the manufacture of swords. The company was founded in London in 1772. The brand is currently owned by Energizer Holdings. Past product lines have included guns, bayonets, and other objects such as typewriters, garden shears, scissors, and motorcycles. Wilkinson Sword has manufactured its products in three UK locations over the years: in London, (Chelsea and Acton), Cramlington in Northumberland and Bridgend in Wales, where they made gardening tools. In 2000 it closed its razor plant in the UK and consolidated production in Germany.
Porters Five Forces Model:
1. Bargaining Power of Suppliers:
Low
Similar with the buyers, the suppliers in this industry has some level of power over the major players. Though they could be readily be replaced by the company with another supplier, it is important in the consumer product industry that a good relationship between the supplier and manufacturer is established. This is done normally through correspondence so as to provide both supplier and manufacturer that capability of using the business knowledge to their advantage.
Parameters:
Inputs have little impact on costs. When inputs are not a big component of costs, suppliers of those inputs have less bargaining power. Low cost inputs positively affect Gillette. Volume is critical to suppliers. When suppliers are reliant on high volumes, they have less bargaining power, because a producer can threaten to cut volumes and hurt the suppliers profits. This can positively affect Gillette.
1. Bargaining Power of Buyers:
Low
There are a couple of factors to consider so as determining the bargaining power of the suppliers in the market. First, it should be determined whether or not there are a good number of customers in the market. In the case of Gillette, the operations of the company are global in nature. Hence, a considerable number of male consumers and some of the female demographic may be acquired as their core customers. However, the intensity of the competition also displays the fact that the players compete at a considerably small market share. On the other hand, it has been established that the switching cost of the consumers may well be low. This means that the customers may shift from one brand to another without any major changes in the costs against them. In the same regard, this is based on the earlier finding that the products are interchangeable and indistinguishable.
Parameters:
Product is important to customer. When customers cherish particular products they end up paying more for that one product. This positively affects Gillette. Large number of customers. When there are large numbers of customers, no one customer tends to have bargaining leverage. Limited bargaining leverage helps Gillette.
1. Threat of New Entrants:
Low
The shaving razor market is completely dominated by Gillette. Any new entrants should very carefully launch themselves because they would be directly pitting against a monopolist kind of market giant. Also the barriers to entry are not many except minimum size requirements for economies of scale, high initial investments and above all the retaliation by Gillette which could be anything.
Parameters:
Strong brand names are important. If strong brands are critical to compete, then new competitors will have to improve their brand value in order to effectively compete. Strong brands positively affect Gillette. Strong distribution network required. Weak distribution networks mean goods are more expensive to move around and some goods dont get to the end customer. The expense of building a strong distribution network positively affects Gillette. Patents limit new competition.

Patents that cover vital technologies make it difficult for new competitors, because the best methods are patented. Patents positively affect Gillette. Customers are loyal to existing brands. It takes time and money to build a brand. When companies need to spend resources building a brand, they have fewer resources to compete in the marketplace. These costs positively affect Gillette.
1. Threat of Substitutes:
Low
Another factor that affects the competition equilibrium is the existence of substitutes. This means that there are certain companies in another industry that provide for products or services that satisfy the existing demands of the market. In this case, the substitutes are seen primarily in salons and barbershops where they provide the customers with a professional shave. This means that the effect of substitution in the said industry is rather low as it appears that it costs more on the part of the customers.
Parameters:
Substitute product is inferior. An inferior product means a customer is less likely to switch from Gillette to another
product or service.
1. Competitive Rivalry between Existing Players:
Medium to High
In this category, male grooming products appear to be interchangeable and indistinguishable. However, the brands implement a high level of product differentiation to keep their core customers from defecting to their competitors and even the substitute products. (Madapati 2003) The recent merger of the Procter & Gamble and Gillette, the major competitors of the company particularly Unilever, Kimberly-Clark and Colgate-Palmolive and Schick-Wilkinson Sword are constantly seeking ways to take away the market dominance of the consumer product monolith.
Parameters:
Large industry size. Large industries allow multiple firms and produces to prosper without having to steal Exit barriers are low. When exit barriers are low, weak firms are more likely to leave the market, which will
increase the profits for the remaining firms. Low exit barriers are a positive for Gillette. market share from each other. Large industry size is a positive for Gillette.
SWOT Analysis:
Strengths:
Market Leader Strong Brand Image Global Presence Aggressive Advertising Quality Innovation Product Portfolio Range
Weakness:
Long Development Cycles Relatively Static Market Growth Expensive Brand Maintenance
Opportunities:
Demographic Changes Consumer Brand Preference Demand for High Quality
Threats:
Cloning of Successful Brands Similar Products available at a Lower Price Economic Downturns
BCG Matrix:
With respect to Gillette:
With reference to the above figures, Gillette predominantly in the Blades & Razor market is a cash cow. The brand typically generates cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would be thrilled to own as

many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.
Advertising:
Gillette has a long history of promotions for its products, especially towards young men.
Early Advertising:
Gillette started production of safety razors in 1903, when they sold just 51 in the year. In 1904 they sold 90,884 and by 1908 they had factories in America, Canada, Great Britain, Germany and France. They were feeding a huge pent up demand for men to get away from cut throat razors. And King Camp Gillette was a believer in strong marketing, something that was possible because of the large profit on the blades. The first advertisement is from March 5 1913 and is aimed squarely at the cut throat razor with the headline Try the 3 Minute Gillette Shave and the copy about how easy it is to use, then finally the tag line on the logo No Stropping No Honing
Next we have a new advert from April 2nd 1913, less than a month later and they have new artwork and copy. But the Headline Think when You Shave and the subsequent copy are still targeted squarely at the cut throat razor, which this time gets named as an ordinary razor. Quaintly they talk about self-shaver because then most of their audience would have had their shaving done for them by their barber.
The following are two wartime adverts. In the real paper these adverts are half the size of the ones above and this time they seem to be simple public information messages about the availability of different kinds of blades during wartime austerity. But in reality they are more than that, these are brand reinforcement, keeping the Gillette name in front of the public during the hostilities.
Another War Advertisement:
The ad is exhorting, presumably womenfolk, to buy men razors for Christmas, a bit brave of Gillette when giving a blade as a gift is traditionally bad luck. This razor as gift concept obviously worked because it is not uncommon to come across totally unused vintage razors, especially travel sets. The men presumably put the gift in the draw and continued using their old razor. Ingraining this gift concept in the collective conscience was good marketing because it reached new customers who would then be forced to buy the expensive patented blades for posterity.
The next advertisement is another dig at the cut throat razor and the use of barbers. It is telling men to shave themselves and is telling them how much more

convenient it will be, how presentable they will be after just three minutes with a Gillette razor.
This third advertisement is getting closer to a true product advert. They use the left hand side to trumpet the superiority of the safety razor with some features and benefits whilst having veiled digs at the competition. Then the right hand side has the product, and for the first time the price. And what a product, triple silver plated in a Morocco box at the immense price of a guinea, or 21 shillings, this is not aimed at the mass market.
Finally we have a much later advertisement and from a different periodical. From the Sketch in Christmas 1926. You can see that this is a much more sophisticated advertisement. Once again they are banging on about the Christmas present angle, just like De Beers banged on about buying diamond engagement rings. And it worked for both companies. Even today you see big Christmas gift packs of system razors appearing at retailers in Q4 each year. One very nice point is that by 1926 they have a royal warrant. By Appointment to His Royal Highness the Prince of Wales. That would be the very clean shaven Edward Albert Christian George Andrew Patrick David Windsor, who 10 years later as Edward VIII abdicated as king. There was no royal warrant to the king in 1926 because George V, Edwards father, supported a very fine beard and an even finer moustache.
World Series:
Gillette purchased radio broadcast rights to the 1939 World Series for $100,000. Despite a short series, in which the Cincinnati Reds lost four straight games to the New York Yankees, sales of Gillette's World Series Special razor sets were more than four times company estimates.
1942 the events Gillette sponsored were grouped together as the "Gillette Cavalcade of Sports." Although it eventually included the Orange Bowl, the Sugar Bowl, and the Kentucky Derby, in addition to the World Series and the All-Star game, the "Cavalcade of Sports" became best known for bringing boxing to American men. Spang attributed Gillette's continuing success to the sports

advertising program, and sports programs remained an important vehicle for Gillette advertising. The Cavalcade of Sports officially began on radio in 1942 as the Gillette Company grouped various existing sports sponsorships under one banner. The sponsorships had begun three years earlier, according to an article on the Gillette Company in Volume 68 of the International Directory of Company Histories. The Gillette stable of radio sports programs spanned several different networks (including NBC, CBS, and Mutual) and grew to include not only ongoing sponsorship of the World Series and All-Star Game in baseball, but the annual Kentucky Derby in horseracing and footballs Cotton Bowl Classic and Orange. The diversified field of sporting events continued onto television, reportedly including at least two golfing tournaments as well (beginning in 1958) football's Rose Bowl. As late as 1988 the Cavalcade of Sports banner was used in connection with Gillettes sponsorship of the NHL's Stanley Cup playoffs. Internationally, the Gilette World Sports program continues the concept to the present day in many countries from Ireland to Africa to Asia. With all of this, however, the Cavalcade of Sports was best known for Friday night boxing on NBC from 1944 through 1960, and (after NBC decided against featuring boxing due to sensitivity over criminal allegations in the sport) then for several more years on ABC.
Gillette World Series Book:

1954 Gillette World Series Record Book featuring 112 pages of outstanding major league baseball facts to include current rosters, 1953 New York Yankees world champion centerfold photo, playing tips, highlights and records of past World Series games highlight of this book for me is the 15 major league baseball stadium diagrams to include Memorial Stadium of Baltimore, Fenway Park, Comiskey Park, Cleveland Stadium, Briggs Stadium of Detroit, Yankee Stadium, Connie Mack Stadium, Griffith Stadium, Ebbets Field, Wrigley Field, Crosley Field of Cincinnati, Milwaukee County Stadium, Polo Grounds, Busch Stadium, and Forbes Field
Modern Advertising:
Advertising Agencies associated with Gillette:
McCann-Erickson O&M BBDO
Advertisements:
Popular Ads:
The Worlds Biggest Shave:
In order to demonstrate the outstanding performance of its grooming regimen Gillette produced a big painted billboard in New York City with Yankees star Derek Jeter. The billboard is being repainted daily to reflect the various stages of mens grooming. Derek Jeter firstly will be seen with stubble, then with shave prep, and finally with his famous shaven face a three-day cycle that will be repeated through March 6. Dereks face on poster was painted by two painters, who have experience of over 45 years including painting fences. His painted face is about 20 feet wide.
Worlds Smallest Ad:

Some people use a pen or pencil to write ads. Others use an electron microscope. To emphasize the precision of its blades, Gillette and French ad agency CLM BBDO, with help from scientists at the University of Nottingham who are not currently curing cancer, used nanotechnology to etch the world's smallest ads on the whiskers of a man's shaven beard. Each ad is less than 100 microns in size. Obviously, that makes them impossible to see, so Gillette blew the images up for print and poster ads. There's also the video below, outlining the process. Obviously, Guinness has been brought in to verify the world record.
Gillette's subway ads offer B.O. terror alerts:

Ads running in New York City subways spoof post-9/11 terrorism alerts, urging that straphangers be mindful of body odor instead. Perhaps after nine years it's time to take Tom Ridge's color-coded attack warnings with a little humor.
Federer stunt more credible than his acting:

Here's a new Gillette video that's been making the rounds, purportedly showing Roger Federer knocking a bottle off a guy's head from a distance with his serve. It would be more believable if Federer weren't obviously trying so hard not to seem like he's actinga bit of a recurring problem in much of the tennis legend's commercial work.
Gillette Paints, Then Shaves, a Giant Grassy Roger Federer:

Gillette has gone from grooming to landscaping in England, where it painted, and then shaved, a huge portrait of Roger Federer in a field. The concept of the stunt, which promotes Gillette's Fusion ProGlide razors, was helped along by the company's Facebook community
Creative Ads:
Charlie Chaplin Clean Shave:
Adolf Hitler Clean Shave:
Saddam Hussein:
Gillete RAZOR Hoarding:
Christmas SANTA Ad:
Take off Everything before You Shave:
Gillette i Phone Application:

Gillette have just launched an iPhone app called uArt. Its a pretty good attempt at a branded iPhone app, where you get to load in a photo of yourself, apply various types of facial hair and then use the Gillette fusion razor (your finger) complete with vibration to shave yourself a masterpiece! Catchy little concept, but to go viral and make the most of the app, they really needed some sort of social media share option to post back into the likes of facebook, twitter, flickr .etc The app was created by BBDO / AIM Proximity.
Gillettes Association with Sports:

Gillette major promotions include sponsorship of sports events such as Major League Baseball (since the 1940s, when it was the only sponsor for World Series television broadcasts) and the England national rugby league team, along with the Rugby League Four Nations. Gillette also ships a razor to males in the United States around the time of their 18th birthday; as of 2010 Gillette has been sending the Fusion Pro Glide. Athletes such as Roger Federer, Tiger Woods, Shoaib Malik, Derek Jeter, Thierry Henry, Kenan Sofuoglu, Park Ji-Sung, Rahul Dravid, and Michael Clarke are sponsored by the company. There were calls to boycott Gillette products given their association with Thierry Henry, after a handball by Henry went undetected by referees and allowed France to knock Ireland out of a major soccer competition. Marketing experts have highlighted "the curse of Gillette", given the mishaps that happen to sports stars associated with the brand.
Gillette & Major League Baseball:

The MLBs partnership with Gillette which began in 1939 - is the longest running sponsorship association of any US sports league. The strong commitment by these companies to join forces with baseball is a testament to the strength of our game and our business as part of the cultural fabric of society and its ability to touch so many people around the world, said Tim Brosnan, executive vice-president of business for the MLB. In addition, these deals make a powerful statement about baseballs strength in the marketplace, especially given the current economic climate.
Gillette & Rugby League Four Nations:

The Rugby League Four Nations is an annual rugby league football tournament run in partnership between the Australian Rugby League, Rugby Football League and New Zealand Rugby League representing the top three nations in the sport: Australia, England and New Zealand The tournament is sponsored by Gillette and therefore officially known as the Gillette Four Nations.
Gillette Stadium:
Gillette Stadium is a multi-purpose stadium located in Fox borough, Massachusetts which serves as the home stadium and administrative offices for both the NFL's New England Patriots football franchise and the MLS' New England Revolution soccer team. The stadium was originally known as CMGI Field before the naming rights were bought by Gillette after the "dot-com" bust. Although Gillette has since been acquired by Procter & Gamble, the stadium retains the Gillette name because P&G has continued to use the Gillette brand name and because the Gillette Company was founded in the Boston area. Gillette and the Patriots jointly announced in September 2010 that their partnership, which includes naming rights to the stadium, will extend through the 2031 season
Gillette Champions Ad:
The ad features a montage of great moments from each sportsmans career, followed by each athlete shaving with a Gillette Fusion Power razor, and ending with the tag line Prepare to be your best today. Gillette claims the two-year deals with the three sportsmen are part of a strategy to bring in a range of sports stars to give the brand resonance with more consumers. Gillette said the new adverts with the trio of sports stars is its largest sports marketing campaign in its 108-year history. The company signed the sports trio in 2006 on two-year deals as part of an attempt to sign up a broader range of different sports stars to give the brand wider exposure. They were chosen for both their outstanding sporting performances and also their performances off the field, in their charitable actions, support of social causes

and for their reputations as icons of true sporting values, said Nathan Homer, Gillette brand manager.
Gillettes Association with Entertainment:

Gillette Master of Style Ad:
Gillette, the worlds leading male grooming brand, announced a partnership in January 2012 with three entertainment icons to unveil a precision styling tool for men with facial hair Gillette Fusion Pro Glide Styler Musician and Fashion Designer Andr 3000 Benjamin, Actor Gael Garca Bernal and Academy Award Winning Actor Adrien Brody will serve as brand ambassadors to help Gillette celebrate the individuality of men with facial hair.
Brand Ambassadors:
Brand Ambassadors chosen by Gillette represents the champion spirit in them for the associated sport they play. For a brand to feature the prefix super, it needs to display a few set characteristics: power, awareness, wealth and influence. Gillette has been responsible for men getting their jobs, getting the girl, having the life and, most importantly, being men. Gillette is one of the earliest brands, if not the very first, to venture into the area of sports marketing. Gillette had been involved with top-tier athletes and sports back in the first few decades of its existence. Over the years, Gillettes participation in sports marketing grew from its ventures in North America to involvement in global sporting activities and events. The global Gillette Champions program, which continued the pioneering element of sports marketing in the brands heritage from its early days close to a century back For Gillette, choosing the right sporting ambassador isnt as easy as it may seem. Gillette has been associated with top athletes and sport since the early 1900s, when the company had the vision to see the value in connecting the brand with top-tier sports and athletes. Gillette is also letting its contracts with other athletes, including soccer players such as Messi, Thierry Henry, and Kaka end as part of the conclusion of the marketing program.

Gillette, however, was keeping some of the athletes - such as Federer, NHL star Alex Ovechkin and New York Yankees captain Derek Jeter - for new local marketing campaigns.
Major brand ambassadors/ex-ambassadors include:

Roger Federer:
Roger Federer is a Swiss professional tennis player who held the ATP No. 1 position for a record 237 consecutive weeks, and 285 weeks overall.
Highlights/ Controversies:
Crazy Roger Federer Trick Shot a Viral Hit for Gillette:
A video featuring tennis star Roger Federer that plays on our collective fascination with real or fake hit the web and has quickly gone viral, accumulating more than 700,000 views.
Tiger Woods:
Tiger Woods is an American professional golfer whose achievements to date rank him among the most successful golfers of all time. Formerly the World No. 1, he is the highest-paid professional athlete in the world, having earned an estimated US$90.5 million from winnings and endorsements in 2010.
Gillette ends endorsement deal with Tiger Woods:
Procter & Gamble Co. will not renew its endorsement deal with golfer Tiger Woods at the end of the year, adding another name to the list of companies that cut ties with the golfer after last year's revelations of marital infidelities.
Thierry Henry:
Thierry Daniel Henry is a French footballer who plays for Arsenal as a striker, on loan from New York Red Bulls.
Boycott threat to Gillette products over Thierry Henry 'handball' row:
A boycott of Gillette products is being organized after the 'face' of the brand, France footballer Thierry Henry, was blamed for knocking Ireland out of the 2010 World Cup.
Curse of Gillette:
One by one, the quartet of global sports stars who have eschewed facial hair to vaunt the merits of a close shave have, pardon the pun, been cut down by ... the curse of Gillette. First Thierry Henry, one of Gillette's current trio of top-notch ambassadors, goes and does that handball. Then Woods, the golden boy of golf and all-round sporting god, makes headline news after crashing his car following an argument with his wife. Not only that, but Woods's crash was quickly followed by a shock defeat for Federer, the world's best tennis player, who was knocked out of the ATP World Tour semi-final by sixth-seeded Russian Nikolay Davydenko.
Other prominent brand ambassadors:
Rahul Dravid
Derek Jeter
David Beckham
Park Ji Sung
Kaka
Michael Clarke
Andr 3000 Benjamin
Adrien Brody
Gael Garca Bernal

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[BRAND MANAGEMENT] Gillette