CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing

561 Analysis and Decision - July 2017 Candidate number: 12036744

Figure 1. Resources and Competencies Figure 3. Porters Value Chain

Resources (what we have) V R I O Competitive implications Outbound Marketing &
Inbound Logistics Operations Service
Existing physical infrastructure, logistics Sales
factories, warehousing, distribution 7 7 3 9 Temporary competitive advantage
centres Consolidation/multi
Warehousing/ Brand

Firm Infr.
product production Localising
Brand equity (20bn USD) and receiving good infrastructure
9 9 9 9 Sustained competitive advantage sites. distribution
infrastructure resources from Resources from
Good resources from centres.
Existing customer base 9 9 7 8 Sustained competitive advantage P&G P&G
P&G.
Human resources, over 100,000
employees experience 8 8 7 9 Sustained competitive advantage Lots of experienced
curve/expertise staff, especially

Margin
Diversification of product lines Competitive parity/temp across all P&G, good
7 6 5 7

H:R
(maximise econ of scale) advantage learning curve.
Communication/
Competencies (what we do)
information systems
Manufacturing 8 7 6 8 Temporary competitive advantage important
Distribution and supply chain
8 7 6 8 Temporary competitive advantage Some use of
management

Tech dev.
New production Virtual Reality
Excellent marketing and customer processes (India). (Australia)
9 7 7 6 Temporary competitive advantage
insight Innovation creative
Innovation and NPD Process 8 9 7 8 Sustained competitive advantage campaigns.

Proc.
Figure 2. Sources of Cost Efficiency Econ of Scale Economies of scale
Source of cost efficiency Evaluation
Key points:
Economies of scale High, worlds largest mfr (consumer goods)
No Value added: Service (especially after sales service). Small competitors can
The experience curve Learning high. Technological high. challenge with more targeted offering/CRM approach.
Simplifying products partially (India). Key value creating: Innovation, tech development, learning curve. Production
Simplifying process partially (US distribution) process development (India). Brand equity high/recognition good.
Product design innovations Incremental product improvements Value creating but vulnerable: Market incursion by Unilever is a big threat, they
complicating design, value to customer could challenge Gillette on many fronts, including their economies of scale.
uncertain.
Using the newest and most efficient In progress in some areas local
production technologies manufacturing. Roll out globally

Use of no frills offerings None.

Minimising overheads Some restructuring in progress. Continue
process in further key regions.
1
CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing
561 Analysis and Decision - July 2017 Candidate number: 12036744

Figure 4. Stakeholder Analysis Figure 6. Sources of Differentiation

Level of Level of Interest at Source of
Stakeholders Response risk Rank Description Analysis
power interest stake differentiation
Customers Has been overtaken by
High High Product Switch to other supplier Loss of first mover
(end user) Place (Distribution) 0 competitors (online/mail
advantage/vulnerable to attack
order)
Retailers High High Product Refuse to stock product/availability Price 5 Planned reduction of 20% Profitability decrease

Shares Sell shares, withdraw support, High awareness, TV, cinema Expensive (especially long term) and
Shareholders High High Promotional 7
(financial) refuse further investment etc. vulnerable to attack

Pay, status, Brand 8 Global, difficult to imitate Expensive maintenance

Sabotage, procrastination, internal
Management High High power, Low differentiation in core/actual
politics Similar to Wilkinson sword
promotion Product 3 product. Could develop augmented
(Schick)
product level
Pay, security,
Employees High High Industrial action, resignation
expertise Figure 7. PEST
Public PEST Analysis
Government High Medium interest, tax, Regulate/tax
elections Brexit may cause unemployment - businesses being cautious. Employment levels may
be linked to sale of grooming products. The issue of Brexit may have further
Lobby governments, influence Political/
importance in that the emergence of trading blocs could have an impact on global free
Environmental Protect public opinion, may gain power by Legal trade. Access to global markets are subject to legal constraints, quotas, tariffs, taxes,
Low high
groups environment joining with other stakeholder etc. These can have a limiting effect on growth.
groups

Suppliers medium High Business Fail to deliver Growing economies such as Brazil, China and India represent important new markets
for Gillette, especially given the predicted stagnation of western markets. Globalisation
Economic may represent a form of insurance against the economic downturns in any particular
Figure 5. Sustaining Competitive Advantage country, and the changes in demand. These countries may also bring the possibility of
achieving cheaper manufacturing costs. Gillette has successfully relocated
Generic source of manufacturing facilities in the past.
Rank Evaluation
competitive advantage

Unique and valued Valued products, but lack differentiation from Demand for grooming products seems to be subject to the volatile trends of fashion
6 and personal tastes. Some countries are experiencing a beard trend which is likely to
products Wilkinson sword/Schick
Social be impacting razor sales in a negative way. In the female market a similar effect is
occurring with many ladies opting not to shave, instead celebrating their natural
Clear and tight definition beauty. This movement has been supported and fuelled by social media.
4 Broad target market
of market tgts
Proctor and Gamble has an excellent reputation for innovation and technological
Techno-logical
Enhanced customer developments. P&G invests heavily in R&D and has made a commitment to develop
4 Reliance on retailers, two part pricing strategy
linkages environmentally friendly products and materials.
Growing consumer awareness and demand for environmentally friendly products, this
Established brand and Environ-mental
9 Well established brand and credibility is driven in part by water scarcity. P&G has joined the plant based plastics collaborative
company credibility with Nike etc.
2
CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing
561 Analysis and Decision - July 2017 Candidate number: 12036744

Figure 8. Porters 5 Forces Figure 10. McKinseys 7s Model

Force Power Evaluation Factor Analysis
Low due to
Supplier
economies of Product dev., marketing and distribution in house Leadership/ownership/integrity/passion for winning/trust
bargaining Shared To be, and be seen as, the best consumer products company in the world /
scale and Economies of scale (suppliers)
power integration values making everyday life just a little bit better.
Gillette has innovation and expertise at the heart of their organisation
Product viewed as necessity
Threat of Medium threat
People may down trade to low cost/value option BIC
Substitute of trade down or Very large org. International structure. P&G has
disposable
products do without Structure leading market shares in 5 product categories. Supports global vision
Do without culture, movember etc.
Localisation/consolidation in progress
Reliance on grocery multiples/retailers
Few switching options (few competitors)
Customers likely to trade-up for more expensive products, eg. Improvement of systems is stated as part of core Unknown: potential room
Bargaining Systems
beard trimmers. value (leadership). for development
power of Medium
Economic uncertainty (eg. Brexit) may effect demand
buyers New market segments identified
Two part pricing increases switching costs (premium) Leadership aims to eliminate organisational
Disposable razors decrease switching costs (low end) Style barriers, this would imply a collaborative, Supports values
participative leadership style.
Barriers to entry: Ad spend, R&D costs, Economies of scale,
Threat of
Developed supply chain
new Medium/High
High threat in unserved sectors
entrants International organisation employing over 100,000
threat due to distribution innovation (internet, mail order)
staff could cause barriers (eg, cultural, language). Excellent staff with good
Mature market (low or negative growth)
Staff
Ownership/empowerment/trust encourage skills
Strong competitors: Razors; Wilkinson Sword (Schick) premium independent working and innovation
Competitive
High and disposable; BIC disposable. Other product lines: Veet,
rivalry Nivea
Lack of differentiation also causes increased competitive rivalry Could provide greater value
Competitive advantage through innovation, product to customers through more
Figure 9. P&G: Net Sales, Costs and Profit Margin (2012-2016) Strategy cannibalisation. Broad specific
Segmentation/targeting/positioning segmentation/targeting
and positioning
$80.0 25.0%
$70.0 P&G (and Gillette) has a strong history of
20.0% innovation.
$60.0 Necessary skills in place or
Skills Positive experience curve.
$50.0 easily obtainable
(BN USD

15.0% P&G invests 2bn USD a year in research and

$40.0 development
$30.0 10.0%
$20.0
5.0%
$10.0
$- 0.0%
2012 2013 2014 2015 2016
Net sales Costs Profit Margin (PBIT)
3
CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing
561 Analysis and Decision - July 2017 Candidate number: 12036744

Figure 11. Cultural Web Model Figure 13. Howard and Sheth buyer behaviour model
Description Evaluation Element Details Evaluation

The best a man can get Behavioural Necessity Ladies often make the actual purchase
The Tech focus (not customer
Expertise and innovation determinants Fashion trends or have a strong influence on a mans
Paradigm focused)
Assumption that people will Economic factors choice of razor.
Assumption may not be true
always want to shave
Rituals 100 year company history Routines and rituals likely to be Price
and Reward structures/ deeply embedded and difficult Pricing structure under review due to
Availability distribution channel
Routines accountability/ empowerment to change Inhibitors gap between high and low end.
Shopping Autopilot/not
Two part pricing locks in consumers
bothered/time-constraints
1903 invention of Safety razor History of achieving the
The Appendix 3
revolutionised the industry. impossible
stories
Historic contracts with the Could compliment macho image
military (P&G). of Gillette products Brand/Advertising/promotion/commu
nications
Recommendations (father son shaving More targeted inputs, especially to
Original safety razor was highly
experience) encourage trade-up purchase
successful and beautiful. The hyper macho image may not
Symbols Inputs Two part pricing structure on premium decisions
Hyper macho image be suitable for all markets
Encourage cross selling of creams,
Celebrity endorsements metro sexual
Negative inputs: lotions etc..
(sportsmen, James bond)
Social media (do without). Educate/communicate benefits
Shift towards Environmental concerns (especially
Power/org Innovation and expertise
customer/marketing power disposable razors)
structures power may lie with R&D
focus
Control Horizontal accountability as Ambivalence to traditional advertising Segmentation and positioning may
Encourages innovation Perceptual
systems well as vertical accountability. Some men may respond negatively to help here, also need for attention
Reaction
hyper macho images (inc. metro- grabbing, creative campaigns to
sexuals as mentioned in the case counter ambivalence alternative
Figure 12. Brandforward Brand Insistence Model study) media, below the line.

Rank Evaluation
Assuming low level of product
High Global brand, very high awareness Product (often) seen as a necessity differentiation, branding seems an
Processing and having run out of razors. important differentiation factor.
Potential danger area: 1, reliance on grocery multiples. 2, other Determinants Availability on shelf Relations with retailers highly
Medium
channels under-utilised Aesthetic appeal important to guarantee availability.
Connection with brand Also alternative distribution
Medium innovation and expertise create value for customer channels

Medium No strong differentiation

Low Broad appeal, speeds the net widely

4
CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing
561 Analysis and Decision - July 2017 Candidate number: 12036744

Figure 14. Competitor analysis Figure 16. Barriers to innovation in Marketing

Methods of overcoming
Competitor Key points Evaluation Barrier Description Evaluation
barriers
Owned by Edgewell Personal Care. Ensure board of directors
Wilkinson Are top (especially CEO) are convinced
Manufacturer of Razors (various other International competitor very similar Unknown.
Sword products) including: Hydro 3, hydro 5 and product and packaging. Resistance to management on- of appropriateness of new
(Schick) Assumption: good
hydro silk all from 1998 change board? P&G core thinking.
commitment
values suggest so Demonstrate effectiveness
Socit BIC International competitor. Low cost razor, Iconic company. (produce results).
S.A. cost leader strategy just whats necessary BIC Pens/BIC Razor
Possibly. Entry into
Dollar Could be Unilever beginning a flanking Has marketing Indian market not Build on marketing as a source
Distribution innovation Old planning
Shave Club attack on the shaving and hair removal been downgraded an immediate of sustainable competitive
Low cost (with parity) systems to tactical level success (lack of advantage.
(Unilever) market.
customer insight)
Second biggest competitor in UK (30% mkt Direct threat to Gillettes Brand
Do individuals
Veet share). DOES NOT MAKE RAZORS, but extensions could attack razor mkt
have limited
creams and lotions. (flanking) Old structures/
responsibilities or Training and development,
functional Unknown
do cross create cross functional teams.
Nair Similar to Veet lower mkt share. As with Veet. specialists functional teams
Growing segment of eco conscious exist?
Gels/potions, NOT RAZORS
King of consumers. Could begin to sell razors in Centralised Increasingly Current situation
Environmentally friendly image Continue as is
Shaves this market. Could be a target for control localised good
Innovative solution to razor burn
acquisition
Huge marketing Uncertain level of
V. Large company. Makes electric shavers Could attack razor market. Need to produce results and
Phillips budget to effectiveness /
Innovative fully waterproof shaver. Similar positioning to Gillette. Cost develop marketing as a source
maintain market customer insight
considerations of sustainable competitive
position no evidenced by Indian
advantage
barrier. expansion
Figure 15. SPACE Analysis
Implications of SPACE
financial
analysis: Figure 17. Strategy Canvas (Industry key success factors)
Conservative Aggressive Good financial strength
strength 10
outweighs environmental
5.25 8
stability.
6
Good competitive advantage 4
and industry attractiveness
2.1 3.1 2
competive industry implies an aggressive strategy.
0
advantage attactiveness Likely to face threats from new
competitors .
Try to grow business raising
3.5 stakes for all competitors.
environment Danger of complacency.
Defensive al stability Competitive Financial strength could make it Gillette Schik Dollar Shave Club
attractive to seek acquisitions.
5
CIM Professional Postgraduate Diploma Exam Centre: Oxford College of Marketing
561 Analysis and Decision - July 2017 Candidate number: 12036744
Fig 19. Gillette Key Innovations
Fig 18. Risks and mitigation strategies
Year Name Comment/ evaluation
Type of
Description % Impact Mitigation
Risk
1901 Original safety razor Revolutionary / Disruptive innovation
Reduced market growth, Cross subsidisation of one
Economic slowdown M 1915 Milady Decollete First ever razor for women
financial hardship segment by another
Economic
Exchange, foreign Negative impact on Pricing (increase Price could Continuous band. No need to touch the razor
H 1967 Gillette Techmatic
blade
currency fluctuations. revenue, profit, cash flow negatively effect sales)

Instability, failure to 1971 GII Twin Blade razor First twin blade razor
Fines, taxes, loss of Insurance, short term deals,
Political comply with local M
investment leasing not purchasing
regulations. 1975 Gillette Daisy First disposable razor for women

Develop programmes to 1976 GII Twin Blade Disp. First twin blade disposable razor
Inaccurate or negative PR Loss of reputation among protect reputation (social
Social (social media)
H
key stakeholders responsibility and 1977 Contour Revolutionary pivot head razor
environmental projects)
1985 Contour + First slippy strip
Declining traditional Market development
Loss of profitability, First pan-atlantic product launch (16 countries).
markets/ less customers H Penetration/ Sales 1990 Sensor
excess capacity Spring mounted blades
trade up. promotions

Changes in supply costs 1992 Sensor for women

Negative impact on gross Cost saving projects, process
(production and
transport) Changes in
H margin, operating optimisation, and find 1993 Sensor Excel Flexible micro-fins
margin, net earnings. alternative sources.
commodity prices. Three blades (today over 90 million men use
Business 1998 Mach 3
Mach3)
Reliance on few key Cost and margin Develop new channels and
H
customers pressures, loss of sales manage relationships 2000 Gillette Venus Three bladed razor for women
Disruption in global supply
2002 Passion Venus Available in Pink
chain (labour, Failure to deliver Develop policies and
manufacturing sites, M product, financial procedures for managing 2003 Mach 3 Turbo
procuring materials, conditions relationships
distributors and suppliers)
Fig 20. Rate of innovation chart
Market incursion from
H Reduce market share Offensive/ defensive strategy
competitors. 2020
Competi- Failure to innovate and 2000
Research into customer
tion respond to competition. 1980
Compromise competitive trends, competitor strategy,
Evolving sales channels, H
position R&D investment, promotional 1960
business models and
incentives
year

consumer preferences. 1940

Quality failures and Loss of reputation among Quality, customer service and 1920
H
counterfeit products key stakeholders. patent protection strategies.
1900
Product Changing consumer
perceptions on certain M
Customers boycott Researching new sustainable 1880
products, negative PR materials. 0 2 4 6 8 10 12 14 16
materials
Innovation number
% Likelihood: L Low - M Medium H High 6