Product Profile

Gillette India Ltd.

PREPARED BY
Harsha.B.Namburi
PGDM-2009-11
MODULE-2ND
SUBMITTED To:
SYRYADATTA GROUP OF INSITUTE’S

SIMMC, Pune.
 Index
No. Contents Page No.
1 Introduction 3
Methodology & Objectives
2 Introduction of the 4
company & Product
3 Business Profile 5
4 Product Details 6
5 Industry Analysis 6
6 Gillette’s Strategy in India 7
7 Share Holding Pattern 8
8 Product Details 9
9 Product life cycle 11
10 Satisfaction Index 13
11 Sales 13
12 Financial Analysis 14
13 Profit & Loss Analysis 15
14 Strategic Priorities 19
15 SWOT Analysis 20
16 Competitors Analysis 24
17 R&D 29
18 Future Plan 30
19 Conclusion & Learning 31
Introduction
Methodology
 Market audit survey.
 Survey of consumer behavior.
 Compiling of the data obtained.
 Analyzing the required data.
 Conducting a detailed study.
 Preparing the report.

Objectives
 To understand customer’s life style habits.
 To gain greater insight of market behaviours.
 To assess customer-purchasing habits.
 To understand how to position new products.
 To identify the best way to reach the customer.
Introduction of the Company & Product
Gillette was incorporated on 9th February 1984 at Rajasthan, house of
Poddar enterprise(HOPE) and Gillette company, U.S.A promoted it.

Gillette has been a leading brand in men’s grooming industry in India and
across the globe. Gillette with its wide range of products caters to the premium
segment of the men’s grooming market.

Gillette is a brand of Procter & Gamble currently used for safety razors,
among other personal hygiene products. Based in Boston, Massachusetts, it is one
of several brands originally owned by The Gillette Company, a leading global
supplier of products under various brands, which was acquired by P&G in 2005.
Their slogan is, "The Best a Man Can Get". The original Gillette Company was
founded by King C. Gillette in 1901 as a safety razor manufacturer.
On October 1, 2005, Procter & Gamble finalized its purchase of The Gillette
Company. As a result of this merger, the Gillette Company no longer exists. Its last
day of market trading - symbol G on the New York Stock Exchange - was
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, which have also been maintained by
P&G.
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.
BUSINESS PROFILE:

Gillette India Limited operates in three segments:

 Grooming – Manufactures blades, razors and toiletries.

 Oral Care – Manufactures toothbrushes and oral care products
 Portable Power - Manufactures batteries, torches and lamps

Some of the renowned popular razors from Gillette used in India include:

 Gillette Presto “Readyshaver” - Priced lowly thus targeting the low-income

group of consumers.
 Gillette Sensor Excel – Targeted for the middle-income group
 Gillette Mach 3 – Targeted for the high-income group
PRODUCT DETAILS:

Company manufacturers stainless steel razor blades. Gillette India has a wider
portfolio of core businesses of shaving products sold under Gillette, 7’O clock and
Wilkinson brands, battery and flashlights business and oral care products(Oral B)).
Company has a strong presence in shaving razor blades market. Blades
manufactured by the Company were of two types, the premium 7 O’clock, Ejtek
Super Platinum and the stainless brand 7 O’clock Ejtek Super Stainless. Company
took over Sharp edge Ltd., by acquiring the entire share capital of that company.
Company also merged Duracell (India) Pvt. Ltd. and Wilkinson Sword India Ltd.
with the company.

INDUSTRY ANALYSIS:

Due to increased awareness and rising income levels, the industry is expected to
undergo a major shift from traditional double-edged razors segment to twin and
triple blades razors segment. Razor blade market has tripled from Rs 2 billion in
1986 to Rs 6 billion in 2006. In value terms, in 2003, double-edged blades
comprised 78%, systems 15% and disposables 7%. As per AC Nielsen/ORG's
estimates, the domestic shaving preparations market in 2003 was pegged at Rs 1.5
billion. Within the industry, cosmetics and personal care industry has been growing
at an average rate of 20 per cent for the last few years. However, current
consumption is still below many countries in Asia which shows that there are
further growth opportunities. In 2004, market size of men's personal care segment
is estimated at approximately Rs 750 crores, with Gillette having the largest market
share.
Thus, the industry is growing at a decent rate but still is at an infant stage and this
offers great opportunities to players like Gillette and Colgate Palmolive to expand
their customer base to include higher number of lower middle class people and
thereby increase their revenues and profitability.

GILLETTE’S STRATEGY IN INDIA:

The Indian shaving products market is characterized by a 97% share of double-

edged blades - a business dominated by the Malhotras, with brands like Topaz
and Panama. Instead of going head-on against them in this highly price-sensitive
market, ISPL has chosen to focus on premium products. The strategy has been to
bring more people into the twin-edged segment, and then gradually move them
towards even more premium products. Also, by segmenting the market with
offerings at different price points - 7 O’clock, Sensor and Mach III, ISPL offers a
continuing upgrade path for users.
SHARE HOLDING PATTERN :

There has been a great shift in the shareholding pattern of the company since its
entry into Indian market in 1984. Gillette entered India through a joint venture as a
minority shareholder. Its share increased to around 75% in 2002. In 2006, almost
88% of the company was owned by the promoters (foreign and Indian). Out of the
remaining 12%, 10% is owned by non-institutional investors and thus, only 2% lies
in the hands of institutional investors.
Product Details
GILLETTE SERIES:

GILLETTE SHAVING GEL - AN INSIGHT :

The Gillette shaving gel/foam series has been developed as a technologically

superior product. Gillette is the only company to have 10 product variants in this
category. No other competitor has even more than 5 variants. So, Gillette has the
deepest product line and the widest product width. Gillette Series has many firsts
to its credit in the Indian market:
First to introduce Shaving gel in the Indian market

First to include ingredients like Aloe vera and Vitamin E in its gels and
foams.

First to introduce foams with no fragrance in “Pure and Sensitive”

 Gillette Series Shave Gel

Sensitive Skin
Formulated with aloe to gently soothe, this Anti-Friction gel enhances razor glide
for a close, smooth, comfortable shave and delivers the protection and comfort you
need for healthy looking skin.

Gillette Classic Shave Foam

Sensitive Skin
Gillette Foam Sensitive Skin has a thick, extra rich, creamy lather for a close,
comfortable shave. Contains special lubricants to help protect sensitive skin.
Spreads easily, rinses clean, leaving skin feeling soft and smooth.
Product Life Cycle
A new product progresses through a sequence of stages from introduction to growth,
maturity, and decline. This sequence is known as the product life cycle and is
associated with changes in the marketing situation, thus impacting the marketing
strategy and the marketing mix.

The product revenue and profits can be plotted as a function of the life-cycle stages as
shown in the graph below:

      Product Life Cycle Diagram    

Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a
market for the product.

 Product branding and quality level is established and intellectual property

protection such as patents and trademarks are obtained.
 Pricing may be low penetration pricing to build market share rapidly, or high
skim pricing to recover development costs.
 Distribution is selective until consumers show acceptance of the product.
 Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate potential
consumers about the product.

Growth Stage
In the growth stage, the brabd ge getting popularity and market share is continuously
increasing.

 Product quality is maintained and additional features and support services may
be added.
 Pricing is maintained as the firm enjoys increasing demand with little
competition.
 Distribution channels are added as demand increases and customers accept
the product.
 Promotion is aimed at a broader audience.

Maturity Stage

Competition with similar products.

The primary objective at this point is to defend market share while maximizing profit.

 Product features may be enhanced to differentiate the product from that of

competitors.
 Pricing may be lower because of the new competition.
 Distribution becomes more intensive and incentives may be offered to
encourage preference over competing products.
 Promotion emphasizes product differentiation.

Decline Stage

As the product demand is continuously growing the decline stage has not yet came but
if it does then marketing mix decicions and new technology will be introduced.
Satisfaction Index
A questionnaire was prepared and a group of 100 people were asked various
questions regarding the products. According to that survey following index was
prepared.

Attributes Rating /100 People Voted

Looks 80 100
Ease of use 85 100

SALES

Gillette India's sales jumped 106 per cent to Rs 516.80 crores after the
addition of new businesses from the merged companies. But operating profit
margins of the merged entity has dropped to 12.9 per cent in 2000, from 19.3 per
cent in 1999. As a result, Gillette India's operating profits rose by a lower 38 per
cent to Rs 67.16 crores. This suggests that the merging companies have far lower
levels of profitability than Gillette India. Gillette India Ltd announced 36.6 per cent
higher net profit at Rs 61.22 crores for the 12 months ended December 31, 2004
on 9.73 per cent growth in sales at Rs 446.57 crores.
FINANCIAL ANALYSIS

Since its entry into India market in 1984, Gillette has been following a strategy of
inorganic growth by acquiring domestic companies in oral care, battery, blades
and razors and stationery business. The company witnessed tremendous growth
during the later half of 1990s. Net sales increased from Rs 107 crores in 1997 to
Rs 477 crores in 2000 representing a growth rate (CAGR) of 45 %. Similarly, CAGR
for net profits over the same period was over 50%. However, operating margin
declined from 19.8% in 1997 to 14.0% in 2000. This further declined to less than
1% in the year 2001. Further, negative sales growth and increased expenses led to
a net loss of Rs 28 crores in 2001. This poor financial performance forced the
company to undertake a major restructuring program. Over the next 2 years,
Gillette concentrated on reducing overheads and better working capital
management to increase profitability. As a result of its restructuring program, the
company reported net profit of Rs 44.82 crores in 2003. Since then, company has
been growing at a steady rate which has resulted in increased valuation of the
company

The company is also focusing on exploring ways to capture the expanding oral
care segment in the near future. Oral care segment contributed approximately
13% of company’s revenues in 2006 as against only 7% a year ago.
PROFIT & LOSS ANALYSIS

Net sales of the company grew at a CAGR of 45% during the period 1997-
2000. After that there was a downfall in the company and for the first time, Gillette
India ended the year with a net loss of around Rs 28 crores. This was primarily due
to significant increase in employee cost and other miscellaneous expenses. In 2001,
revenues declined to Rs 453 crores from Rs 477 crores a year earlier. Revenue
figures further reduced by around 18% in 2002 to approximately Rs 385 crores.
Although due to IIM Indore Group 6 Section B
restructuring, the damage was controlled to some extent in 2003, yet there
was a further fall of 3% in the revenue figures. Since it‟s restructuring in 2003,
company has recorded double digit growth rate in revenues. However, the
growth rate was moderate in 2005 as compared to the figures in 2004.
 Chart showing Revenue growth over last 5 years

Despite higher revenue growth in late1990s, operating margin of the

company declined from 20% in 1997 to 14% in 2000. Similarly, net profit margin
almost remained constant at around 5% over the time period. The situation
worsened further in 2001, and company reported a net loss of 6%.

In 2002, Gillette undertook restructuring initiatives and it took the company

two years to revive its operations. In 2003, company recorded a net profit of Rs
44.82 crores. It entered into contracts with new suppliers for better raw material
prices and also brought about a significant reduction in wastages. As a result of
which, raw material cost as percentage of net sales declined from 46% in 2001 to
31% in 2003. Further, miscellaneous expenses reduced to just Rs 15.57 crores in
2003 from Rs 82.68 crores in 2001. The net profit margin increased to 12.45% in
2003 and the operating margins stood at 25.90%. Improved financial performance
led to an increase of almost 120% increase in share prices over the year 2003.

Chart showing profitability margins over last 6 years

The market capitalization of the company has increased from Rs 845 crores in
2001 to Rs 2695 crores in 2007.
STRATEGIC PRIORITIES:

This step involves portfolio analysis of company’s products in the market.

Company derives almost 80% of its revenues and 90% of its profits from Personal
Grooming division. Within this particular division, majority of the sales come from
its razors division. Gillette is an undisputed leader in this sub segment. Similarly,
company leads in the market for gel and foam products. Thus, Today’s business is
driven by this two sub segments.

In the future, Gillette still needs to concentrate on its two major sub segments for
regular cash flows. However, the new product in the shavings cream market can
also become tomorrow s breadwinner for the company. Oral Care business has
shown volatile performance over the years and thereby, has led to irregular cash
flows. Gillette’s portable power business has been facing stiff competition from
the alkaline batteries in the market. This division grew by only 4% in terms of
revenues in the year 2005-06. And in fact, there was decline in the profit figures
from this division by approximately 60%. The company can consider divesting this
segment to direct its investments to Oral Care and the new shavings cream
product.
 SWOT ANALYSIS

STRENGTHS:

STRONG BRAND EQUITY:

Gillette’s portfolio contains well establish brands such as Gillette and Braun,
oral-B line and Duracell. It eases the introduction of new products, as consumers
are already well acquired with the names and more receptive to promises of
improved user experiences. The strength and quality image of these brands
allows the company to charge higher process and achieve high margins.

MARKET LEADERSHIP:

The company’s product are well known with a reputation of quality are also
market leader in their perspective segment.

Strong parental support in advertising and promotion:

 During the 2002 FIFA World Cup, Gillette India announced a
promotion scheme offering a unique opportunity to win a trip to
Yokohama, Japan, to see the finals, live.
 To promote its products directly to consumers, Gillette India Limited
has launched “Gillette Grooming Centres” along with 50 salons.
These centres provide specific tips on shaving etc. and also help in
promotion of company products.
 Gillette has localised its advertisements as per Indian culture. For
example the promotion campaign for “Vector” was related to an
Indian marriage party.
WELL DIVERSIFIED PROTFOLIO:

Gillette has a well diversified portfolio in terms of product diversification and

market diversification. Diversification of this nature helps the company avoid the
risk of overdependence on any one source for its revenue stream.

BRAND ENDORSEMENT:

Gillette India is investing heavily in advertisement in order to create awareness

among Indian rural and urban population. They are also endorsing their brands
through champions or role models of different sports.

STRONG R&D TEAM:

WEAKNESS:

PROFITABILTY HIGHLY DEPENDENT ON CORE BUSINESS:

Gillette profitability is highly reliant on the performance of its razors and blades
business. A substantial portion of its revenues come from this sector. Any
downturn in the sector or in Gillette’s competitive position within it could have a
serious negative effect on the company.
OPPORTUNITIES:

NEW PRODUCT LAUNCHES:

Gillette is known for constantly introducing new products in the market with
better technology and performance. This new product launches will help the
company to gain competitive advantage over its competitors.

GROWING DISPOSABLE INCOME:

INCREASED AWARENESS:

Cable television has penetrated into the smallest of Indian towns and has taken
with it awareness of latest lifestyle trends and trends.

PRICE INCREASES IN PREMIUM SHAVING SEGMENTS:

Gillette has been increasing the price of its razors and blades at an average rate of
around 4% per year over the last ten years. This price increase will help the
company to accumulate more profits from the present level of sales.
THREATS:

LIMITATIONS/DISPOSABLES ARE A THREAT TO THE MACH3 OFFERING:

Gillette ability to sustain a price premium and earn an attractive return on its
extensive investment three-blade platform is threatened by the numerous
imitators of the mach3/mach3 turbo franchise, including disposables and private
label systems and even including Gillette’s own three-blade disposable. This
numerous imitations are threat to the company in the long term as they are going
to reduce the sales of the original products.

PRESSURE ON PRICING POWER:

Gillette pricing power is being further eroded by channel migration and increasing
consumer resistance to paying significantly higher prices for innovation. Pricing
power is hey to revenue growth in a mature category especially when Gillette’s
strategy has historically been to drive revenue growth per consumer and not
volume growth.

COMPETITIVER ENVIRONMENT:

Gillette faces intense competition in most markets. Its products compete with
widely advertised, well known, branded products, as well as private label
products, which typically are sold at lower prices. The company’s survival depends
upon its ability to adopt itself in this kind of competitive environment.
COMPETITOR ANALYSIS:

COLGATE PALMOLIVE :

Colgate-Palmolive has three products in the shaving cream/gel/foam segment.

Palmolive shaving creams are enriched with revitalizing sea minerals, this rich
formula refreshes skin and protects against razor irritation.
They are formulated with soothing Aloe-Vera, this rich foam is mild on skin and
helps guard against irritation.
One variant is a creamy formula featuring palm extract to hydrate and moisturize
skin. This cream in a long thin tube is very easy to use. As you just put onto your
face and use your shaver and it will get all your stubbles of your face leaving it
nice and smooth

The Price of each of these products is mentioned with size of the pack in the table below
HINDUSTAN LEVER LIMITED (HLL ):

Hindustan Lever Limited is the biggest player in the Indian FMCG market. It has
two brands in the shaving cream segment. Axe and Denim.
HLL has extended its brand „Axe‟ which is a success in the deodorant market to
the shaving creams.
The Axe shaving cream has very good awareness scores among the consumers. It
comes in various fragrances, colors and its packaging also has many variants.
Denim is another shaving cream from the house of HLL. This is almost in the same
segent as that of Axe in terms of price and product attributes.
The pricing of shaving products by HLL for both Axe and Denim is almost same.
It is also very similar to that of Old Spice shaving cream. But HLL does not have
any product in the gel or foam category to compete brands like Old Spice and
Gillette
GODREJ:

Godrej is the domestic brand of shaving cream for Indian market. Recently Godrej
has invested heavily for the expansion in this market.
The shaving cream from Godrej is among the lowest priced shaving cream in the
market. It is targeting the price sensitive customer in the Indian market. But the
quality of the product is satisfactory in spite of its near about half the price than its
competitors.
Although, variants are few in terms of size, fragrance and packaging, it is still in
the shopping list of many consumers.
Godrej is a domestic brand of shaving cream and now it is looking to expand in
the global.
 STRENGTHS (S): WEAKNESSES (W):
S1: STRONG BRAND EQUITY: PROFITABILTY HIGHLY
S2:MARKET LEADERSHIP DEPENDENT ON CORE
BUSINESS
S3:Investing heavily in
Advertisement and Promotion
schemes

OPPORTUNITIES (O): SO STRATEGIES: WO STRATEGIES:

O1: GROWING DISPOSABLE Use S1, S2 & S3 to capture O1 They should focus more on R&D,
INCOME Gillettee India should focus on aesthetic, design and packaging in
O3: INCREASED AWARENESS producing shaving products like order to explore new segments of the
shaving cream for the middle class market.
of India as their disposable income
is growing. They should also focus on marketing
concept in order to meet the needs of
different segments of market.

They should make their distribution

system more effective by attracting
mega dealers and retailers by giving
them special promotions and incentive
schemes.

THREATS (T): ST STRATEGIES: WT STRATEGIES:

T1: COMPETITIVER Use S2 to cater T1: Various designs, distinct features and
They should use competitive edge products with the touch of some
ENVIRONMENT of their brand name and image to innovation should be made available to
take the lead from their the consumer market in order to cope-
competitors. up with the competition.
As they have good industrial
relations so they should go for joint
venture with an established partner
which is capable of providing good
leadership and direction to the
company.
 T O T A L M A R K E T C A P T A L IZ A T IO N

100000

80000

60000

40000

20000

0
1 2 3 4 5 6 7 8 9 10
GILLETE COMPETITOR

100
1
90
2
80
3
70
market share

4
60
5
50
6
40
7
30
8
20
9
10
10
0
1 2 3 4 5 6 7 8 9 10
gillette compe titor
Research & Development
 Packaging & Looks
The company will change its current packaging and looks to suit the new
requirements of customers as to attract them within the upcoming
quarter.

Technology
Extensive research is being carried out for the betterment of current
formula

Future Plans
• High Branding/Quality - Premium Price

• Develop New Market Segments & Niches through R&D

• Maintain/Promote Strong Brand Loyalty

• Tailoring Demographic Targeting (E.g. US vs Europe)

• Reduction in Product Unit Costs

• Grow Razor Systems Segment

• Strategic Alliances (Suppliers and Distributors)

• Shedding Non-Core Businesses (E.g. Papermate)

Conclusion & Learning

While making this product profile I understood what all problems the
company faces while introducing a product into the market and what all steps
they take to overcome those problems. Different types of strategies are adopted
by the companies to make their product successful in the market i.e. the new
product introduction and market testing, their financial arrangements, their
marketing strategy, their research and development operations etc. what are the
main benefits of a product and also how the quality standard of a product is to be
maintained so as to keep the companies goodwill in the market.From the product
profile I learned how to design a product and provide a good service. By the
product profile ,I got the complete information about a particular product,its
features and even deficiencies. It was a real learning process where I was able to
explore my theoretical knowledge in analyzing and studying the detailed process
of developing and introducing the product in the market.