Gillette Startegic Analysis Essay

1069 Words Nov 13th, 2008 5 Pages
FROM: Giuseppe Fornaro
TO: Edward “Cutting Edge” Barber, Head of Gillette Shaving Division
RE: Rejuvenating the strategy of Gillette’s razor business

Current Strategy
Gillette has grown to be a power brand in the shaving industry. Its products are seen as premium quality and are thus sold at a premium price. Gillette’s current business model consists of high spending in marketing and product development (R&D). Gillette’s traditional competitive strategy for razors is to focus technology and marketing on increasingly sophisticated blades. In other words, Gillette strengthens their position by introducing new products or services that make existing ones obsolete. By utilizing this tactic, Gillette is remaining competitive
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This will change what the current product life cycle of the Gillette razors currently looks like in a positive way (compare exhibits 4 & 5). The consumer will still be reaping the benefits of an enhanced razor, but will not have to shop for an entirely new product. This strategy will also enhance the product’s brand image and awareness, which will further strengthen Gillette’s stronghold in the industry.

As we know, the basics of determining price are cost, demand, and competition. Fortunately, Gillette is going to price their razors for a penetration strategy (e.g., increase market share). Gillette’s razors are priced at a premium because consumers see their products as premium and high quality. Gillette’s pricing strategy will be one that is profit oriented (i.e., targeting return and maximizing profits). Therefore, Gillette will not compete on the basis of price, and will instead compete on the basis of quality. Furthermore, Gillette can reduce costs by reducing the costs of advertising, as they will be pairing their brands and depending on the power of their brand. The current state of the economy will not affect the pricing strategy. A wise professor once said, “the success of a strategy depends not on the state of the world today, but the state of the world in the future.” Lowering the price of the products would be detrimental the brand image as

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