Gillette Guard in India – Customizing a Product with Customer Insights
In 2008, despite being the market leader of the ₹1,000 crore and 5 billion units’ razors and blades market in India, Gillette India Ltd. (GIL), witnessed a tepid growth rate as its volume sales increased by a minimal 2.8% (fiscal year 2009 year ended June). Its flagship brand Mach3 Turbo (Three Blade) of the razor category introduced 4 years earlier for the premium segment (with a price tag which was 10 times more than its two-blade competitors,) couldn’t garner the expected mileage. In a bid to increase its sales GIL introduced Mach3 in a new avatar slashing the price to ₹125 or 60% lower than the Mach3 Turbo. This product was customized and targeted for greater conversion from the double edged segment, which accounts for 62% and 86% of the razors and blades market in value and volume terms respectively.
In the year ended June 2010, its total shaving products and cartridge sales rose by only 5% in volume terms, but by 53% in value terms. Until 2010, GIL had been following a strategy of marketing cheaper US developed razors. However, low-income Indian customers who could not afford Gillette’s premium price relied on the outdated, conventional double-edged razor shaving products. Analysts opined that, while Gillette commands about 70% of the world’s razor and blade sales, it lags behind rivals in India and other developing markets, mainly because those consumers can’t afford to buy its flagship products. What intrigued the GIL team is that how to capture the 82% of the blade market of India and convert them to razor segment? Identifying a huge opportunity in the bottom of the pyramid, the team kicked off a massive research program to identify the innate consumer needs with a strategic intent.........................
The Emerging Rural Markets in India
According to a study by Accenture ‘Masters of Rural Markets: Profitably Selling to India’s Rural Consumers₹6-since 2000, GDP has grown faster in rural India (Exhibit I) than in Urban India; at a 6.2% compounded annual growth rate versus 4.7%. Between 2010 and 2012, spending in rural India was ₹3,73,566 crore, while urban consumers spent ₹2,97,770 crore................
The Cutting-Edge Market Research
The team spent 3,000 hours with more than 1000 consumers. They observed the consumers on close fronts, shopped along with them, had discussions and paid home visits. The important insights they gained were, how these men shaved themselves in a completely different way — seated on the floor, with a small amount of still water in a tumbler............
Gillette’s Disruptive Innovation – Product
With that knowledge, Gillette team started making a new razor for the Indian market. In nine months, P&G developed five prototypes of which they refused to share the information for competitive reasons. But they tested things like handle designs, how well the blade cuts hair and how easy was the razor to rinse. Resulting in Gillette Guard, the first low cost razor designed for India, in India and the emerging markets, was introduced in October 2010..............
Communication – Razor Sharp Campaigns
Continuing its streak of innovation, Gillette reved up its marketing communications that would eventually have reflected glory on its newly launched Guard. Extensive programs like ‘Shave India Movement’ featuring infomercials, social media and stunts such as a world record for shaving were devised to encourage frequent shaving habits............
Distribution
Local manufacturing enabled Gillette to lower its cost structure and maintain low prices. The distribution model, not based on few large retailers, but on millions of local shops called kiranas, allowed Gillette to achieve a higher market penetration. The Indian retail sector is estimated to be worth $200 billion. Out of which only 5% is organized. Organized players target cities and not the hinterlands. It’s the kirana guys who take care of the daily household needs in those areas...............
The Road Ahead
Given the low barriers to entry in the razor business, how Gillette will sustain its competitive advantage raises few questions. Innovative start-ups (for instance, DollarShaveClub) are growing fast in the US by selling simple two blade razors online at a fraction of Gillette’s price.............
Assignment Questions
I. What was the tipping point for the Gillette India Limited to reach out to the rural markets in India and how it has leveraged the potential of the fortune at the bottom of the pyramid in the shaving segment? What were the factors which helped Gillette India Limited to reverse its innovation in devising the tailor made low cost razor ‘Gillette Guard’ for the value centric customers in rural Indian markets?
II. Why do you think Gillette had to fly in 20 people from Gillette’s headquarters to observe the rural markets and interact with 3000 respondents? Couldn’t they have done with Indians? Do you think Gillette could have saved few thousands of dollars had they opted for a market research instead of personal observations and interactions?
III. ......................
Exhibits
Exhibit I: Growing Rural Markets in India
Exhibit II: Estimated Market Share for Selected Razor Brands in India - 2009
Exhibit III: Gillette Vector Razor
Exhibit IV: Shaving at a Roadside Barber Shop
Exhibit V: Gillette Guard – Product Features
Exhibit VI: Gillette Guard – Core Brand Values
Exhibit VII: WALS – Women Against Lazy Stubble & Bollywood Actor Madhavan for Guard
