Published on March 12, 2014
Gillette India Ltd. Case Analysis SDM, NMP Term IV Group 4 Abhijeet Tomar - 03 Argha Ray - 15 Khushal Malik - 28 Vipin Kathuria– 59
Context • Gillette launched double edged shaving blades in collaboration with ISPL. • Cutthroat competition in shaving blade market. • 3 payers include Malhotras , Goenka-Wilkinson and Gillette-ISPL. • Malhotras are overall market leader. • Gillette-ISPL bleeding on account of low sales for past couple of years.
Gillette’s Strength: • Global Brand with popularity since sixties. • Premium stainless steel blade competing against outdated carbon blade. • Twin Blade story suggests that Malhotras can be beaten in the upper end market segment. • Consumer survey reveals that first 3Ps of Marketing Mix is well received. • Six months window to set up new channel after signaling severance of ties with Lipton. • Malhotras’ strong arm tactics may have also caused its channel members to be at the receiving end.
Gillette’s Follies: • 4Th P of Marketing Mix in disarray. • Tea Bags and Razor Blades need separate treatment through a channel. • Very limited stake for Lipton’s Channel to prop me-too Gillette. • Limited Information flow for Gillette from retail end. • Virtually no control on channel flow for Gillette. • Tea Bag sales force may not be well placed to provide push to razor blades.
Mid Course Correction Risks: • High upfront investment to select channel members. • Good chance of non availability of product at retail level, the moment Gillette severs ties with Lipton. • Lipton may put the squeeze on current sales and may even generate negative publicity in the intermediary universe. • Immediate losses may be immense to even contemplate later recovery. • On the other hand, Channel Strategy if not rejuvenated will lead to demise.
Channel Criteria: • Ownership and Possession Transfer at each level of Channel flow. • Information flow from sales point to Gillette. • Gillette should share risk on unsold inventories. • Negotiations should set targets and promotional requirements at the outset. Service Dimension Arguments Bulk Breaking Smaller Lot Size calls for deep channel structure Spatial Convinience Smaller distances that the consumer is willing to travel calls for intense distribution Waiting Time Zero wait time due to low involvement requires inventory maintainence at each level Assortment Consumers may be willing to buy entire shaving kits and not just blades alone
Decision: • Select Independent Wholesalers who deals in complementary products such as Premium Saving Foam, Razor etc • Depots must have all India coverage specially catering to towns and cities where consumers are concentrated at the upmarket end. • A wholesaler per state will lead to clear territory demarcations. Even another level of wholesalers may be added to break bulk. • Retailers must be encouraged to club Premium Shaving Assortment together for shelf display.
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Gillette India Ltd. Address: SPA-65A+B+C, Rd. No. 13, Phase-I, Indl. Area, Bhiwadi-301 019 Distt. Alwar (Raj.) Ph: (01493)224240-45