read the mini case and leave common for each answer
one paragraph for each people about there three answers so there should be three paragraphs but each paragraph include common for their three answers of the mini case the common should be thoughtful reflection, and clear and concise comments
1 How was Gillette initially able to gain a competitive advantage?
Gillette’s success stemmed from its first mover status in the safety razor market of the men’s grooming industry, when it invented the safety razor over 100 years ago. By quickly creating a new and profitable business model (dubbed the ‘razor-razor-blade’ model) revolving around this invention, Gillette was not only able to create new technology that would become a staple item in households worldwide but profit tremendously off it by offering necessary complements like razor blades at a much higher price. Gillette’s initial competitive advantage stemmed from the fact that Gillette was the only one offering the safety razor at the time since they invented it, as Robin stated above. This allowed the company to not only be the only ones to sell the product, but also have the time to dedicate to R&D to improve on said product such that when their patent was up, they had a razor predicated on years of improvements, customer trust, and brand loyalty built up. Many came to think of Gillette as the go-to, only razor brand on the market because of the usefulness of the safety razor and the exclusiveness that Gillette held over the product.
Why was Dollar Shave Club able to enter the industry?
Dollar Shave Club was able to enter the industry due to Gillette’s growing inability to address what prevailing customer needs were for a razor. Despite Gillette’s dominance in the safety razor market for years, Dollar Shave Club was able to scan the market and note a sizable opportunity that Gillette was neglecting; they became too comfortable with their position and perhaps too greedy with their expectations. Noting customer experience and price as two problems that many had with Gillette’s offerings at the time, Dollar Shave Club chose to pursue a blue ocean strategy that addressed both issues by offering razors and razor blades at cheap prices to be delivered monthly to the consumer’s front door. With this strategy, Dollar Shave Club eliminated the need to go to a physical store, reduced the number of blades in their razor to offer a much simpler product compared to Gillette’s, raised consumer surplus by offering a cheaper product, and created a sales model that combined both razor-razor-blade and subscription models. The sizable gap in the safety razor market which Gillette neglected allowed Dollar Shave Club to implement their strategy with tremendous success.
What are Gillette’s options for stopping its decline in market share?
As Gillette’s current business strategy is one seemingly focused on differentiation, they need to reinforce into the minds of consumers that their razor product offers much more value to the consumer than those of competitors like Dollar Shave Club. Since they already have economies of scope stemming from their various product lines such as the ProGlide, Mach3, Sensor3, and Fusion5, Gillette needs to ensure that consumers are clear on the various features and benefits that each line offers, and how Gillette has a product that will fit anyone’s particular needs. This can be done via options such as marketing campaigns, in-store displays that emphasize the major differences between each product line, or even giveaways for samples so that potential customers can try out Gillette’s products. Gillette should make clear that each line offers exclusive benefits which, at current pricing, offer consumers the most surplus in the market. Like Spencer stated above, Gillette must also place emphasis on its long-tenured history in the safety razor market as a trustworthy and premium brand with its outreaches; it is a brand of value and trust that customers should feel at home with.
- How was Gillette initially able to gain a competitive advantage?
As Benjamin said, Gillette has been a household name at this point for generations. This stems from their initial ability to be the first-mover into the industry that some have noted combined with the business model innovation that Jingyi pointed out. When you combine these two simultaneously, Gillette was able to rapidly create an almost impenetrable market share in what was and continues to be a massive market. This quick development of both product and business model is unique, but seems to have established a basis that allowed Gillette to dictate the market over the following years.
- Why did Unilever acquire Dollar Shave Club?
Siddhant and Robin both pointed out that Unilever saw it as an opportunity to take market share away from P&G, Gillette’s parent company. Since P&G had been so dominant in the US wet shaving market, Unilever saw this as an opportunity to break in to the market, and was willing to snap up the $1 billion price tag to do it.
I think the high valuation assigned to Dollar Shave Club by Unilever is the interesting part however, because when we consider it seemingly nothing Dollar Shave Club does would be very unique for Unilever to try to copy. Unless US Distribution was the key problem, Unilever should have better production and distribution capabilities than Dollar Shave Club, a new start up. However, Unilever still choose to buy instead of build a competing business – to me this indicates the value of the brand that Unilever saw, and how challenging they thought it would be to go against it. This could be an ominous sign for Gillette Shave Club, suggesting that it is not as easy to create an imitator of Dollar Shave Club as we might initially suspect
- What are Gillette’s options for stopping its decline in market share?
Gillette certainly stands in a very precarious position right now, and both Andy and Spencer have great options to potentially stop the slide. I particularly agree with Spencer on the point that Gillette needs to refocus its marketing on younger demographics. Anecdotal, but I remember upon turning 18, I received a free razor in the mail from Gillette – something I quickly tossed in the garbage. Focusing the their advertising on online partnerships would be a far more effective way to draw me in then to send me a sample I have no interest in trying. Updating these marketing practices could be critical to re-establishing Gillette with a younger audience, who will continue to use their products for the rest of their lives. It’s also important to note that for young people, it is likely they could be more price sensitive – as such, Gillette should be careful which products they choose to market, avoiding the more premium selections to the younger consumers.
I also like Andy’s point about the economies of scope that Gillette benefits from. Gillette can certainly take advantage of their scale to be able to make a product offering for everyone. However, they should also to take care to stay away from the over engineering that has harmed them in the past. By keeping the product lines to a few core items that broadly cover the markets, Gillette may be able to increase product quality as well as profitability.
1. At that point of time, Gillette’s brand has been a known household brand in the market. This was one of the first competitive advantage Gillette had, thus customers would purchase Gillette out of familiarity. In addition to that, Gillette also had a distinct product innovation along with a cost-differentiation. Gillette invented safety razors with a low selling price, whereas their other competitors tend to overprice the products. It was a temporary innovation, until Gillette continued to innovate. They then added five more blades to their initial one blade razor. Although selling it with a low price, Gillette still gained profit, mostly from replacement razors. It looks like this price has made customers to have a new behavior to buy it in bulk.
3. As Gillette then focused on the high-end and high-margin products, Dollar Shave Club saw the opportunity to enter the market. Other than its pricing strategy, Dollar Shave Club went viral from its hilarious promotional video that got 25 million views. The Youtube platform also helped Dollar Shave Club to gain familiarity from the market and resulted 12,000 new customers to signed up for membership. Marketing was one of Dollar Shave Club strengths as the firm continued to advertise regularly on television and held online campaigns. Moreover, Dollar Shave Club had a different business model compared to the usual model in the market. It was an e-commerce and delivered products by mail. Products were accessible online, through a membership program where customers could pick the level of the plan and got delivered monthly. This innovative business model disrupted the existing market as the comfort of not having the need to go to supermarkets and the low-price products appeal to be the deal for customers.
4. Looking at the reason why one of the Unilever’s brand declined in market share, Unilever was quick to act. Unilever acquired Dollar Shave Club to gain their innovative business model, as well as to maintain Gillette’s market share. It was not a problem for a five-year-old start up to be bought $1billion in cash.
5. Gillette was doing so well in the start; it was because they kept innovating (safety blades and low-price products). Sometimes big firms believe that when they dominate the market, people will forever get their products. However, there is a pattern where innovation appeals more to consumers. It looks like Gillette was not able to do so. Although it we believe that “successful innovations also lead to imitation,” Gillette was not able to overcome the next competitor with the new business model from Dollar Shave Club. Therefore, the most important key to stopping its decline in the market share is a continuous innovation.