In: Economics
Case: Gillette Mach3 and Fusion (Crawford and Di Benedetto,
2014)
For decades, the Gillette Company (now a division of Procter &
Gamble) has followed a
simple strategy for success: Replace excellent blade technology
with an even better one.
Over the years, Gillette has brought us the Blue Blade, the
Platinum Plus, the Trac II, the
Atra, the Sensor, then the SensorExcel. In April 1998, Gillette
launched the Mach3: a three-
bladed pivoting cartridge system. In early 2006, the five-blade
system, the Fusion, hit the
market. This case examines the development of the last two
generations of Gillette
products.
By the early 1990s, design problems that had initially stalled the
three-blade system had
been overcome. A prototype three-bladed razor (code-named the Manx)
was developed
and shown to outperform the Sensor in internal tests. A key element
of the Manx’s design
was the positioning of the three blades: Each blade was a little
closer to the face than the
previous one. This patented design reduced the irritation caused by
the third blade. In
addition, the pivot point was moved to the bottom of the cartridge;
this new pivot point
made shaving feel a little like using a paintbrush, added to the
cartridge’s stability, and
ensured that the bottom edge of the cartridge always touched the
face fi rst (ensuring that
hairs were lifted properly). Other design features were also built
into the Manx. To the
white lubricating strip found on the Sensor, a blue indicator was
added that gradually faded,
indicating when the blade needed to be changed. And engineers were
working on better
blades, perfecting a way to make them thinner and harder, thanks to
new metal technology
borrowed from the manufacture of semiconductors. Furthermore,
consumer studies found
an interesting problem incurred by Sensor users that suggested a
potential product
improvement: 18 percent of men put the cartridge on the razor
upside down! A new snap-
in mechanism was developed that would only work in the right
direction.
The new design was going to be costly to manufacture. There was
internal resistance within
the ranks of Gillette, with some managers believing that the
company should go with a
less-revolutionary, three-bladed SensorExcel rather than a costly
and risky introduction of
a totally new product. Nevertheless, the new design (now called by
the code name 225)
was locked in during the month of April 1995. The next three years
were spent in designing
and producing the equipment needed to manufacture the new
cartridges—most of the
machinery had to be specially designed for the task. Meanwhile,
product use tests with
consumers were showing that the Mach3 was outperforming the
SensorExcel 2 to 1 and
doing even better against competitive brands. The consumer tests
were also suggesting that
users were fairly insensitive to price—the Mach3 tested well even
at a 45 percent price
premium over SensorExcel.
Gillette geared up for an April 1998 launch. In total, the Mach3
development took six years
and $750 million, about four times what the Sensor cost. Further,
$300 million was
allocated for marketing worldwide in the fi rst year, so the
upfront costs broke the billion-
dollar barrier. The rollout began in the United States, Canada, and
Israel in July 1998, then
Western Europe and part of Eastern Europe in September. The plan
was to have the Mach3
available in about 100 countries by the end of 1999. To accommodate
the rollout,
production ramp-up was targeted to 1.2 billion cartridges per year
by the end of 1998. The
price point was set high (about 35 percent above the SensorExcel’s
price of $1 per blade);
sticker shock was reduced by putting fewer blades in each
pack.
Eight years later, Gillette repeated the process with the launch of
the Fusion, a five-blade
system with lubricating strips on both sides and one extra trimming
blade on the back. In
addition to having more blades, the Fusion also placed the blades
closer together in the
cartridge for a close, comfortable shave, and also came in a
battery-powered model (the
Fusion Power) that vibrates, adding to shaving comfort.
The launch of the Fusion occurred at around the time Gillette was
starting to lose market
share to a key competitor, Wilkinson Sword (a division of
Energizer), with its Quattro
shaving system featuring four-blade cartridges. The success of the
Quattro suggested that
customers were willing to accept shaving systems with more than
three blades and
encouraged Gillette to launch the Fusion soon thereafter. In fact,
Gillette never launched a
four-blade system—with the Fusion, Gillette leaped over the
competition and moved
directly to the five-blade system.
Fusion was the first Gillette blade launched after the P&G
acquisition and was an
immediate success. Despite a price point about a dollar higher per
cartridge than Mach 3,
four million razors were sold in the first two months. An important
part of the marketing
support for the Fusion was an extensive, worldwide television
advertising campaign
featuring globally recognized athletes such as Tiger Woods, Thierry
Henry, and Roger
Federer. Promotional support for most regions of the world was
switched entirely to the
Fusion, while in a few selected markets in Asia, both Mach3 and
Fusion promotions were
carried out.
Nevertheless, Gillette received some criticism and scepticism at
the time of the Fusion
launch. A story in Consumer Reports found no additional performance
benefits beyond
what the Mach3 offered, and critics wondered why as many as five
blades were needed for
a good shave. Some even recalled phony, satirical TV ads on
programs such as Saturday
Night Live and MadTV for 20-blade systems and wondered if Gillette
was going in that
direction. It was also troubling to Gillette executives that, while
the razors were selling
well, sales of the cartridge refills were lagging. This was a real
cause for concern, for two
reasons. Low sales of refills would suggest that customers viewed
the Fusion as a novelty
product and were not building loyalty; also, in the razor business,
refills are much more
profitable than the cheaply priced handles. Despite the initial
skepticism, the Gillette
Fusion has been a top-seller and major generator of revenue for
Gillette.
QUESTION ONE
“Concept statement states a difference and how that difference
benefits the customer or
end user”.
With reference to the above statement, prepare the concept
statements for Mach3 and
Fusion and discuss about the format, commercialised versus
non-commercialised
statements, competitive information, and price in the
statements.
QUESTION TWO
(a) Based on what you see in this case, what strategic role did
design play at Gillette?
Discuss.
(b) What are the risks involved in the decision to go with “really
new” replacement
technology, versus making incremental design improvements to the
older
technology? Discuss.
QUESTION THREE
Using the list of product use testing decisions, make
recommendations as to how Mach3
and Fusion could have been product use tested prior to launch.
QUESTION FOUR
(a) Discuss the differences between the Mach3 and Fusion
launches.
(b) Comment on the aggressive marketing and rollout plans used by
Gillette to support
their product launches. Would you recommend they take it slower?
What are the
pros and cons?