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?

QUESTION 16

1. Jon reads that 76% of Americans prefer Coke over Pepsi. He works at a local restaurant and decides to poll his customers there about their soda preference. He finds that 120 out of 150 customers surveyed prefer Coke. He would like to conduct a test of hypothesis to see if there is a significant difference between customers at his restaurant and the national results for all Americans, in terms of their preference for Coke over Pepsi. After calculating the test statistic and p-value, what would his statistical conclusion be at an alpha level of 0.10?

   	A.	Yes, do not reject Ho
   	B.	No, do not reject Ho
   	C.	Yes, reject Ho
   	D.	No, reject Ho

QUESTION 19

1. In 2017 it was reported that 46% of Americans still had landline phones in their homes. Researchers would like to see if that percentage has declined since that time. Data was collected in 2019 and of the 655 participating Americans, 265 said they still had landlines in their homes. Is this enough evidence that the percentage of Americans with landlines in their homes has significantly decreased in the past 2 years? Identify the parameter in this problem.

   	A.	true proportion of all Americans in 2019 who use their landline phone as their primary means of contact
   	B.	true proportion of all Americans in 2019 who have a landline phone in their homes
   	C.	true proportion of all Americans who have both a cell phone and a landline phone
   	D.	true proportion of all Americans in 2017 who have a landline phone in their homes

QUESTION 26

1. In 2017 it was reported that 46% of Americans still had landline phones in their homes. Researchers would like to see if that percentage has declined since that time. Data was collected in 2019 and of the 655 participating Americans, 265 said they still had landlines in their homes. Is this enough evidence that the percentage of Americans with landlines in their homes has significantly decreased in the past 2 years? After completing the full hypothesis test, what is the final conclusion?

   	A.	With 95% confidence, I do not have enough evidence to conclude that true proportion of all Americanhouseholds in 2019 that have a landline phone is significantly lower than the 2017 value of 46%.
   	B.	I am 95% confident that the true proportion of all American households in 2019 that have a landline phone is significantly lower than the 2017 value of 46%.

QUESTION 27

1. In 2017 it was reported that 46% of Americans still had landline phones in their homes. Researchers would like to see if that percentage has declined since that time. Data was collected in 2019 and of the 655 participating Americans, 265 said they still had landlines in their homes. Suppose researchers computed a 95% confidence interval for this data. Which of the following would be true?

   	A.	The value of 46% would fall within the interval.
   	B.	The value of 46% would fall outside the interval.

Dr. Patel is concerned about the long wait times in his office. The following table presents six random observations for the patient waiting times over a period of 10 days.

1. Dr. Patel is willing to use three-sigma limits. Use the given data and the factors from Table 3.1 (page 110) to construct R-chart and -chart.
2. Is the process in statistical control? Explain.
3. If patient surveys indicate that they are willing to wait between 10 and 30 minutes before seeing Dr. Patel, is the process capable of meeting this demand at the three-sigma level?

Table 3.1

Factors For Calculating Three Sigma Limits for the x¯x¯ -Chart and R-Chart

Problem 5-24 Present Value of Multiple Annuities (LG4) A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $3,400 per month for the next three years and then $2,400 per month for two years after that. If the bank is charging customers 10.75 percent APR, how much would it be willing to lend the business owner? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Determine the treatment of each of the following items:

Y-Mart Store has a policy of refunding purchases by dissatisfied customers, even though it is under no legal obligation to do so. Its policy of making refunds is generally known.

Fly With Me Ltd commenced operating a low budget airline two years ago. The law requires airlines to overhaul its aircraft once every three years. At the end of the reporting period, a number of the airlines planes have been in use for 2 years.

Week 9 Duncan’s Pizzas is a chain of pizza stores. Pizzas are made fresh in-store, and then delivered to customers by a fleet of drivers. The senior management team has identified the strategic priorities for the business as on-time delivery and product quality. Required: a) For each of the strategic priorities, suggest three performance measures. b) If the company is successful in achieving challenging targets for these performance measures, will it also necessarily achieve high profitability? Explain your answer. (4 marks, maximum 400 words)

Foreign currency analysis of Merck & Co. which is s an American multinational pharmaceutical company and one of the largest pharmaceutical companies in the world.

Explain the business activities and environment of Merck & Co. from the perspective of foreign currency and identify three currencies that Merck & Co. is exposed against. This can be due to its business structure (i.g. location of factories, customers and suppliers, and the currency that the products/services are quoted), and arising from the competition against its rivals. State the rationales of your selection and references.

1. In many cases, companies may charge a different price to different customers without any true cost differential to justify the discrepancy – this is referred to as price discrimination. Provide examples of how the three different types of price discrimination would apply. If you cannot find a real-life example, provide a hypothetical scenario for how the assigned company could apply each form of price discrimination.
   1^st Degree Price Discrimination,  2^nd Degree Price Discrimination, 3^rd Degree Price Discrimination

Course: Marketing Management

For a product of your own choosing, pick one logical variable (e.g., age) that can be used to segment the market. Now add a second variable (e.g., gender) so that customers have to satisfy the categories of both variables simultaneously (e.g., 18 - to 24 year old women).Now add a third variable. How many possiblesignments can you identify from a combination of three variables? What implications does this have for the marketing manager?

Question #2 For a product of your own choosing, pick one logical variable (e.g., age) that can be used to segment the market. Now add a second variable (e.g., gender) so that customers have to satisfy the categories of both variables simultaneously (e.g., 18- to 24-year-old women). Now add a third variable. How many possible segments can you identify from a combination of three variables? What implications does this have for the marketing manager?