TakeAway:
Gillette’s newest shaving system has just one blade, a light plastic handle and a sharply lower price. The Gillette Guard will hit stores – in India – next week and costs 15 rupees, or 34 cents, and uses blades that cost five rupees, or 11 cents.
P&G’s goals are to first bring more consumers into Gillette and then try to lock them in to future purchases.
To develop the Guard, P&G used target costing– starting with what consumers can afford and then adjust the features and manufacturing processes to meet the target.
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Excerpted from Wall Street Journal, “Gillette’s Latest Innovation in Razors: the 11-Cent Blade” By Ellen Byron,October 1, 2010
The Guard reflects P&G’s aggressive push into emerging markets for new customers and growth. That focus is forcing P&G to be more modest on scale and more flexible on price.
Gillette commands about 70% of the world’s razor and blade sales, but it lags behind rivals in India and other developing markets, mainly because those consumers can’t afford to buy its flagship products.
Gillette Guard is aiming to lure users of double-edge razors, about 400 million men in India, according to P&G estimates. In India, a brand called Super-Max holds the lead in double-edge blades, which cost roughly 1.5 to 2 rupees, which is half of the cost of even Gillette Guard.
The need to grow in emerging markets is pushing P&G to change its product-development strategy. In the past, P&G would sell basically the same premium products in developing countries, where only the wealthiest consumers could afford them. To reach more consumers, P&G changed course by creating pared-down products specifically designed to be less expensive.
P&G has a lot of ground to make up in India, where it estimates just 10% of men who shave use Gillette blades, compared with about 50% world-wide. Its plan is to get men to start using its products and then upgrade them as India’s economy grows.
Edit by AMW
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Full Article:
http://online.wsj.com/article/SB10001424052748704789404575524273890970954.html?mod=WSJ_hps_LEFTWhatsNews
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