Gillette is a leading worldwide home appliance manufacturing company, producing razors, batteries, electronic and manual toothbrushes. On April 14, 1998, the company introduced the world’s first triple-bladed razor and began selling it on July 1, 1998, in the United States and in September in Western Europe.
Since Gillette launched a new razor in 1998, the company expected high returns in the short term. However, the results of the new product have not yet been defined. SWOT ANALYSIS – Key Learning: The areas of the internal factors are Finance, Management, Manufacturing, Market position, Personnel, and Research & Development. All these factors can be defined as either strengths or weaknesses or both. First of all, the company as a whole gained a net sales amount of 10.
The company had a net income of 1.4 billion dollars in 1997 due to the acquisition of leading battery company Duracell in 1996 and the growth of the Sensor Excel razor. As a result, the company was able to spend 1 billion dollars to invent the Mach 3, a triple-bladed razor. Even though Gillette had sufficient funds to invent the new product, the company took a high risk of financial side effects. If the new product’s sales did not reach the company’s expectations, the company would face a shortage of capital resources and could lead to bankruptcy.
But if Mach3 turns out to be a New Coke or McDonald’s Arch Deluxe – much-hyped new products that were mostly duds and fizzled – the gloom will be heavy from Gillette’s corporate headquarters in Boston’s Back Bay to the South Boston factory that Gillette has overhauled to produce 600 million Mach3 blade cartridges per year, or about half of Gillette’s annual target of 1.2 billion Mach3 blades. (Boston Globe, 4/15/98) Since Gillette introduced Mach3″ in April, the company changed its manufacturing tools to produce Mach3 at South Boston’s factory. Gillette already spent 300 million dollars for advertising and promotion worldwide for the year that the company introduced the new product. The amount is twice as much as the company put for advertising “Sensor Excel” in 1989.
Gillette released the new product to retail stores on July 1, 1998 and started advertising on TV and other media six weeks later. However, many people went to the company’s website to look at the new product. Even though the company spent a tremendous amount of funds on advertising, some people from Asia did not recognize the product according to our group’s survey. For customers, there are both satisfaction and complaints for Mach3. People who were satisfied with Mach3 according to our survey said there was less irritation and faster shaving time. Customers who complained about Mach3 argued that they did not want to spend more money on a better outlook. According to our survey, 100% of survey respondents who were not satisfied with Mach3 said the price was too high for the product.
The price of Mach3 is relatively higher than other products, including Sensor Excel,” which was the most expensive one before Mach3 came out. Its price is $6.99 per razor with one blade included. Currently, the company is selling it for $7.29 per Mach3, which is a 4% increase from the original price and 40% higher than other products.
This may lead to a decrease in sales and the company’s total revenue. The company is trying to reach customers in several different ways. Gillette offers a Mach3 package product, which includes the Mach3 razor, a couple of extra razors, shaving cream, and deodorant. This package product makes each item’s unit price lower than if sold separately. Additionally, the company offers sweepstakes on its website, and there is no obligation. This is one of the finest ways to reach and involve customers.
The company gives people a chance to win a prize without any obligation. However, people will recognize the product automatically. Also, Gillette can acquire customers since it is a well-known global company. Many retail stores are not offended to carry the company’s product even though the product’s price is high. Retail stores assume that Mach3 will bring more customers. On the other hand, even if more customers come to the store, it is unpredictable for increasing store sales revenue because the price is too high, so consumers would not buy. External factors are competitive, economic, and social. Gillette’s major rival in the market is Shick.
Since Gillette was the first company to produce a triple-bladed razor, the company will lead the market. However, rival companies such as Shick will develop the same product with higher quality or a lower price. The result will be unforeseen unless Gillette improves Mach3’s weakness, which is its high price. For a long time in the United States, people’s income has been growing, and as a result, customers’ purchasing power has also increased. However, the company’s market is not limited to the United States.
