Gillette case

Group 1 Sec F (PGP 17)

Ankita Roy PGP17-311 Harsheen Jammu PGP17-321 Parul Singh PGP17-331 Rohan Gautam PGP17-341 Susnato Lahiri PGP17-351 Sandeep S FPM07-11S

Case Analysis Note Submission

Each group is required to submit a two/three page case analysis note in MS word (not PPT) for specified cases. You should ensure that your analysis addresses the preparation questions. The first page of the case analysis note should include: Major decision issues in the case Recommendation/inferences on the major issues. Summary of Analysis (quantitative and qualitative) supporting the recommendation Remaining one / two pages should be used to present detailed analysis / calculations to support your recommendations. You may use additional excel worksheet if required to include calculations, if required.

Major issues 1. Distribution issue and complexity in Indonesia low penetration in local market 2. Rural areas and low segment people there is low sales and revenue 3. High threat of substitute in low income areas esp. rural ones because Gillette is 4 times as costly as the nearest competitor 4. Advertisements were targeted specifically to urban male customers 5. Lack of managerial talent and job fluctuations for better opportunities 6. Wholesalers not competent and had poor distribution and storage facilities. 7. Supermarkets became unviable demanded 80% cost as slotting allotments 8. Promotional offers not in place 9. Products except for the double edged did not have sufficient sales 10. Indonesia is a Muslim predominant country customers not shaving 11. Indonesia law prohibited direct import and distribution

Recommendations 1. Tap the low segment market 2. Come out with a low cost variety product that can cater to the lower and middle income level people as well 3. Advertisements and promotions in local vernacular, first time discounts and promotional offers including coupons and lottery systems which worked in Indonesia 4. Packaging can suit the mood and culture of the local people and the local place boasting of 15000 island and 250 regional dialects. 5. Market penetration is abysmally low a. For example, all figures pertain to the period of 1995 Total population of Indonesia in 200m Total shaving population was 40 % ie 32 million Out of this 40 % used razors and blades for shaving ie 12.8 m Now Gillettes share was 48 %, ie approx 6.4 m

Hence 6.4 m people out of a total population of 200 million presently use Gillette razors. Hence the present market capitalization is very less and there is a huge potential to tap the market esp the lower segment.

6. Better compensation for managers engaged in distribution and sales of the product.

Quantitative Analysis Shaving population above 18 years s 80% of 40m = 32 m Avg no of shaves per month = 5.5 Total no of shaves per month = 176 Sales of total blades in 1995 = 115 m (this is 48 % of total market) Total market = 240 m in 1995 (20 m per month in the same year) Avg no of shaves per blade per month = 9 (approx)

Expected figures for the year of 1996 Avg no of shaves per month has increased to 6 And Avg no of shaves per blade per month has reduced to 8 Therefore, total no of shaves per month = 32 * 6 = 192 m shaves Hence total no of blades in a month = 192 m /8 = 24 Hence in an year avg no of blades used is 24 * 12 = 288 million Now since the market share of Gillette in 1996 is 50 %, 144 m blades of Gillette can be used as per the estimation of Mr.Effio This figure will stand even closer to the expectation of Mr Effio if few more customers can be tapped.

Attached Excel sheet