GILLETTE INDONESIA

1Q. What factors determine the demand for blades? How can the demand be increased?

A. Factors determining the demand for blades are:

 Geography: This can be further divided into:

o Inter-country: As mentioned in the case population from Asian regions tend to have
lower growth of facial hair as compared to Caucasian or Latin races. Thus the
demand in Asian regions for blades will be low. Further, it could also be dependent
on the inherent general temperature of the region. Regions with very low
temperatures tend to grow their beards to survive the colder periods, whereas
people from hot regions would shave regularly.
o Intra-country: Within a country, people living in urban areas might create more
demand for blades because of the status quo needed to be maintainedduring work
hours. Rural areas might not have this restriction.
 Substitutes: Some people might find trimming a viable alternative compared to shaving, thus
reducing the demand of blades.
 Cost: People with relatively lower financial power, might consider shaving to be a luxurious
task and might refrain from buying blades, reducing demand.

Suggestions to improve demand:

 Complementary goods: As normally blades are used with liquid soap or gel, providing offers
for the sale of both blades and gel together might be very helpful and lucrative.

2Q. How is Gillette doing in Indonesia? Has Gillette leveraged its first mover advantage?

A. Gillette has been a big success in Indonesia. Below are some salient points about their business:

 After entering in 1971, within 24 years Gillette started producing 150 million blades of which
46 million were exported.
 Dynamically improving according to market demands shows great operational and
management skills. Gillette were involved in making 3 million blades in 7 days, which when
required got made in 3 days.
 In 1995, Gillette was operating at 20% gross profit.
 Captured 28% market share by 1993 and 48% by 1995.
 Bright future prospects with an expected increase of 40 % in sales revenue from 1995 to
1996.
 Gillette had 97% brand awareness among the population.

Gillette seems to have taken its first mover advantage largely by establishing its foothold on the
blade industry of Indonesia. When in 1971, Gillette entered through a joint venture, the market
of blade industry was very open and there was not any particular player with a strong foothold.
Now, Gillette seems to have a 50% market share, eliminating its competition.
 3Q. How should Gillette accelerate the development of blade market in Indonesia?

A. Following are the basic steps to be followed:

 Introduce low cost variants of blades (such as disposables) to introduce them in the market.
After people get accustomed to blades and shaving, introduce higher cost variants.
 Educate the population about the importance of shaving.
 Target advertisements towards working population above 18 years of age that work in
Multi-National Corporations.

Further,

 Improvements in production process and efficiencies are already in place with production
moving in response to market demand. However, improvements in staff recruiting, training
could further help improve the process.
 Identifying through feedback from sales executives the optimal price for the sale of blades in
the market.
 Reaching to an agreement with the supermarkets over the commission charged by them to
have shelf space. This is important as market report show a shift in the shopping habits of
customers to buy in malls outside.