Case Study: Gillette Indonesia

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

The following factors determine the demand for blades

- GDP growth year on year for in the last 20 years resulted in increase of per capita income.
Thus improving the consumer spending, facilitating the increase in western grooming
practices
- As the employment rate is constantly on rise where in 2 million people joining the workforce
every year mostly in the urban areas with shaving considered at the status symbol lead to
the increased demand for blades
- The value people receive from shaving blades vs shaving knives like the effective shaving,
shelf-life and value for money is likely to influence the demand
- Growing need of beauty care among women and young boys due to greater penetration of
education in masses

Gillette can increase their sales by attempting the following:

- The incidence rate in Indonesia is much lower compared to developed markets. Companies
can come with campaigns to increase the frequency of shaving, will lead to increase in the
number of razors
- Increase the penetration in the rural areas by advertising the benefits of will bring in more
first time users
- Increased advertisement will pull in more customers
- Target people using shaving knives and explaining the benefits of using razor over knife will
likely increase the demand.

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

Gillette has been growing fast year on year with latest being 17% growth in 1995 and further
projection of about 25%. Also, it was successfully able to create brand awareness among male
shavers wherein 97% of the surveyed people were aware of the brand. Their market share also
jumped from 23% in 1993 to 48% in 1995. Also their revenue increased with sales growing 9%
annually, net income by 17% and 18% increase in earnings per share. Although, due to poor
transport facilities and lack of infrastructure resulted in higher prices products limiting their
affordability to lower income groups. Gillette was able to make the best of first mover
advantage as
 There was constant increase in incidence in Indonesia from 4.5 in 1994 to 5.5 in 1995
 It was able to create a brand value with 97% of the adults aware of the brand in
premium category. Gillette held 90% share of the premium priced segment of the blade
market.
  Lastly, it was able to cover a network of about 60000 small kiosks and mom and pop
shops and direct tie ups with supermarket chains

3. How should Gillette accelerate the development of blade market in Indonesia?

Gillette is performing well, but it can further accelerate the development the blade market in Indonesia
by the following steps

- Being considered as a status symbol and due to its cost. Although it has cheaper options in its
product line, their brand awareness is very low below 20%. Gillette penetration in the rural
areas is also very low with 80% of its volumes coming from the urban areas. It should come up
with campaigns to improve brand awareness to lower income people
- It should come up with educational campaigns using multimedia messages in print
advertisement and media to explain the benefits of using blades, over the knives to bring in
more first time users, especially in villages persuading them to shave for the first time.
- Gillette can also tap the female shaving market by coming up new product lines specially
designed for their grooming needs. Creating a demand in women could be achieved by
increased spending on promotional items like ( lottery for lucky winner, promotional offers etc)
- Gillette should work more rigorously with the super chains to obtain more rack space, so that
more people will come across it ultimately increasing the demand especially the premium ones
which will give them greater margins.