Gillette Indonesia - Case Study

Gillette Indonesia - Case Study

1. Current Situation and Trends

1.1. Market

1.1.1 Definition, Size and Growth

Broad - Personal Grooming Products

Narrow - Shavers, including double-edged blades, disposables, and “systems” blades

Gillette expects to sell 108m units of double-edged blades, 10m units of disposables and

18m units of systems blades. Gillette’s market share is expected to be 50% in 1996, so

there is an existing market of double-edged blades of 116m.

The >$10k income bracket has grown by 30%, the $5k-$10k bracket by 15% and the $2k-

$5k bracket by 3%. The only bracket to reduce in size is the <$2k bracket, decreasing by

15%. Also the incidence of shaving is increasing, and lacks far behind that of Hong Kong.

This evidence suggests that the shaving market is in the early stages of growth on the

Product Life Cycle.

1.1.2 Structure

Rivalry - Low

Gillette’s market share is expected to reach 50% in 1996. Having such a strong monopoly

results in a high concentration ratio, signifying low rivalry.

Threat of Substitutes - High, moving to Med/High

There is a strong threat of substitutes coming from the use of wet or dry knives, however

as Indonesia becomes more westernised this is expected to decrease.

Buyer Power - Low

As Gillette has such a large portion of the market, buyer power is comparably low.

Supplier Power - Medium/High

As a result of financial constraints from buyers, Gillette is limited in what they are able to

charge, moderating their power within the market.

Threat of New Entrants - High

The market being...

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... elements of the

marketing mix remain the same.

However, doing so leaves Gillette Indonesia vulnerable to the threats outlined in the above

SWOT analysis.

6. Recommended Strategy

As “5.1 Cut Costs & Reduce Prices” results in both increased profits and increased market

share, it is the alternative that is suggested.

It should be noted that the success of this alternative is dependant on the assumption that

the lack of growth experienced by Gillette was primarily caused by the increase in price,

and not be another factor. Fortunately the alternative suggested is not drastic, so its

benchmarking and control can be performed in an environment with reduced risk.

This alternative also involves the reduction of costs, the details of which have not been

outlined in this report, but will need to be executed to ensure the increased profitability of

the alternative.