Situation Analysis
Gillette is the premium brand that provides personal care provisions that have been working in the market for a period of almost 100 years. This specific brand has achieved high popularity due to the premium quality products offered by them. In addition to this, the company uses the latest technical equipment for manufacturing the products of the company that helps them to stay loyal to their customers’ thereby developing a strong customer base (Gillette.com.au. 2018). However, the existing marketing strategy of the organisation is focused on core grooming products for men as well as women.
Based on the different marketing strategies used by the company the organisation, the study focuses on the present market competition and external environment analysis through PESTLE and competitive analysis. Apart from these, the study also outlines the marketing mix of the company along with suitable recommendations for the company to achieve success in the market.
Company analysis
Gillette started its own shaving subscription in the year 2014 known as The Gillette shave club to start a competition with DSC and a grooming start up named Harry’s in Australia. However, in the third months of the year 2015, Fortune reported that the online business activities of Gillette increased by 21% owing to the e-commerce market of the razor (Forbes.com. 2018). From the further evidence report, it has been found that Gillett is taking more competitors in their stake. The present market share of Gillett in the international market is $66.8 billion in the last year that accounted for 10% of the company share . During the period of last year, the average price of the Gillett product fell down to 12% that influenced its acquisitions, led to the decline of 35 of the total organisation sales (Meyersohn 2018).
Market analysis
Gillett is one of the leading markets with manufacturing of almost 800 products in nearly 200 counties Gillette is most famous for providing innovating service related to men grooming products as well as women products. In this context, the company produces safety razors for both men and women along with other personal care services to several locations around the world, the company is owned by a multinational organisation Procter & Gamble. Gillett is ranked at 830 from amongst 2000 companies in Australia (Gillette.com.au. 2018). In the year 2017, the company has generated almost $468,568,000 of the market revenue in Australia from all its subsidiaries.
Environment analysis
Political
Similar to any other organisation, Gillett organisation is also obligated by the government regulations. However, owing to innovative service Gillette has the opportunity to easily beat the competitors in the Australian market. Although the business organisation may be influenced by government policies. On the contrary, to this GDP of Australia is almost AUD 1677.47 billion in 2016 with an unemployment rate of 5.733% of the workforce that may be helpful for the business to expand its market (Teather 2018).
Economical
Gillett grabbed the opportunity to enter the market of Australian to have a prestigious place in the market. Australia has a huge number of the target audience that will allow them to make more sales and profit owing to economic growth. This is because the Australian economic revenue is almost AUD 586.179 billion while the expenditure is about AUD 632.074billion in the year 2017(Digitaljournal.com. 2018).
Social
Gillette offered most of the comfortable and innovative shaving products provided with innovative characteristics in it for both males as well female. In order to follow the social trend in the market, the company offered a complete package including other products and services (Asare and Asare 2015). The company has even contributed service to enhance the social condition of people by offering them confidence and beauty in their outlook.
Technological
The company uses the laser technology for removal of hair that has proved to be an indirect competitor in the Australian market. In contrast, to this Gillett has always played a reasonable role towards the consumer by offering them comfortable and upgraded technological solution needed by the customers.
The competitive benefit of the company
The company has a strong product line with a huge number of offering an expanded product line that supplements each other for the sustainable period leading to the greater amount of customer loyalty and brand popularity.
The company provides one of the most profitable products for P&G with an operating profit varying from 25-30%. More than 750 million men in almost 250 countries (Business Insider 2018) use the products. Therefore, with such a wide presence in the market, Gillett will able to reduce its cost of operation and mane its cost of distribution through the wide network.
BCG matrix
Gillett has a wide presence in different business segments like Razors, blades, trimmers, shaving ointment and skincare products. The company portfolio of shaving products is a star in the BCG matrix since the company has a wide range of competitive products from low to high-end substitutes. These products have helped them to beat the competitors by consistently retaining its offerings. Its skin care products manage to compete with a wide number of popular players in the market.
Competitive Analysis
Smart Objectives
- To expand the size of the market with new emerging variations in product technology
- To enhance the profit within a period of one year of the organisational expansion’
- To identify ways to upgrade the present user of Gillett up to the value chain
- To recommend methods to transform their services for the double-edged users to premium services users.
Target Market
The main target market operating in the countries are loyal salons, parlours, hotels that allow them to increase their brand popularity and increase their offers. The major customer of Gillette is the drug store, departmental organisation, supermarket store, hotel chains. However, its retail segment mainly targets Men aged in between 12 to 40. Currently, the company has expanded its product line by introducing products to women aged 18-40.
Place
A survey has been carried out according to which almost 600 million people utilise their products across the international boundary (Ibisworld.com.au. 2018). Such high customer base represents the trust of the customers and company makes sure that the products are distributed on time.
Price
Gillett maintains a premium strategy of pricing and their standard of the product is quite high. However, the organisation has set a fixed price for each of the products based on their features and technical characteristics.
Promotion
Gillett has an effective strategy for promotion through its activities of advertisement of products through media channels. The company also offer incentives to the customers for retaining a high customer base from all located around the globe. Moreover, the company has a strong base of the brand to sustain its strategy of advertisement and to create unbeatable feelings.
Product
Gillett is offered products for grooming that is offered through a broad range of retail outlets; the company papers their product through innovative technology with a premium quality (Gillette.com.au. 2018). The company also offers various products to meet the demands made by the customers in almost all countries around the globe.
Budget
The products of this company are offered at reasonable rates and purchaser have to pay a onetime amount in return provided with multiple types of shaving procedure with it.
|
Fixed Expenses |
|
|
Bldgs / Real Estate |
$ 12,000 |
|
Leasehold Improvements |
1,000 |
|
Capital Equipment |
3,000 |
|
Location / Admin Expenses |
7,500 |
|
Opening Inventory |
– |
|
Advertising / Promo Expenses |
5,000 |
|
Other Expenses |
30,000 |
|
Total Fixed Expenses |
$ 66,500 |
|
Variable Expenses |
|
|
Inventory or Materials |
0.0 |
|
Direct labour (includes payroll taxes) |
0.0 |
|
Other expenses |
0.0 |
|
Other expenses |
0.0 |
|
Salaries (includes payroll taxes) |
0.0 |
|
Supplies |
0.0 |
|
Total Variable Expenses |
0% |
|
Breakeven Sales level = |
66,500 |
|
Year 1 |
|||
|
Gross revenue |
$4,564,000 |
||
|
Cost of goods sold |
$155,000 |
||
|
Gross margin |
$2,390,000 |
||
|
Other revenue [source] |
$0 |
||
|
Interest income |
$0 |
||
|
Total revenue |
$2,390,000 |
||
|
Operating expenses |
|||
|
Sales and marketing |
$3,000 |
||
|
Payroll and payroll taxes |
$45,000 |
||
|
Depreciation |
$3,400 |
||
|
Maintenance, repair, and overhaul |
$0 |
||
|
Total operating expenses |
$55,400 |
||
|
Operating income |
$4,345,600 |
||
|
Interest expense on long-term debt |
$0 |
||
|
Operating income before other items |
$4,345,600 |
||
|
Loss (gain) on the sale of assets |
$0 |
||
|
Other unusual expenses (income) |
$0 |
||
|
Earnings before taxes |
$4,345,600 |
||
|
Taxes on income |
30% |
$887,320 |
|
|
Net income (loss) |
$3,250,320 |
Implementation
In order to expand the market in Australia, the company does not have to invent an entirely new business model but they have to expand their business. They can utilise their existing model of business and refine them to achieve competitive advantage. They can adopt an advertising strategy from print to online media such as social media platform such as the creation of content to display their products.
As stated by Miara et al. (2014), they can also use affiliate model of business to collaborate with another existing market to promote its products. Brokerage business connected purchaser and seller will help them to facilitate the transaction. Apart from these, some of the existing products and services are needed for consumers to give it a unique touch.
Evaluation
As per the above analysis, it is evident that the competition of the industry is high. Therefore, it is making it easier for the merging market to enter the industry. In this case, the merging market could change the environment of the market. In this context, there may be a high pressure for reaction and a problem for Gillett in the market. However, it has been estimated that more than 600 people have placed their faith in Gillett products from various countries (Rowell et al. 2018). There may be issues arising from operational failure and risk from the competitors in the market.
Future recommendations
- In order to enhance its sales, Gillett needs to utilise the strategy of patients by utilising a differentiation strategy for marketing its products.
- The company needs to use an innovative technological strategy that becomes irreplaceable for their competitors to replicate the product.
- In case of distribution of its products the company needs to use indirect as well as the direct method of distribution from different manufacturers for creating a control over the manufacturing of the product,
- For the purpose of promoting its products and service the company may take part in trade shows and convention as well as sales competition for increasing sale force thereby increasing its sales result over a specific period of time.
Reference list
Asare, I.T. and Asare, D., 2015. The effective use of quick response (QR) code as a marketing tool. International Journal of Education and Social Science, 2(12), pp.p67-73.
Business Insider. 2018. The war for your face is heating up like never before. [Online] Available at: https://www.businessinsider.in/The-war-for-your-face-is-heating-up-like-never-before/articleshow/53308740.cms [Accessed 26 Sep. 2018].
Digitaljournal.com. 2018. Australia PESTEL Analysis, SWOT Analysis and Risk Analysis Market Research Report Launched – Press Release – Digital Journal. [Online] Available at: https://www.digitaljournal.com/pr/3345099 [Accessed 25 Sep. 2018].
Forbes.com. 2018. [Online] Available at: https://www.forbes.com/sites/andriacheng/2018/01/24/pgs-gillette-woes-have-translated-to-this-good-news-for-consumers/#f1343867d54d [Accessed 24 Sep. 2018].
Gillette.com.au. 2018. Men’s Razors | Gillette Australia. [Online] Available at: https://www.gillette.com.au/en-au [Accessed 26 Sep. 2018].
Ibisworld.com.au. 2018. Procter & Gamble Australia Pty Limited. [Online] Available at: https://www.ibisworld.com.au/australian-company-research-reports/wholesale-trade/procter-gamble-australia-pty-limited-company.html [Accessed 23 Sep. 2018].
Meyersohn, N. 2018. Beards are back. That’s bad news for Gillette. [Online] CNNMoney. Available at: https://money.cnn.com/2018/08/08/news/companies/razors-shaving-blades-gillette-braun-harrys-dollar-shave-club/index.html [Accessed 23 Sep. 2018].
Miura, A., Tarr, C., Spellman, R., Vörösmarty, CJ and Macknick, JE, 2014. The power of efficiency: Optimizing environmental and social benefits through demand-side-management. Energy, 76, pp.502-512.
Rowell, K. 2018. Razor Blade Market | Industry Research Report 2018-2025. [Online] Daily Biz Report. Available at: https://dailybizreport.com/razor-blade-market-2018/ [Accessed 27 Sep. 2018].
Teather, D. 2018. The $57bn marriage of Gillette with Procter & Gamble – the best a brand can get?. [Online] the Guardian. Available at: https://www.theguardian.com/media/2005/oct/27/business.advertising [Accessed 25 Sep. 2018]
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