This case can be used for a variety of classroom discussions. First, the case demonstrates how a firm can grow through both diversification and innovation. Despite its many successes, Gillette has had several unsuccessful acquisitions and business ventures in its history. The key learning point here is that Gillette faced difficulties when it ventured away from its main core competence in the razors and blades business.
A second approach, and the theme of the case, is related to the use of product innovation as a means of maintaining market dominance. The case discusses the history of the razor wars between Gillette and Schick—the company’s key competitor. As the case notes, the war escalated in 1998 when Gillette introduced the Mach3 razor. Since that time, Gillette has been embroiled with Schick in a battle of product one-upsmanship and legal proceedings. For the time being, Gillette’s Fusion Pro Glide system sits atop the global razor and blade market. However, a number of problems remain. First, Gillette’s most advanced shaving technology is expensive. This makes Gillette vulnerable to lower priced shaving systems (including its own Mach3) and to online startups such as Dollar Shave Club. Second, Gillette must convince consumers (most notably in emerging markets) to trade up to higher priced shaving systems. This is further complicated by the fact that shaving is not necessarily a daily phenomenon in countries outside the U.S.
Given the maturity of the wet-shaving market, Gillette must depend on innovation to perpetuate its dominance. Many experts, however, believe that product innovation has come to an end in this market. If this is true, Gillette will need to find new ways to stay on top. The challenge for Gillette is to push the envelope without creating innovations that are seen as trivial. Thus far, Gillette has focused on innovation in its marketing program rather than innovation in shaving technology.
1. Evaluate product innovation at Gillette throughout its history. Has Gillette been a victim of its own success? Has product innovation in the wet-shaving market come to an end? Explain.
2. What do you make of the razor wars, first between Gillette and Schick, and now with online competitors? Does Gillette face a serious threat from competitive inroads? Explain.
3. What actions would you recommend over the next five years that could help Gillette maintain its worldwide dominance in the shaving market? What specific marketing program decisions would you recommend? Should Gillette be worried about its pricing strategy? Explain.