Gillette Case Study

Recommendation

The growth of 25%-30% in the Indonesian market is substantial for the Gillette in order to capture the untapped market segment as well as to achieve its goal of being the market leader. Basically, to meet its objectives Gillette has to increase in the first place its production capacity. . Next, it needs to rely on extensive and aggressive advertising techniques to attract the price sensitive customers who are used to shave with knifes. Finally, Gillette has to reduce the price of the offerings, especially the cheap ones, in spite of increasing them by 20%.

As Gillette now serves only 48% of the market and it capacity is working almost near to the edge this is most necessary means for meeting the potential demand. Through advertising it will be possible for the company to persuade customers to shave the first time, increase the shaving incidents, change the brand awareness into actual purchases and make the existing low-margin consumers to shift into higher-margin products. Most of the populating is in the lower income bracket indicating that they are sensitive to the products’ prices, so the prices are the number one determinant of their preference whether to shave using knifes of blades. Thus, a logical continuation of this fact will be to decrease prices in spite of increasing them by 20 % and expecting a 19% growth in sales. This will seem a little bit strange when considering the 12% inflation rate; however, the increased capacity and exports together will offset some of the negative effects of inflation.

Financials

In this section first I estimated the total market size available to Gillette. As we know Gillette is now mostly concentrated on urban areas because they represent most of its sales. According to the case there 40mln men in urban areas of which 80% are shaving. Based on this information you can see below the total number