How Is Gillette Doing in Indonesia? Has Gillette Enjoyed First Mover Advantage?

1. How is Gillette doing in Indonesia? Has Gillette enjoyed first mover advantage?

Gillette is doing well in Indonesia in the double-edge blade business. By 1995, The unit share of Gillette's blades is close to 50%. Gillette had a total revenue of $23 million and a profit of $4.6 million in 1995. Furthermore, Gillette has 90% of the premium-priced segment of the blade market.

Gillette has enjoyed first mover advantage which can be shown in various ways. Firstly, shaving is still underdeveloped in Indonesia, but the shaving incidence is increasing. Secondly, the product differentiation can target different segments of customers as to stay competitive. Thirdly, Gillette-brand blades have high awareness in Indonesia. Market research showed 97% brand awareness and 55% brand used most often ratings for Gillette's Goal Red Blade (P.6 of the case). This sets up a high entry barrier for new competitors.

2. What factors determine demand for blades? How can demand be increased? (If you were to express demand in an equation, what are the elements? How would you write the math sentence?)

There are a number of factors that determine the demand for blades.

Economics¬ - In Indonesia, shaving blades are considered as luxury items. The demand in upper- or middle-class customers is higher than in lower-class customers.

Foreign influence - People living in urban areas and cities of Indonesia are influenced by Western grooming practices through mass media. Thus the demand for blades is correlated to the degree of foreign influence.

Race - Asian beards grow slower than Caucasians or Latinos beards, so the frequency of shaving in Indonesia is smaller than in other Western countries. The demand for blades in Indonesia is smaller than in Western countries.

Education - College students and graduates have more opportunities to learn or experience Western cultures, which may increase the demand for shaving blades.

Working environment - People working with overseas personnel and in companies with multinational settings may shave more frequently than in local companies in an attempt to adapt the environment. The more people working in a multinational environment, the higher demand for blades would be.

The demand can be increased by the followings:

Price - Indonesia has about 80% of people earns an income less than $10,000. Lowering the price of the product would make more people could afford to buy it. Thus the demand increases.

Economy - Am economic growth in Indonesia would raise the standard of living. More people would consider using blades, which was previously regarded as a luxury product.

Potential customers - With a large number of population in Indonesia (about 200 million), there are