Gillette’s newest shaving system has just one blade, a light plastic handle and a sharply lower price. The move by P&G is to aggressively push into emerging markets for new customers and growth. That focus is forcing P&G to be more modest on scale and more flexible on price. Gillette commands about 70% of the world’s razor and blade sales, but it lags behind rivals in India and other developing markets, mainly because those consumers can’t afford to buy its flagship products.
The affordable Gillette Guard razor costs Rs. 15 and uses blades that cost Rs.5 ,in contrast to the Mach 3 blades that Gillette has been selling in India cost about Rs.100.
Gillette Guard is aiming to lure users of double-edge razors, about 400 million men in India, according to P&G estimates. In India, a brand called Super-Max holds the lead in double-edge blades, which cost roughly 1.5 to 2 rupees, which is half of the cost of even Gillette Guard.
The need to grow in emerging markets is pushing P&G to change its product-development strategy. In the past, P&G would sell basically the same premium Pampers diapers, Crest toothpaste or Olay moisturizers in developing countries, where only the wealthiest consumers could afford them. To reach more consumers, P&G changed course by creating pared-down products specifically designed to be less expensive, like Naturella’s extra-absorbent, cotton feminine-hygiene pads and Downy Single Rinse fabric softener, which requires less water.
P&G uses what it calls reverse engineering. Rather than create an item and then assign a price to it—as in most developed markets—the company starts with what consumers can afford and then adjusts the features and manufacturing processes to meet the target.
For Gillette Guard, the target was five rupees, about the cost of shampoo sachets or small tubes of toothpaste. The price takes into account not only consumers but the kiosk owners who serve most shoppers in developing markets. The lower cost will encourage more small store owners to stock up on the item, P&G hopes.
To cut costs, P&G eliminated the lubrication strip and colorful handle designs Indian men weren’t willing to pay for. Though most men in the U.S. and Western Europe prefer a heavy razor handle, P&G found Indian men prefer a lighter weight, which also cut costs.
P&G has a lot of ground to make up in India, where it estimates just 10% of men who shave use Gillette blades, compared with about 50% world-wide. Its plan is to get men to start using its products and then upgrade them as India’s economy grows.
The Gyaniz Take:
While MNCs have arrived with their internationally successful products, but the same has not been success all the time as the Indian customer’s palate looks for the product as well as the sweetness of its price to his pocket. Fortune at the bottom of the pyramid has tremendously caught on innovations like satchets, pouches, no frills, etc. to allow the customer the first experience of the product & brand which always was far out of his reach in the traditional selling mode & packaging.
Looking at the industry figures, the Indian market is still largely controlled by a host of local players like Malhotra Shaving products but it is this segment which was still largely untapped by MNCs like Gillette that they ruled like kings. What I can see from here?
A brilliant move to enter the strata which had never experienced your product, provide him with a brand & product experience and over a period of time upgrade him to your mainstay products which would not be too difficult task looking at the considerable rise in disposable incomes in India.
This Battle will see the sharpest emerge the winner, afterall its blades & swords. Your views.
(Source: WSJ, Euromonitor)