Description
It gives a brief overview of the Indian Shaving Products Market. It provides the competition Gillette faces in India. It provides an overview of Malhotra and Wiltech. It then describes the distribution channel of Indian Shaving Products Limited (ISPL). It then describes the 4P framework for Gillette
Case Of Gillette
Choosing the right distribution channel
1
Case Report: The Indian Shaving market was the largest in terms of volume (annually 2.4billion blades) but small in terms of value although the value difference compared to USA was quite significant. With the Indian Shaving industry dominated by majors like Malhotra’s and the R.P.Goenka Group, Indian Shaving Products Limited(ISPL) which was a venture between Gillette group and House of Poddar’s decided to enter Indian market. Gillette had global presence with over 70% of the market share. Being a world leader in stainless steel blades the Indian market was new where the predominance was of low tech carbon steel blades. Technologically latest twin blades segment was less than 2%.Priced its blades about 50%80% over Wiltechs’. They had brands like 7 O'clock Ejtek, 7 O'clock Super Stainless.
Competitive Analysis: House of Malhotras: Malhotras were the market leaders controlling around 80 to 90% of the market share. They had best selling brands like Topaz, Panama, Laser etc with 7 manufacturing units of which Calcutta was the largest with a capacity of 1500 million blades per year. They were street smart and dis not allow the competitors to survive in the market. They distributed products through a network of large wholesalers , semi wholesalers and retailers. They used special promotions and stock push strategies to increase their sales. Wiltech: Belonged to the RP Goenka group and Wilkinson Sword Ltd of UK and had a capacity of 120 million blades per year and 80% capacity utilization. Brands like Wilman I, Wilman II which occupied 50% market share in twin blade ( by value).Priced its blade about 50% over Malhotras brands but due to the expensive they had accumulated losses of around 2 crore in 1986-87.
2
Marketing Mix Analysis for ISPL (4P’s of marketing): Product: ? ? ? ? ? Low tech carbon steel blades making the bulk of the market Stainless steel blades, present only in urban market Latest Technology Twin Blades-market less than 2% ISPL believed there was big opportunity at upper market. Created Stainless Steel Blades
Price: ? ? ISPL believed that consumer is ready to pay higher price for a better product ISPL priced 50%-80% above Wiltech’s brands, while Wiltech was priced 50% above Malhotra’s brands. ? ISPL priced 125%-170% above the main competitor Malhotra’s price.
Promotion: ? ? ? ? ? Gillete and House of Poddars paid 5 Crores each. (5 Crores=24 %) The joint venture raised 20.83 Crores Investment on Plant- Over 20 Crores Presumably, small budget on Promotion New Product- 7O’ Clock Launched at Higher Price- Poor Sales
Place-Proper Distribution Channel: ? ? ? Combination of Push and Pull strategy More Emphasis on Pull Strategy through promotions Simultaneously, start building its own distribution network 3
?
Variable Sales Margin To Distributors &Stockists
STP Analysis for shaving blades: Market: People who want to shave Target Market
eople who want to have a clean and smooth shaving experience Segments: • • • Income:Low, medium, high Geographic location: rural, urban, semi-urban Psychographic:Lifestyle, personality
Target Segment • • • Income: Medium, High Location: Urban, semi-urban All age groups(15+)
ISPL’s Distribution Channel:They had 2 options -Build own distribution network or Tie-up to use Lipton’s network at 5% margin.The main advantage of the tie-up was that it was a low cost solution since it did not involve any permanent costs. Lipton has well established sales network which meant that the prosuct reach could be easily extended.For Lipton, better utilization and profit without extra investment
4
Problems for ISPL: ? ? ? ? After 2 years, less than 3% market share Accumulated losses of Rs 7.24 crores According to customer surveys, no serious problem in product, prices, positioning. Problem in distribution strategy.
? ? ? ? ? ?
Gillette- 70% worldwide market share Sales in 1987-88 Rs 4 crores Accumulated losses Rs 7.24 crores Stainless steel blades Priced its blades about 50%-80% over Wiltechs’ Brands like 7 O'clock Ejtek, 7 O'clock Super Stainless
SWOT Analysis: Strengths: • • • Global Presence Experience in shaving needs Latest technology and innovative products
Weaknesses: • • • Lack of distribution channel Low product variety Price 5
Opportunities: • • Threats: • • Established rivals Low value market Growing stainless steel blades market World’s largest shaving blades market
COMPARISON- DISTRIBUTION CHANNEL MALHOTRA’s Distribution Channel MALHOTRA’S GILLETE Distribution Channel GILLETE
PRIMARY WHOLESALER
Lipton
SECONDARY WHOLESALER N o RETAILER F e e d b a c k
DISTRIBUTOR
STOCKIST
6 CUSTOMER
CUSTOMER
Sr. No 1 2 3 4
Malhotra’s Unorganised Distribution Wholesalers were mulit brand distributors Due to own network, easy to get feedback Customer response
Gillete Unorganised Distribution Distributors were Single brand No feedback No Customer response
Owing to above mentioned reasons, it was difficult for Gillete to understand the market situation in depth and even after right product and promotional strategies, Gillette was not able to capture significant market resulting in losses.
Solutions: We propose a combination of Push and Pull strategy to be used. Also we think providing stainless steel blades to barbers all across the country at discounted rates will help spread word of mouth and encourage users to use stainless steel blades compared to the conventional carbon steel blades. At the same Gillette must start building its distribution strategy as a part of its long term strategy. They must target first time users, by promoting in high schools and Colleges.The Company should simultaneously promote the advantages of stainless steel blades produced by ISPL. The company should employ extensive market research to exactly know the future of stainless steel blades market. They must look for other tie-ups as part of horizontal marketing system. Also as a part of distribution system, introduce target based commission to Lipton(e.g. 5% for sales upto Rs 5 crore and 7% for sales between 5 and 10 crore)
7
doc_215805536.docx
It gives a brief overview of the Indian Shaving Products Market. It provides the competition Gillette faces in India. It provides an overview of Malhotra and Wiltech. It then describes the distribution channel of Indian Shaving Products Limited (ISPL). It then describes the 4P framework for Gillette
Case Of Gillette
Choosing the right distribution channel
1
Case Report: The Indian Shaving market was the largest in terms of volume (annually 2.4billion blades) but small in terms of value although the value difference compared to USA was quite significant. With the Indian Shaving industry dominated by majors like Malhotra’s and the R.P.Goenka Group, Indian Shaving Products Limited(ISPL) which was a venture between Gillette group and House of Poddar’s decided to enter Indian market. Gillette had global presence with over 70% of the market share. Being a world leader in stainless steel blades the Indian market was new where the predominance was of low tech carbon steel blades. Technologically latest twin blades segment was less than 2%.Priced its blades about 50%80% over Wiltechs’. They had brands like 7 O'clock Ejtek, 7 O'clock Super Stainless.
Competitive Analysis: House of Malhotras: Malhotras were the market leaders controlling around 80 to 90% of the market share. They had best selling brands like Topaz, Panama, Laser etc with 7 manufacturing units of which Calcutta was the largest with a capacity of 1500 million blades per year. They were street smart and dis not allow the competitors to survive in the market. They distributed products through a network of large wholesalers , semi wholesalers and retailers. They used special promotions and stock push strategies to increase their sales. Wiltech: Belonged to the RP Goenka group and Wilkinson Sword Ltd of UK and had a capacity of 120 million blades per year and 80% capacity utilization. Brands like Wilman I, Wilman II which occupied 50% market share in twin blade ( by value).Priced its blade about 50% over Malhotras brands but due to the expensive they had accumulated losses of around 2 crore in 1986-87.
2
Marketing Mix Analysis for ISPL (4P’s of marketing): Product: ? ? ? ? ? Low tech carbon steel blades making the bulk of the market Stainless steel blades, present only in urban market Latest Technology Twin Blades-market less than 2% ISPL believed there was big opportunity at upper market. Created Stainless Steel Blades
Price: ? ? ISPL believed that consumer is ready to pay higher price for a better product ISPL priced 50%-80% above Wiltech’s brands, while Wiltech was priced 50% above Malhotra’s brands. ? ISPL priced 125%-170% above the main competitor Malhotra’s price.
Promotion: ? ? ? ? ? Gillete and House of Poddars paid 5 Crores each. (5 Crores=24 %) The joint venture raised 20.83 Crores Investment on Plant- Over 20 Crores Presumably, small budget on Promotion New Product- 7O’ Clock Launched at Higher Price- Poor Sales
Place-Proper Distribution Channel: ? ? ? Combination of Push and Pull strategy More Emphasis on Pull Strategy through promotions Simultaneously, start building its own distribution network 3
?
Variable Sales Margin To Distributors &Stockists
STP Analysis for shaving blades: Market: People who want to shave Target Market
eople who want to have a clean and smooth shaving experience Segments: • • • Income:Low, medium, high Geographic location: rural, urban, semi-urban Psychographic:Lifestyle, personalityTarget Segment • • • Income: Medium, High Location: Urban, semi-urban All age groups(15+)
ISPL’s Distribution Channel:They had 2 options -Build own distribution network or Tie-up to use Lipton’s network at 5% margin.The main advantage of the tie-up was that it was a low cost solution since it did not involve any permanent costs. Lipton has well established sales network which meant that the prosuct reach could be easily extended.For Lipton, better utilization and profit without extra investment
4
Problems for ISPL: ? ? ? ? After 2 years, less than 3% market share Accumulated losses of Rs 7.24 crores According to customer surveys, no serious problem in product, prices, positioning. Problem in distribution strategy.
? ? ? ? ? ?
Gillette- 70% worldwide market share Sales in 1987-88 Rs 4 crores Accumulated losses Rs 7.24 crores Stainless steel blades Priced its blades about 50%-80% over Wiltechs’ Brands like 7 O'clock Ejtek, 7 O'clock Super Stainless
SWOT Analysis: Strengths: • • • Global Presence Experience in shaving needs Latest technology and innovative products
Weaknesses: • • • Lack of distribution channel Low product variety Price 5
Opportunities: • • Threats: • • Established rivals Low value market Growing stainless steel blades market World’s largest shaving blades market
COMPARISON- DISTRIBUTION CHANNEL MALHOTRA’s Distribution Channel MALHOTRA’S GILLETE Distribution Channel GILLETE
PRIMARY WHOLESALER
Lipton
SECONDARY WHOLESALER N o RETAILER F e e d b a c k
DISTRIBUTOR
STOCKIST
6 CUSTOMER
CUSTOMER
Sr. No 1 2 3 4
Malhotra’s Unorganised Distribution Wholesalers were mulit brand distributors Due to own network, easy to get feedback Customer response
Gillete Unorganised Distribution Distributors were Single brand No feedback No Customer response
Owing to above mentioned reasons, it was difficult for Gillete to understand the market situation in depth and even after right product and promotional strategies, Gillette was not able to capture significant market resulting in losses.
Solutions: We propose a combination of Push and Pull strategy to be used. Also we think providing stainless steel blades to barbers all across the country at discounted rates will help spread word of mouth and encourage users to use stainless steel blades compared to the conventional carbon steel blades. At the same Gillette must start building its distribution strategy as a part of its long term strategy. They must target first time users, by promoting in high schools and Colleges.The Company should simultaneously promote the advantages of stainless steel blades produced by ISPL. The company should employ extensive market research to exactly know the future of stainless steel blades market. They must look for other tie-ups as part of horizontal marketing system. Also as a part of distribution system, introduce target based commission to Lipton(e.g. 5% for sales upto Rs 5 crore and 7% for sales between 5 and 10 crore)
7
doc_215805536.docx