Is The Best Product Defense A Cheap Defense?

Is The Best Product Defense A Cheap Defense?

What should Gillette do about new cheap razors?
What should Gillette do about new cheap razors?
Image Credit: lihua88

Shaving is something that men without beards or mustaches do just about every day. In all honesty, I don’t think that we spend a lot of time thinking about shaving – it’ just something that we do. Over at Gillette, since they make razors, they spend a lot of time thinking about how men shave and they have reached a startling conclusion: their products cost too much!

The Challenges That Gillette Is Facing

Gillette is in the middle of facing challenges from two different corners. The first are critics who have been saying that Gillette products cost too much. In the other corner, new startups, such as the Dollar Shave Club, have sprung up promising men a better shave for less money. In order to deal with this, the Gillette product managers have decided to overhaul their product lines. As a part of this overhaul, they are introducing a new product called the Fusion Blades which contain new technology. What makes this new product interesting is that it is being introduced at no additional cost.

This type of behavior is different for Gillette. The company has spent decades creating new razors. Their new razors have been increasingly complex and therefore have come with higher and higher prices. The Gillette product managers have always done it this way. Their products have tended to designed for the higher end of the shaving market. This marketing strategy has come with its own set of risks. It is possible for Gillette to continue to grow their market, but they are dealing with a smaller and smaller group of customers who are willing to pay top dollar for better performance.

What Gillette’s product managers are doing is changing their way of thinking. They now want to innovate not just on the super-premium tier of shavers. In the past, Gillette has spent roughly US$1B every 7 or 8 years in order to create a new razor system. They would then back this new system up with a very large advertising campaign. At the same time, they would also raise their prices. In 1990 they introduced the two-blade Sensor line. In 1998 the Mach3 was introduced. In 2005, the Fusion5 was introduced.

How Gillette Is Going To Face Their Challenges

The Gillette product managers have been doing very well over the past few years and have had a lot to add to their product manager resume. The company has enjoyed a dominate market share despite offering products that had higher prices. However, now they have encountered online razor companies what have been stealing customers with innovative marketing campaigns. The result of all of this is that the Gillette product managers are now starting to understand that customers are no longer going to be willing pay more to shave. Now what is going to happen is that Gillette’s bottom line is going to be impacted.

What this means for the Gillette product managers is that their old ways of doing business are not going to work in the new world. They are going to have to look at their product manager job description and make adjustments so that the company can compete with all of the low cost razor competitors who have just shown up. The good news for Gillette is that there will always be a high end for the shaver market, there are some people who will pay for a better shave. Gillette is well positioned to keep offering this group of people exactly what they want. There will also be very little competition for this portion of the market. However, the larger portion of the market has now indicated that their buying decisions will be guided by price.

The Gillette product managers are going to have to make changes to their product development definition in order to adjust to the new market that they will be competing in. They are going to have to beat the new lost cost entries at their own game. This is why Gillette has decided to move forward and introduce the Fusion Blades product which contains new technology. The goal here is to create a product that contains Gillette’s unique brand of shaving technology at a lower price point. The hope is that based on all of the advertising the Gillette has invested in, customers will recognize the Gillette name when they are buying razors and the lower price will make them decide to select this product. If they can accomplish this, then Gillette can continue to sell razors while still competing with all of the low cost razor providers.

What All Of This Means For You

Shaving is not something that a lot of men spend a lot of time thinking about. However, it is something that they do almost every day and that makes it a big business. For a long time, the product managers at Gillette have done a good job of dominating their market by rolling out fancier and fancier shaving systems and charging more money for each innovation. However, times have changed. The arrival of discount razors from online firms has upset the razor market. What are the Gillette product managers to do now?

Gillette for the first time is facing a challenge from firms that are offering men good shaves at a lower price. Gillette has dominated the higher end of the shaving market for decades and they have been able to keep growing because there are always men who are willing to pay more for a better shave. However, the largest part of the market turns out to be price sensitive and these are the customers that Gillette is losing. In the past, Gillette would introduce a new shaving system every 7-8 years and then spend a great deal to promote it. The arrival of the low cost online razor firms has changed all of this. Gillette is going to have to create products that will be able to go toe-to-toe with the discount brands. This is why they are introducing their Fusion Blades product which contain new technology. They hope to use their market share to attract new customers and their lower prices to keep them.

The good news for Gillette product managers is that they have realized that they have a problem on their hands. The low cost razor firms are going to take away a significant amount of Gillette’s market share if they don’t do something quickly. Creating a new product to offer to the price sensitive part of their market is a great idea. Now Gillette needs to back it up with some of their famous advertising campaigns and then they’ll be able to determine if they have been successful in defending their market share from new entrants.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Should Gillette continue to introduce new high end shaving systems even though that part of the market is small?

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What We’ll Be Talking About Next Time

So if I was to take a look inside of your purse or wallet right now, what would I find? I’m willing to bet that you probably have either a Visa or a Mastercard credit card, perhaps an American Express credit card or even a Discover credit card. However, what else would be there? Would you have any store issued credit cards? Perhaps from Walmart, Macy’s, Home Depot, etc.? Well guess what, these store issued credit cards are in trouble and their product managers are scrambling to find ways to change their product development definition in order to save them.

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