Table of Contents

History................................................................................................................................................. 3
Internal Strengths and Weaknesses............................................................................................... 4
External Opportunities and Threats............................................................................................. 5
SWOT Analysis................................................................................................................................. 6
Strength.............................................................................................................................................................. 6
Weakness........................................................................................................................................................... 6
Opportunity....................................................................................................................................................... 6
Threat.................................................................................................................................................................. 6
Current Business Level Strategy.................................................................................................... 6
Duracell............................................................................................................................................................. 6
Energizer.......................................................................................................................................................... 7
Rayovac............................................................................................................................................................. 7
Challenge Ahead............................................................................................................................... 7
Recommendation............................................................................................................................... 7
Plan of Action.................................................................................................................................... 8
Appendices......................................................................................................................................... 9
Appendix 1-History................................................................................................................... 9
Appendix 2-Industry Life Cycle Analysis..........................................................................10
Appendix 3-Competetive Forces Analysis pre 1996........................................................10
Appendix 4- Competitive Forces Post 1996.......................................................................11
Appendix 5-Analysis of Industry......................................................................................... 11
Duracell............................................................................................................................................ 11
Energizer.......................................................................................................................................... 11
Rayovac............................................................................................................................................ 11
Market Analysis.............................................................................................................................. 11
Appendix 6-Distinctive Competences for Gillette............................................................12
Appendix 7- Barneys VRIO Analysis................................................................................. 12
Value:................................................................................................................................................ 12
Rarity................................................................................................................................................ 12
Imitability......................................................................................................................................... 12
Opportunities.................................................................................................................................. 12
Appendix 8- Internal Strengths and Weakness................................................................12
Strengths.......................................................................................................................................... 12
Weakness.......................................................................................................................................... 13
Appendix 9 – External Opportunities and Threats.........................................................13
Opportunities.................................................................................................................................. 13
Threats.............................................................................................................................................. 13
Appendix Ten- Current Business Level Strategies..........................................................13
History

Founded in 1901, the first retail outlet was located above a fish store in Boston
and was operated by King C Gillette. When the store first opened they sold only 58
razors and 168 blades in the first three years of operation. In order to expand the
company from just typical manual razors to small household appliances, Gillette acquired
Braun in 1964. This provided Gillette with the technology and innovation required to
maintain market share in the industry. In 1971 the Trac II was introduced to the razor
world followed by the Gillette Atra in 1977. These shaving systems created a want for a
disposable razor, which had the features of a pivotal head and twin blades. This was
ultimately an updated version of the Trac II, and came between the years of 1977-1988.
The next razor Gillette introduced was targeted towards consumers who were looking for
a closer, more precise shave. The Gillette Sensor system answered these requirements in
1990, followed by the Sensor Excel and the Sensor for women. With the acquisition of
Oral B in 1994, Gillette became involved in the oral hygiene market, which was when
Oral B and Braun combined their research and development departments and created the
world best selling Braun-Oral B Power Toothbrush. In 1998 Gillette introduced yet
another shaving system into the market, the Mach 3 Razor. In 2000, Gillette took a major
hit losing approximately $428 Million by selling their Paper Mate division to Newell
Rubbermaid. In the beginning of 2001 Gillette was comprised of four different business
segments, which include small appliances, portable power, personal grooming products,
and oral care products.

In the beginning of 2001, Gillette made a major change in corporate management

by firing then CEO Michael Hawley for his inability to reverse the trends at Duracell.
With the hiring of James Kilt, Gillette was able to seek new opportunities through a fresh
mind and begin to recuperate from their loses incurred previously.

With the current revenue generated, Duracell seems to be in the Maturity Stage of
the product lifecycle. Duracell has dominated the industry and has a strong competitive
advantage over their competitors. With the developments of several different batteries,
Duracell has many competitors, although they have sustainable advantage from strong
research and development departments. The distribution of batteries is sold through three
main channels; super markets, drug stores, and discount retailers. From the wide
distribution channels of batteries, they are ranked 25th out of 200 in sales. With 75% of all
alkaline sales resulting from impulse purchases, retailers market the batteries at impulse
purchase locations such as the check out lanes at stores. Statistics from 2000 showed that
discount were responsible for 52.5% of the total dollar sales of alkaline batteries, while
drug stores and super markets were accountable for 23.8% and 23.7% of total sales
respectively.

Internal Strengths and Weaknesses

Both Duracell and Gillette show strong brand recognition, due to the fact that they
have an extremely strong research and development department, along with many years

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of experience in the industry. Both Gillette and Duracell have a wide product range with
many different products to meet different needs. They are a considered an “XXX” in the
industry because they are consistently developing new products and their market growth
is increasingly growing along with the market share. Both companies have threatened the
profit growth of new companies because they continue to develop innovative, market
leading products, which meet the exceeding needs of consumers.

With increasing globalization, Gillette has a strong global presence and is a

market leader in all aspects of its operations. With the physically powerful innovations
of Gillette they are able to create the most useful and consumer demanded razors. Gillette
controlled 77.2% of the world razor blade refill market while controlling 52.4% of the
market share in disposable razors.

Duracell has a very strong brand recognition and loyalty from years of producing
products that meet the needs and expectations of consumers. With the smart business
plans of Duracell they have aligned themselves with Gillette, which gives them more
recognition in the market and a more trustworthy business background.

With the joining of Gillette and Duracell, this brought on a potential issue for both
companies. This posed the possible friction between current employees of both
companies. Employees may feel less valued in their positions and feel the need to fight
for their current position and operation techniques.

Catastrophic loss for Gillette was when they sold Paper Mate to Newell
Rubbermaid in 2000. The company took a huge hit financially. Gillette also dealt with
the issue of Michael Hawley not being about to turn the company around after this loss
and the current trends of Duracell. Due to his performance he was terminated after only
18 months of employment. With the acquisition of Duracell brought of a large drain on
the performance of Gillette and ended their impressive earnings growth history. In
September of 1999 Gillette took large strides in trying to cut back on spending by laying
off and restructuring the company. They ended up cutting 4,700 jobs along with shutting
down 14 plants, which caused significant problems within the company. Downsizing
causes job sharing within the organization and the company posses the possibility of
losing valuable talented employees.

A major weakness for Duracell is that they are slowly realizing that similar
products are meeting the needs of consumers but are sold at a much lower price. This is
eventually going to cause Duracell to lose their current competitive advantage. Also
because Duracell is owner by Gillette they face the fact that they many be second to
Gillette’s products.

External Opportunities and Threats

Gillette posses many opportunities that can help expand the recognition of the
brand. With the many products they develop their product expansion is strong. Gillette
has branched off from just their basic razor to many more enticing products to meet all

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needs of different consumers. They also have the prospect for entering new market
segments. Gillette has the funding to branch out into different segments and because they
are the current market leaders it gives them the opportunity to increase their existing
market shares.

With all the increases in technology Duracell can branch out into rechargeable
batteries for things such cell phones and cameras. This gives Duracell the chance to enter
a new market segment, which will help increase the brand image and brand recognition.

Both Gillette and Duracell face similar threats because they have been in the
industry for several years. The fact that their products may hit market saturation and the
only way they companies can grow from this is to restructure the current produces or
there is a raise in market share demand. They also face the fact of new entrants. Even
those both companies have strong market presence there are new innovation being
created daily and they target companies like Gillette and Duracell because they have such
strong market presence. The competing companies are also developing new innovation
which are challenging Duracell and Gillette’s currents products, they are increasing
amount of product are very similar to both companies but are sold at cheaper retail value.

SWOT Analysis

Strength
Duracell excels in their research and development division, which in turn allows
them to gain strong brand recognition globally.
Gillette has an extremely large diverse range of products, which allows them to meet all
different needs of their consumers globally.

Weakness
With Gillette’s wide range of products they don’t have the manpower to fully
focus on a specific product at the time of entrance in the market.
Duracell is realizing that their products are being copied and sold at lower retail value.
Opportunity
Gillette shows greater chances of succeeding if they continue to expand their
product lines and enter new market segments.
Duracell has a strong research and development department which gives them the chance
to expand into reusable batteries that are targeted towards technology like cell phones and
cameras.
Threat
Both Gillette and Duracell face the same major threat, which are substitute
products. Companies are developing similar products to those of Gillette and Duracell but
selling at lower retail prices.

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Current Business Level Strategy

Duracell
The major goal of Duracell is to maintain their stance as the industry leader in the sale of
alkaline batteries, as well as grow their current level of market share. They currently offer
AA, AAA, C, D, and 9 volt batteries in their product line. The major reason they are able
to achieve high levels of success is through innovation. The newly offered ‘ultra’ brand
of lithium ion battery gave consumers a 50% longer life. This newly designed battery
became very popular among customers especially when it came to the use of high drain
items such as portable CD players and personal gaming systems. They rely on
differentiation as their cost strategy. Duracell strives on offering a top of the line battery.
Their sales rely on customer’s perception that their battery is superior to that of the
competition. Currently this strategy has been successful. Due to the fact they are the
market leader in battery sales consumers are apparently willing to pay a little extra money
for a longer lasting quality battery. They are becoming the bench mark battery within the
industry.

Energizer
Energizer Holdings Incorporated has separated their product lines into two separate
entities, Energizer and Eveready. Eveready differs from Energizer in the power source
they will rely on. Eveready will use zinc carbon as the main ingredient where as the more
popular Energizer relies on the more traditional alkaline. Within the popular alkaline
market, Energizer released a very powerful e2 battery which rivals Duracell’s ultra brand.
Similar to Duracell Energizer offers AA, AAA, C, and D batteries. They have also
entered a more unique market, supplying a power source for hearing aids. Similar to
Duracell, Energizer is practicing a differentiation cost strategy. They rely on advertising
and higher end products in order to entice customers into purchasing their product. Over
the last couple years Energizer has been relatively quiet in the market. Due to the fact that
they are aligned in direct competition with Duracell, they are less successful in sales as
they lack in product loyalty compared to industry leading Duracell.

Rayovac
Rayovac is in the mainstream line of alkaline batteries. The major focus however is in
disposables. Rayovac offers a similar quality product that of its main competitors,
Duracell and Energizer, but it prides itself on being 15% less expensive. They do
compete in the rechargeable battery segment with the NiMH line however the majority of
their sales are in disposables. Rayovac was very innovative in their marketing strategy.
They were the first of the major battery companies to use celebrities to endorse their
product. The cost strategy they are practicing is differentiation cost strategy. With
Duracell and Energizer offering a high quality more expensive battery, Rayovac offers
consumer with a similar quality product but targets customers who are not willing to
spend the extra money. This affects the market in a major way, choices. Customers have
a choice to value what they willing to pay for a battery.

5
Challenge Ahead

How will Gillette keep their competitive advantage in regards to all of their
different segments? How will they determine a definite positive revenue in each
segment?
Recommendation

Gillette needs to continue their current marketing tactics through North America
and Internationally. They have an extremely strong research and development division
within both companies and need to pay close attention to other competing products in the
market segments so they do not lose competitive advantage. The issue of similar products
entering the market is never going to be eliminated but Gillette needs to ensure that when
developing their products that they are proving their consumers with the exact needs and
quality they deserve for what they are paying. We believe that the strategies Gillette is
currently operating by are strong and effective. They have been leaders in the market for
many years and excel in each product aspects in the segments. We think that with the
unique innovations of Gillette and successful products in the market they are financially
stable and well positioned to prolong their rain at the top of the market.

For the future strategies of Gillette they need to continue the positioning in the
market segment, along with entrance into new segments with the development of
products that will entice consumers. We suggest that for future strategies of Gillette they
limit the number of products introduced into the market within time frames. They
introduce so many different types of razors within that specific line and do not fully focus
on the success of that specific product. They need to allow the product to grow in the
market and establish itself so that Gillette will benefit fully from the product.

Plan of Action

In order to maintain market share, or even gain market share, Gillette should limit
the number of razors launched within a specific time. By doing this, their new and
innovative products would have sufficient time to gain market share, strengthening the
reputation of the brand. By maintaining distribution alliances with Wal-Mart, Gillette will
be able to efficiently distribute its products to many different markets. Having a solid
distribution strategy such as this provides Gillette with a competitive advantage over
other competitors. This alliance would allow them to reach larger foreign markets where
they have been unable to effectively distribute due to economic conditions restricting the
construction of a manufacturing facility over seas. Gillette should also focus their
attention in foreign markets where there is still potential to gain market share outside of
the United States. In order to do this, Gillette should look at building a manufacturing
facility in a foreign market when economic conditions improve. This would reduce the
shipping costs associated with moving product from manufacturing facilities in the
United States to the large number of potential consumers in foreign markets. By doing
this, Gillette will become a strong financial performer like it once was.

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7
Appendices

Appendix 1-History
- Founded in 1901 located over a fish store in Boston by King C Gillette
- 1964 Acquired Braun
- 1971 new razor introduced- Trac2
- 1977 new system known as Gillette Atra
- 1977-1988 new disposable razors with pivitable head and twin blades along with
an updated version was Trac2
- 1990 company introduced censor shaving system
- 1994 Acquired Oral B
- James Kilt replaces Michael Hawley as CEO of Duracell
- 1998 new system to the market Mach3 razor
- 2000 company still carries his name and has total $9.2 billion in revenue
- 2000 Sold Papermate to Newell Rubbermaid for a substantial loss
- 2001 Mach3 and the Censor were the top 2 shaving systems in the USA
- Beginning of 2001 the company comprised 4 distinct business segments: personal
grooming products, oral care, oval power and small appliances

Appendix 2-Industry Life Cycle Analysis

- In 2000 they generated 2.6 billion in US domestic sales in dry cell batteries
including alkaline batteries
- The use of batteries can be traced back as late as the 18th century
- Batteries can be divided into primary and secondary categories
- Primary batteries were made for one used then disposed
- Secondary batteries are rechargeable over their lifetime
- Batteries come in all shapes and sizes
- 75% of all alkaline sales were resolute of impulse sales
- Batteries ranked as 25th in sales in the top 200 products of general
merchandise/health and beauty aids for retailers
- Distribution of batteries were through 3 main channels in the USA: supermarkets,
drugstores and discounters
- Retailers markets the batteries at impulse buying locations such as the checkout
lane
- In 2000 discounters were responsible for 52.5% of the total dollar sales of alkaline
batteries, this was an increase from the previous 4 years from 48.7% in 1996

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 - Drugstores and supermarkets held 23.8% and 23.7% of the total dollar alkaline
sales in 2000

Appendix 3-Competetive Forces Analysis pre 1996

+ Bargaining Power of Suppliers
The bargaining power of suppliers was low because there were many different
suppliers available and only a few manufacturers.
+ Bargaining Power of Customers
Bargaining power of supermarkets, drug stores, and discounters is relatively low.
There is a demand for the batteries and if they choose not to stock them certainly other
stores will and reap the profit. Therefore customers are forced to buy and stock the name
brand batteries.
+ Threat of Entrants
The threat of new entrants is relatively low. This industry carries high amounts of
brand loyalty and recognition among the 3 big industry leaders. Retailers entered the
market under a private label however their alkaline batteries were being manufactured by
Duracell and Energizer.
+ Threat of Substitute Products
There are very few substitutes in the industry. Typically batteries were either
primary or secondary. A substitute offered was solar technologies yet it is offered on a
limited number of products.
- Competitive Rivalry Within the Industry
Rivalry within the industry is relatively high. Advertising wars existed between
the two leading battery manufacturers Energizer and Duracell.

Appendix 4- Competitive Forces Post 1996

+ Bargaining Power of Suppliers
Bargaining power of suppliers remains low as there are still three dominant
manufacturers in the industry.
+ Bargaining Power of Customers
The bargaining power of customers has started to grow. Since 1996 technology
leaders such as Sony and Panasonic have been developing batteries offering customers
more options.
-Threat of New Entrants
The threat of new entrants is starting to rise. Newer technologies, such as iPod’s
and cell phones, are now a mainstream trend. These devices are replacing products that
used to require alkaline batteries. The companies in these industries are developing their
own power source technologies.
-Threat of Substitute Products
Threat of substitutes is starting to grow as newer products are becoming more
popular. These products are using their own original sources of power.
-Competitive rivalry within the Industry

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 Competitive rivalry remains high within the industry. With new entrants in the
market as well as old rivals the market is becoming more competitive. Rivalry is also
high in sense that each rival mimics the other. Each competitor launched the extended life
battery line around the same time.

Appendix 5-Analysis of Industry

Duracell
Duracell is currently the market share leader in the alkaline battery industry. Their
revenues have been steadily increasing. Their operating margin is on the decline.
Energizer
Energizer’s market share has been decreasing over the last 6 years. Operating margins of
the company have been increasing and decreasing within that time frame.
Rayovac
Rayovac has made the most progress in terms of market share among the major 3 labels.
Their operating margins have grown exponentially over the last 6 years.

Market Analysis
The alkaline battery market is beginning to shift. Although Duracell is still the market
leader by far but slowly Rayovac is gaining. They are beginning to steal market share
primarily from Energizer. Although Duracell and the other companies are still making a
profit the overall market is shrinking. New technologies with power sources that are not
interchangeable are reducing the size of the overall market.

Appendix 6-Distinctive Competences for Gillette

One of Gillette’s main competencies is their solid relationship with vendors around the
world. They have a very good reputation among retailers which will translate into the
distribution of Duracell. Gillette is a very worker friendly organization. They were
determined to make the transition of workers for Duracell employees a smooth one. The
fit between the two companies was perfect in terms of channel distribution. Because
batteries are ranked 25th among the most popular merchandise/health and beauty
products, having razors linked with batteries will now associate Gillette razors with a
more popular product.

Appendix 7- Barneys VRIO Analysis

Value:
Is the firm able to exploit an opportunity or neutralize an external threat with the
resource/capability?
The acquisition of Duracell by Gillette is very valuable. With Gillette’s knowledge of
marketing and the understanding of the global market these core competencies of Gillette
will be passed onto Duracell. These skills can help neutralize the threat of new entrants
by using them to create global product awareness.

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Rarity
Is the control of the resource/capability in the hands of a relative few?
There are few companies within the competitive market. Among the market leaders,
Duracell and Energizer manufacture private label brands.
Imitability
Is it difficult to imitate, and will there be a significant cost disadvantage to a firm trying
to obtain, develop, or duplicate the resource/capability?
It would be difficult but not impossible for companies to imitate Duracell’s product.
Other companies such as, Sony and Panasonic, have entered the industry successfully but
had high brand recognition is similar fields prior to launch.
Opportunities
Is the firm organized, ready, and able to exploit the resource/capability?
The answer to this question is yes. With a large company, Gillette, backing them they are
in a perfect position to expand their product and branch into new market.

Appendix 8- Internal Strengths and Weakness

Strengths
- Duracell and Gillette both boast strong brand recognition
- Strong R&D in both companies.
- Both Duracell and Gillette are consistently coming out with new products and
their market growth is increasing along with a strong market share already
between the two companies
- Gillette contains a diverse range of products
- Gillette is increasing globalization
-Duracell has high levels of brand recognition as well as brand loyalty
Duracell has a good business plan with their alignment with Gillette
Weakness
- Joining the two companies cause some friction with the employees over job
positions and their operation techniques
- Gillette has now moved out of their area of core competency. From developing
and marketing razors to the increasingly competitive battery market.

Appendix 9 – External Opportunities and Threats

Opportunities
- For both companies product expansion and entrance in new market segments
offers as a opportunity
- Market share growth

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 - With competencies being passed through companies they may be able to develop
a competitive advantage within their respective markets
- Duracell can grow with social trends and increased technologies

Threats
- Market saturation
- New entrants
- Product innovations by existing rival companies
- Similar products exist in both markets.

Appendix Ten- Current Business Level Strategies

Duracell
Duracell’s main business strategy is to continue to be the industry leader in the sales of
alkaline batteries. They offer their product in AA, AAA, C, D, and 9 volt batteries. A
major reason they are able to achieve this is though innovation. Their newly introduced
“Ultra” brand offered consumers 50% longer life, became popular with higher drain
items. They will continue to strive for advancement as they believe that continued
advancement of power sources will fuel the growth of more advanced technologies.

Energizer
Energizer Holdings Incorporated has segmented its brands into two separate companies,
Energizer and Eveready. Eveready will sell the zinc carbon based batteries while
Energizer will sell only the alkaline. Within the alkaline market energizer has released
new line, the Energizer e2. This spin-off was aimed at becoming a power source for
newer high tech technology items such as digital cameras, CD players and cell phones.
Both brands now sell AA, AAA, C, and D batteries. Other markets they have entered
include rechargeable batteries as well as power sources for hearing aids
Rayovac
Rayovacs main target market is in the disposable battery market. Their product is very
comparable to that of its competitors, Duracell and Energizer, but prides itself at being
15% less expensive. Rayovac also entered the rechargeable battery segment with the
introduction of their NiMH line. Their main competency is offering a cheaper alternative
for high performance batteries. This was apparent with their launch of the new Rayovac
Maximum which was priced 20% lower than its main competitors.

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