Indian Institute of Management, Kozhikode Executive Post Graduate Program 2011-13 Marketing Management

By, Prof. Joffi Thomas,

Case Analysis Note on, Gillette Indonesia

By, Manish Kumar Carpenter EPGP-04B-047 & Gibi George EPGP-04B-028 EPGP-04 Section B

Marketing Management Case Analysis Note on, Gillette Indonesia By, Manish Kumar Carpenter EPGP-04B-047 & Gibi George - EPGP-04B-028, IIMK EPGP-04 Section B Page 1

I. Case Summary :
Gillette Indonesia Company founded in 1901 in Boston was the world leader in blades and razors and in nine other consumer product categories. Gillette Manufacturing operations were conducted at 50 facilities in 24 countries. Gillette divided their world territory as, North America, Western Europe & International Group. International Group comprises three geographical divisions; Latin America, Africa and Asia Pacific. 12 Countries comes under Gillette Asia Pacific Group. Chester Allan is the Gillette Country Manager of Indonesia reporting to Rigoberto Effio Business Director sits at Singapore. Allan Plan projected 19% increase in sales in Indonesia in 1996, which seemed reasonable given a 17% increase in 1995. Wherein Effio believed that a 25% - 30% increase in blades sales could be achieved in Indonesia in 1996. Indonesia having population of 196 million is divided into 15000 islands. 60% of the population lives in five major urban cities of Indonesia against 7% land and 75% of GDP. Average standard of living in these cities is higher than the rest of the Indonesia. Major development and investment is coming in these five countries. Gillette contributes to 48% of the Market Share of Indonesia of the Shaving products in Indonesia by 1995 and trying to capture 50% of the market share by 1996. Gillette did the Market research and observed the shaving practices of Indonesia and developed the shaving incidences along with the beard growth analysis against Latino. Gillette entered Indonesia in 1971 with manufacturing plant near Jakarta, 60% in-house manufacturing and rest importing. Gillette research team working and bringing investment to improve the operational efficiencies to achieve the desired market and economics of scale subject to the indigenous demand and export. Gillette having four competitive product lines i.e. three types of Double edge blades, Disposables, GII Shaving system, Counters, & Sensor system. Disposables razors Goal II & advances Blue II was low price convenience product and having high Margins. Government of Indonesia policy for the more and more foreign investments brings more western culture, will effect on increase in inflation, increase in buying power, will help Gillette to increase sales of the higher value Double Blade razors in the market at the same time Gillette brand will be sold being more population will move towards the shopping stores. 1995 Gillette sales in Indonesia valued $19.6 million, Gillette Indonesia Management projected that this value increased $27.6 million by 1996. Gillette using all the marketing techniques to sales their product to achieve the targets by creating the demands looking to the nation growth, lacking in to the sales and distribution patterns as Indonesia, direct sales and distributions is directly into the hands of the local public / government. This is affecting the face value of the product during the marketing due to the weak communications. Gillette sales team is educating the distributors and their sales persons along with the operational cycle analysis so as to reduce the expenses and increase the sales commission in-turn increased sales.

Marketing Management Case Analysis Note on, Gillette Indonesia By, Manish Kumar Carpenter EPGP-04B-047 & Gibi George - EPGP-04B-028, IIMK EPGP-04 Section B Page 2

II. What factors determine the demand for blades? How can demand be increased? Answer: The following factors determine the demand for the blades: 1. Urbanization. 2. Inflow of the western culture. In 1995 survey of the urban men over 18 years indicated 80% shaved. 3. Western trendsetters are the teen age groups work force. 4. Increased buying capacity will support to afford the luxury. 5. Beard growth rate in the particular region. 6. Increase in GDP by 7%. 7. Foreign direct Investment. 8. Better distribution network. 9. Improved marketing communication face value. 10. New market development. 11. Customer Migration on Value added products. III. How is Gillette doing in Indonesia? Has Gillette leveraged its first mover advantage? Answers: Gillette having 48% market share in Indonesia with intact gross margins of 46%, and Profits @ 20%. IV. How should Gillette accelerate the development of blade market in Indonesia? Answers: By following ways: 1. By improving the operational efficiencies. 2. By improving sales and distribution channel and educating the sales and distributors including their sales personals. 3. By improving the marketing face value improvement in the communications skills. 4. By Targeting the Middle growing population for the sales of product with high margin and low cost, get the brand sales and increased economics of scales. V. Refer Case Exhibit 3 & 4. Prepare a 1996 income statement projection for Gillette Indonesia similar to the Exhibits. An excel template with two worksheets for making the 1996 is projection is uploaded in the Black board for your perusal. Answer: Refer Attachment Excel Sheet.

Marketing Management Case Analysis Note on, Gillette Indonesia By, Manish Kumar Carpenter EPGP-04B-047 & Gibi George - EPGP-04B-028, IIMK EPGP-04 Section B Page 3