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Case Learning
How the worlds largest FMCG company P&G gained consumer insights and identified consumer specific needs in EM through ethnographic research How were these insights leveraged to develop a safe, easy to use and affordable India specific razor using reverse innovation How was this Indo-vation successfully marketed
Global
P&G
Founded 1837, FY 2013 $84bn, 4.8bn daily consumers Operations 70 countries, marketing 180 countries Worlds biggest advertiser, Portfolio- 25 billion$ brands Gillette M&A 2005 $57bn India 1988- household, beauty, grooming, health care 650mn daily consumers
Gillette India Ltd, Procter & Gamble Hygiene & HC Ltd, Procter
& Gamble Home Products Ltd (Unlisted)
Gillette M&A
Synergy- P&G- focus on women, Gillette- focus on men Same channels, reach, customer connect- control, cost Ability to command premium, profitability, captive pricing
Gillette India
1984- Indian Shaving Products Ltd- Poddar Group + Gillette(24%) 1991 Gillette 51% share, allowed to use "Gillette" name 2005 Gillette M&A by P&G for $ 57bn 2013 Gillette India sales Rs 1500 cr
FY12
205
16.5
91
44.5
44
21.5
52
25.3
17
8.7
12
6.1
Costs of goods sold has increased on account of currency devaluation and changing product mix Gillette Guard launch, increased spending on Oral Care behind competitive promotions, increased spending on Duracell Accounting reclassification from Advertisement and Promotion to Sales Higher contract manufacturing set up expenses for upcoming initiatives, Increased freight expenses and devaluation of currency
147.3
118.4 98.9 74.4 81.3
s
Oral Care Oral Care
FY08
FY09
FY10
FY11
FY12
FY13
48.0 48.0
5.4 5.4
5.9 5.9
6.9 6.9
FY08
FY09
FY10
FY11
FY12
FY13
FY08 FY08 FY09 FY09 FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13
FY08 FY08
FY09 FY09
FY10 FY10
FY11 FY11
FY12 FY12
FY13
Segment Sales $mn, 1$= Rs 60, Source- P&G website and Annual Reports
Oral Care
Toothbrush + Toothpaste Rs 7800cr @13%, niches, penetration
Oral Care Toothbrush Portfolio50%sales Growth in 23% contribution to GIL
Oral Care Toothbrush Portfolio- 50% Growth in (1) Market Share Market Share(1)
Mid Tier: < Rs. 20
wth in
Oral-B Pro-Health
Super Premium Tier: > Rs. 45
Pro-Health PH Clinical Power
Oral-B 20% of GIL Brush Sales (FY13) 20% of GIL Brush Sales (FY13) Extra Fresh
35Gms -15 INR, 80 Gms -36 INR
Entered Sensitive toothbrush segment with launch of All-Rounder Sensitive Brush Brush Entered Sensitive toothbrush segment with launch of All-Rounder Sensitive Strengthened Super Premium portfolio with launch of Pro-Health Clinical Clinical Strengthened Super Premium portfolio with launch of Pro-Health Plans to build scalescale in the Oral by playing across price points Plans to build in theCare Oralsegment Care segment by playing across price points Strong dentist endorsement
Source: Company filings & website (1) Over the last 5 years
Oral-B Healthy 32
40Gms - 15 INR, 80 Gms 35 INR
15
15
Personal Power
Batteries India Market size- $160mn
Personal Power Converting the Category High growth potential- toys, cameras, games through Superiority
AA AAA Ultra Specialty
Mens Grooming
India Rs 3800 cr @22%, Gillette Rs 1500 crores, 5.5 billion units 72% GIL contribution, 51% NMS Pre shave (Blades, Razors, brush, gel, foam)- national leader Post shave (after shave, deo, moisturiser) Strong brand recall, strong growth Beauty majors shifting to men- Garnier, Nivea, Emami, Olay, ITC
Men's Shaving
Segmentation
Premium
Mass Premium
Value
Fusion Power Fusion Mach3 Sensor Excel Vector Guard Presto
Razor Rs 99 Blade Rs 79
Razor Rs 39 Blade Rs 16
Razor Rs 19 Blade Rs 7
Razor Rs 18
GIL sales 15% GIL sales 51% GIL sales Blades &34% RazorsPresent and Innovating Across the Spectrum
de portfolio of pre & post shave products lso has a presence in the female blades & razors market in India
Razors
Brush
Blades , Cartridges
Brand Architecture
Corporate Brand Endorsed Brands
Razors
Brush
Blades , Cartridges
NPL
2010
2002 1999
2011
1996
1993
1987
Presto
NPL 1993
Volumes
Rs 18 + blade free Refills @ Rs 5 for 5 shaves High ad and promotion spends
Vector XP
2002- NPL Indians using double-edged razors Insights- thick, long hair, shave less frequently, Vector- plastic push bar, slide down to unclog Testing- Indian students in US- India trip costly Reaction- Wow that's a big improvement Result- Vector flopped- clogging- still water
2009 Pre-Guard MS
Brand Vector MS % Company 13 Company MS %
Mach3
Wilkinson Others Super Max Topaz Laser
9
8 7 15 10 Super Max 15
P&G
37
16
Euromonitor
Gillette Guard
Breakthrough shaving system
Objectives
Understand EM consumers
Need gaps Preferences Role that grooming plays in their life
NPD
Design, manufacture and deliver a unique, affordable and sustainable model for safe razors for EM
Market immersion
2008- Multi-functional US innovation team 20 engineers, developers- in India for 3 weeks Ethnographic research
Observe daily routines- 300 rural home visits
Experience life- 3,000 hours with 1,000 consumers, shop along GDPI- aspirations, why they shave, how often
I had never seen people shaving like that A Carvalho, VP, Gillete
Shaving insights
Insights- small houses, power cuts, common bathrooms Indian male shaver price-sensitive
NPD
Safety
NPL 2010
Co-created, meaningful features, impactful Plugged key need gaps Consumer Insights
74% felt Gillette Guard provides fewer nicks and cuts
75% felt safer using Gillette Guard than double edge razors
80% felt Gillette Guard offers an affordable alternative
N3M No. 1 razor in India, N8M 11 million tried Gillette Guard N18m 50% razors sold in India, N36m 66% razors sold in India
Gillette Guard
Swivel head Comb Guard Easy rinse blade
Textured grip
Hang hole
Enlarged lubrastrip
Place
22 Depots 3 Distribution Centers Gillette 20 lakh retailers (P&G 55 lakh) Guard fastest to reach 9.5 lakh stores
Pricing
Penetrative pricing strategy
Re 1/ shave
Promotion
IMC
QFY11
ention by Global R&D for the Indian value tier consumer product drawing new consumers h to t e Gillettes Systems regimen y impactful trial and awareness program in rural India ease in Cartridge sales volume
Celebrity endorsements
Campaigns
data
13
Celebrity Endorsements & Awards Guard is th Gillette 1.9mm distribution of 9 campaigns ever share bui 85 + Awards for Shave
Product India Movement (Gillette) including 8 Lions at Cannes. Only Brand to win Black Lion for effectiveness in Asia (11-12) Oral-B 1.8mm Duracell 0.12mm
Grown di
Distribut
Bhubane
Mental map
Razor Easy to use Gillette
Available
Safe
Affordable
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13
Guard Cartridge Gillette Guard Razor
VFM International
12
STPD
Rural men, Urban value conscious men Men who seek an affordable , and safe shaving experience
12
4QFY12
VFM, convenience
Guard Cartridge
FY11
1QFY12
Target segment
2QFY12 3QFY12
4QFY12
1QFY13 2QFY13
al R&D for the Indian value tier consumer Consumer behaviour Price sensitive, ing new consumers h to t e Gillettes Systems regimen al and awareness program in rural India ge sales volume
Point of parity
p 2011
Point of difference
Reason to believe
PoP/ PoD
POP
Razor Single Blade
POD
Safe Convenient
Affordable
Made for India
Desirable- Offers safety, ease of use, economy Deliverable- Gillette dominance and credibility
Brand Personality
Competent
4QFY12 1QFY13 2QFY13
Gillette Guard Razor
Sincere Reliable
Y12
e Guard Cartridge
High performance
3QFY13
4QFY13
n value tier consumer Value h to t e Gillettes Systems regimen ogram in rural India
Safe shave
13
EmotionalSafe
EconomicRe 1 / shave
Performance
QFY12
1QFY13 2QFY13
3QFY13
4QFY13
QFY12
13
4Ps
Place
20 lakh retailers Kirana, modern trade Safe, easy to use razor Made for India
Price
4QFY12
Y12
e Guard Cartridge
Penetrative Affordable
1QFY13 2QFY13
3QFY13
4QFY13
Promotion
IMC, Celebrity Consumer Touch Points
Safe
Easy to use
Affordable
Gillette customers are very loyal- 100% Customers demand specific Gillette brands- 86% Customers willingly pay premium for Gillette brands-100% Gillette customers wait if product is not available- 86%
Impact 2013
Gillette Guard preferred 6:1 v double-edge razors Gillette Guard- 2 out of 3 razors sold in India Gillette 50% NMS (37% in 2007) Matched the model to the market HBR Safe and inexpensive shaving option for 500 million Indians
References
P&G Innovates on Razor-Thin Margins, Vijay Govindarajan, HBR Blog, April 16, 2012 http://blogs.hbr.org/2012/04/how-pg-innovates-on-razor-thin/ Gillette Guard http://news.pg.com/sites/pg.newshq.businesswire.com/files/image/image/Gillette _Guard.jpg Cheap razor made after P&G watches Indians shave Business Today 6Oct13 http://indiatoday.intoday.in/story/cheap-razor-gillette-guard-procter-&-gamblealberto-carvalho-indian-shave/1/313382.html How Indian men pushed Gillette to do things differently, AP, October 06, 2013 Gillette Guard www.gilletteguard.com Gillette Guard, 3 October 2013 http://www.dailymail.co.uk/news/article2443191/Gillette-spent-fortune-Indian-razor-forgetting-countrys-runningwater.html Gillette launches Gillette Guard at Re 1, Business Standard, October 18, 2010 Gillette Guard P&G 2011 Annual Report Cheap razor made after P&G watches Indians shave, Times of India, AP | Oct 6, 2013, 12.10PM IST