- Published: September 20, 2022
- Updated: September 20, 2022
- University / College: University of Guelph
- Language: English
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Before agreeing on pricing, Gillette Company put the following factors into considerations: it checks on the fixed and variable costs, competition from other institutions, the objectives of the company, the proposed positioning strategies and the target group and willingness of the customers to pay for the prices set.
The pricing strategies used by the Gillette Company include penetration pricing, skimming pricing, competition pricing, product line pricing, bundle pricing and cost up pricing. In penetration pricing, the Gillette Company places a price that is low so that it can increase its sales and the market share of all the products. After attracting a large base of the customers, Gillette Company therefore increases the prices of the products. In the skimming pricing strategy, the company has adopted measures where it has a tendency to set higher prices and with time, the prices are lowered so that the products reach a wide market.
In competition pricing, Gillette does a research about the prices used by their competitors. After considering the prices of the competitors, the company settles on three decisions: it either lowers its prices to attract more customers; it can also level its prices at the same level with its competitors or else place a higher price to the products with the highest demand and has a higher quality than the rest. Competition pricing is a good base to perform price matching so that they can counter all the competition that is brought on the board by other competitors.
The distribution channel of Gillette Razor covers not only regional market but also international market. The Gillette headquarters are based in Massachusetts in United States. The distribution channel comprises of a combination of its own network and that of a franchisee. For instance, Gillette channel in India is regionally distributed among twenty main cities that Product & Gamble operates with. This distribution network is demonstrated the spoke model. The main hub of this network is Mumbai city. The spokes are the various cities that surround the main city.
Each city comprises of exclusive distributors, acting like managers, and one franchisee distributor. The franchisee distributor had a system comprising of set of employee who are entitled to work for them. The function of these distributors is to manage the fleet costs and provide supply channel to the retailers. The following is an example of the spoke model representing Mumbai hub.
In the distribution channel of Gillette razors consists of four steps. The first step is the Distributor, then area sales manager, sales representatives follows and the final step is the fleet drivers. However, the sales representatives go hand in hand with the fleet drivers to different retailers in various regions and takes order on weekly basis. The credit period therefore covers seven days, that is, if the order is taken, the amount is due to the preceding week is collected. The two sales managers control the two different parts of city they represent, and are in charge of super market and the big markets among others.
Gillette has extensively established promotion campaigns fro its brands in various markets around the world. One of its main markets is the Indian market. The global Gillette ambassadors are such as Thierry Henry, Tiger Woods, Roger Federer and David Beckham, they are globally known as Gillette Champions. The advertisement is aimed to attract the target consumers, the potential consumers, from lower middle and middle class, focusing on attributes and price sensitivity. The adverts are enticed to the customers values, such as those mentioned above, to win the consumer loyalty.
However, for the shaving foam/gel three has been minimum advertisement. Actually, only one famous adverts of Gillette Series Shaving Gel that has been in the advertisement, but has not been so significant. For the shaving products, such as gel, the company has made combine adverts with its razors. The company has identified an opportunity for the shaving cream category. Therefore, the company has undertaken an aggressive promotional campaign for this product.
Gillette is the world leading producer and supplier of several types of razor division in the grooming segment of men. The company produces hi-performing razors, after shaves and both shaving gels and shaving foams. The company has developed a value chain, which ensures that it penetrates to reach a wide market in the entire universe. Gillette products under the shaving gels and foams has been branded as Gillette series and they include the following: foam conditioning, foam deep cleansing, foam pure and sensitive, foam moisturizer, foam sensitive skin, foam lemon, gel sensitive skin and gel ultra comfort.
Gillette differs from other companies since it produces 10 product variants compared to the rest, which produces at most five variants. The company is unique as it first introduced shaving gel before the rest, included aloe Vera and vitamin E ingredients to its gels and foams and introduced pure and sensitive foam that does not have any fragrance. Its brands are also unique in its packaging as the Gillette series have a design that comes with a futuristic theme. The gels also are packaged in tubes with a gloss on top and this makes the gel to appear like metallic cylinders.
The life cycle of Gillette Company is considered to have come from the growth stage and now it has entered the maturity stage. In the maturity stage, all the products of the company compete with all the alternatives from competitors in the market. The prices of the products have reached the lowest point, the placement is now intense and the promotion of its products focuses on competition and repeat purchasing. The maturity stage boosts the future marketing strategy that targets avoiding reaching the decline stage.
The promotion for the Gillette razors comprises of a push cum pull strategy. In the push strategy, the product undergoes a pilot test in Indore where the market research is carried on. The company aims to provide an offer of a 20gram of the shaving cream free if a customer purchases a Gillette Prestol, for a price of Rs 17, and 30gram of Gillette Vector, priced over Rs 50. The selling price of tube is Rs 40 and it has a margin of 25%. Therefore, the company would incur a cost of Rs 12 for the 30grams tube and Rs 8 for the 20-gram tube. Due to the increased sales of the razor is an indication of the consumers’ interest in the cream. This promotional measure is aimed to upgrade the consumers from the regular category to the premium category.
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