Review then answer questions that follow about International Marketing: CASE 3-7

Question

Review then answer questions that follow about International Marketing: CASE 3-7 Gillette: The 11-Cent Razor, India, and Reverse Innovation

1. Describe the razor-and-blades business model. 2. How and why do US razor consumers differ from razor consumers in India? 3. How did Gillette’s product development process differ for the Gillette Guard when compared to its previous product development processes? 4. Should Gillette release the Gillette Guard in the US? Should it release the product in other low income countries besides India?

Explanation / Answer

1. A razor blade business model is where a company sells a product at extremely low prices, sometimes even incurring loss on the product, to push the sale of its complementary product or consumable product later on. For instance, Gillette sells hand-held razors at low cost, while making profits through the sale of high margin consumable product, i.e. the razor blade in this case.

2. Indian razor consumers are price conscious, as they are prone to using a cheap two edged blade razor model. Whereas, the American consumers prefer convenience and features over price as they prefer expensive Gillette Fusion Pro guide, as it provides a closer shave, over other lower priced options in the market.

3. The product development process of Gillette Guard was different from their previous product development processes, as earlier Gillette used to develop a product that is an improvement over the older products Gillette and other brands are offering in the market. For instance, Gillette Fusion Pro Guide was Gillette’s most technologically advanced razor. Whereas, in case of Gillette Guard, the company first studied the consumer, that is the Indian male market, to understand their needs and limitations, then developed a product that meets their needs, while making it accessible keeping in mind he limitations of the target consumer. Gillette Guard was developed to provide a cut free, and hassle free shave to Indian men, while keeping in mind, the affordability of the product, as the Indian consumer is highly price sensitive.

4. Gillette Guard can be released in the US market, as it will help Gillette capture the low cost razor segment of the market. As far as the fear of Gillette Guard cannibalizing Fusion Pro’s market is concerned, Gillette Guard is not as technology advanced razor as the Fusion Pro, hence, the consumers using fusion pro, wont switch to the low cost Gillette Guard, as they will not get the same shaving experience with it. The American customer choosing Fusin Pro is buying it for the features it offers, and there are other low cost players in the market, which the customer would have bought if he valued price over features. Hence, with Gillette Guard, Gillette will be able to enter into another segment in the American market.

Gillette Guard should be released in other low income countries, after ensuring that the concerned market does not already have any similar or better product in the price range that Gillette offers. If Gillette Guard is better than the existing razors in the low income country being considered, then Gillette should release Guard there.

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