Gillette

© INSEAD Blue Ocean Strategy Institute

blue ocean strategy

Noncustomer Exercise

Life in the 1900s


Shaving in the 1900s


Shaving in the 1900s

Obtained with permission from © Roy Export Company Establishment


Who are the existing customers of the industry


• Medium/high‐income




•White‐collar workers




•White‐collar workers

•Barbers



What are the key competing factors of the industry?


• Life‐lasting razors




• Forged blades




• Forged blades

•Size of blade




• Forged blades

•Size of blade

•Price of razor



Who are the noncustomers?


• Occasional shavers




• Low‐income




• Low‐income

•Women



The Three Tiers of Noncustomers

Shaving Market



1st Tier Noncustomers: occasional shavers

Shaving Market



2ndTier Noncustomers:low‐income


Shaving Market



3rdTier Noncustomers: women

2ndTier Noncustomers:low‐income


Shaving Market


Shaving was not yet a common habit


Many people found it a hassle to shave

Shaving was not yet a common habit


In 1900, less than 26 million people lived in metropolitan cities where there were barbershops…


1st Tier: Occasional Shavers

The remaining 66 million lived in

nonmetropolitan territory and could not easily

go to the barbershop


• 40% of total population had low incomes

2nd Tier: Low Income



• 2 million people unemployed




• 2 million people unemployed

• 30 million below the poverty level



• 37 million (49%)

3rd Tier: Women


• 37 million (49%)

• 12 million between 20‐39

3rd Tier: Women


• 37 million (49%)

• 12 million between 20‐39

•Can they realistically go to the barbershop?

3rd Tier: Women


What are the factors that kept them from shaving?


• Price



• Price

•Safety



• Price

•Safety

•Ease of use



• Price

•Safety

•Ease of use

•Maintenance‐free



• Price

•Safety

•Ease of use

•Maintenance‐free

• Fashion and image



Acting on our understanding of noncustomers

Eliminate Raise

Reduce Create

ERRC Grid



Eliminate Raise

Reduce Create

ERRC Grid

Life‐lasting razorsForged blade



Eliminate Raise

Reduce Create

ERRC Grid


Size of bladePrice



Eliminate Raise

Reduce Create

ERRC Grid


Size of bladePrice

Safety Ease of use



Eliminate Raise

Reduce Create

ERRC Grid


Size of bladePrice

Safety Ease of use

Maintenance‐free Fashion & image


Gillette’s Safety Razor


• In 1903 Gillette invented a safety razor with disposable blades

Gillette’s strategic move



•The razor required a small initial investment




•The razor required a small initial investment

•Gillette changed the business model of the industry



FROMFROM TO



FROMFROM

High‐priced razor

TO

Low –priced razor



FROMFROM

High‐priced razor

Forged blade

TO

Low –priced razor

Stamped steel blade



FROMFROM

High‐priced razor

Forged blade

TO

Low –priced razor

Stamped steel blade


Thick and wide blade Narrow and thin blade


FROMFROM

High‐priced razor

Unsafe

Forged blade

TO

Low –priced razor

Safe

Stamped steel blade


Thick and wide blade Narrow and thin blade


FROMFROM TO



FROMFROM

Difficult

TO

Easy



FROMFROM

Difficult

Complex honing and stropping process

TO

Easy

Disposable blade



FROMFROM

Difficult

Unfashionable

Complex honing and stropping process

TO

Easy

Fashionable

Disposable blade



Strategy canvas

High

Low


Strategy canvas

High

Low

Straight Razor


Strategy canvas

High

Low


Straight Razor


Strategy canvas

High

Low


Straight Razor

Eliminate


Strategy canvas

High

Low


Straight Razor

ReduceEliminate


Strategy canvas

High

Low


Straight Razor

Reduce RaiseEliminate


Strategy canvas

High

Low

Create


Straight Razor

Reduce RaiseEliminate


Breaking the value‐cost trade‐off



Life‐lasting razors

Forged blade

Size of blade

Cost savings

Low cost




Forged blade

Size of blade

Cost savings

Low cost

Safety Ease of use

Maintenance‐free

Fashion & image

Differentiation




Forged blade

Size of blade

Cost savings

Low cost

Lowpricing

Safety Ease of use

Maintenance‐free

Fashion & image

Differentiation




Forged blade

Size of blade

Cost savings

Low cost

Lowpricing

Safety Ease of use

Maintenance‐free

Fashion& image

Differentiation

High volumeAttracting the mass




Forged blade

Size of blade

Cost savings

Low costCreate a

blue ocean

Lowpricing

Safety Ease of Use

Maintenance‐free

Fashion& Image


Differentiation




Forged blade

Size of blade

Cost savings

Low costCreate a

blue ocean

High profitable growth

Replacement of blades sales

Lowpricing

Safety Ease of use

Maintenance‐free

Fashion& image

Differentiation



Annual sales,Blades

1903 1905 1907 1909 1911 1913 1915

millions

6

5

4

3

2

1

0


Annual sales,Blades

3m3.4m

6m

1.1m

847,400

14 98,909

1903 1905 1907 1909 1911 1913 1915

millions

6

5

4

3

2

1

0


Annual sales, Razors

450

400

350

300

250

200

150

100

50

0

1903 1905 1907 1909 1911 1913 1915

thousands



450

400

350

300

250

200

150

100

50

0

1903 1905 1907 1909 1911 1913 1915

thousands

266,346

385,806

444,294

397,504

451,861

276,577

51


• In the 1910s, hair removal for women started to become fashionable

Increasing the size of its blue ocean



• Lengths of skirts and dresses reduced




• Lengths of skirts and dresses reduced

•This triggered Gillette to introduce the Milady Décolletée



• During WWI, soldiers needed to be clean‐shaven in order to fit the gas mask properly




• It became imperative for them to shave





•Gillette partnered with the US army, selling 3.5m razors and 32m blades





•Gillette partnered with the US army, selling 3.5m razors and 32m blades

•When they returned home they were heroes. It became fashionable to be clean‐shaven.



Annual sales, Blades

6m

847,4001.1m

3m3.4m

98,90914

17

6

5

4

3

2

1

01903 1905 1907 1909 1911 1913 1915

million


Annual sales, Blades

6m

847,4001.1m

3m3.4m

98,90914

17

6

5

4

3

2

1

01903 1905 1907 1909 1911 1913 1915

million 17m



266,346

385,806

444,294276,577

397,504

451,861

2000

1800

1600

1400

1200

1000

800

600

400

200

50

thousands

1903 1905 1907 1909 1911 1913 1915 1917 1919© INSEAD Blue Ocean Strategy Institute


266,346

385,806

444,294276,577

397,504

451,861

2.3m2000

1800

1600

1400

1200

1000

800

600

400

200

50

thousands

1903 1905 1907 1909 1911 1913 1915 1917 1919© INSEAD Blue Ocean Strategy Institute

• Before 1745, barbers also performed surgery

Shaving Trivia: Origins of the barber pole



•Bloodletting was a popular medical practice




•Bloodletting was a popular medical practice

•The spiraling red and white stripes symbolized blood and bandages



Gillette

Documents

Transcript of Gillette