Gillette Christy Katopodis Roberto Asaro Joe Carpinone.
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Transcript of Gillette Christy Katopodis Roberto Asaro Joe Carpinone.
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GilletteGilletteChristy KatopodisChristy Katopodis
Roberto AsaroRoberto Asaro
Joe CarpinoneJoe Carpinone
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IntroductionIntroduction• Headquarters in Boston, Mass.• Founded in 1901, by King Gillette.• World leader in male grooming
products.• World leader in alkaline batteries.• Top seller of toothbrushes and oral
care appliances.
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Recent NewsRecent News• Proctor & Gamble (P&G) acquired
Gillette ($57 billion in stock).• Combined market capitalization of
about $185 billion.• Better distribution channels, keep
competitors away, and leverage with Wal-Mart.
• Gillette strong marketing tactics for men.
• P&G strong marketing tactics for women.
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Key FinancialsKey FinancialsYR
Rev ($mil)
Rev
Growth
N.I.
($mil)
N.I.
Growth Margin
Dec-04 $10,477 13.24% $1,691 22.09% 16.10%
Dec-03 $9,252 9.45% $1,385 13.9% 15.00%
Dec-02 $8,453 -5.67% $1,216 33.63% 14.40%
Dec-01 $8,961 -3.59% $910 132.1% 10.20%
Dec-99 $9,897 -6.08% $392 -68.9% 4.20%
Dec-98 $10,056 -1.58% $1,260 16.56% 12.70%
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Gillette Revenues
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Rev
enu
e ($
mil.
)
Revenue($mil.)
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$0.00
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
$1,400.00
$1,600.00
$1,800.00
Net
Inco
me(
$ m
il)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Gillette Net Income
Net Income($ mil.)
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2004 Year End Financials2004 Year End Financials
Debt Ratio 75.50%
Cash ($ mil.) $219.00
Current Ratio 0.97
Long-Term Debt ($. mil) $2,142.00
Shares Outstanding 990,000,000
Dividend Yield 1.50%
Market Cap ($ mil.) 44,332.00
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SWOT SWOT ANALYSISANALYSIS
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Internal: Strengths/WeaknessInternal: Strengths/Weakness
• Product: Top quality, always releasing new and innovative products. Lack of focus on 1 particular brand.
• Place: Geographic diversity, strong position in many countries. Mediocre position in fastest growing markets.
• Promotion: Strategic highly successful promotions, Celebrity promoters – David Beckham.
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Internal: Strengths/WeaknessInternal: Strengths/Weakness
• Price: Competitive with rivals, while maintaining market share.
Product Retail $
Schick Quatr. $7.99
Blade Refill $7.99
Gillette Fusion $9.99
Blade Refill $12.99
Schick Power $11.83
Blade Refill $11.49
Fusion Power $11.23
Blade Refill $14.29
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Internal: Strengths/WeaknessInternal: Strengths/Weakness
• Manufacturing: High capacity, major realignment to reduce costs in 2003. Increase cost of materials, uncertainty in oil prices.
• Personnel: Highly Skilled, innovative. Job cuts are always looming, trend over past few years.
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Gillette: # of Employees
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
# o
f E
mp
loye
es
Employees
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External: External: Opportunities/ThreatsOpportunities/Threats
• Economic: Economies of scale, lower cost to produce and distribute. Threat of currency fluctuations.
• Competition: Barriers to entry, very few competitors in each segment. Large retailers like Wal-Mart retails its own brand of batteries at a cheaper price.
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External: External: Opportunities/ThreatsOpportunities/Threats
• Industry/Market Structure: Large percentage of market share for its core product (70%). Difficult to exceed this market share, little room for growth.
• Legal/Regulatory: Patents protect brands in this industry. High sunk costs to protect brands and finance legal battles.
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Market Market Product Product StrategyStrategy
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Market PenetrationMarket Penetration
•$750 million dollars in R&D for Mach 3.
•$200 million for advertising worldwide in marketing year 1.
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Market DevelopmentMarket Development
• Developed markets rapidly.• King Gillette said of his own razor, “There
is no article for individual use so universally known or widely distributed. In my travels, I have found it in the most northern town in Norway and in the heart of the Sahara Dessert.”
• 60% of sales generated outside U.S.• Operates production facilities in 14
countries.
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Product DevelopmentProduct Development
• Sensor Razors• Gillette’s Mach 3 “The best a
man can get.”• Gillette Fusion “Gillette Fusion
offers every man whether clean shaven or with facial hair a better way to shave.”
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DiversificationDiversification
•1996 acquisition of Duracell.
•Oral-B line in April 2004.•2005 P&G merger.
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Porter’s Five Forces Porter’s Five Forces ModelModel
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Supplier PowerSupplier Power• Supplier Concentration: Raw
materials discount.• Importance of Volume to
supplier: Economies of scale.• Cost relative to total purchases
in industry: Purchasing power for raw materials.
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Barriers To EntryBarriers To Entry
•Absolute cost advantage.•Proprietary learning curve.•Capital requirements.•Brand identity.•Switching Costs•Access to distribution.
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Buyer PowerBuyer Power•Bargaining leverage.•Threat of backward integration.•Buyer volume.•Buyer information.•Substitutes available: Yes.•Buyers’ incentives.
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Threat of SubstitutesThreat of Substitutes• Switching costs: Can easily switch
from one brand to the next.
• Buyer inclination to substitute: Moving towards more expensive wet shave systems, with higher prices could be potential for a substitute.
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Degree Of RivalryDegree Of Rivalry•Exit barriers.•Industry concentration.•Fixed costs/Value added.•Product differences.•Switching costs.•Brand identity.•Diversity of rivals.
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ConclusionConclusion
•Bold Advertising Campaigns
•Maintain rigorous R&D operations.
•Expand existing product lines.
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QUESTIONSQUESTIONS