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Dollar Shave Club Disrupting The Shaving Industry Case Solution
The American based company Dollar Shave Club had been constantly rising in its rank among the shaving products market since its advent in 2011 (Pearson, 2016). The company was born out of humble beginnings in terms of monetary values, but it soon started to attract attention from big capital investors such as Kleiner Perkins and Shasta Ventures. It came as no surprise that mainstream companies, such as P&G with their Gillette products, were strongly pinned down by the rise of DSC sales until eventually it was bought by their competitor Unilever for $1 billion (Mayur, 2021). Dollar Shave Club operates on a Business to Consumer (B2C) model of business. It follows a subscription revenue model. It is the second largest business of shaving products behind Gillette. They have a fairly simple value proposition stating that shaving products come at higher price and poor quality, and DSC fulfills both the criteria of low price and better quality to attract customers. This is how it was able to break Gillette’s market share and continues to do so with its low priced, maintained quality products. The only way to halt DSC’S onslaught from Gillette’s point of view is to embrace better technologies and try to reach economies of scale. Innovations, such as 3-D printing of razors, will help Gillette to make products that are customized to the customer’s needs (Anonymous, 2018). Unique characters like these at an affordable price is what will hand competitive advantage back to Gillette.
Following questions are answered in this case study solution:
Introduction of Dollar Shave Club’s business model
External Market Analysis
Internal Market Analysis
Alternatives and Recommendations
Case Study Questions Answers
The rest of this report will focus on DSC’s external market analysis, internal market analysis and analyze its feasibility in the market of shaving products.
2. External Market Analysis
DSC’s market analysis of potential threats to its sales and potential opportunities in the market were measured by using Porter’s Five Forces, Pestle analysis and Disruptive innovation analysis. Porter’s Five Forces is a tool which is used in order to determine the risks of faced by DSC in its competitive advantages. The top three threats faced by DSC would be competitive rivalry between DSC and various competitors, threats of new entrants in the market and substitute products that customers are now starting to prefer. As for the top three opportunities for DSC, it can work on its brand image and customer loyalty, investing into research and development and reaching economies of scale.
The market for shaving products is considered to be a fragmented industry, with plenty of competitors selling similar products including both big and small firms. The market share is sparsely distributed with DSC having about 8% of the whole market share. DSC is not at par with some of its competitors in terms of brand management, especially compared to Gillette which has worldwide recognition. Moreover, this fierce competition has led to price competition and high fixed and marketing costs for large scale businesses leaves a window of opportunity for smaller firms to charge lower prices and capture market share. This leads to the treat of substitute products. Since there are various companies in the market of shaving products, Gillette and Harry’s products are hard to compete against. Its especially dangerous because their sales lowers DSC’s revenues. Also, due to no barriers to entry stopping any new firms to seek their market share, DSC always has to face tough competition to amp up its sales. From PEST analysis, it can be seen that better economic conditions that come out of political stability has enabled DSC to rise among so many other brands. From social standpoint, consumer surveys and customer behavior has helped the company to design their products according to the needs of the customers which has resulted in more sales with 15-20% yearly sales increase (Pearson, 2016). With technological advancements, DSC has had to look over social media platforms for their marketing campaigns and global internet meant that they could increase sales through e-commerce.
3. Internal Market Analysis
This analysis mainly revolves around DSC’s top 3 strengths and weakness measured using VRIO and core competence analysis. Among the strengths, DSC has a seamless supply chain, possesses product differentiation and cost control. At the same time, DSC needs to work on its brand image, innovation and unemotional affiliation with its customers.
Supply chain - One of the reasons why DSC is so highly cost effective, and has made a name for itself on the basis of being affordable is due to a proficient supply chain. It sources its manufacturing in China and South Korea and using its efficient logistics, is able to transport its products around the globe (Pandey, 2019). This has also enabled them to be one of the key players in the e-commerce business today.
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