Gillette Indonesia Case Solution

1. What factors go into deciding the demand for blades in Indonesia? How can demand be increased?

The demand for blades in Indonesia is primarily determined by the awareness levels of the adult population about the importance of shaving. The more educated the population, the higher the chances of them wanting to groom and look more professional. The demand for blades is also determined by the number of people entering the workforce each year. This is because working professionals can be more easily targeted to look well-groomed by shaving with blades.

Another important factor in determining demand in Indonesia is by future projections based on previous years’ demand. Hence, demand forecasts are used by the sales and marketing planners at Gillette.

The demand can be increased by creating awareness about the basics of shaving. As research has shown that a large segment of Indonesian adults either does not shave or shape with other objects such as knives, awareness levels are low about the importance of shaving with blades. The dynamics of shaving are different; for example, in United States and Indonesia. Hence, Gillette needs to get down creating basic awareness in Indonesia.

2. What is the Customer Lifetime Value of a Sensor customer?

Sensor falls under the System Blades category of Gillette in Indonesia and is a sophisticated shaving system. The Customer Lifetime Value, in terms of profitability, is likely to increase in Indonesia with each passing year. This is because of rising income levels in the country, a greater population that shops in supermarkets, and awareness about improved shaving systems. Therefore, the Customer Lifetime Value of a Sensor customer can be said to hover around $10 million to $15 million in the next two to three years.

Although the current usage of Sensor in the portfolio of Gillette products in Indonesia is small, higher margins and higher expected usage in the next few years would tend to improve the Customer Lifetime value. The sales revenue earned by the Sensor in 1995 was $5.6 million which is expected to jump to $10.4 million in the year 1996. Based on this sales revenue projection, the Customer Lifetime Value of a Sensor customer has been estimated. Figures depict that Sensor is amongst the fastest developing shaving systems for the Indonesian population.

3. How is the Gillette Brand doing in Indonesia?

Gillette brand is currently one of the leading brands in shaving systems in Indonesia. Only two or three important local and foreign players come anywhere close to Gillette’s performance in Indonesia. The performance of Gillette brand in Indonesia has been successful primarily due to focus on creating awareness and promoting double-edge blades. Gillette has successfully shifted consumer preferences to shaving with double-edge blades, as opposed to their previous means of shaving, some of which did not even involve a blade. Gillette is the leading brand in double-edge blades sales in Indonesia and more successful due to its basic shaving systems.

Given the demographics of a vast country like Indonesia, it is important to note that the success of Gillette brand has come mainly from the urban centers, including Jakarta, Bali, and Surabaya. The Gillette brand has not been able to totally penetrate into rural Indonesia, which forms the major geographical part and hosts a large population. Therefore, this is an area of improvement for Gillette which requires close co-ordination with distributors in order to penetrate into this market of small retail and mom-and-pop stores.

4. What Brand Strategies do you recommend to increase the demand for Gillette blades?

The biggest advantage that Gillette has sought in Indonesia is through its established name of ‘Gillette’ which is synonymous to high quality in many parts of the world. Hence, any strategy to increase the demand for Gillette blades in Indonesia has to hover around the company’s powerful brand name. The main brand strategy to promote blades should be that the double-edge blades are produced in-house in Indonesia in some state-of-the-art plants. Strict quality checks and assurances are made to produce the best performing double-edge blades in facilities that Gillette has acquired in Indonesia.

Moreover, branding at retail stores and supermarkets has now become crucial for the success of any shaving equipment in Indonesia. Due to more competition coming in over the next few years, it will be important to target the customer at point-of-sales. This would mean that Gillette should have special dedicated kiosks where it can sell its all categories of blades and razors, in all stock keeping units and varieties. Although intense competition for shelf space is expected, the powerful brand name is likely to keep Gillette in the lead.

5. Did Gillette get the first-mover advantage? Have they capitalized on it?

Yes, Gillette got the first-mover advantage in Indonesia by focusing on doubled-edge blades. So far, Gillette has capitalized on the advantage, and this is indicated by the large number of sales in the country for double-edge blades. Gillette has been the pioneer for double-edge blades in Indonesia and been able to convince the Indonesians to shave with double-edge blade and a razor. Currently, Gillette faces competition from a Chinese brand and a local firm who are into shaving products. Bic has been a reasonably sharp competitor for Gillette in disposables category. However, since Gillette launched an extensive sales and distribution network, they have performed much better than competing firms.