HBP Gillette Indonesia Case 1
To: Rigoberto Effio, Business Director, Asia-Pacific Group
From: Chester Allan, Country Manager, Indonesia
Date: October 23, 1995
Subject: Gillette Indonesia 1996 Campaign
Gillette is enjoying a dominant position in the Indonesian razor and blade market, but the rate of growth in the market is not satisfactory. Most of the operations have come from double-edge blades shaving products, accounting for 60% of the manufactured products. Brand awareness is up 97%, so it is not necessary to use additional resources on advertising and promotion. In the Pacific area, costumers still consume Gillette products, even though prices are four-times that of local brand competitors Tatra, Super Nacet and Tiger. Competition from low-end, imported double-edged blades from East Europe and China slowed down the segment of customers who have changed from lower-end ...view middle of the document...
We need to improve our advertising campaigns efforts to focus mostly on this segment. Tapping into the trends of young adults with higher incomes will help us gain market share and sales.
The Indonesian shaving market is still underdeveloped. Forty million Indonesian adult men shave about 5.5 times per month, five times less than in the US. Twenty percent of shaving men in Indonesia used 15 blades per year, compared to the occasional userâ€™s four per year. Forty percent used store-bought blades the majority of the time. Only 4% used foam or lotion, 25% used soap or water, and 12% used water alone, while the rest 58% shaved dry.
The Asian market did not have in 1996 enough wealthy nor sophisticated costumers interested in buying the Sensor shaving system. Redirecting advertising to this new technology will be a long-term investment. Gillette could instead allocate part of the advertising money on it, but mostly they should invest in moving the basic Gillette products. Gillette may also want to expand the women market.
The distribution system is weak. Indonesian regulations forced Gillette managers to focus on a distribution system over which they had little control. A national distributor did not work. Gillette needs to continue working in finding and establishing distributors throughout the country. With more distributors, there will be less communication problems. If problems were to arise, they can be solved on the spot by someone familiar with the relationship and language or dialect of the area. Equally important is to continue educating salespersons and distributors with product benefits, marketing, and methods to successfully demonstrate the high quality Gillette products have over its competitors.
Analyzing the market history and the profitability of different areas, I recommend Gillette to distribute and advertise the double-edge blades (Basic Gillette, Gillette Goal Red, and Gillette Goal Blue) in rural and low-income areas. National and Local advertising through TV and newspaper is recommendable. On the other hand, The Gillette II, Contour and Sensor systems need to be sold in areas of high and middle class income. Some advertising through Internet would be recommended.