Read the Case Study and Answer the following questions
‘Gillette Targets Emerging Markets'
As it entered the twenty-first century, Gillette faced a difficult choice. Should it continue
targeting emerging markets or not? Its strategy to move aggressively into markets in the
developing world and the former Soviet bloc had been hailed as a success only a few years
before. Recent poor earnings, however, had management considering whether this choice had
been a wise one.
The Boston-based firm was founded in 1895 and is still best known for its original products,
razors and razor blades. By the end of the twentieth century, Gillette had grown into a global
corporation that marketed its products in 200 countries and employed 44,000 people
worldwide. About 1.2 billion people use Gillette products every day. Its sales are about
equally distributed among the United States (30 percent), Western Europe (35 percent), and
the rest of the world (35 percent).
As markets matured in developing countries, Gillette sought growth through product
diversification, moving into lines such as home permanents, disposable lighters, ballpoint
pens, and batteries. In the mid-1990s, Gillette targeted several key emerging markets for
growth. Among them were Russia, China, India and Poland. Russia was already a success
story. Gillette had formed a Russian joint venture in St. Petersburg and within 3 years Russia
had become Gillette's third-largest blade market.
Gillette's move into the Czech Republic had prospered as well and in 1995 Gillette bought
Astra, a local; privately owned razor blade company. Astra gave Gillette expanded brandpresence in the Czech market. Astra's relatively strong position in export markets in EastEurope, Africa and Southeast Asia proved a boon to Gillette in those markets as well. Just asin other markets in the developing world, 70 percent of East European blade consumers usedthe older, lower tech double-edge blade.
In more developed markets, consumers appreciated product innovation and the shavingmarket had moved to more high tech systems such as Gillette Sensor. Then disaster struck. Afinancial crisis that began in Thailand quickly spread across Asia. Many wary investorsresponded by pulling money out of other emerging markets as well depressing economiesacross the globe. Bad economies meant slower sales for Gillette, especially in Asia, Russiaand Latin America. In Russia, wholesalers could not afford to buy Gillette products.
Consequently, these products disappeared from retail stores and Gillette's Russian salesplummeted 80 percent in a single month.
Gillette found it could not meet its projected annual profit growth of 15-20 percent. The priceof Gillette shares tumbled 36 percent in 6 months. To save money, Gillette planned to close14 factories and layoff 10 percent of its workforce. Despite its recent bad experience indeveloping countries and in the former Soviet bloc, Gillette was still moving ahead with plantexpansion plans in Russia and Argentina that would total $64 million. Some even suggestedthat this was a good time to expand in the emerging markets by buying up smallercompetitors that had been hurt even worse by the crises. Meanwhile, back in the developedworld, another large global consumer products firm, Unilever, announced that it would beentering the razor market.
Go through the above case study carefully and answer the following Questions:
1. Why do companies such as Gillette target emerging markets? Do you agree with thisstrategy?
2. What are the dangers to Gillette on targeting emerging markets?
3. What would be the appropriate marketing strategy that you would suggest to Gillette?
4. Why would local, privately owned companies like Astra want to sell out to companieslike Gillette?
Why smaller competitors are attractive to be targeted by multinational firms?
5. What would be the advantages and disadvantages, short term and long-termimplications of the marketing strategy that you had suggested in the question 3 abovefor a company such as Gillette? Explain your answer with proper justification.
INTRODUCTION The case “Gillette Targets Emerging Market” discusses about the Gillette’s dilemma of whether it should remain bullish on emerging markets. Gillette is a Boston based firm, which was founded in the year 1895 and is known for its razors and blades. Gillette became a global corporation by marketing its product in 200 countries by the twentieth century. Majority of its sales comes from United States (30 percent). As markets matured in developed countries it started entering the emerging countries and diversifying its product portfolio. By mid-1990’s Gillette had entered India, China and Russia.
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