Gillette in Indonesia
Gillette in Indonesia
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Gillette in Indonesia
Gillette was a company that was evolved in Boston to provide hygienic resources to consumers such as razors, writing instruments, correction products, and electronic razors among other products. This company had a vision to expand into global markets and create a company management to “think global, act global.” How does Gillette create a demand for razors in a country like Indonesia?
Indonesia is a country that is expected to maintain the annual GDP growth rate at 6.2%. It is also expected that the workforce would experience a growth of two million Indonesians. This means that more of the Indonesian population will have more disposable income and could be convinced to try new products such as razors for shaving. The standard of living in Java and Bali was much higher which is more feasible to target these consumers due to the greater disposable income.
Greater demand for razors will be equivalent to the improvement of the educational system and more exposure to the Western style of living. As a global company, the launch of a new product is done through the bigger wealthier cities. This will create a trend within the Indonesian population and hopefully will become popular within the society/population.
This case clearly stated that shaving was still underdeveloped in Indonesia but was a trend that was increasing. It is predicted that in Indonesia, 80% of men over 18 shaved at least 5.5 times per month. The effect of Western grooming practices has created an increase in awareness, which in turn creates an increase in demand for such products. This exposure is caused by the extensive amount of “foreign media and increase in multinational companies and their overseas personnel.” Due to the features of the Asian man, the demand for razors is substantially lower than the demand for these products in the West.
It is clear that the most popular product among the Indonesian market is the double-edge blade razor and cartridges. These products accounted for 60% of the value of products manufactured. These double-edge blade razors were substantially higher priced than the traditional disposable razor. The Indonesian market has potential for both types of razors. The double-edge razor should be targeted to the higher income population like the ones in Java and Jakarta. The disposable razors should be targeted to the lower income population that shop at the moms and pops and should be advertised through the radio and with entry forms inside that seem to be popular in Indonesia. The higher income population reflected supermarket sales and this effort should be enforced. The brand awareness is there and it accounts for 97% and the task is to change this awareness to actual purchase. It is also apparent that the population in Indonesia does not shave with foams or soaps. Harder persuasion is needed to change the habit of the users to shave with foams instead of shaving dry.
How is Gillette doing in Indonesia? Has Gillette enjoyed a first-mover advantage?
Overall Gillette has a stable business with potential growth in Indonesia. In 1995 there were sales of $6.8 million and blades and razors accounted for $2.6 billion, which reflects 40%. “The company had consistently maintained profitable growth over the previous five years…Gillette’s mission was to achieve worldwide leadership in its core product categories.”
Gillette as a whole in 1995 produced 150 million blades and exported 46 million, which means that the rest of the 104 million were to be used in the country’s production/sales. As of 1993, Gillette had a 28% of the blade market by volume and by 1995 Gillette’s unit share had grown to 48% and was expected to grow in 1996 to 50%.
As for competition, Gillette with imported, low-end, double-edge blades from Eastern Europe and China. Even though Gillette’s price was four times higher than the competing, market share shows that this does not make a huge difference when it comes to purchase decision.
Gillette penetrated the Indonesian market in 1971 as a majority ownership with a local company to form a joint venture. The plant was built in 1972 but no apparent facts show that the razor industry was already established. Since there are no signs of competitors when Gillette started they had a first mover advantage and this gives them a benefit to establish their name and create loyalty.
How should Gillette accelerate the development of the blade market in Indonesia?
Gillette has a potential for further growth in the Indonesian market with more centralized target marketing. Gillette needs to enhance their marketing research to gain knowledge into what the Indonesian consumer wants and needs. They need to gain knowledge into what habits they have when purchasing and where they should target what products.
For example, since they know that supermarkets are more prevalent in the higher income population then advertising towards the brand in these specified supermarkets will possibly increase sales. Since the entry forms inside the products works good for this niche then increase the use of this promotional method. It is apparent that coupons are not successful in Indonesia therefore banishing this promotional method will not hurt the company and costs could be reevaluated towards other marketing tools.
As for the higher income consumer POP could be used (taking into consideration that they already shave) to persuade the consumer to change to a more sophisticated product and demonstrate the advantages of the enhanced razor. For the lower income consumers more efforts are needed to educate the consumer of what shaving is and the benefits of shaving. Since the Western is a huge influence in consumer decisions and trends, Western characters could be used in print media and radio since their channel of marketing consist of these.
I believe that the use of worldwide advertisement could be an advantage as well as a disadvantage. Cultures are very different and therefore what is accepted in the west might not be accepted in the east (waving good bye with your left hand). Advertisements should be targeted to the Indonesian market with no offensive gestures that might hurt the company image. In contrast, the Western ideal/image is very persuasive. If the west does it why not try it. Westernalization and globalization is a huge trend in today’s society and many cultures have been adapting and becoming more western. Therefore, the use of western/worldwide advertisements could be a positive and reinforcement to consumers to purchase the product. Accessibility to the product is also important to the consumer. Having accessible wherever one might go gives you the advantage of purchasing the product when needed or desired.
Gillette has a great growth potential but more research is needed in order for this company to achieve their expected revenues and market share. This global company has showed immense success and it will continue if their efforts are geared to better marketing research and more effective targeting.
Disclaimer
The above essay merely states opinions by a college student. However, if you feel strong about responding to the opinions stated, please write to articles@directorym.com and express your concerns.
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