As a man with young children, they do not like my “spikes” when I choose not to shave. I should be thankful that Gillette has invested $750 million in research for the Mach 3 razor, resulting in 50 patents. They followed this up with the Fusion razor, which has 70 patents.
Gillette’s market share of the razor industry in 2011 was a dominant 66%, followed by Schick with 12.5%. A couple years later, they are struggling:
· In Q4 2013, sales fell 15%, as the prostate cancer awareness event “Movember” spread from Australia to other parts of the world, resulting in at least 4 million men not shaving;
· Dollar Shave Club has 300,000 users paying $9/month…and there is Harry’s too!
Gillette responded by investing in more R&D for the “power ball” razor; whereas, their competitors have created a sales channel to eliminate trips to the store to purchase a razor.
Contrast this with BIC, a “pen company.” Attempting to innovate, they developed four-color pens, erasable pens, and pens with logos. Their CEO, Baron Bich, then shifted the mental outlook of his people, as well as his manufacturing machines and sales distribution channels, to be a “disposable plastic item company.” They expanded revenues and profits by offering razors, lighters, etc.!
Are your organization’s R&D investments meeting customer needs?
