Gillette Company's Global Strategy Today  Term Paper
- Length: 31 pages
- Subject: Business
- Type: Term Paper
- Paper: #4294100
Excerpt from Term Paper :
His ideas are not important for their uniqueness (though they are singular), but because of the essential similarities between his conservative business utopia and other versions of collectivism" (Gilbert, p. 12). This biographer reports that King Camp Gillette was born in January 1855, the fifth of seven children, to George Wolcott Gillette and Fanny Camp Gillette, in Fond du Lac, Wisconsin; when King was four years old, the family moved to Chicago, where King attended Skinners School. Following the disastrous Chicago fire, which destroyed much of his father's property as well, King worked with the hardware firm of Seeberger and Breakey. Two years later, he took a comparable job New York; as he later recalled of the time, "From the time I was twenty-one until the fall of 1904 I was a traveling man and sold goods throughout the United States and England, but traveling was not my only vocation for I took out many inventions, some of which had merit and made money for others, but seldom for myself, for I was unfortunately situated not having much time and little money with which to promote my inventions or place them on the market'" (Gilbert, p. 13). All of this traveling naturally resulted in Gillette's being forced to "shave on the run," and given the relatively primitive (and dangerous) nature of the straight razors in use at the time, it is little wonder that men were looking for something safer, and contributed to the development of Gillette's concept about a razor that would not endanger the shaver's life on a bad morning (Gilbert, 1972). Demand for a good razor was also something that he knew was practically universal. According to Gillette's corporate Web site, "In 1926, the year of the Company's 25th anniversary, King C. Gillette wrote of the Company's flagship product, the safety razor, 'There is no other article for individual use so universally known or widely distributed. In my travels, I have found it in the most northern town in Norway and in the heart of the Sahara Desert'" (Gillette at a Glance, 2005 p. 1).
Gillette was also encouraged by friends and supervisors along the way as well. For example, an employer quickly noticed Gillette's mechanical aptitude and on occasion, his gadgets had resulted in commercially profitable inventions; this employer suggested that Gillette should invent "something that would be used and thrown away," so that the customer would have to buy more. This was a timely suggestion since Gillette was already working on honing a permanent, straight-edge razor at the time. As a result, Gillette was inspired to substitute a thin double-edged steel blade placed between two plates and held in place by a T. handle. "Though the proposal was received with skepticism because the blades could not be sharpened," one biographer notes, "the manufactured product was a success from the beginning. According to Gilbert, "With a family history of tinkering and a life spent in travel from one hotel to another -- and in one barber shop after another -- King Gillette became interested in finding a quick and safe way to shave. Most of all, he wished to make a time-saving invention, one which would end the waste that he saw and deplored around him" (p. 14). At the time, Gillette recorded in his journal that, "If the time, money, energy, and brain-power which was wasted in the barber shops of America were applied in direct effort, the Panama Canal would be dug in four hours" (in Gilbert, p. 14). Gillette's idea took several years and some unsuccessful and discouraging efforts to perfect. Finally, with the help of William W. Nickerson of the Massachusetts Institute of Technology, Gillette developed a useful blade and holder. "In 1903 his small Gillette Company of Boston began to produce 'safety razors' and blades. Almost immediately the company found an enormous market, and Gillette, overnight, became wealthy and extraordinarily successful" (Gilbert, p. 15). The first razor sale in 1903 consisted of a small lot of 51 razors and 168 blades; however, just over a year later, by the end of 1904, Gillette's company had produced 90,000 razors and 12,400,000 blades (King Camp Gillette, 2005).
Even corporate management guru Peter F. Drucker points to King Camp Gillette as a shining example of how an individual's leadership style can make or break a company. "For many years," Drucker writes, "the best known American face in the world was that of King Gillette, which graced the wrapper of every Gillette razor blade sold anyplace in the world [see graphic at Appendix B for example]" (Drucker, p. 246). Mary Craig Sinclair (1999) reports that Gillette "was middle-aged when the photograph was taken and his mustache was black" (p. 222). In fact, millions of men all over the world were using a Gillette razor blade every morning. Interestingly, though, Drucker also notes that "King Gillette did not invent the safety razor; dozens of them were patented in the closing decades of the nineteenth century. Until 1860 or 1870, only a very small number of men, the aristocracy and a few professionals and merchants, had to take care of their facial hair, and they could well afford a barber. Then, suddenly, large numbers of men, tradesmen, shopkeepers, clerks, had to look 'respectable'" (Drucker, 1985 p. 246). Not surprisingly, Drucker also reports that there were not very many men - even during the adventuresome days of the late 19th century and early 20th century - who could actually use a straight razor properly or felt comfortable "with so dangerous a tool"; however, being shaved by a professional barber was expensive, and worse, time-consuming.
Consequently, a number of inventors introduced various "do-it-yourself" safety razors; however, these inventors lacked something that Gillette recognized early one: how best to sell such a product to working men. "A visit to the barber cost ten cents and the cheapest safety razor cost five dollars -- an enormous sum in those days when a dollar a day was a good wage (Drucker, 1985 p. 246). In fact, Drucker emphasizes that Gillette's safety razor was actually was no better than some other designs and it was much more expensive to manufacture as well; however, Gillette's approach to marketing his new product did not involve "sales" so much as it did developing a reliable customer base. According to Drucker, "He [Gillette] practically gave it away by pricing it at fifty-five cents retail or twenty cents wholesale, not much more than one-fifth of its manufacturing cost. But he designed it so that it could use only his patented blades. These cost him less than one cent apiece to make: he sold them for five cents. And since the blades could be used six or seven times, they delivered a shave at less than one cent apiece -- or at less than one-tenth the cost of a visit to a barber" (Drucker, 1985 p. 246).
Because the Gillette razor was, in reality, no better than its competitors and in many cases cost more, the underlying marketing strategy that emerged - and remains in place today - was to help his customers understand what is really cost to use his product compared to the alternatives. Drucker says, "What Gillette did was to price what the customer buys, namely, the shave, rather than what the manufacturer sells. In the end, the captive Gillette customer may have paid more than he would have paid had he bought a competitor's safety razor for five dollars, and then bought the competitor's blades selling at one cent or two. Gillette's customers surely knew this; customers are more intelligent than either advertising agencies or Ralph Nader believe" (Drucker, p. 247). Despite the higher prices involved, the Gillette pricing approach appealed to his customers and it soon occurred to them that, "They were paying for what they bought, that is, for a shave, rather than for a 'thing.' And the shave they got from the Gillette razor and the Gillette razor blade was much more pleasant than any shave they could have given themselves with that dangerous weapon, the straight-edge razor, and far cheaper than they could have gotten at the neighborhood barber's" (Drucker, p. 247). Therein is the source of one of the company's early fundamental secrets to success then -- using pricing as a strategy:
Most suppliers, including public-service institutions, never think of pricing as a strategy. Yet pricing enables the customer to pay for what he buys -- a shave, a copy of a document -- rather than for what the supplier makes. What is being paid in the end is, of course, the same amount. But how it is being paid is structured to the needs and the realities of the consumer. It is structured in accordance with what the consumer actually buys. And it charges for what represents 'value' to the customer rather than what represents 'cost' to the supplier (Drucker, 1985 p. 247).
The company's advertisements during the early days were fully blown of the founder's…