Case study, Pages 4 (780 words)
It has been empirically proven that having too many options makes decision-making harder. In fact, some studies show that having to make too many decisions can leave people tired, mentally drained and more dissatisfied with their purchases. If you look at the major development milestones of Gillette, they occurred in 1903 // 1971 (68 years later) // 1990 (19 years later) // 1995 (5 years later) // 1998 (3 years later) // 2002 (4 years later) // 2004 (2 years later) // 2006 (2 years later with 2 key development milestones).
1) The major development milestones are occurring closer and closer together, requiring consumers to learn and adapt to product enhancements more rapidly 2) While at the same time, the product enhancements are becoming increasingly complex 3) And the marketplace has more options than ever before
Rapid product innovation resulting in superior quality is desirable, however educating the consumer on those innovations must move to the forefront of marketing priorities.
Otherwise the innovations can actually confuse the consumer and you miss an opportunity to capitalize on having created a better product. Furthermore, many consumers view price as an indicator of quality.
If you convey a product as being superior in quality, the pricing should reflect that. The M3Power is of lesser quality than the Fusion Power, yet the Fusion Power was priced the same. The M3Power was introduced to the market at $14.99 for a razor, 2 cartridges & a battery.
The price was later dropped to $11.99 and included 1 instead of 2 razors. To speed the adoption, the Fusion Power was introduced as a superior product, but priced at $11.99 (the exact same as the M3Power) for the same shaving materials.
In fact, it was first introduced to the market $3 lower than a product of lesser quality. This pricing strategy was unlike that of the MACH3, in which the cartridges were priced 35% higher than those of its predecessor, the SensorExcel. The razor itself was priced higher as well, and the M3 Power razor was prized an astounding $6 higher than its predecessor, the MACH3 Turbo.
Now, MACH3 cartridges were also introduced in a different format: packs of 4 and 8 compared with 5 and 10 for SensorExcel. Gillette believes this strategy worked, but why? More specifically, did it work because of a perceived lower cost, as the case suggests, or did the consumer perceive those 4 superior cartridges as having the same cumulative duration for usage as the 5 inferior cartridges – or some combination or alternative? If the consumer learned that the 4 superior cartridges lasted no longer than 5 SensorExcel cartridges, the strategy of moving from 4 cartridges to 3 cartridges for the Fusion will not be as effective.
Gillette also decided to target the Fusion to the 20% of men who use electric trimmers, but how? The case doesn’t say – and these consumers will require a greater degree of product education on why they need to add an additional non-disposable razor system to their shaving equipment arsenal.
1) Continue to educate the consumer. Communicate the benefits of the Fusion in all forthcoming promotional campaigns in a similar fashion to the MACH3 launch, which was focused on product details. The Fusion has become increasingly complex (i.e. more features) and if the consumer is overwhelmed or unsure of the new technology it will not be readily adopted.
a. Gillette has made a decision to target the 20% of men who use electric trimmers. There needs to be specific marketing efforts to convey the value proposition to these consumers. b. The ‘microchip’ feature is the only difference between the Fusion and Fusion Power cartridges, resulting in $2 price difference. The consumer needs to understand the benefit of this feature.
2) Eliminate the SensorExcel completely – it’s an outdated product and Gillette is known for innovation and superior quality. 3) Have all starter packs be 1 razor, 1 cartridge, and 1 battery (if applicable) to simplify the purchasing decision. Including only 1 cartridge also aligns with the strategy of rapid handle adoption as a precursor to heightened cartridge sales downstream captive product pricing.
4) Lower the price of the M3 Power starter pack from $11.99 to $10.99 // Raise the MACH3 starter pack price from $7.29 to $7.99. 5) Maintain the $11.99 introductory price point for the Fusion Power starter pack and $9.99 introductory price point for Fusion: c. This creates uniform starter packs at the $7.99 // $8.99 // $9.99 // $10.99 // and $11.99 price points d. This leverages price-quality inference
e. Aligns with captive product pricing strategy for rapid handle adoption as a precursor to heightened cartridge sales downstream