Gillette-P&G chemistry faces sales block
Gillette’s integration with P&G may have raised hopes the world over, but it’s showing early signs of gloom for the shaving company in India.
By Bhanu Pande & Chaitali Chakravarty, TNN |
NEW DELHI: Gillette’s integration with P&G may have raised hopes the world over, but it’s showing early signs of gloom for the shaving company in India.
In the past six months, almost a year since the integration process started in India, Gillette has witnessed a sharp fall in its market shares for both disposables and oral care. Insiders call it a “setback” and attribute it to a mismatch in the two companies’ sales and marketing strategies.
“The shaving market is largely dependent on trade push which had become an integral part of Gillette’s turnaround strategy in India. However, P&G subscribes to the pull model or offtake-based selling which essentially means it produces only that much needed to replenish buffers with its distributors.
This is exactly what is adversely affecting Gillette’s market penetration and coverage,” said a highly-placed source. P&G has also put a break on Gillette’s trade promotions and highly-visible merchandising, which was the cornerstone of the shaving firm’s marketing module.
As part of the transition, Gillette moved to P&G’s distribution structure early this year and discontinued services of the 700-plus distributors engaged in the mass trade of Gillette products.
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When contacted by ET, Gillette India managing director, Zubair Ahmed declined to comment on the development. Ashok Chhabra, P&G India’s executive director who is also on the Gillette India board, said things are pretty normal.“Disposables are not too significant for us. It is 10% of our total sales and there is no decline in shares either. It’s not our bread and butter since we make money on shaving systems rather than disposables,” he told ET. He also declined to give market share data.
However, analysts say disposables’ share has slid from around 75% to under 50% while that of oral care is down 8-10% in the past six months. They added that even though the disposables business is small for Gillette, it’s critical for the company’s game plan of upgrading customers to higher-end systems.
Gillette sells disposables under Presto, 7 O’ Clock and Wilkinson brands. Since the P&G sales model relies less on sales force on the ground, analysts say, it’s also likely to impact Gillette’s coverage for even conventional blades and channels such as the barber shop.
Meanwhile, rivals like the House of Malhotra are capitalising on the changed circumstances for Gillette and quietly nibbling at its shares across segments. Industry sources reveal that the rival group is revamping its sales structure in order to mount more pressure. Similarly, in the oral care segment, Colgate is not lagging behind and getting more and more aggressive.
As part of the integration process, the American blades and razor com-pany adopted P&G’s organisational structure and effective July 1, ’06, relocated its headquarters from Gurgaon to P&G Plaza in Mumbai which houses all P&G subsidiaries in India. The company will also now follow P&G’s fiscal year (July-June).
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