Can Gillette tap into rural market and yet retain its value for urban consumers?

Gillette's recent campaign with soldiers as brand ambassadors marks a big shift in market capture strategy. But can premium brands go mass easily?

By Kamya Jaiswal, ET Bureau | Updated: Dec 12, 2011, 12.40 PM IST

Can Gillette tap into rural market and yet retain its value for urban consumers?

The folks at Gillette take their jobs a tad too seriously. Why else would they pack in five blades, precision trimmers, 15-microfins, and lubrastrips in a device primarily meant to mow some hair? Isn’t this too much fuss over some fuzz? Women still bear with wax strips that brutally tear out hair all over. Men, for mere 10-30,000 hair strands sprouting on their jaw, get a five-plus-one Gillette Fusion.

But then Gillette does nothing without research. And it needs no survey to discover that the male half of the human species would rather not drag a razor through a beard, stubble or hedge-like. So the company, and the women, are only too happy with the innovation overkill: if it takes fancy toys to make men shave, so be it.

These days though, razor joy is not enough. The five o’clock shadow is in vogue, sported by actors, models and sportsmen alike. This fad further lowers the incentive to shave regularly, bad news for a razor and blade brand. But Gillette India seems to have found a way to upturn the trend. And it is banking on the hero of all times for the turnaround: the soldier.

Clean-shaven and distinguished looking, these men with steely resolve and fastidious manners are perfect pin-up boys for Gillette. “The message is bang on. The campaign rides on familiarity, aspiration, respect and sympathy for soldiers,” says ad guru Prahlad Kakkar. The company cites a Nielsen survey in which men and women voted the armed forces as the best groomed profession in India.

The combination of effective marketing and innovation has always been a hit for Gillette. As they loaded their razors with more features, revenues grew. In 2010-11, the Mach 3, till then the most feature-rich razor, reached 70,000 more stores across India to consolidate its bestseller status.

The brand has sussed out the urban psyche so well, it enjoys almost monopolistic hold over the market in the metropolises and big cities. According to Technopak Advisors, its chief competitors, Malhotra Shaving Products ( Topaz, Laser and Centwin) and Vidyut Metallics (Supermax) muster single digit market share in the razor and blade segment valued at Rs 1,625 crore and growing at 5% a year.

But for a few months now, Gillette India has been manoeuvring tricky territory, one it knows little about: small town and rural India. Having almost saturated the urban market, herein lies the key to further growth: the chunk of the majority of the 400 million-odd shavers of the country. Can the company tap into this market, yet retain its feel-good value for urban consumers?

Innovation for New Consumers...

Last year, Gillette launched its first made-for-India product: Guard. At Rs 15, the razor uses blades that promise five shaves for Rs 1 each. It also introduced the Series Gel, priced at Rs 2 a shave. This is one of the cheapest Gillette experiences across the world.

Cutting costs to expand customer base is an old trick. Guard’s trump card is that it is not a stripped-down version of Mach3 or Vector Plus. It doesn’t remove features to lower price. Instead, it boasts functions especially designed for low-income consumers.

“Many villages have limited access to running water. A rural customer relies on a cup of water to rinse a double-edged blade and razor. We realised that our product design must be tweaked so that cleaning it uses less water. Similarly, double-edge razors cause nicks and cuts. A safer and more hygienic razor would be immediately seen as a value buy,” says Sharat Verma, marketing manager, Gillette India.

Guard incorporates features which address such issues. Small details reveal the focus on enhancing the shaving experience for the new customers Gillette wants in its fold. For instance, the razor handle has a “hang hole” to dangle it for drying after use.

"The main lesson from Gillette's model is that it pays to be intensely market focused . letting the consumer and his needs and desires drive innovation. This means localising what is necessary. P&G has a great phrase for this. as common as possible, as different as necessary," says Scott Anthony, managing director of Innosight Asia Pacific, and author of the forthcoming Little Black Book of Innovation.

Gillette's Guard has become a volume spinner for the brand. Though the company refused to reveal sales numbers of Guard, the annual report 2011 claims it is higher than Vector and Mach 3 combined. This success is ably supported by the double-edge blade brand Wilkinson Sword, another bestseller for Gillette.

...And for Old Fans

The introduction of Fusion in September 2011, about a year after Guard, sends an important signal to Gillette followers: the brand is not ignoring the customer base it knows best.

"We track urban consumers regularly and have identified two key trends in big cities. One is that the men don't shave regularly because they believe it damages sensitive skin. Secondly, they don't just want to grow a beard but experiment with facial hair shapes and styles," says Verma. To keep up with these trends, Gillette has expanded its range of shaving accessories and skincare products over the past year or so.

In fact, it has piggybacked on its razor and blade reputation to build the brand in shaving gels, foams and after shave lotion categories. Here, it faces stiff competition from multinational companies (MNCs) like Nivea and Godrej. But Gillettefs advantage is its control over the entire shaving experience: from blade to lotion.

The BlackBerry Question

Gillette’s move to penetrate the rural market is natural progression for the brand. No one doubts its competence to build products specifically for the value-conscious consumer. But there is a fundamental contradiction at play. Gillette wants to be aspirational and affordable at the same time. Is this possible?

"If the company is smart enough, yes. Consider Unilever, the king of soaps. The consumer of one soap brand, say Lux, is not conscious of the other, say Lifebuoy, when making a choice. Gillette does not have the comfort of such clearly demarcated subbrands.

But that is a function of the shaving category. If both affluent and value-conscious consumers are satisfied with their shaving experience, both will buy Gillette," says Debashish Mukherjee, partner and vice-president, AT Kearney, a consultancy.

Research in Motion India has shown how this is done. The company operates in the high-end smartphone market. Yet, it redrew the segment boundaries, slashed prices by over 40%, launched new products in the Rs 8,000-plus range and designed marketing campaigns which spoke to customer across all networths.

Gillette is following the same strategy. It is likely to have it easier than BlackBerry though because there is no snob value attached to the brand. Gillette may promise the best shaving experience, but the category isnft up there with smartphones.

So the image makeover required is not extreme. Villagers can exchange their razors with college goers who still wait for their first salaries to move up the shaving hierarchy and spend Rs 5-10 per shave. Customer Beyond Reach Despite a marketing and innovation overdrive, there is a type of shaver who doesn't care about Gillette.

He is the one who occasionally shaves at local barbershops and swears by the single-edge usturas. To make him a Gillette customer, the company must teach him how to shave.

“Rural customers whose purchase decisions are driven by affordability are low-hanging fruits for Gillette. It can convince them to replace an existing product with theirs. Drawing in customers who use rudimentary shaving tools will be a long and painful process. Such a transition can only be a long-term goal for the company” says Mukherjee.

Regional players with deep distribution channels also pose a big challenge for Gillette. Kakkar says these companies play dirty to monopolise distribution in small towns and villages.

Here Gillette must promise lucrative deals and perhaps take a hit on margins for a while to build the brand ground up with widespread and effective communication of its products. The soldier, a popular career choice in such households, might do the trick.

Gillette India’s Portfolio

Grooming: Rs 7,09.4 cr segment revenue

Razor Brands: Fusion, Mach3 & Mach3 Turbo Sensitive, Vector Plus, Guard, Presto, Prestobarba 3

Blade Brands: Wilkinson Sword, 7 O’Clock

Chief Competitors: Malhotra Shaving Products (Laser and Topaz), Vidyut Metallics (Supermax)

Shaving Accessories: Gels and foams, after-shave creams

Chief Competitors: Godrej, Palmolive

Skincare: Moisturisers (with and without sun protection factor), deodorants

Chief Competitors: Nivea, Emami, Axe, Reebok; Rs 1,625 cr Size of razors and blades market; 285 cr Size of shaving accessories market

Oral Care: Rs 292.7 cr segment revenue

Toothbrushes: Oral B

Competitors: Colgate, Pepsodent, Classic

Portable Power: Rs 54.9 cr segment revenue

Batteries: Duracell

Competitors: Eveready

Sources: Bloomberg & Technopak Advisors

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Can Gillette tap into rural market and yet retain its value for urban consumers?

Gillette's recent campaign with soldiers as brand ambassadors marks a big shift in market capture strategy. But can premium brands go mass easily?

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