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Posts Tagged ‘E-tailing’

It is hard to ignore the increased frequency at which men can be seen with a beard of some form or style on their faces in recent years. Beards have become popular especially among young men towards or in their early twenties. The renewed fashion of growing beards is making troubles for 115+ years old Gillette, once an independent company and since 2005 a division and brand of consumer packaged goods giant Procter & Gamble (P&G). The difficulties for the famed brand of razors and blades caused by changes in shaving habits of male consumers have been further exacerbated by increased competition and the growing shift to e-commerce. Yet above and beyond, Gillette faces a key challenge to defend and sustain its brand equity, arising from its reputation and position of leadership for many years.

Indeed ‘beards’ are far from being uniform. Beards, and facial hair in general, can be thick or thin, with or without a moustache, covering the cheeks or leaving them clear (see for example the  top 15 beard styles described by Gillette). Often enough the beard is not much more than stubble kept growing for a few days. But beards should be more than a matter of avoiding a shave everyday. As said above, there are different shapes and styles of them, and to keep the beard in form and in good appearance, one has to cultivate and nurture his beard on a regular basis.

  • From the late 19th century and through the first half of the 20th century the moustache was the epicentre of facial hair for men. It was a fashionable sign of manhood, and there were some creative and artistic designs of them.

According to figures from 2013, it was estimated that 17% of American men grew a beard of some form in that year, up from 14% in 2009. Beards are particularly frequent among young US men age 18-24: 35% in 2013 compared with 31% in 2009 (Experian Marketing Services, 14 March 2014; the estimate of ‘bearded men’ is based on a definition of men not using any shaving products or men who use electric shavers or shaving cream (foam) fewer than two times per week [to be distinguished from watching men and counting those bearded]).

The problem of Gillette seems to be aggravated, however, by a reduced frequency at which men shave per week. It is increasingly popular to grow a 2-day, 3-day or 5-day beard. If to judge by the frequency of using shaving cream, US men used it 4.5 times per week in 2009 versus 4.3 times in 2013 (mean 3.5-3.6 among 18-24 years old). Therefore, this is not simply a question of whether an individual uses shaving products, particularly disposable razors and blades, but how much one uses them (and thereof pays to buy them). It should be noted that just 15% of young men age 18-24 in the US have had a thick beard (using no shaving products) in 2013 (2009 13%);  among those in the next age group of 25-34 years old this proportion was a minor 5%.

  • In other data (by Mintel) for 2015, 41% of men using shaving products in the US do not shave daily (50% of  18-24 years old, 51% among 45-54 years old). Nonetheless, among those who do not shave daily not all is lost, probably far from it.

Hence, there is a different way, more optimistic, to look at the situation. Many of the men who grow some form of a beard do have to continue to shave regularly enough. First, it can be noticed that many of the young men grow a rather thin and light beard. Second, many grow a beard on part of their faces (e.g., around the mouth) and hence have to keep shaving the remaining areas where facial hair grows. Therefore, instead of looking at how men do not shave or shave less frequently, one should look at the frequency they do shave, when and how. Additionally, men who grow thin and partial beards can be encouraged and advised on nurturing their beards, keeping them in line and aesthetically appearing. In fact, Gillette demonstrates in videos on its country-websites how to do so with their manual shaving products, a step in the right direction (note: similar instructive videos are available from other sources as well). Nevertheless, more emphasis may have to be given to trimmers for cutting off more dense facial hair to offer customers a more complete solution.

Shaving manually with razor blades is a ritual that demands time, patience and care. It involves three main stages and requires the use of supplementary products (e.g., pre-shave lotion, shaving cream or foam). Part of the market of manual razors and blades has been captured years ago, especially in developed countries, by electric shavers for the greater simplicity of shaving with them and also for being safer. In the US, the ratio between shaving methods stands (2013) at about 3:2 — 6 users of disposable razors and blades to 4 users of electric shavers (Experian). Younger men (18-24) tend somewhat more to prefer manual shaving over electric shavers. If it gives any consolation, only 27% of American users of electric shavers apply the machine daily (i.e., 7+ times per week). In addition, users of electric shavers seem to have lowered their frequency of shaving (mean uses per week): 4 in 2009 versus 3.7 in 2013 (18-24 years old use them less frequently to start with, 2.5-2.6). A possible lesson from those revealed figures might be that men in developed countries should not be expected nowadays to shave daily, perhaps only half as frequently, using either manual or electric devices.

In some ways, as suggested below, the management of Gillette can draw back users of electric shavers to using the brand’s razors and blades. First, users of electric shavers may be convinced of a greater accuracy in which Gillette razor blades can be used to keep, for instance, a beard within its intended  border lines. Second, while men may not find the time and patience to shave manually during the week, they may see the benefits of doing so, instead of using the electric shaver, on weekends and holidays when they have more time to groom themselves. It may be possible to widen an already small overlap that appears to exist between the use of electric shavers and the use of disposable razors and blades.

  • P&G also markets the Braun brand of electric shavers (foil covering a straight-line blade). Philips, a leader in electric shavers (round rotary heads), is offering models with or without a pop-up trimmer on back of the handset shavers; a trimmer is also available as a separate device, as may fit the need to separately treat more dense hair. (Royal Philips has been re-aligning its business in the past few years, but it seems to have found a place for its shaving products in the personal care category for men as an extension to health-care technologies).

Gillette looks as an autonomous division of P&G, almost independent from it. It may get even more freedom than other brands in the house of brands of P&G. Indeed, Gillette has been an independent strong brand for many years and is still capable of being a driver of consumer choice without the help of the corporate name of P&G. Moreover, Gillette has been and remains the endorser of product brands such as Sensor (since 1990), Mach 3 (since 1998) and Fusion (since 2006; Fusion has two premium sub-brands ProGlide and ProShield). The three product brands may be strong enough each to share a driving power equally with the endorsing Gillette name. Some consumers may know that Gillette is owned by P&G and they may value the solid backing it can give Gillette, but it seems the P&G name has no more than a role of shadow endorser [1]. The root (US) website of Gillette and its various country-websites make no reference to P&G in their content; the only mention given is a title at the top left corner saying “Part of the P&G family”. This approach thus helps in instilling the notion that Gillette acts as a stand-alone brand (or brand tree).

The cost of replacing the disposable razors (‘handles’) and blades of Gillette has become a key issue for the brand in the last ten years. The ‘heads’ that contain the blades (e.g., Sensor with 2 blades, Mach has 3 blades and Fusion has 5) seem to cause the greater burden for users, especially as they have to be replaced more frequently than the razor on which the ‘head’ is mounted. Gillette has embarked on a major effort in the US to lower their cost and bring back customers — the US website includes a ‘Pricing’ page introducing a special Lower Prices offer on razors and blades (these are recommended retail prices that Gillette is careful to stress it cannot guarantee for every retailer). A similar ‘Pricing’ page appears on the Canadian website but without details of prices, while no such page appears on websites of other countries (e.g., Australia, UK, Germany, Argentina, South Africa). Additionally, Gillette publishes on its American website a ‘Letter to Consumers’ from its employees as part of its effort: showing how they listen to consumers, and expressing gratitude to those who have already returned after trying razors and blades of competitors (attributed to Gillette’s quality advantage and their lower price offering). It begs one to wonder why this effort is limited to North America.

A threat to Gillette has come primarily from online retailers such as Dollar Shave Club (now owned by Unilever) and uprising Harry’s. At first, men reacted to increasing costs of blades by growing beards and shaving less frequently, but then also by turning to online suppliers. Dollar Shave Club was estimated to have an online market share in 2016 of 52.4% on razors and blades, and Harry’s obtaining 9.4%. However, Gillette has also entered into selling its razors and blades online and launched a customer Club in 2014; in 2016 its share online was estimated at 21.2% (CNBC, 7 August 2016, estimate figures provided by Slice [Ratuken] Intelligence). An increasing interest in subscription plans was further noted by Mintel (5 Nov. 2015) — such plans offer razors and blades at lower prices with the advantage of providing also supplementary shaving products; all can be ordered together in convenient packages. Gillette had to adapt to the new conditions, including the shift in consumer behaviour and new market rules (i.e., e-tailing). The subscription scheme of Gillette Club is available mostly in Western countries of North America and Western Europe (notes: in some countries it is labeled ‘On Demand’, and in the scheme described online, orders are set to be fulfilled via retail stores).

  • Gillette was acquired by P&G in 2005 for $57Bn. In May 2018 the Gillette brand was ranked #32 on the List of Most Valued Brands of Forbes, valued at $17.1Bn. Market share of razors in the US has been sliding down during six consecutive years, from 70% in 2010 to 54% in 2016. Since 2012 the sales of Gillette have declined from a peak of $8.3bn to $6.8bn in 2016, and dropped another 3% in 2017 to $6.6Bn. There is an anticipation now that the Club would help to halt the decline in 2018.

The slogan of Gillette, sustained for several decades already, is “The Best a Man Can Get”. Gillette has been thriving for excellence in the area of shaving as a cornerstone of its brand equity. It has won its recognition as a leader based on high perceived quality of its shaving products, especially its razors and blades (as a ‘power brand’, it achieved a central category benefit [‘the closest shave’], and has been continually improving [2a]). An association that resonates with consumers is significant for brand-building; it has to be meaningful and relevant to them. David Aaker and Erich Joachimsthaler noted in their book ‘Brand Leadership’ that Gillette was among the brands “that have high customer resonance because their customer value proposition is highly relevant” [2b]. This could be the prime challenge of Gillette as a brand for the coming years: The high quality of its products is undeniable, but can it uphold its relevance to consumers?

 


In its struggle to bring customers back, a national advertising campaign to persuade men to shave again has missed its target. An Israeli advertising agency (ACW) created a campaign titled ‘The Dad Test’ featuring a ruler for measuring how much a beard or stubble hurts babies by scratching the baby’s face (2017). The campaign stirred protest and anger for being insensitive and aiming low (Mako-Keshet TV, 7 June 2017 [Hebrew]). First, the ‘problem’ the ad caught onto is hardly new. Second, the campaign took an offensive stand by raising a conflict, alienating customers, and thus was shooting in the wrong direction. (ACW is affiliated with international advertising agency Grey; this campaign does not seem to have appeared outside Israel).

The US-based advertising agency Grey New-York launched in the past three years ad campaigns, for American Father’s Day, that seem to adopt a more positive and constructive approach to father and son relations: (1) In 2016, ‘Go Ask Dad’ instead of turning to the Internet (The Drum, 19 June 2016); (2) In 2017, ‘Handle with Care’ featuring a son helping his elderly father shave (AdWeek, 22 June 2017); (3) In 2018, ‘Your Best Never Comes Easy’, meant to redefine or re-establish the brand’s slogan (AdAge, 11 September 2018). A leading theme in these ad campaigns is connecting fathers and sons with a razor product of Gillette as the pivotal mediator. They may also be noted for enhancing a functional benefit of Gillette with an emotional benefit.


 

An approach that may help Gillette paving its way forward is looking through the lens of The Theory of Jobs to Be Done developed by Clayton Christensen [3]. In order to attract customers and keep them, a company has to understand the goal or task the consumers wish to accomplish and focus on how its designated product will help them in making progress towards achieving their goal (i.e., ‘getting the job done’). Furthermore, jobs are context-dependent, that is, in different circumstances or conditions the consumer may need the same product to do differing jobs. In the case of shaving razors and blades, we may posit ‘jobs’ such as: (1) What type of look men wish to display with their beards — does the consumer want to foster a ‘neat and elegant’ look or is he interested in appearing ‘rough and tough’? — from here a company may derive the extent to which razors have to provide a close shave and accuracy; (2) The main concern of male users may be that shaving will be easy and convenient, and without taking too much time (say 10 minutes). An additional goal for shaving may require that it is more economically affordable. Taking these options into consideration, it may prompt Gillette to examine whether consumers can easily distinguish between the different razors it offers and trace which model of razor and blades is most appropriate for the job one wants to accomplish.

The challenges Gillette has to resolve may be divided into two levels. In the short to medium term the brand may be more engaged in tackling the contemporary fashionable trends in growing beards and thereby the shifts in shaving behaviour of male consumers. There is little point in speculating how long this period may last — the brand just has go through it and adjust its product offerings and marketing. In the longer term, more crucially, Gillette will have to be concerned with sustaining the relevance of the brand (e.g., fit for a job) to men, younger and older, and ensuring that associations they hold of the brand remain valid and meaningful. On that depends the future of Gillette.

Ron Ventura, Ph.D. (Marketing)

Notes:

[1] Based on the model of brand architecture in: Brand Leadership; David A. Aaker and Erich Joachimsthaler, 2009/2000; London, UK: Pocket Books (paperback edition, originally published in 2000 by Simon & Schuster UK)

[2] Ibid. 1: [a] (p. 67) and [b]  (p. 89)

[3] Competing Against Luck; Clayton M. Christensen with Taddy Hall, Karen Dillon, & David A. Duncan, 2016; Harper Business (HarperCollins Publishers)

 

 

 

 

 

 

 

 

 

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Academic books are part and parcel of academic studies and research. This general class may include textbooks (+tutorial materials), readers (compilations of articles), and a variety of many more books that present the products of academic work (e.g., theory development, empirical research). Academic book stores usually work side-by-side with departments at academic institutes to provide to students copies of books used each term in courses. These stores are often located on-campuses or nearby. Wide selections of academic books in different fields can also normally be found in large book stores, some occupying several floors, at city centers. Definitely these are hubs of knowledge and learning.

Students may come with bibliographic lists from their lecturers to look for books required for their courses which are worth purchasing and keeping. Occasionally, students are looking for additional books in their fields of study to assist them in their academic work. Research students and academic staff members may look for books in very specific areas that are essential for developing their knowledgebase in their fields of research. The visitors can browse books available on the shelves, consult with librarians, or order books that they specifically seek but are not regularly in stock. Even people who have long graduated yet value continued learning may easily spend an hour or two browsing and choosing books that will help them enrich their knowledge and be better informed about most recent developments in their areas of profession and beyond.

A peculiar process that has been rolling-on in the past few years at Dyonon, a small chain of academic bookstores associated with Tel-Aviv University (TAU), raises concerning questions about its identity and direction in the future: books are gradually disappearing from its main and original store adjacent to the campus of Tel-Aviv University. Should we see in this a sign of lack of economic sustainability for the academic book store? Are there other factors contributing to this process? And how should the university deal with the situation?

A brief backgroud: Dyonon is owned in partenship by the University of Tel-Aviv and the Student Union at the university. For more than 40 years the original store was managed and operated by the student union. In later years it opened branches at private and public colleges and academic centers. However, in the early 2000s TAU has run into financial difficulties, the Dyonon has yielded less net income, and the student union could not maintain the retail operation alone. Eventually the owners reached an agreement to license Office Depot (Israel), a retailer of office supplies and equipment, to manage the stores of Dyonon on their behalf.  The local chain of Office Depot has been run at times as an independent franchiser or a direct subsidiary of the international Office Depot company. In September 2006 Office Depot launched the rennovated store at TAU with an investment of two million shekels (~ $0.5 million). The chain of Dyonon now has 5 stores including the original store at TAU (at least until 2006 they have had 8 stores).

At an early stage of Dyonon under management of Office Depot the books were migrated to a back wing of the ground floor and in the basement floor in order to make space for office supplies and equipment. Soon after, the migration of the books to the lower floor was completed. Positively, the books were awarded a whole floor as they deserve. On the negative side, a customer who enters the store can no longer tell this is an academic book store.  Now it resembles more a computer-related technology store. Nonetheless, gradually the books in the lower floor have been losing more shelf space in favour of other products typical of Office Depot. In recent months several sections of the lower floor dedicated to psychology, political science, history and other fields of the humanities and social sciences were given up for other products. The academic books left remain in a back wing of the floor and they now occupy about 20%-25% of the whole store area.

The business of academic book stores worldwide is facing some significant challenges that have only aggrevated in the last decade and could be of risk to the economic sustainability of the stores. Here are three salient factors worth conisdering in this regard:

    • Textbooks have been relatively expensive for students to purchase for decades. They may cost anywhere between £30 to £120 (when available, students can save considerably by buying paperback volumes that cost 50% of the price of hardcover volumes). Hence students would rather try to borrow their required textbooks from the library or acquire used books. Yet some books may be more essential and fundamental to the student’s field of study so that a new book is worth buying to have in hand during the period of studies. (The problem in Israel is more complex because of language issues).
    •  Academic books are widely available to order online. One may sit in the comfort of his/her home in front of the computer’s screen, search for required books in e-tailing websites, even read sample pages, and then order some chosen books. This course of action is especially efficient and attractive for acquiring books that are more difficult to find in stores at any given time. The best known e-tailer of books is Amazon but is not the only option. To counter this threat, many of the chain booksellers also operate an e-tailing channel in their Internet website. This business extension may canniabalise sales in stores to some extent, but it can be designed to improve service to their customers. That is, customers may search for books more conveniently at home, and they may even order some books online, and then come to the store to buy or pick them up, and then possibly look for some other books while on premises.
    • A growing variety of academic books is becoming available in a format of eBooks, including graphics-rich textbooks. The e-books can be viewed with electronic reader software applications and devices. One may read e-books on an electronic reader device, a tablet or a laptop. The e-book version may be priced 10% to 20% lower than the print version (one still has to pay for content). This is still a young field in book distribution and as a mode of reading but it can be expected to become a more serious challenge for stores to confront in the near future.

These challenges pose different levels of risk and difficulty. The problem is that a retailer like Office Depot is neither prepared nor motivated to take the challenge. It is not in its core business and mission, and thus it is not likely to be committed enough to face those challenges. The easier solution for a retailer who does not genuinely see his place in this area is to remove the books and replace them with products its management is more familiar with and expects to be more profitable, as Office Depot does. A professional staff qualified to advise customers and sell books cannot be sufficient if the management is not ready and qualified to tackle the strategic difficulties and challenges of the academic book market.

Moreover, Office Depot in Israel has run into operational and finanical difficulties in the last 18 months for reasons that are beyond the scope of this post, making the situation more complicated. Unsurprisingly, at the time of critical test Office Depot is seemingly acting not in the true interests of Dyonon. In retrospect, it seems that early on Office Depot has “kidnapped” Dyonon for its own line of business and now we see just the culmination of this process in an apparent crisis for Dyonon.

But Office Depot is not the only party that bears responsibility. The University and the Student Union reportedly agreed in licensing Office Depot that it would display its usual products on the ground floor and books on the lower floor. This is not without logic and benefit to both students and faculty and to the retail business. If Office Depot in any way “kidnapped” Dyonon as suggested above, it was rather in later stages of its operation when it let its usual trade become more dominant at the expense of books, and the store’s owners did not interfere to curb this activity in time. The more intriguing question remains: Why did the owners choose an operator without desired skills and experience in the book market?

Recognizing the economic burden on students to purchase new books and their preference to find used copies, academic book retailers entered this scene and are engaged in mediating between buyers and sellers. More momentum is now given to the transition to eBooks and the means to view and read them. For example, the American book retailer Barnes & Noble  is more focused in the past few years on advancing its Nook programme of eBooks and electronic reading applications and device. It offers special library and service (Nook Study) for students and professors online, and is particularly specialising in offerring lower cost eTextbooks. Some described features of the application seem particularly useful for studying (e.g., search, mark-up, notes).

Exectuvies at Tel-Aviv University and the Student Union should be planning for the days after Office Depot to restore Dyonon as an academic book store. A possible path to follow is return to a model more similar to the past. The store may be governed by the university and student union but managed and operated by a professional team directly hired by the owners. The team may be organised as a business unit. This type of arrangement can be found at the University of Washington in Seatle — over the years they have built a model where an incorporated body of professionals is running the academic book store (and other stores) under supervision and control of a Board of Trustees of the university’s academic and admininstrative staff and the student union representatives. Other examples for stores controlled by student unions and universities include the Union of Toronto in Canada and the Co-Op Bookshop in Sydney, Australia (fully named “The University Co-operative Bookshop Limited”, a not-for-profit bookseller). It is further noted that another chain of book stores in Israel, Academon, is affiliated with Hebrew University in Jerusalem (12 bookshops, four of them in Jersualem).

If this model, however, seems no longer feasible or practical for the university, and they need to lower their level of involvement, they should be renting or leasing the store space to an established book retailer. A convenient solution may be adopted for instance from the United Kingdom where the bookseller Blackwell operates its own academic book stores in 45 locations on-campus of academic institutes or nearby (see also the Student section on its website).

  • The book retail scene in Israel is controlled by two chains of book stores (“Steimatzky” and “Tzomet Sfarim”), possibly distancing the university from dealing with them. In fact, negotiations were held with “Tzomet Sfarim” but terminated by the owners in 2005 in favour of Office Depot. The former lost its case in court against this action. From a position of strength, it is likely the book retailer has made high demands for control of the business the owners would not accept. The alternative solution the owners chose with Office Depot, however, was not any more viable.

An academic book store is one of the most valuable services a university is ought to provide its students and faculty in one form or another. However, in order to protect and enhance the economic sustainability of the book stores, they should be supported with an “envelope” of complementing value-added services, employing also advanced technologies, thus making the stores more attractive, interesting and useful.

Ron Ventura, Ph.D. (Marketing)

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