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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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The consumer goods global company Procter and Gamble (P&G) is an acknowledged master of brand management. Overseeing more than 300 brands across 160 countries worldwide, its innovations and business practices in branding, product development, marketing and advertising are taught probably in almost every marketing course programme at business schools; over the years it has also been a source for exemplary strategies and tactics to many companies that chose to follow in its footsteps. P&G is actually credited with conceiving in the early 1930s the concept of managing-by-brand and assigning a brand team to be in charge of orchestrating and streamlining all marketing and other managerial activities for any given brand (an idea attributed to Neil McElroy).  It took another fifty years to expand and formalise a theory of brand management, and particularly develop the psychological concepts of brand’s role and functions in consumer decision processes; still, P&G has practically started this ball of brand management rolling.

Now the top management of P&G finds itself in a crossroad, how to sustain its record of excellence and leadership in marketing, product innovation, and business in general. The last four years — since the financial crisis erupted in 2008 and following economic recession– have proven a tough period for P&G: Lower earnings, market shares declining, and a stagnation of its share price (at $60-70 after recuperating from a bottom low of ~$45 at the outset of the crisis); just in the last 4-5 months P&G started to see some improvement.  A decline in consumer spending, particularly in the developed countries, must have aggravated P&G’s difficulties. However, the problems of P&G originate to a large extent from within: Bob McDonald, CEO of P&G from 2009, identified in a recent meeting with investors two key weaknesses, excessive bureaucracy and insufficient product innovation (1). Yet, a higher-order problem seems to hover above these causes, that P&G has allowed its distance from consumers to widen.  Internal problems appear to have inflicted on the company’s competence to reveal changes in consumers’ needs and concerns and react to them soon enough or proactively. Currently, major shareholders, analysts, and P&G alumni are skeptical if McDonald can return the company to the right course. In the last quarter the share price climbed to $76, but more time is needed to see if correction is indeed on its way.

McDonald initiated a vision and strategy ‘driven by purpose’ for guiding the company’s business initiatives and actions with a key motive “touching consumers’ lives”. Critics argue that the directive of McDonald had been at first too abstract and vague to execute, and then in attempt to become more focused he turned to over-emphasis on efficiency of internal processes, making P&G too much inward-looking (1).

The vision called “purpose-inspired growth” directs, as explained by McDonald, towards “touching and improving more consumers’ lives, in more parts of the world, more completely”. It implies for instance that employees were not selling merely soap but cleanliness itself or that diapers let parents sleep through the night and that would enable an improvement of the earning power of middle class families (2). The intention is positive, emphasising the connection of the company to consumers, but the implementation was flawed. On a ladder of product attributes – consequences (benefits) – values (Means-End Chain decision model) McDonald was trying to start right from the top.  Employees had difficulties to interpret the strategy and translate it into action, configuring what is ‘a purpose’ and how to pursue it. Consumers may feel quite uncomfortable relating explicitly to their end-goals and personal values or they may not admit to them in advertising claims made by the company — this has to be done implicitly by hinting consumers from the bottom up on the basis of prior research.

A.G. Lafley, CEO of P&G in 2000-2009, highly respected for helping to salvage the company from a previous major downturn, championed a strategy centered on “the consumer is boss”.  The important contribution of Lafley to make the strategy practical was his highlight of two “moments of truth”: when a consumer first sees the product in a store and when he or she first uses it at home (2). These are decision points at which a consumer makes a purchase decision and, after experiencing the product, decides whether he or she will be a continuing customer of the brand. Thereon, employees could direct their efforts to win on these two crucial moments of truth. In an interview last month to Wall Street Journal, Lafley emphasised that the importance of being close to consumers has to be demonstrated by personal example:”Whenever I went outside the US and into an emerging market, I would go inside a store the first day and shop with real consumers. I could have told my employees ‘the consumer is boss’ a million times, but it wouldn’t have made any difference if that isn’t what we did” (3). That kind of practical guidance and personal commitment to a consumer-centric vision was apparently lacking in McDonald’s executive approach.

Procter & Gamble owns and manages brands in five head categories: grooming; beauty; fabric and home; health; baby and family. Among its more renowned brands are Ivory, Camay, Tide, Ariel, Crest, Pampers, Pantene, Always, Head & Shoulders, Olay and Wella. The company has been divesting lately from the food category, giving up on brands such as Folgers and Pringles, and, on the other hand, made the substantial acquisition of Gillette in 2005 which brought under the roof of P&G also Oral-B, Braun and Duracell. 25 brands generate each more than $1Bn in sales. The brands have generally been organized and marketed at the level of single products or mostly product lines (i.e., close variants of the same concept and function) so that many consumers would not  know the parent company of the brands they use. On a spectrum of brand architecture that spans over four main grades of brand relationships — House of Brands, Endorsed Brands, Sub-brands, and Branded House — Procter & Gamble is distinctively a House of Brands: the company hosts a pool of brands, each in charge of a narrow range of products, but there are only loose connections between them or to a parent endorsing brand (e.g., the corporate name). The autonomy given to a brand to tailor its positioning and marketing for its product(s) is a blessing for a brand leading in its category but may limit and impose a risk for brands that take the third or fourth place in their categories (4). In practice the autonomy of brand teams has been reduced in recent years in a way that seems to limit rather than support smaller brands. In addition, assimilating acquired brands that arrive with different types of relationships is more difficult and may cause greater confusion in the brand architectural model of the company (e.g., the Gillette brand is an endorser of a broader range of grooming products for men and their sub-brands like razors (Mach 3), shaving creams, deodorants, body wash gel and more).

In the 1980s the company added another layer of category-level management; they shifted focus towards spreading more brands in every category (e.g., laundry detergent, hair care) with aim that every market niche may find its answer in a brand of P&G. McDonald added yet new priorities defined by combinations of category and country. Lafley instated a complex “matrix” structure that involved a system of checks and balances, and its grip is said to have even tightened more under McDonald as CEO. It means that actions have to be approved by executives responsible for marketing, human resources and finance, geographical regions and product categories; brand managers are required to get permission for relatively simple actions or consult a book of PACE models (Process Owner, Approver, Contributor, Executor) for finding who has the relevant authority to settle disagreements (2). Perhaps this was meant to achieve better co-ordination between brands and control of functions and budgets but it has caused much frustration and discouragement of employees.

  • Jennifer Reingold of Fortune magazine (2) summarised the effect pointedly: “Process itself was threatening to become more important than conceiving great products and selling them” (p. 39).
  • Sonsoles Gonzales, former general manager for Pantene (left P&G in 2011) commented to Fortune that “There was lots and lots of measuring for the purpose of promoting productivity, but it resulted in too many internal transactions and negotiations and had less to do with winning the consumer” (p.39).
  • And Ed Artzt, CEO in 1990-1995, expressed his exasperation with the “brain drain” from P&G: “The loss of good people is almost irreparable when you depend on promotion from within to continue building the company” (p. 37).

Complexity is only increasing in the company with time and managing at the brand level is becoming harder as decision processes slow down. Nik Modi, analyst with UBS, suggested that P&G “is not too big to grow, it is too complex to grow”, making the fine argument that in times of volatility this problem becomes critical because the company’s structure limits its ability to confront quick changes and improving competition (1,2).

P&G’s brands are losing market share particularly to competing brands of key consumer goods companies such as Unilever, Colgate-Palmolive and Johnson & Johnson. Criticism claims that P&G is creating too few breakthrough product innovations. The more recent products to be appreciated as successful innovations were a synthetic detergent of Tide, Swiffer sweeping mop and Febreze odour freshener, but they are already more than ten years old (1,2). However, the claims urging more breakthrough innovations may be somewhat impatient and too harsh because such achievements are usually not so frequent — research and development (R&D) processes can take several years (mostly in the range of 3 to 10 years), requiring much experimentation and testing, and deep pockets. It is fair to say that many of the categories in which P&G is marketing are crowded with solutions offering different benefit-strengths and it is increasingly challenging to create new products that truly change the way consumers do things and influence their lives. The question to be raised is how a company like P&G is handling these challenges and works to overcome the obstacles to innovation in its fields of operation.

Going back to 2000, Lafley recognized P&G’s hardship to generate growth by innovation from within the company, in spite of its large apparatus of R&D (7,500-strong). He started a programme called Connect and Develop to import greater knowledge to the company by co-operation with outside sources (P&G’s approach to Open Innovation). The company estimated that for every member of its R&D team there were about 200 scientists and engineers out there who had talents the company could benefit from. The programme directed by Larry Huston linked with suppliers and other business partners, highly experienced retired experts, and young scientists in or fresh out of academia, to initiate new R&D projects (5). This brave initiative has had successes in creating more new products, but unfortunately it came short of impressing the stakeholders. It is claimed the company, helped by Connect & Develop, did not manage to create significant ‘blockbuster’ innovations, more of minor line extensions. The implication is that these product formulations justify much less paying price premiums, turning away consumers especially in the current economic period (2, 6).

In the past decade the ratio of R&D investment as % of sales continuously dropped from its peak of nearly 5% in 1999 to 3% in 2006 and 2.4% in 2011-2012. According to Bloomberg-BusinessWeek, this cutting back in R&D is explained not necessarily by reliance on external resources through Connect & Develop but mostly by decentralising and passing authority for R&D to heads of business-units who have put other priorities before investment in R&D (6).  Notwithstanding, more factors may have had adverse effect on innovative achievements in P&G. First,  a drawback of the Connect & Develop programme may be that drive and commitment to innovate are slipping farther away from P&G. Second, a long tradition of acquiring brands over at least three decades can weaken the ability and motivation to develop home-grown brands and innovative products in-house.

Much of the pressure on P&G is directed squarely at CEO Bob McDonald, with some shareholders demanding him to step down. Alumni managers are reportedly divided between opponents and supporters of McDonald. Nonetheless, he enjoys the backing of three former CEOs, Lafley, Artzt and Pepper, from whom he sought advice in recent months. He deserves extra time to show what improvement he can make. It may be wise for him to consider giving back more autonomy to brand management teams but promote joint-actitivites between brands, and encourage more co-operation between R&D, the in-house market research division Consumer & Market Knowledge, and brand managers. It is a testing time for McDonald and P&G to convince the company can keep touching and improving consumers’ lives meaningfully.

Ron Ventura, Ph.D. (Marketing)

Sources:

1. “P&G Chief Reassesses His Priorities”, Barney Jopson, FT.com (Financial Times Online), 31 January. 2013 http://www.ft.com/intl/cms/s/0/eb442eda-6b27-11e2-9670-00144feab49a.html#axzz2Oqll9hRr

2. “Can P&G’s CEO Hang On?”, Jennifer Reingold, Fortune (European Edition), 25 February 2013, Vol. 167 (No. 3), pp. 34-41.

3. “Former P&G CEO: What Companies Get Wrong” (Interview with A.G. Lafley), Wall Stree Journal: At Work Blog (Management), 4 March 2013 http://blogs.wsj.com/atwork/2013/03/04/former-pg-ceo-what-companies-get-wrong/

4. “The Brand Relationship Spectrum: The Key to the Brand Architecture Challenge”, David A. Aaker & Erich Joachimsthaler, 2000, California Management Review, 42 (4), pp. 8-23.

5. “Innovating Innovation: Procter and Gamble”, Management Lab (MLab), New Frontiers (case study, pp. 28-32) http://www.managementlab.org/files/u2/pdf/case%20studies/procter.pdf (“MLab is a non-profit  corporation, based in California, with the aim to accelerate the evolution of management”.)

6. “At Procter & Gamble, the Innovation Well Runs Dry”, Lauren Coleman-Lochner & Carol Hymowitz, Bloomberg-BusinessWeek (Online), 6 September 2012   http://www.businessweek.com/articles/2012-09-06/at-procter-and-gamble-the-innovation-well-runs-dry

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