THE MARKETING MIX OF THE RAZOR INDUSTRY
This blog will assess the razor industry and ways in which the marketing mix variables are used. Particular consideration is given to the contrasting approaches used by market leader Gillette and industry disruptor Dollar Shave Club (DSC).
Brooks and Simkin (2012) suggest that there is no “magic bullet” for effective marketing, The
diverse approaches to the marketing mix in the pogontomy domain validate this
theory.
PRODUCT
The
product variable of the marketing mix is concerned with assessing customers’
expectations to create or alter a product to best satisfy them (Dibb et al,
2016 p28). A product is not necessarily
tangible. An idea or a service can also
be described as a product (Dibb et al, 2016 p311).
BRANDING
A
product is distinguished from its competitors by its brand. A brand adds value and gives a commodity a
personality (Baines and Fill, 2014 p 456).
DSC’s distinct brand
identity was built through video marketing.
Their CEO describes their videos as being the heartbeat of the brand
(Gesenhues, 2016). Barker et al propose
that strong connections can be built by giving a brand a human face (2017 p66). This could account for DSC’s success as the
videos they produce are irreverent, funny and relatable. The first video, titled “Our Blades are
F***ing Great” was posted on YouTube in 2012.
It featured Michael Dubin, founder and then CEO talking directly to the
camera and explaining the premise of the club (Barker et al, 2017). He lightheartedly mocks the industry leaders
and suggests that there is no need to buy a premium brand as the money is spent
on celebrity endorsement and enhancements not required for shaving. The quality of the razors, convenience of
having them sent directly and a transparent
price point are also
highlighted in an authentic and conversational manner (Dollarshaveclub.com,
2017). This creativity and the humour of the brand are consistent throughout their videos, website, social
media and even the product packaging.
Dollar Shave Club founder Michael Dubin introduces the concept.
Gillette’s brand image is somewhat contrasting. It is more aspirational than relatable. Since their 1989 Super Bowl XXIII campaign
they have marketed their gents brand as “The best a man can get”. This unattainable yet desirable sentiment is also
articulated in their Venus female range, which uses the ad line “reveal the
goddess within” (Adage, 2017).
PRODUCT MIX
The
product mix describes all products offered by an organisation. Typically, to satisfy various target markets, a
variety of products are presented (Baines and Fill, 2014 p286). Within the razor industry, in keeping with this practice,
most
organisations
offer more than solely razors. DSC keep
their product mix small and exclusively target men. They offer three variations of blades and
handles, skincare, and hairstyling (Dollarshaveclub.com, 2017). This allows them to manage their market more
easily and specialize in these areas.
Gillette have more depth to their male product line. 22 different types of razor are marketed to
men. They have various distinctions,
such as disposable, body, electric and even vibrating. They have an extensive range of pre and post
shave treatments, deodorants, body washes and anti-perspirants (Gillette.com,
2017). Furthermore, Gillette show
product width by additionally marketing to female consumers with their Venus
range. This product line is extensive,
with 27 variations of razors and a collection of shaving gels and oils,
PACKAGING
Packaging
is useful for both functionality and for showcasing a brand identity. It can aid a product’s appeal by making it
easier to use, more attractive or safer (Dibb et al, 2016 p334).
Schick,
known as Wilkinson Sword in the UK, indicate on their website that packaging is
significant to them and they aim for it to be both informative and
functional. The packaging keeps the
product safe and clean and gives the consumer product information. Their branding is also strong in their
packaging, with the theme of water displayed throughout the product line to
highlight the moisturising qualities of the range (Shick.com, 2017).
In
recent years, a growing concern for corporations and for consumers regarding
packaging is environmental awareness (Dibb et al, 2016 p366). In 2011 Gillette, in keeping with parent
company P&G’s sustainability goal for 2020, redesigned the packaging for
their Fusion Pro Glide range. It is now smaller
and lighter, therefore using less material.
It is also 100% PVC free, instead using moldable pulp from bamboo,
sugarcane and bulrush (P&G factsheet, 2011).
DSC
have chosen to use their packaging to further connect to club members and reinforce
their brand with yet more irreverent humor.
One DSC member, content strategist and blogger Jonathon Colman, shared his “unboxing” experience. He conversed about how well DSC have achieved
brand consistency across channels. The
packaging itself has a wood paneling effect, which is reminiscent of the office
shown in the marketing video. The
caption “shave time, shave money” along
with the company logo is the first visual. The literature inside is a welcome
to the club with more jokes and humorous captions such as “Congrats on making the best decision you have made in a long time. You’re now part of an elite group of
stratospheric thinkers. You’ll fit right
in”. The packaging is modern, attractive
and is made from recyclable cardboard (Coleman, 2012).
PLACE
The
place, or distribution element of the marketing mix is focused on how an organisation satisfies a customer’s needs
(Baines and Fill, 2014 p16). An organisation is concerned with ensuring
that there are sufficient products available to customers when and where they
are desired, while also keeping costs to a minimum (Dibb et al, 2016 p
29).
CHANEL INTENSITY
A business can distribute their product
in one of three ways. Intensively,
through any reasonable market outlet, selectively, through multiple outlets, or
exclusively through a single intermediary (Baines and Fill, 2014 p429).
Due
to their subscription business model, DSC use exclusive distribution. Products can only be purchased by joining
their club and are only available directly.
This distribution channel allows DSC to have absolute control with
issues such as price stability, image and quality of service (Baines and Fill,
2014 p431).
For
most other razor manufactures, such as Gillette, Schick, Bic and Braun an
intensive distribution strategy is used.
They can be found in supermarkets, chemists, local shops and various
online retailers. The advantage of this
distribution channel is that buyers will have optimal means of access to the
products, thus increasing accessibility and the likelihood of impulse buying
(Baines and Fill, 2014 p429).ONLINE PRESENCE
Dibb
et al (2016 p89) propose that the emergence of social media has changed the
boundaries for organisations
with regards to online presence. A
website alone is no longer sufficient means to engage customers in
communication and commercial transactions.
In
terms of social media marketing there are two categories. Interruption, which is paid for social
advertising, and the more organic permission approach where consumers have a
choice to view or not (Barker et al, 2017 p 63).
DSC were a disruptor to a near monopoly in the
U.S razor industry. They used “permission marketing” and their online
presence as their strongest weapon.
Permission marketing is, as the name suggests, marketing in which
consumers agree to, welcome, or feel adds value to their lives. Their comedic and highly popular YouTube
video went online in the U.S on March 1st, 2012 and by September
2015 they had already surpassed Schick in terms of razor blade cartridge
sales. They are now second only to
Gillette (Barker et al, 2017 p 62-63). DSC’s
CMO describes their technique as storytelling rather than just selling. He articulates that videos should reward
consumers for giving a moment of their time.
People watch DSC’s videos because they want to, not because they have to
(Gesenhues, 2016).
TWITTER LINKS... you will not be disappointed!
Dollar Shave Club Twitter Gillette Twitter
DISTRIBUTION CHANNELS
The
primary objective when deciding on a distribution channel is to ensure that the
desired product is available in the right place at the right time when a
consumer needs it (Dibb et al, 2016 p 616).
DSC use a subscription
based business model, where anybody can join the “club” for as little as $1 and have razors sent directly to their
home each month. Initially, as a
welcome, new club members will receive handles and a full pack of
cartridges. They will then pay a monthly
subscription and decide on their own frequency and any additional extras
required. DSC tell patrons that with
this distribution channel they will never forget to buy razors, and therefore
never run out. It is a low commitment
subscription and users are free to cancel at any time (Dollarshaveclub.com,
2017).
Since launching in 2012,
DSC have altered the distribution landscape within the U.S razor market. “Shave clubs” have become increasingly
popular with companies such as Harry’s, 800 Razors and Bevel adopting similar
marketing models (Barry et al, 2016).
Gillette themselves, after a 13.5% loss of market share to DSC, have now
introduced their own shave club (Whipp, 2017).
Cook and Garver (2012) suggest that superior customer satisfaction and
value can be gained through subscription relationships, and that vast
opportunities loom for organisations who successfully exploit them.
PRICE
PRICING STRATEGY
For
DSC price is at the core of both their business model and their marketing mix,
so much so it features in their company name.
Dibb et al explain that an organisation uses a pricing strategy to achieve both marketing and
pricing objectives (2016, p608). As
with their brand DSC’s focus when it come to a pricing strategy is transparency. The name “Dollar Shave Club” gives reference
to the most modest of their subscription packages. “The
Humble Twin” retails at $1 per
month. For this price, which is far
below the market average, buyers receive a handle with 5 razor cartridges on
the first month and 5 refill cartridges every month thereafter
(Dollarshaveclub.com, 2017).
The practice
of setting a low price to attract customers with the intention of also selling
higher priced items is called bait pricing (Dibb et al, 2016 p605). Once the $1 bait price has led buyers to
DSC’s website they have the option of upgrading their subscription to superior
products for either $6 or $9 per month.
Additional skin care products can also be purchased. DSC’s strategy would have been considered penetration
pricing when they first entered the market.
The price is lower than their competitors and this allowed them to gain
a sizable share of the market. This pricing
strategy has been consistent for DSC since they first entered the market
(Vinjamuri, 2012). DSC's prices can all be seen by following the link below to their website.Dollar Shave Club Website
INFLUENCES
UPON PRICING AND CHANGING PRICE
Gillette
held the majority of the U.S razor market until DSC materialised (Vinjamuri,
2012). They traditionally employed a
non-price competition approach, emphasising instead their quality. Gillette belong to the Proctor and Gamble
(P&G) group and are one of their most profitable businesses. Operating margins for their razors are 29%
and until recently there was no reason for them to change their pricing strategy
(McMahon et al, 2016). A Wall Street Journal article from 2017
suggests that marketers do not pay enough attention to the price element of the
marketing mix. For Gillette specifically
their obliviousness to buyers looking for a more reasonable priced quality
razor may have cost them significant market share (Glazer, 2017). A low cost entrant can alter the entire
market structure (Brooks and Simkin, 2012).
DSC did just that and this has resulted in a change to Gillette’s
pricing structure. In order to protect
the brand, Gillette will alter prices by as much as 20% as of March 2017. They have also recognised a gap in their
pricing structure and vowed to fill the “white
space” between their cheaper and more expensive items (Whabba, 2017).
PRICING
TACTICS
Captive pricing
describes the relatively low cost of a basic product with a subsequent high
cost for a product needed to enhance or activate it (Dibb et al, 2016
p604). This type of price lining is
prevalent throughout the razor industry.
So much so that it is often referred to as the razor-razor blade
business model (Teece, 2010). Some
suggest that that King Camp Gillette founded this model, though this has been
widely discredited. Regardless, it is
still used by most razor companies with handles which can last for years being
comparable in price to just one month’s quota of blades.
A psychological pricing
tactic, namely odd/even pricing is employed by Gillette. Not a single razor or blade on their website is
priced at an even number (Gillette.com).
Buyers perceive odd numbered items to be less expensive, as they
subconsciously assume a reference price rounded up to the nearest ten (Baines
and Fill, 2014 p321).
DSC do not subscribe to
this tactic and all subscriptions are priced as even numbers. This is in keeping with their authentic
no-nonsense brand image.
Promotion is the way in which a company communicates with the market. It can be used for persuasion and information sharing. The role of a marketer with regards to promotion is to ensure that this information is targeted at the appropriate market segments (Dibb et al, 2016 p467).
DIRECT MARKETING
Direct marketing has been
recognised as a useful tool to forge stronger relationships with customers (Baines
and Fill, 2014 p 360). Customised
communication is used to directly connect with customers and the target market
(Dibb et al, 2016 p481).
Since DSC introduced the shave
club concept, the marketing mix employed by many manufacturers in the industry
has changed. Chuang and Tai (2016) observed
that the social benefits of being a member of such a club strengthens a
consumer’s loyalty. So much so that due
to the increased level of interaction between the provider and consumer they
may be inclined to stay loyal to the product even if they become disappointed
with the performance. This is due to feeling a psychological investment.
When a customer joins a
shave club they are not only signing up for a monthly subscription of razors,
they are also allowing for a channel of direct marketing. The company will have access to their email
address and home address (Dollershaveclub.com and Gillette.com, 2017). Gillette utilise this well and target their
club members with exclusive coupons, promotions, free samples and information
on new products. The also intensify the
inclusive club feeling by mailing their members with new ideas and shaving tips
(Gillette.com, 2017).
ADVERTISING
Advertising is a way in which organisations
use paid for media to communicate information about themselves and their
product. It is non-personal, wide
reaching, and on a cost per person ratio it can be considered very cost
effective (Dibb et al, 2016 p475).
For the razor industry, advertising as a
marketing tool can be dated back to the 18th Century. Newspaper adverts were placed for pioneering
steel razors with the emphasis being on both the quality of the product and the
metallurgical skill of the manufacturer (Withey, 2012). This message of high quality and innovation
remains the emphasis of Gillette’s recent razor adverts. Their “The
best a man can get” campaign premiered in 1989 and is the tag line most
consumers still associate with them (Adage, 2017).
Gillette invest in many forms of advertising
media and reach a wide audience via television, magazines, internet, newspapers
and billboards (Advertising archives, 2017).
This allows them to stay in the public’s awareness and have an up to
date communication of new products and innovations. Marketing magazine (2016) suggest that
Gillette do not simply market a product to men, they “market masculinity”.
SPONSORSHIP
One element
of the marketing mix which polarizes competitors in the razor industry is the
use of sponsorship, particularly with regards to celebrity endorsements. Sponsorship is defined as support, either
financial or material, from an unrelated donor (Dibb et al, 2016 p479). The benefit of sponsorship to an organisation
is to generate brand awareness and exploit positive associations to a target
market (Baines and Fill, 2014 p398).
Gillette have
used sponsorship in many forms to promote their brand. Their most favoured method is celebrity endorsement. By using aspirational brand ambassadors such
as David Beckham, Roger Federer and Lionel Messi, Gillette are aligning their
products with success, power and respect.
Most recently they have tapped into current trends and recruited online
gaming star Enrique Cedeno Martnez, known in the gaming realm as xPeke (Lang,
2017). Gillette also sponsor beautiful
and successful female brand ambassadors, such as Jennifer Lopez and Emma Willis
to promote their Venus razors (Advertising archives, 2017). DSC by contrast mock celebrity endorsements,
asking in their promotional video “do you
like paying 20 bucks for razors? 19 of them go to Rodger Federer”.
Lionel Messi and Roger Federer have both been sponsored by Gillette.
In 1938,
Gillette president Joseph P. Sprang Jr significantly increased their
advertising budget. They have since
sponsored many events, such as baseball world series, beauty pageants, boxing
events and the super bowl (Adage, 2017).
They
also pay $7 million annually for the New England Patriots “Gillette Stadium” (McMahon
et at, 2016).
Within
a seemingly similar market such as the razor industry, diverse approaches to
the 4 Ps of the marketing mix are exploited.
Organisations
within the industry employ opposing yet successful marketing approaches.
For
DSC their main marketing objectives are honesty, fun and relatability. When they entered the market their unique use
of the marketing mix not only gave them instant success but also changed the paradigm
of the industry. Straight forward pricing and distribution along with the sharp humour of their video marketing
have proved exceptionally successful tools.
Gillette
employ more traditional tactics which have been established in the industry
since the 18th century. They
use the marketing mix to emphasize their innovation and product
superiority. Their application of the
marketing mix asserts them as powerful industry leaders. They make use of celebrity affiliations to
reinforce their image, and their distribution and advertising models make sure
that they are always in close proximity to consumers, both physically and
psychologically.
