Gillette’s Market Research in Sri Lanka

Gillette has been a pioneer in the shaving products category since 1990 and has since been
the world leader in the category. Gillette started its operations in India in 1988. It sells many
types of razors, razor blades, shaving cream, deodorants, toiletries, and oral care products.
The market structure of many of the Gillette’s products has mainly been virtually
monopolistic even with many producers in the market. Technology and product
differentiation plays a key role in the marketing of razors. Besides, Gillette spends heavily on
advertising and sales promotion.

Most of the Gillette’s products are interdependent in demand, production and consumption.
For instance, razor blades and shaving creams are complementary with razor. The demand for
razor is price-elastic and any reduction in the price of razor tend to increase its demand,
which has a direct bearing on the total revenue of complementary products such as razor
blades, shaving creams and shaving lotions. Gillette’s strategy has been to keep the razor’s
price low and the prices of razor blades and shaving creams relatively higher. Razor
contributes very low revenue to the company’s turnover, whereas razor blades contribute
almost 90% of the company’s turnover. Gillette’s marketing strategy entails price reduction
on one particular brand of razors. This, as a result, increases its demand while cannibalizing
demand of other razors in the similar category. The companies keeps a constant vigil on the
market and monitor the effects of pricing decisions on substitutes and its cannibalizing
impact on its other products.

Gillette India has a market share of 60% in blades and razors in India. The composition of Sri
Lanka’s shaving market (Figure 1) suggests that disposable razors accounted for 67% of the
market share followed by double-edge blades (32%) and twin blades (1%) in 1990. As
indicated in Figure 2, Gillette’s market share was a meager 7% while BIC dominated the
market with 91%.

Figure 1

Double edge
blades
32%

Disposable
razors
67%

Twin blades
1%
 Figure 2

BIC Super Max Gillette Others

1% 1%
7%

91%

Analysis of macro-economic data indicates that Sri Lanka has a population of 19 million that
is growing at 1.3% annually, with a per capita GDP of USD 850. The literacy rate in Sri
Lanka is quite high at 92% in the South Asian region. The male population in Sri Lanka is
about 52%, of which 60% males are above 15 years of age. This gives a broad indication of
good market potential in Sri Lanka. Gillette’s meager share of 7% in value term is a matter of
serious concern for the firm and the top management is naturally worried.

Questions:

1. Work out in detail the type of information required for conducting the research
2. List the sources one could tap for compiling secondary-level database of information.
3. Identify the cultural traits of Sri Lankan consumers that influence the field surveys
and marketing decisions.
4. Prepare a detailed market research plan with the following objective:
(a) To identify reasons for such a low market share of 7% in Sri Lanka compared to
60% in India.
(b) To increase its market share to 30% in the next five years.