Gillette's Marketing Strategy

One of the most innovative businesses of the 20th century is Gillette. One of the very few businesses that have endured more than 120 years, more than 7 revolutions, and two World Wars. However, what is more, intriguing about Gillette is not its expansion but rather the fact that it came up with a multi-billion dollar idea, and this Gillette’s Marketing Strategy laid the groundwork for some of the biggest businesses on the planet, including Kodak, PlayStation, Xbox, and even the Amazon Kindle.

What precisely is this tactic, We wonder?
How did the makers of razors influence the PlayStation and Xbox?
The more crucial question is how you may use this method for your startups.

The history of the Gillette company, which dates back to the late 1800s, contains the solution to this query. At this period, clean-shaven moustaches was becoming more popular than thick beards, which were going out of style. However, shaving was not a simple task back before, and it was even regarded as a dangerous task. There were only two ways to shave in the late 1800s.

A straight razor was the first choice, and a safety razor was the second.

A Straight Razor

The straight razors were the ones that resembled those you may have seen in Game of Thrones the most. Because they were so sharp and people were a little hesitant to approach them close to their faces or necks, they were also seen as being quite unsafe.

A Safety Razor

The safety razor, on the other hand, required constant sharpening, which was a highly time-consuming process. It was more like an initial investment. As a result, men in the 19th century had to seek professional assistance and went to the barbershop two to three times every week. A traveling salesperson became exceedingly tired of using his dangerous razor as he was running late for work one fine day. Additionally, he had run out of patience with constantly sharpening the safety blade between shaving sessions.

How Idea of Gillette Generated?

That’s when he had the idea to create a razor with a replaceable, disposable blade that could simply be thrown away after each use, and that is how the contemporary razor blade concept came to be. The groundbreaking invention of disposable blades, which went on to transform men’s grooming forever, was the brainchild of none other than Mr. King Gillete himself. King Gillette worked with a friend to obtain a patent for their razors and their blades, so no one else could imitate their unique design.

That is how Gillette maintained its market-leading position for the subsequent 15 years and grew to be a million-dollar business.

Also Read: Marlboro Marketing Case Study

Affect of Competition

When the Gillette razor blade’s patents expired in 1921, things began to shift. Within a single year, every single Gillette competitor was producing a pair of razor blades that were identical to Gillette’s, which put Gillette in serious financial problems. This was also amply demonstrated by their sales figures. From 1921 on, Gillette razor sales had a drastic reduction of 20% in just one year, which is an absurd decline for a business that had dominated the market for more than a decade.

Gillette Billion Dollar Idea to Compete

It basically said, “Give them the razors and make them come back for blades,” in one phrase. In order to compete with the competition, Gillette started selling razors for extremely low prices, sometimes even at a loss. This was done in order to draw customers into the “Gillette Ecosystem.” Guess what, too?

Sales of Gillette razors increased dramatically within a year, and after 1922, when the razor blade plan was completely adopted, they increased by an enormous 127 percent. I reiterate: Due to the successful implementation of the Razor Blade strategy, Gillette saw a significant gain in sales of 127 percent in just one year, turning around a 20 percent fall in sales. And in doing so, Gillette created a legacy in pricing that has endured for 100 years and continues to act as an inspiration for some of the most well-known companies of the twenty-first century. And the Razor Blade concept is still heavily covered in business schools all over the world today.

Also Read: 4 Economic Concepts Everyone Should Know

Other Companies Using the Same Approach

To this day, Sony still follows its price strategy and sells PlayStation consoles at a loss in order to generate ongoing revenues from CD sales and PlayStation Plus memberships. In fact, Sony lost around $60, or roughly 4200, for each PS4 console they sold in order to generate billions from CDs and subscriptions.
Kodak only sold cameras at a pitiful price to encourage users to return the film rolls.
The Amazon Kindle is now being sold for nearly no profit in order for Amazon to earn handsomely from the selling of e-books. This is the Razor Blade model’s power.

How can you use the same approach for your startup?

People, as far as I’m concerned, there are three key lessons you should remember while you implement this plan for your startup. The first thing you must realize is that by attracting clients to your ecosystem, you will always have an unfair advantage over your rivals because an ecosystem invariably leads to high levels of customer retention.

Second, as you implement this strategy, you must identify the areas where resistance is at its highest and then seek to reduce it. For instance, you might be less hesitant to purchase a PS4 console than you would be to purchase PS4 games first. In contrast to doing it otherwise, selling consoles at a loss and raising the price of the games will result in exponential returns.

Thirdly, you must be careful not to get so reliant on this model that you overlook the potential prospect of disruption, as happened with Kodak. I’m not sure how many of you are aware of this, but Kodak was so focused on making money from the sale of their film rolls that despite being one of the first companies to file a patent for digital cameras, they were unaware that the film roll would eventually cease to exist as the digital revolution gained momentum.

They were essentially digging their own graves by adhering to the razor blade concept. Finally, and perhaps most crucially, every business owner must understand that price has two sides. If employed properly, it can yield astounding results, but if you fail to monitor developments, it may even cause the demise of your company.

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