Gillette and the Razor Market
Trends and Case Studies
A project by the Marshall Economic Research Group
Outline
TRENDS IN THE RAZOR MARKET
THE ECONOMETRIC ESTIMATION
CASE STUDY: KIWI AND THE SHOE POLISH MARKET
CASE STUDY: REDBULL AND THE ENERGY DRINKS MARKET
More beards in recent years
•  Metrosexual / hipster trend in Western Europe and North America
•  Socially accepted and propagated by media
Can this be the reason for the observed decline in
Gillette market share?
Gillette Market Shares (%)
32
France
22
UK
USA
Germany
12
2
2005
2006
2007
2008
2009
2010
2011
2012
2013
Social trends are intangible and unpredictable
•  “There is no actual evidence that beards have peaked or are in decline
as a fashion statement or anything else.”
– Keith Flett of Beard Liberation Front
Approaching peak beard
•  “We may have reached peak beard.”
- Prof. Rob Brooks, social anthropologist
at the UNSW Australia
•  “…beards are on the wane…”
- The Guardian
•  “Let’s face it, this beard’s gone feral”
- Schick ad campaign
While “hard” economic dynamics might be somehow
more persistent…
•  Part-time employment
Hypothesis:
in Part-time rate ~
razor sales
•  Employment of the young
Hypothesis:
in youth employment ~
razor sales
•  Job sector
Hypothesis:
in Service Sector workers ~
razor sales
Outline
TRENDS IN THE RAZOR MARKET
THE ECONOMETRIC ESTIMATION
CASE STUDY: KIWI AND THE SHOE POLISH MARKET
CASE STUDY: REDBULL AND THE ENERGY DRINKS MARKET
Our methodology to estimate these impacts
Specify a model with nineteen
developed countries with similar
features in the 2005-2012 interval
Use the coefficients to
compute the estimates for
analysis and forecasting
Countries Included
Australia, Austria, Canada, Denmark, Finland, France, Germany, Greece, Italy, Japan, Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, United States, United Kingdom
Our results
The model
The Implications
•
An increase by 1% in the Part Time to Total Employment ratio leads to a decrease in the Gillette
Market Share by 0.29%
•
An increase by 10% in the Labour Force Participation of younger people leads to an increase in
Gillette Market Share by 0.65%
•
An increase by 10% in the Service Sector ratio of employment leads to an increase in Gillette
Market Share by 0.6%
Using the Estimates for Forecasting
Framework
•
We use the estimates for the 2005-2012 model to “forecast” the market share for 2013. This allows us
to evaluate the quality of the model
Gillette Actual and Predicted Market Share
for 2013
Country
Actual
Predicted
France
27.8
28.2
Germany
21.3
20.4
United
Kingdom
29.3
30.0
USA
30.4
27.2
Conclusions
•
•
The model seems to be able
to forecast reasonably well
for European countries.
It does not perform similarly
for the US, possibly because
the market has a different
structure
Outline
TRENDS IN THE RAZOR MARKET
THE ECONOMETRIC ESTIMATION
CASE STUDY: KIWI AND THE SHOE POLISH MARKET
CASE STUDY: REDBULL AND THE ENERGY DRINKS MARKET
Shoe Polish Market Characteristics
Low sales
volume
Low value
Consumer
demand inelastic
Infrequently
purchased
Shoe Polish Market Characteristics
Target consumers: 25-44 years old
Non user
Male shoe care users
Female shoe care users
38%
37%
63%
25%
Timeline
1906
1984
2011
Traditional Sales Strategy
Legacy
Brand
Recognition
Product
dominance
•  Used by Allied troops since WW1: still has
a higher market share in Allied countries
•  Using kiwi is like a tradition for some
•  Niche market that started off as a product
of social status symbol
•  Brand loyalty
•  Simply better than other products quality
wise
•  Does not dry up leather like other polishes
Adjusting to new market trends
Increased Product Line
•
Decrease in sales
due to more casual
footwear (e.g.
sneakers) from
1980s onward
Kiwi introduced new foot-care products,
including shoe inserts, heel cushions,
and anti-slip pads and strips
Expand Targeted Groups
•
Developed specific products for
women, which Kiwi had previously
ignored
New merchandising System
•
Integrated their new foot-care products
and traditional shoe-shine products into
a single aisle, to facilitate the shopping
experience
Kiwi: wrap-up
Expand
Consumer
Group
Conduct
Extensive
Market
research
New
Merchandising
System
Kiwi maintains dominance
Outline
TRENDS IN THE RAZOR MARKET
THE ECONOMETRIC ESTIMATION
CASE STUDY: KIWI AND THE SHOE POLISH MARKET
CASE STUDY: REDBULL AND THE ENERGY DRINKS MARKET
Timeline
•  Started in
Austria
1987
•  Created the
global market
for energy
drinks
2002
•  Monster
enters the
energy drinks
market
2013
•  Red Bull still
dominates the
market with 5
billion cans
annually
Current Market Shares
Historical Market Shares
Redbull and Monster Sales (US $ million)
4,000
3,500
3,000
2,500
Redbull
2,000
Monsters
1,500
1,000
500
0
2010
2011
2012
2013
Traditional Sales Strategy
“Cool” Image
Extreme Sports
“Red Bull gives you wings”
Risk-taking attitude
Adjusting to market trends: how to face Monsters
“Coolness”
Factor
•  Marketing done mainly through extreme
sports events, like Red Bull Air Race
and Formula 1
•  Red Bull also gained popularity through
bars and other alcohol-serving
establishments all over the world
Alcoholic Drinks
•  Vodka Red Bull, which has led to
dangerous effect on health but
nevertheless raises the brand’s
association with “fun”
Wrap up: how to face Monsters competition
Energy
drinks
replacing
soda drinks
Entire
energy
market still
growing
Main target
consumers
are young
people
Continuing growth for
Red Bull
Concluding Remarks
The
importance of
employment
trends
Kiwi: the
ability to adapt
to market
trends
Trends in the
razor market:
not just the
“hipster-mania”
Red Bull: the
importance of
targeted
marketing