Presented to:
The School of Business
California State University, Monterey Bay
Presented by: Team 8
Valerie Dominguez
Joshua Kern
Christopher Phelps
Monique Yniguez
March 14, 2013
Executive Summary
MARKET ANALYSIS SECTION- Part 1
MARKET ANALYSIS SECTION
Situation Analysis[CD1]
In the current marketplace many consumers go to supermarkets to buy razors even though there
is a much better alternative. The most notable market leader, Gillette, manufactures their razors,
and then sells their products to supermarkets. The reseller such as Target or Wal-Mart marks up
prices for consumers.
The Dollar Shave Club manufactures the same quality razor and ships it right to the customer’s
door allowing the consumer to pay less for the same product sold in stores. This club has
identified a niche in the razor market and shortened the supply chain of their competitors. In
order to enter the full marketplace they have to extend their product line to broaden their target
audience.
Currently, The Dollar Shave Club is missing an opportunity by not targeting women with their
advertisements or products. Their top competitor, Gillette offers the “Venus” product line. If The
Dollar Shave Club intends on taking advantage of this opportunity, they need to make it possible
for women to order products on The Dollar Shave Club’s website.
Market Summary
Gillette, the market leader, caters to 94% of women that prefer shaving by offering the “Venus”
line (Marketing Strategy[CD2] p.396). The Dollar Shave Club needs to extend their product line
to offer female razors [CD3] in order to expand their male dominated target audience. They must
do this in order to compete with the market leader, Gillette, a company that generated $8.34
billion of the $13 billion dollar razor industry Dan, K. (WSJ Reporter). (2013).
Many other razor companies such as Schick cater to women by offering different styles of razors
such as “Schick Hydro.” Until The Dollar Shave Club caters to women, other companies in the
industry will continue to have the competitive advantage in the female razor market[CD4] , giving
other companies the overall advantage in the razor industry.
The Dollar Shave Club has the chance to build their revenue and gain a competitive advantage
over Gillette if they can manufacture and deliver the same quality but for a lower price to
women. In order to expand as a company and introduce new female products, The Dollar Shave
Club should target the following market segments:
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City Strivers
College Students
ATM Nation
Loan Rangers
Generation Wi-Fi
City Startups
Bohemian Mix (Nielson).
Market Summary
Geographics
Warmer Climates
People are likely to shave and use razors if they live in warmer climates because they would
be more likely to wear swimwear and clothing such as shorts and tank tops.
California
Our marketing campaign will start in California because we are focusing on a state with a
diverse population and a warm climate. Additionally, we want to start marketing in
California because people in other states look to California for the next leading trends.
Suburban Areas
Focusing on suburban areas will help us reach women who lead busy lives trying to run
their households and raising children.
Large College Campuses in Southern California
College Campuses that are located in Southern California have large student bodies that
are usually comfortable with technology and purchasing monthly subscriptions[CD1] . Most
students enjoy being outside in the sun and going to the beach which typically means
shaving more. Also students don’t always have a vehicle accessible to them to go to the local
department store to purchase razors.
Demographics
Women
Women make up a large part of the razor market and have enormous buying power[CD2] .
Currently The Dollar Shave Club is only targeting male consumers and losing out on a
large part of the market. We will continue to pursue the male market but also expand to
appeal to females.
Caucasian, Latino, and Mix
California's top two ethnicities are Caucasian and Latino[CD3] . We will try to reach these
two ethnicities foremost because they make up such a large part of the population.
Full time employees
Typically people with full time jobs lead such busy lives that they would be more willing to
join a monthly subscription to make their lives easier.
College Students
College Students tend to pass on information quickly about their likes and dislikes. This would
allow The Dollar Shave Club to be marketed by their peers.
Single Moms
Single Moms tend to lead very busy lives. They are always trying to juggle all their
responsibilities and having one less thing to worry about would make their lives less chaotic.
Large Cities
Of the people we surveyed those living in larger cities were more willing to try a new brand of
razor and sign up for a mail subscription (M. Yniquez, Survey, March 10, 2013).
Renters
Renters were more likely to be open to trying a new razor brand based on the income levels
surveyed (M. Yniquez, Survey, March 10, 2013).
Annual Income Level of $0-$10,000
In our survey we found that those individuals who were in this income bracket were more likely
to try a more cost affordable brand of razor (M. Yniquez, Survey, March 10, 2013).
Annual Income Level of $40,000-$60,000
Our survey led us to the conclusion that people who were in this bracket of income were open to
online subscriptions and were not as brand loyal. They were looking for savings but also wanted
quality (M. Yniquez, Survey, March 10, 2013).
Behavior Factors/
Psychographics
Use razors as their primary hair removal device
We will focus our efforts only on those who use razors as their hair removal choice.
Wear shorts/skirts/dresses/tank tops
Those who wear this type of clothing are more likely to use razors as their hair removal
choice.
Lead busy lives
We want to target those who have busy lives because the subscription would help them
eliminate the need to buy razors at the store.
Have children
Those with children more than likely do not have the time to run to the store every few
weeks to buy razors or it might be an inconvenience. They are more likely to be open to
a monthly subscription[CD4] .
Don’t have brand loyalty with razors
Those without brand loyalty will be open minded about trying another brand that offers
the same quality.
Looking for a bargain
Those looking for a bargain will gladly sign up for The Dollar Shave Club because they
offer quality products at a bargain price.
Open to new trends such as monthly subscriptions
People who already have monthly subscriptions and enjoy them will be more likely to
sign up for The Dollar Shave Club.
Interested in appearing well groomed by society standards
Since society has put such an importance on being well groomed, this will be the need
that The Dollar Shave Club can help fulfill.
Read magazines such as Cosmopolitan, Seventeen, Glamour, Maxim, Family
Circle, Readers Digest, and Shape
We want to target women that put grooming on the top of their lists. We also want to
target moms at home.
Have online banking
On the Nielsen website those who are in the income ranges we are targeting were most
likely to have online banking ("2011 P$YCLE Segmentation," 2011).
Early Adopters
Those who are first to jump on the bandwagon will be the first to sign up for The Dollar
Shave Club.
Early Majority
Following the Early Adopters will be the Early Majority who typically wait for a bit until
something has been out on the market a while.
Market Need
There is a great need for another competitor in the industry. Procter and Gamble is currently the
market leader, controlling approximately 70% market share of blades and razors with the Gillette
Company (McDonald, 2012). Procter and Gamble currently own 40% of market share of women
with their Braun, electric epilators. Net sales of Procter and Gamble’s grooming division for
2012 was $8.34 billion. The hair removal industry is being firmly controlled by Procter and
Gamble, providing them with the ability to set the market price of products.
Dollar Shave Club is offering another option for female customers. One hundred million women
over the age of 13, in the United States, remove hair in some fashion. 94% of the women say
they prefer to shave with a razor blade (Ferrell & Hartline, 2011). The Dollar Shave Club will
give these potential customers a more affordable option. In drug stores and grocery stores, there
are only two or three brand options to choose from, primarily Gillette brands.
Market Trends
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High Prices
Laser Removal
Increasing gas Prices
Three variables are important within the marketplace: high products prices, increased popularity
of laser hair removal, and increasing gas prices. The most important trend occurring in the
marketplace is the high prices associated with quality razors. Many women are spending more
than 20 dollars a month on razor blades. The industry is being controlled by a single company,
allowing them to set the price of industry products.
Laser hair removal is becoming more popular among women. Many women hate to continue
shaving with razors or electric shavers. Thus, these women decide to permanently remove leg
and arm hair with laser hair removal treatments. According to American Society for Aesthetic
Plastic Surgery, in 2010, nearly 1 million laser hair removal treatments were performed
(American Society for Aesthetic Plastic Surgery, 2011).
Increasing gas prices will continue to increase the overall cost of purchasing razor blades at the
store. According to Gas Buddy, gas prices have been unstable but are steadily rising (Gas Buddy,
2013). Companies, primarily Procter and Gamble, need to deliver their product to stores.
Consequently, increased gas prices will increase delivery costs of products. Not only that but it
will be very costly for consumers to drive to the store in order to purchase razors.
Market Growth
The hair removal industry is naturally growing. Industry sales are continuing to grow at a small
rate (Global Industry Analysts, Inc., 2010). The market for shaving products is expected to grow
to 33.3 billion dollar globally, by 2015 (Global Industry Analysts, Inc., 2010). “Technological
innovations, expected new product launches, enhanced focus on women’s shaving products, and
a regain in demand for high-end disposable products upon economic recovery are expected to
fuel market growth” (Global Industry Analysts, Inc., 2010).The market trends are currently
affecting the growth of the hair removal industry.
Net sales and net earnings of our competition are constantly expanding. The previous two years
have shown an increase of both sales and earnings of the Gillette brand. Sales of the Gillette
brand increased 5% in 2011 and earnings increased 10%. The increases are small percentages,
yet make up hundreds of millions in sales and earnings.
The market has a large window of opportunity for new competitors. The hair removal industry
currently lacks in competition in the marketplace. The market is shifting towards more
competition, with Axe recently entering the hair removal market. An increased competition will
lead to more affordable prices. The Dollar Shave Club with be leading the way with the most
affordable prices of any company.
SWOT Analysis
Competition
Product Offering
Keys to Success
Critical Issues
Marketing Strategy Section- Part 2
Marketing Strategy
The value the Dollar Shave Club can bring by offering a female product line is convenience.
Dollar Shave Club already offers convenient razor delivery at a low price to men. Adding a
female product line will allow this company to broaden their targeted audience. This new
product line targeted towards females will offer female products with quality comparable to
competitors at a lower cost in a far more convenient fashion. All of these products will be
integrated into the company’s website making them easily accessible to the targeted audience.
The Dollar Shave Club will be able to offer a significantly lower price than competitors because
they have a shorter supply chain with fewer intermediaries which will save the end user money.
Also, the Dollar Shave Club will continue to be responsive to consumer demands and maintain
excellent customer service throughout its expansion. Another strategy Dollar Shave Club will
use is to expand its digital marketing channels on television and social media.
Value Proposition
For anyone who buys razors, is pinched for time, and is tired of paying too much for a product as
simple as a razor can benefit from the service The Dollar Shave Club provides. Unlike industry
leaders such as Gillette, The Dollar Shave Club manufactures the razors themselves and sends
them right to your door so you save money spent on resellers like Target, and time lost going to
those resellers.
Mission
Our mission is to deliver outstanding, quality razors at the beginning of every month, for only a
few dollars.
Marketing Objective
The marketing objective of Dollar Shave Club is to bring awareness to the company. Many hair
removal consumers don’t have a variety of options. Dollar Shave Club has already targeted the
male segment and assembled a solid customer base.
We are attempting to acquire a new segment of customers; women. Of the women who partook
in the survey, over 93% of the women have never heard of Dollar Shave Club and over 85% of
the women would be willing to try a different brand of razor. These numbers are astonishing, if
we can inform all these women of the Dollar Shave Club products, many of them would be
willing to subscribe to our monthly delivery.
Financial Objective
Break-even third quarter.
How this will need to be accomplished (Numbers)
x units/ month or ____ sales
(Refer to our Sales Forecast)
Target Markets
Dollar Shave Club will be primarily targeting women aged 18-49. Despite accounting for 75% of
the nation’s assets, Dollar Shave Club is not targeting baby boomers as target customers (Our
Book). Baby boomers are welcome to use our services if they wish. Baby Boomers will hear by
word-of-mouth through our current customers and will be exposed to our magazine
advertisements as well. We are working to acquire the greatest number of subscribers as
possible. Baby boomers will not be targeted because each subscription will boost revenue
equally; Dollar Shave Club needs to target segments with the most interest in our product. We
will be targeting all the Generation X customers. Dollar Shave Club will also be targeting
Millennials, over the age of 18. We will be advertising mainly over the internet and a study
shows that 91% of Millennials are on the web (Our Book).
Positioning
Dollar Shave Club will be positioning products in a “More for less” category. Competitors have
set the market price and they offer their products for a higher price. Dollar Shave Club offers our
products at an affordable price. The prices of our service will be fixed and minimal for the
consumers.
Strategies
The marketing strategy of the Dollar Shave Club is focused on the convenience of the monthly
subscription as well as the amount that the customer is saving by buying brand name razors. This
is only possible with good relationships with our suppliers and the efficiency of the distribution
channels. The target market consists of males and women ages 18- 49 that want convenient and
reliable blades. The target market is made up of people that are busy and lead hectic lives. These
include college students, single moms and busy professionals. The Dollar shave Club adds
convenience, quality, and low prices to people’s lives. Our product brings value by offering off
brand razors that are inexpensive and delivered straight to the customer’s door.
Marketing Mix
Pricing
There are 3 price levels for the male segment and the female segment providing a razor for each
segment that is affordable. These are: the Humble Twin/ the Silky Twin which costs 1$ plus
s&h.The 4x/The lover’s Blade: 6$ s&h included. Lastly, the Executive/the VIP: 9$ s&h
included.
The starting price level is based on the name of the company. Then after the dollar razor, the
price increases as the the next two levels are fancier razors with more add-ons like strips of aloe,
added blades, and more grip to the razor, which increase the price.
These are all affordable razors and relate to our target market because our positioning is more for
less; this allows the customer to get more value for a lower price. Currently, the prices for these
razors are below the prices of Gillette and Schick prices (Gillette). The shipping costs are low for
the dollar razor and come with the other two razors. This allows for the customer to actually be
getting the value they paid for.
Distribution
Dollar shave club will create close distribution channels with suppliers and intermediaries to
keep prices low for customers this makes sure they maintain prices and this adds to customer
value.
Distribution channels:
(ADD CHART HERE)
Marketing Communications
The marketing communication mix was determined by the fact that Dollar Shave Club has no
tangible store, it is an online subscription, therefore there needs to be enough marketing and
online presence to get the word out about the company and its products. We will use extensive
social media and Internet marketing to gain awareness and a following of new customers. Next,
we will distribute print ads and magazine ads as well as some T.V commercial spots to inform
people about the company. The Dollar Shave Club will host marketing events and advertising
events on college campuses to encourage them to sign up. This mix will target our customers
online and offline.
Mix comprises of
Marketing Mix
Marketing Research
Our primary research was held in an online survey, which 98 respondents participated and
answered a total of 15 questions. Our team emailed the survey to family and friends. In addition,
we also posted the online survey on social medians for friends and acquaintances to engage in.
The responses of our survey were submitted between March 07, 2013 and March 12, 2013.
Our secondary research was gathered by searching online from the Procter & Gamble annual
reports, the Gillette website, journal articles from Factiva and newspaper articles. We have also
analyzed market trends of current razor companies.
Future marketing research will include following existing trends in the razor industry. We will be
researching successful segments of consumers. We will analyze the geographic locations of our
current customers and possibly connect warmer climates to increased razor blade sales. We will
research the effective demographics and bring our focus to these segments.
Financials
Break-even Analysis
Sales Forecast
In the first quarter The Dollar Shave club expects to sell over 10,000 of each new
product. It is expected that the cheapest, most basic razor will sell the most and that our
most expensive razor will sell the least. Since the products are new, rapid growth per
quarter is expected in the first year yielding over $815,000.00 in sales. For the second
year it is predicted that sales will not increase as rapidly but will still experience a 7%
growth from year one, sales equaling over $872,000.00. In the third year it is forecasted
that growth will continue and increase 10% from the second year, a total 17% from the
first year. Total products sold in the third year would be 190,674 with sales reaching
over $959,000.00. These sales should satisfy our marketing budget and yield profits.
Therefore, these forecasts might be used as a quota but should be readjusted after the
first quarter for a more accurate number.
Expense Forecast
Dollar Shave Club will have many marketing expenses, annually. The company has created
multiple fixed and variable marketing expenses which are listed below.
Fixed costsWebsite Developer (in house)- $60,000
Graphic Designer- $40,000
Domain Name annual fee - $2,000
Director of Marketing- 70,000 + bonuses
Variable costsCommercial Advertisements- $225,000
Banner Ads - $10,200/ 1,530,000
Facebook side ads- $5,000/ 7,980 hits
Street Teams- (college orientation) - $20,000
Magazine Advertisements Magazine Table: (Insert)
http://www.condenast.com/brands/glamour/media-kit/web Glamour
http://www.cosmomediakit.com/r5/showkiosk.asp?listing_id=360482&category_id=27810&
category_code=read Cosmo
http://www.condenast.com/brands/gq/media-kit/print GQ
Controls
In order to measure the success of our new campaign that targets women, we will keep track of
all sales by monitoring each new subscription and phone ordered subscription done by females.
Since there are no other outlets to purchase a monthly subscription to The Dollar Shave Club it
will be relatively easy to keep track of. We will also continue to track new male subscriptions as
we want to keep our already established customer base and make sure that we do not lose any
because of our new campaign to target women.
Implementation
Dollar Shave Club will begin by conducting initial research and surveys, regarding the popularity
of women razors in the marketplace. The company will continue the implementation process by
acquiring our female-friendly products from our distribution manufacturer. Our three new blades
will be the focus of our new marketing campaign. Our main priority is to create awareness of our
product.
We will begin the marketing campaigns by introducing Dollar Shave Club to College Campuses.
The goal would be to attract students, who recently moved out on their own by introducing the
products during orientation. Students who have no vehicles, will be more willing to subscribe for
the program.
We will be advertising our program with commercials and magazines articles over popular
women television networks and publication companies. Dollar Shave Club will advertise on
social media and invest additional resources into Facebook side ads. We will create banner ads
for women interested in fashion and beauty blogs, in order to raise additional awareness to our
target market.
At the conclusion of our marketing campaign it is important for us to analyze the results of our
initial marketing campaign. The advertising projects which were successful, will need additional
resources, in order to boost the successful advertisements, even more. Unsuccessful
advertisement will be discontinued, leaving a larger marketing budget for the successful
advertisements. The Dollar Shave Club will also implement new advertisements strategies in
order to follow current market trends in the hair removal industry.
Marketing Organization
(insert chart Valerie created)
The Dollar Shave Club's current Director of Marketing will be leading our marketing
team. The team is comprised of our Webmaster, Graphic Designer, Street Team and our
Social Media Intern.
Director of Marketing and sales will be in charge of implementing new ideas and making sure
that our team is on track to meet deadlines. They will also be in charge of researching new trends
and promoting public awareness through press releases. Other job responsibilities include buying
commercial air time, magazine ads, banner ads, and facebook ads; these are just a few of the
everyday functions that our Director of Marketing and Sales will do.
The Webmaster will be in charge of development and upkeep of The Dollar Shave Club’s
webpage. They will also be in charge of all of the coding and making sure the website is
functioning correctly for customers to purchase subscriptions. Lastly our Webmaster will be in
charge of working with the graphic designer to ensure that the look and feel of the website is in
line with The Dollar Shave Club's brand.
The Graphic Designer will be in charge of all of the visual aspects of the website from ads to the
look and feel of the website. They are also in charge of working with the Webmaster to ensure
that all of the design is cohesive on the website and all other marketing avenues, such as
magazine print ads.
The Street Team will be our brand ambassadors. They will represent The Dollar Shave Club
across major college campuses during events. They will have booths in which they attract
students by offering freebies and having contests. Job duties will also include selling
subscriptions and creating brand awareness.
Lastly the Social Media Intern will be in charge of keeping up The Dollar Shave Club’s
Facebook, Twitter, and google+badge profiles. They will engage with our current and potential
customers by spreading awareness about our brand and creating an outlet for a conversational
relationship with consumers.
Contingency Planning References
Difficulties and risks that we foresee:
One issue is competitor’s influence in the marketplace. If Gillette decided to create a similar
service for mailing razors, this would be a threat, because Gillette has much more brand
recognition and market share.
This would mean Gillette would have to lower their prices to compete with the Dollar shave
club, which would essentially go against their company’s mission. If Gillette chooses to do so
Dollar shave club will expand the marketing to make sure new customers are always being
sought out. In addition to this Dollar shave club will continue to offer razors and additional
products. The customers that are already loyal will stay with Dollar Shave Club.
If we need to, we can always push efforts to new segments or expand our marketing campaign
for college campuses because this is a market that is changing every year. new students are
admitted and are newly living away from home. In addition our magazine and internet ad
presence can be widened as we have more funds to do so. At the moment the plan is for several
of the top magazines, but expanding this would make more people see the advertisements.
Examples include family circle and sports magazines as an expansion.
If expanding the company is an option and there needs to be a secondary headquarters built in
another location, personnel will need to be hired. New agreements and contracts with suppliers
and intermediaries need to be redrawn to keep up with the demand. This includes their razor
suppliers, mailing service, and the website maintenance crew.
The way the company would deal with the growth is to build another headquarters possibly on
the east coast of the United States or in the northeast to make shipping to the east coast and
possibly Canada, feasible in a timely manner. New intermediaries might need to be sought, as
well as new personnel to run the warehouse. Internet and Website maintenance can be done from
one location as is it possible to work from anywhere because of the internet.
If agreements with suppliers are cut off, this can impede on business and halt production, this
would not allow the company to function as needed. The Dollar Shave Club will have to reexamine and make agreements with another intermediary, possibly without the customer’s
knowledge so it doesn't affect price or the distribution.
Worst Case scenario(s):
China/India trade relations (war, foreign affairs) the worst case would be that our foreign affairs
impedes with our production of supplies. this would mean that the company would need to
acquire another factory to produce the razors at the same price that we need to keep prices low
and quality high.
The warehouse that we are holding our inventory is damaged due to natural disaster, fire or
means that are out of our control. The first thing would be plan out how much time we need until
the next shipping of product and if it affects people’s subscriptions, we need to notify our
customers and try to figure out how subscriptions would be handled. The company would have
to work with our intermediaries and suppliers and possibly rent a facility that is temporary to
deal with inventory as well as the customers that haven't gotten their shipments.
In these worst case scenarios, communication with the customers is essential. We will notify the
customer by email and mail and make sure that they know their razors are on the way. To curb
customer dissatisfaction, Dollar shave club can send either samples of shaving cream and or
samples of other products that are offered as gifts to ensure customer satisfaction. Sometimes all
the customer wants is to be heard and apologized to, so the Dollar shave club will ensure that
dissatisfied customers are addressed quickly and apologetically.
References
http://www.traderscockpit.com/analysisView/balanceSheet.jsp?symbol=GILLETTE
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&sqi=2&
ved=0CF8QFjAF&url=http%3A%2F%2Fwww.forbes.com%2F2001%2F10%2F18%2F1018gi
llette.html&ei=tiGAUePXKYe7iwKJ0IFY&usg=AFQjCNFYJMfTzrjRBOlBchp05ivJCefeBg&s
ig2=ug-vyCH9GaKIBnuihqVATA&bvm=bv.45921128,d.cGE
http://www.traderscockpit.com/analysisView/balanceSheet.jsp?symbol=GILLETTE
http://www.andyfox.net/dollar-shave-club-review-dollarshaveclub-com/
Price per banner ad
http://business.hibu.com/products/banner-advertising/#?cam=ppc-ao1-gog-ppc-c003g001-internet_banner_advertising-ph-m000-txt
cost per facebook ad
http://www.socialadstool.com/facebook-ads-guide/facebook-ads-cost/
shopify e comerce pricing
http://www.shopify.com/pricing
http://www.forbes.com/sites/davidvinjamuri/2012/04/12/could-your-brand-be-dollarshave-d/