Gillette : Managing Product Innovation

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Case Details:

Case Code : MKTA015
Case Length : 21 Pages
Period : 1990-2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Gillette
Industry : Consumer Goods
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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There are few companies with more powerful global brands than Gillette, and there are even fewer companies that have so successfully used innovation to increase the market strength and consumer appeal of their brands.

- James M Kilts, Chairman and CEO¹

Gillette presents the classic example of innovation as product extension. Gillette used to make razors with one blade, then it made them with two blades, and now it has razors with three blades. That is the all-too-typical view of innovation. And there is nothing wrong with it, except at some point adding another blade is not going to make a substantial difference to how customers perceive the product. More important, this narrow view of innovation is very unlikely to create new markets and new wealth. In today's economy, it is only radical innovation that will lead to significant growth.

- Gary Hamel²

Introduction

In early 2003, Boston (US) based Gillette was the world's leading producer of shaving products. Gillette's product line also included toothbrushes, toiletries, cosmetics and other household appliances.

With the purchase of Duracell batteries in 1996, Gillette was also a leading player in the alkaline battery market (See Exhibit I for Gillette's product line).

In fiscal 2002, Gillette's sales were $8.45 billion and net income was $1.22 billion (See Exhibit II for past financial performance and Exhibit III for segment wise revenue split-up).

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Gillette earned more than a third of its sales and more than half of its profits from razors and blades. Over the years, Gillette had established a formidable reputation for combining sophisticated technology and savvy advertising to launch innovative products. The company's corporate mantra was "Innovation is Gillette.”

Gillette : Managing Product Innovation - Next Page >>

1] Letter to Shareholders, 2000 Annual Report.
2] Leader to Leader, No: 27, Winter 2003, Leader to Leader Institute (formerly Drucker Foundation).

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