Gillette show how leaders can grow

The new version of the brandgym book we're working on is all about brand leadership: how to achieve it, and then retain it. And a great example of a brand leader that keeps getting stronger is Gillette, as described by Mark Ritson in his column.

They have an 85% share of razor-blade sales, so you may think that's it for growth. But, as Mark explains, this does not have to be the case. Here are his four ways for leaders to keep growing:

"1. Drive profitability. Market share might have reached its zenith, but that doesn't mean your margins can't be squeezed. One industry insider recently claimed that, despite a pack of four Fusion razor blades retailing for £9.72, the manufacturing and packaging costs for the product are less than 30p. That's a whopping mark-up of more than 3000%. How about that for a margin?

2. Practise positive cannibalisation: Gillette launched its five-blade Fusion line in 2006 with a 30% price premium over Mach 3, its previous three-blade offering. With an 85% market share, it makes more sense for Gillette to focus its marketing on switching its own customers from Mach 3 to the more profitable Fusion line than trying to win any more competitor share. That is why Gillette is spending millions to compete against itself with ads and online comparisons to convince its Mach 3 consumers that their current razor is simply not good enough and to trade up to Fusion.


3. Drive usage. Gillette is now investing heavily in an online campaign to encourage consumers to use their Gillette razor 'downstairs as well as upstairs'. Videos with powerful messages, such as 'When there's no underbrush, the tree looks taller', are increasing blade-use on the lower body. One of the joys of an 85% share is that you can run general campaigns to grow total category usage, safe in the knowledge that most of the upturn in sales will benefit your brands.

4. Extend the brand. You have a billion-dollar brand equity, so use it to take control of other related categories. For Gillette that has meant a successful foray into the 'software' side of shaving with a 55% share of the UK's shaving-cream category.

5. Stay edgy. Today's market dominator could end up tomorrow's has-been brand. But not Gillette, who is one of the brands linked to the coolest TV series of 2009 - HBO's True Blood. Its tie-in campaign shows a vampire endorsing Fusion as the best shave for the undead. It will deliver defensive awareness while keeping the brand contemporary and hip."

More on how Gillette stay on top here, in a post on how they combine product "sausage" and emotional "sizzle", including my fave Gillette ad of all time starring David Beckham.

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[Bas]

I didn't know that the margin for Gillette was 3000%, but the high price is exactly why I stopped using Gillette after 15 years of daily use.

They keep coming up with innovations which aren't real innovations to me - it's just more blades. I resent buying a non-innovative, white label brand now (I tend to stay loyal to the people who do their best to make things better), but Gillette's pricing is way over the top.

Besides that, hiring Woods, Federer and Henry just because they're famous is not telling a story. I think their marketing budget could be spend a lot better.

Just to be clear: It's not that it is too expensive for me, it's just not value for money.