Global Gillette

Company Profile
Publication Date: 24 Apr 2007

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

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Global Gillette
Company Overview

COMPANY OVERVIEW
Global Gillette, a subsidiary of Proctor and Gamble, is a manufacturer and supplier of shaving supplies. It also produces and supplies batteries, personal care and oral care products. The company is headquartered in Boston, Massachusetts. As a subsidiary of Proctor & Gamble, Global Gillettte does not release independent financial information.

KEY FACTS
Head Office Global Gillette Prudential Tower Building Boston MA 02199 USA 1 617 421 7000 1 617 421 7123 http://www.gillette.com December

Phone Fax Web Address Financial Year End

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SWOT Analysis

SWOT ANALYSIS
The Global Gillette (Gillette) is a leading manufacturer and marketer of shaving supplies. It also produces batteries and personal and oral care products. The company has a market leading position in its core shaving supplies business but consumers are reluctant to pay higher prices for razors and blades, putting pressure on the company's pricing power. Strengths Strong brand equity Market leadership Well diversified portfolio Opportunities New product launches Price increases in premium shaving segment Growth potential for battery business in China Weaknesses Profitability highly dependent on core business Over reliance on a single customer Threats Imitations / disposables are a threat to the Mach3 offering Pressure on pricing power Competitive environment

Strengths

Strong brand equity Gillettes portfolio contains well established brands such as Gillette and Braun, Oral-B line and Duracell. It eases the introduction of new products, as consumers are already well acquainted with the names and more receptive to promises of improved user experiences. The strength and quality image of these brands allows the company to charge higher prices and achieve high margins. Market leadership The company's products, being well-known and with a reputation for quality are also market leaders in their respective categories. The Gillette blade and razor portfolio achieved a record 76.5% share of the global market in 2005. The Venus female shaving franchise has delivered more than $1 billion in retail sales in just three years and has a 32% share of the worldwide female shaving market. Duracell is the market leader in the highly competitive global alkaline battery category, with a worldwide share of 39%.

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Global Gillette
SWOT Analysis

This allows the company to generate more revenues by leveraging its brand effectively. Well-diversified portfolio Gillette has a well-diversified portfolio in terms of product diversification and market diversification. The company though primarily engaged in the shaving supplies business, also derives about 60% of its revenues from other businesses like batteries, oral care and personal care. Also, while the US is the single largest market with a share of 37%, foreign operations and sales account for the remaining part of revenues. Diversification of this nature helps the company avoid the risk of overdependence on any one source for its revenue stream.

Weaknesses

Profitability highly dependent on core business Gillette's profitability is highly reliant on the performance of its razors and blades business. A substantial portion of its revenues come from this sector. Any downturn in the sector or in Gillette's competitive position within it could have a serious negative effect on the company. Over-reliance on a single customer Wal-Mart Stores is Gillette's major customer. With a large part of its revenues originating from a single costumer, the company is at risk of adversely affecting its business, operating results and financial condition if its strategic relationship with Wal-Mart Stores is terminated for any reason.

Opportunities

New product launches Gillette is known for constantly introducing new products in the market with better technology and performance. Most of its line extensions have been very successful in strengthening the franchise. The industry in which Gillette operates requires the company to keep introducing newer and better products and with its strong line up of new products, Gillette can expect similar performance to continue. Gillette's launch of M3Power, a powered wet shaving system for men and Passion Pink Venus, the new shaving system for women further improved the companys performance in 2004. In 2006, the company launched a line of shaving products that complement the new Gillette Fusion(TM) and Gillette Fusion(TM) Power shaving systems for men. This new product launches will help the company to gain competitive advantage over its competitors. Price increases in premium shaving segments

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Global Gillette
SWOT Analysis

The growth in demand for premium shaving systems and consumer trade-up are expected to continue in 2007. With launches like M3Power, Venus Divine and Sensor3 shaving systems, all of which launched in 2004, revenues have greatly benefited from the price increases. Gillette has been increasing the price of its razors and blades at an average rate of around 4% per year over the last ten years. This price increase will help the company to accumulate more profits from the present level of sales. Growth potential for battery business in China The Chinese battery market is a large and fast-growing market. Gillette has acquired a majority interest in the Fujian Nanping Nanfu Battery Company. This has resulted to significantly improve the performance of the company's overall battery business and will have its impact on the future performance of the company.

Threats

Imitations / disposables are a threat to the Mach3 offering Gillette's three-blade offering is being commoditized by competitive disposable and systems launches. Gillette's ability to sustain a price premium and earn an attractive return on its extensive investment three-blade platform is threatened by the numerous imitators of the Mach3/Mach3 Turbo franchise, including disposables and private label systems, and even including Gillette's own three-blade disposable (Disposables are a margin trade-down for Gillette and brand loyalty and Gillette's leadership are weaker in the disposable segment). In addition, more entry level users regularly switch back and forth between improved disposables and systems. This numerous imitations are threat to the company in the long term as they going to reduce the sales of the original products. Pressure on pricing power Gillette's pricing power is being further eroded by channel migration and increasing consumer resistance to paying significantly higher prices for innovation. Pricing power is key to revenue growth in a mature category especially when Gillette's strategy has historically been to drive revenue growth per consumer and not volume growth. Gillette's pricing power in blades is under pressure on multiple fronts as consumers migrate to value channels. Razors skew heavily to mass and club stores. Razors' channel migration is the fastest in the staples sector. These pressures are being compounded by the growing consumer resistance to paying ever-higher prices for razors and blades. Competitive environment

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Global Gillette
SWOT Analysis

Gillette faces intense competition in most markets. Its products compete with widely advertised, well-known, branded products, as well as private label products, which typically are sold at lower prices. In most of its markets, it has major competitors, some of which are larger and more diversified. Schick's development of Intuition and Quattro (four blade razor) gives Gillette the strongest direct competition at the high-end of the shavings systems segment that it has ever had. This is expected to result in increased competition in the blades and razors segment. The companys survival depends upon its ability to adopt itself in this kind of competitive environment.

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