Building Brand Value: Gillette
The first safety razor with disposable blades was invented in 1901 by King C. Gillette. Since then to this date Gillette has been one of the leaders in shaving technology and innovation. Gillette has been the preferred choice for many men and women around the world for over 100 years. In the Mid-1970s the then appointed CEO Colman M. Mockler succeeded Vincent C. Ziegler after being with the company since 1957. Mockler’s strategic plan included the concentration of limited number of potential markets mainly with high volume returns and repeat purchase consumer items.
He also invested in companies’ that were compatible with already existing manufacturing or distribution capabilities. Gillette’s advertising budget was increased whilst at the same time cost-cutting measures were done in all other divisions. Basically he took a financial approach rather than a sales approach. The company was seeing success under the leadership of Mockler. Mocker was expected to retire at the end of 1991 but died unexpectedly in January 1991. While Mockler served as CEO for the period 1975 to 1991 the company was the target for three takeover attempts. In 1998 the Mach 3 was introduced.
The new safety razor system introduced a third blade into the twin-blade system that dominated the wet-shaving market costing Gillette $35 billion to bring to the market. Gillette faced its worst economic performance in 1998, sales had dropped by 15 percent and 4700 jobs were cut. Some of markets that contributed towards the loss in income were Brazil, Germany and Russia, with the share price dropping by 11 percent. Gillette continued to underperform well into 1999 to 2000 and in October 2000. At that point the company’s managing board fired the then CEO Michael Hawley and announced a world-wide restructuring of Gillette.
In 2001 James M. Kilts was recruited by the Gillette Board both as the chairman and CEO to bring his turnaround talent to the company. Kilts, the former Nabisco CEO had a reputation for fixing troubled companies. He was the first outsider recruited to lead Gillette. Some of the issues Kilts had at the top of his list to address upon his arrival at Gillette were 1) Duracell was no longer dominating the market as it had lost market share to other brands for example Energizer and Rayovac which offered similar performance at a lower cost. ) The company IT system was outdated and in some departments did not exist 3) Lacked communication throughout the organization both locally and internationally 4) Lack of discipline 5) Gillette’s earnings were below expectations. 6) Lack of Innovation 7) Stock prices fell to 60 percent between early 1999 and late 2001. Attacking Gillette’s problems from within the organization Kilts demanded greater executive discipline, accountability and focus. Kilts also found that the company had lost its edge with a corporate culture that was outdated and failed to reward innovation.
He found that the company did not keep up with the marketplace innovations and promoted staff mainly from within which did not foster any new ideas. Kilts introduced to the company a new more efficient meeting approach that promoted fact-based management, open communication, simplicity, collaboration, measurement, reports, and methods for working together. He wanted excellent performance that included the ability to collaborate across business units. Kilts Strategic Plan * Introduction of computer programs to aid with tracking of sales and inventory. Reduced the number of stock-keeping units, instead greater concentration was placed on the best selling items. * Reduction in overheads.
* Increased advertising and conscious spending on R&D in key business units. * Increase accountability from managers through one and one meetings to discuss quarterly and annual reviews. * People were hired to lead and innovate, gradually changing people at the top. * Fostered teamwork and increased communication within the entire company globally. * The entire strategic plan was adapted or mapped precisely around the world. Kilts’ guiding principles included: Straight talk about problems and expectations * Courage to admit responsibility * Open dialogue and widespread communications * Clear priorities and attention to detail * Performance feedback At the end of the first quarter in 2004 Gillette reported 43 percent increase in profits which came mainly from the wet razors, Mach 3 and Venus systems. Under the watch of Kilts, the Gillette’s stock had risen by 50 percent. Within four years time Kilts was able to take Gillette from a declining slope to an inclining slope and made it one of the best-performing consumer products companies in the world.
Eventually, on October 1, 2005, Gillette and Procter & Gamble merged companies. Procter & Gamble bought 100% of Gillette for $57 billion. Gillette continues to operate as the world best-selling razor with a mission and visions statement as follows. Vision: “The Gillette co. is a globally focused consumer products marketers that seeks competitive advantage in quality, value added personal use product. We are committed to build shareholder value through sustained profitable growth. ” Mission: “To Build total brand value by innovating to deliver consumer value and customer leadership faster, better and more completely than our competitors. ”
