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The U.S. Men’s Razor-Blade Market: A Competitive Profile

Journal of Economics and Public Finance

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Title The U.S. Men’s Razor-Blade Market: A Competitive Profile
Creator Datta, Y.
Description This paper follows the footsteps of five studies: the U.S. Men’s Shaving Cream, the U.S. Beer, the U.S. Shampoo, the U.S. Shredded/Grated Cheese, and the U.S. Refrigerated Orange Juice markets.Porter links high market share with cost leadership strategy which is based on the idea of competing on a price that is lower than that of the competition. However, customer-perceived quality—not low cost—should be the underpinning of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher, to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. Quality, however, is a complex concept consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation as a symbol of quality.In 2008—and 2007—the Gillette brand dominated the U.S. Men’s Razor-Blade market like a colossus, with a 90%, and 78% share, respectively, in Blades and Razors in 2008. In 2008 sales for the U.S. were $111 million for Men’s Razors, and $591 million for Men’s Blades.We tested two hypotheses: (1) That a market leader is likely to compete in the mid-price segment, and (2) That the unit price of the market leader is likely to be somewhat higher than that of the nearest competition. Employing U.S. retail sales data for 2008 and 2007, we found that for both 2008 and 2007 the market leader in the Razor market was not a member of the mid-price segment, but the premium segment. Likewise, in the Blade market the leader was part of the premium segment, not the mid-price segment.Several arguments can be offered to explain this deviation: (1) Gillette had a virtual monopoly of the industry because it was pursuing “First to market” strategy of innovation and on-going improvement, (2) The technology of producing Razors and Blades has become more complex and consequently more expensive, (3) Producers are now offering many more new feature—and benefits--than ever before that further raise the cost of production, and (4) Many men regard shaving an important part of personal grooming which they regard an “affordable luxury”.Whereas Gillette had positioned itself as a premium brand in the past, it stepped up the ladder and placed Fusion Blades in the Super-premium segment in 2007 and 2008.We also found strong support for the idea, that relative price is a strategic variable.Finally, we discovered three strategic groups in the industry.
Date 2019-08-31
Type info:eu-repo/semantics/article
Peer-reviewed Article
Format application/pdf
Source Journal of Economics and Public Finance; Vol 5, No 3 (2019); p354
Language eng
Rights Copyright (c) 2019 Y. Datta