Leistungen // Laterales Management

attacking the giants

A video clip by the Dollar Shave Club asked people why they think they have to pay 20 dollars a month for a razor which earns 19 dollars for the tennis icon Roger Federer, the advertising icon for the industry leader Gillette.

Mike Dubin's video was the start of a new business model for shaving: The Dollar Shave Club provides its customers with a standard razor for one dollar per month by direct internet sale. Alongside this core product there are other items on offer such as soap and skin creams associated with shaving. Set up four years ago, the Dollar Shave Club has now been bought up by the Anglo-Dutch industry giant Unilever for one billion dollars.

Lateral entrants take giants by surprise

Procter & Gamble of all companies, Gillette's parent group with a market share of over 50%, has been surprised here by a lateral entrant:

"Procter & Gamble is distinguished not only by the way the company is managed but also especially by the way it handles creativity, innovation and research concerning customer needs. In these areas the company operates in a very experimental, even scientific manner. The story about how P&G developed the "Pampers" brand is famous in this connection. People in the USA were using disposable nappies made by Johnson & Johnson under the brand name CHUX already in 1949. P&G spent five years examining the market and invested a lot in analysing their competition. They focused especially on the problems associated with CHUX and the product. P&G did not go into the market until they had developed a nappy that absorbed more liquid, was more watertight, more comfortable to wear, cheaper to produce and could be sold in a number of sizes. Being innovative does not always mean being first. In 2014 the Forbes magazine calculated the market value of Pampers at €7.5 billion. The nappies are worn by 25 million infants in 100 countries. The CHUX brand, however, was taken off the market by Johnson & Johnson in the 1970s."

Reassigning roles

Gillette is now just like CHUX and the Dollar Shave Club is the Pampers of the 1960s: Even innovative companies get into difficulties with digitalisation. There are no longer any certainties because Gillette has lost a share in the shaving market of approximately 10% in recent years. Incidentally, spectacles are now marketed in the USA in a similar way to razors.