1. Should Gillette come in the cassette market at all?
Gillette Safety Razor Division ( SRD ) would be foolish to non come in the cassette market at this clip in the game. With the established and well-trusted trade name name on it’s side. Gillette will be able to work the undeveloped marketed to it’s fullest potency. The manner that Gillette can carry through this is by using some of it’s biggest and strongest assets to get the better of what the advisers believe are the three major jobs in the industry: ( 1 ) oversized cassette instances. ( 2 ) hapless internal building. and ( 3 ) inferior quality tape ensuing in hapless recordings. First. Gillette will do usage of its expertness in high-volume fabrication of plastic merchandises to better the size of the cassette shells every bit good as enhance the internal building. This will assist to increase the dependability of the Gillette Cassette. Second. by utilizing the trade name name Gillette. it will be easy for SRD to contract with high quality. dependable providers for the constituents and stuffs required to bring forth a top-quality merchandise.
Having the best constituents and stuffs will ensue in a cassette with first-class entering abilities. Last. Gillette will use its proficiency in marketing mass-distributed packaged goods. Due to the fact that taking trade names have done minimum advertisement and limited distribution. it is critical for Gillette to put to death adept selling to increase their initial market portion. By concentrating its distribution channel entirely on section and price reduction shops ( where 40 % of cassette unit gross revenues are made ) . Gillette will be able to maximise it’s gross revenues force possible. In add-on. by stressing it’s selling run towards the low-income college pupil section Gillette will necessarily tap into a big part of the cassette market portion. Approximately 30 % of the US population ages 0-29 are cassette proprietors with 26. 5 % doing less than $ 9. 000 a twelvemonth.
2. What quantitative analyses can you supply to assist reply inquiry # 1? What are the borders in each section? How many cassettes would Gillette hold to sell to interrupt even? Below I have generated three tabular arraies exposing the Numberss I used to cipher the part borders. interrupt even in units and dollars. and the per centum of market portion for three sections. These sections consist of a new. high quality section that Gillette will present. the professional class. and the standard class. I hypothesized a possible retail monetary value of $ 3. 10 for the high quality class.
By multiplying all the retail monetary values by 50 % . I found the maker monetary value to utilize in ciphering the part borders. Additionally. variable costs were different for each section. The lone variable cost that remained consistent within all three sections was the burden. wadding. and inspecting cost of $ 0. 20 per cassette. Within the variable cost tabular array are the monetary values listed for professional and standard tape. Both of these Numberss have been multiplied by 2. 68 because there are 268 pess of tape within a 60-minute cassette and the monetary values listed in the instance are for 100 pess of tape. Last. I utilized the expected figure of $ 130 million in clean cassette gross revenues in 1970 to configure the per centum of market portion Numberss.
After analysing the tabular arraies. it is clear that whichever section Gillette chooses to prosecute they will all be successful in bring forthing a profitable return. It is recommended that Gillette produce an advanced. high-quality cassette to keep the Gillette trade name name. This cassette will merely necessitate to get 5 % of the predicted $ 130 million clean cassette gross revenues to interrupt even. and with $ 2 million dollars pumped into televised advertisement Gillette could easy earn over a 5 % market portion by selling at least 2. 099. 076 cassettes in a twelvemonth.
Furthermore. Gillette would be wise to hold a lower priced option for consumers who do non necessitate a high quality cassette. Therefore. by geting the criterion class cassette the Gillette Cassette would be a more various merchandise. With the low retail monetary value of $ 1. 95 Gillette’s mark market of low-income college pupils could easy afford it’s cassette. Granted. the standard class cassette will necessitate over 2. 000. 000 more units in gross revenues to interrupt even. nevertheless with the Gillette trade name name. premium packaging & A ; shows. and advertisement to back up the merchandise it should be an easy achievement.
3. Why is SRD even sing this merchandise?
Harmonizing to the instance. SRD has been assigned an net incomes growing mark as portion of the corporate long-range planning procedure. SRD’s current prognosis of demand for shaving systems indicated that the division would be unable to make its gaining growing mark for several old ages unless it added new merchandise classs to its merchandise lines. Ralph Bingham’s occupation as frailty president of new concern development is to place new concern chances for the division. measure their feasibleness and develop programs for come ining such new concerns.
SRD is sing the Gillette Cassette undertaking as an extension to Gillette’s merchandise classs because many trade diaries have carried articles on the rapid growing of entering tape gross revenues. which are expected to transcend $ 500 million in 1970. Bingham is good cognizant that tape cassettes merely stand for a part of this figure. nevertheless he is confident that the cassette portion of the market is big and turning quickly. Additionally. many of the failings that the cassette market is confronting are coincidently many of SRD’s advantages.
As I mentioned before. Gillette has mastered the packaging and exposing construct for their merchandises. Furthermore. Gillette excels at mass selling packaged goods. Both of these constructs could help Gillette in perforating the cassette market before other taking trade names. It would be a immense advantage for Gillette to be the first dependable space cassette distributer in the market. seeing that consumers have merely been “burned” by the low quality cassettes available in the market.
4. What concerns do you hold about Gillette’s marketing plan? Gillette is really good known for their invention in the razor and blade industry. As you know. this industry has nil to make with the electronics industry where the cassette merchandise resides. This big contrast between the two trades could do some vacillation for consumers to wholly swear the quality of the merchandise. It is of import that Gillette conveys a big apprehension of the cassette market through their advertisement to convey to consumers their cognition of cassettes. Below I have constructed a competition analysis tabular array to showcase the strengths of both Gillette and its competition in the cassette market. As you can see. none of these established trade names have acknowledgment in the cassette industry therefore far.
The two companies that pose an evident menace onto Gillette are Sony and Memorex. Both of these companies’ focal point are within the electronics industry and are good known for an audio device. Additionally. Sony has been really successful in advancing its wireless to the point of success. As the instance mentioned. Memorex is besides constructing a competitory staff by engaging ex-P & A ; G forces and enrolling the Leo Burnett Agency to make their cassette ad run. This opens up a few concerns with Gillette’s marketing plan. SRD will necessitate to construct credibleness in the electronics industry every bit good as compete with the proficient ad run from Memorex. It is recommended that Gillette set up a mark market instantly to get down developing a selling scheme to implement before the other trade name names. Fortunately. the cassette market is forecasted to be turning at a rate of 30 % per twelvemonth go forthing Gillette with a big market to systematically tap into.