Gillette Cassette Case Study, 1/9/11
In 1970 Gillette Razors was dominating the manufacturing and distribution of men’s and women’s razors, blades and other toiletries. Their distribution to 500,000 retail outlets in the US and the strong relationships of their sales team with chain retailers and wholesale distributors made them well-positioned to enter the emerging market of blank cassettes.
Based on the research they received from their consultants, Gillette was smart to seriously consider expansion into the new arena of selling blank cassettes. The Gillette sales team already had accounts with 67% of the places where blank cassettes were sold and could leverage their existing reputation for quality with retailers and customers. Also important to note is that blank cassettes were a growing market, expected to increase 60% in 1970 to total $130M in sales. At an average cost of $1.95 per cassette, that is 65 million cassettes being sold in 1970. A 30% increase to 86 million units was expected for the following year. This predicted increase in sales was in part due to the development of automatic-reversal and the expectation for cassette players to become safer, and more common to install in cars.
The competition for Gillette in this market does present some reason for caution. Though currently there was little marketing for the blank cassette brands, Gillette learned that Memorex had plans to aggressively develop their sales force, led by ex-P&G personnel. Memorex was likely to initially focus on high-fidelty and electronics stores, where their brand was more known by music afficianandos. They lacked the brand name recognition, distribution outreach and promotional displays that Gillette had already established with variety, department, and chain stores, 67% of the blank cassette outlets. However, Gillette was not naïve and knew that Memorex would look to quickly expand to the same mass-market retailers.
Given this competition, they should...
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