Gillette Safety Razor Division: Blank Cassette Project

1039 words 5 pages
In late 1970, after the split-off of the Toiletries Division, the Gillette Safety Razor Division (SRD) is considering a proposal to enter the blank recording cassettes market to try to achieve its assigned earnings growth target. The blade and razor business is mature and the SRD knows it won’t be able to achieve the growth target there, so it’s evaluating a diversification strategy to enter the new business. As in any diversification strategy, they are facing a new market, with a new product.
The first thing that SRD should do, in order to profitably satisfy customer needs, is to do a situation analysis. The firm first must understand its external and internal situation (strengths and weaknesses), including the customer, the market
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• Main weaknesses: no experience in the industry, no knowledge of customers, sales force with no capacity to reach electronics and high fidelity stores and brand association with other industries. Also don’t have a tape producing capacity or knowledge and margins for that supply are very high (50%).
Because the brand can be a strength or a weakness, RSD needs to find that out before deciding whether to use it or not for the cassettes. One way to find this might be through focus groups or customer interviews.

After the situational analysis, RSD needs to define its objectives and core strategy. For its objective they should go for market share, because cassettes industry is in its early stages, growing at fast rates, with price oriented competition and with no market leader so the position is still open. For the customer target, they should focus mainly in teenagers because of the recording music trends, especially the off the air recording and because is a easy to recognize growing segment that would help them reach its market share goal. Even though the teenagers should be their primary target, they should also address the other targets with different communication and distribution strategies. Finally, because of the objectives and customer target selection, the value proposition should be a Gillette branded cassette that through its broad distribution channels will let