The world shaving headquarters in South Boston is finishing a long shave.
The world\'s most successful razor is waiting for Sensor\'s successor.
Big bet: keep Gillette\'s double
The new shaver must achieve digital growth on the sensor and be sold for \"the best man can get\" prices.
\"Developing a new shaver seems to be Gillette\'s children\'s game, which has dominated shaving for decades.
But it\'s been tortured.
Includes thousands of shaving tests and design modifications.
But even if Gillette\'s marketers are preparing for their biggest product launch ever ---
The new shaver is expected to be available this spring and will set off a multi-million dollar marketing boom worldwide. -a team of Ph.
Scientists are using the latest high
Technology equipment to dig deeper into the mystery of shaving. There\'s high-
The speed video, which can capture the action of the blade cutting a single must, can even check the microscope of the blade at the atomic level.
Our mission is to create the next shaving breakthrough.
Expected debut: 2006.
In the coming months, the conference will receive all the attention.
But the more important Gillette story is in a lab like this.
They are at the heart of one of the great innovative machines in the consumer world ---
A machine that is dedicated not only to producing new products, but also to inventing new ways to make new products.
Now, executive director, Alfred M.
Zeien wants to throw this machine into the speeding of Gillette\'s entire consumer product range ---from its Oral-
Recently acquired toothbrush and Braun appliances for Duracell batteries.
He expects that Gillette\'s 50% sales will soon come from products launched in the past five years, up from 41% in 1996, twice the level of innovation for ordinary consumers --
But his ultimate goal is even bolder.
Zeien vowed, \"If I can\'t make the next five years better than the last five,\" when Gillette\'s net profit grew at a rate of 17% a year, \"I don\'t think I did a good job.
\"It\'s a particularly high order for mass marketers like Gillette.
In fact, Mercer Management Consulting recently conducted research on 50 top consumersGoods Company--including Coca-
Coke, P & G and Johnson & Johnson--
Only 17 were found to have successfully achieved the above goalsindustry-
Average growth in sales and profits from 1985 to 1990.
More notably, only seven of the 17 have maintained this excellence over the next five years. True, Gillette--
With J & J and P & G-
One of the seven stars.
But the thought-provoking suggestion of this study is that most of these seven products are destined to decline in the next five years, simply because it is very difficult to continue to find new products and markets that can stand out. OUT OF STEAM?
In this era of low inflation, it seems more likely, making it almost impossible for cost growth to pass.
Given the strong dollar and the Asian flu, the so-called global Treasure Bowl has become more elusive.
No wonder investors are in a hurry.
Gillette\'s sales in the first nine months of 1997 grew by only 3%, which is bad enough ---
Far from the speed of 9% in the past five years.
But after Gillette suggested analysts cut their expectations by 1997 ---
Revenue increased from 17% to 15%-
Gillette\'s shares fell 24%, down from a peak of $6 in July 10.
Investors are worried that Gillette\'s stable growth machine will eventually run out. -
Make it more difficult to justify the Sky
The 41-fold high p/e ratio is expected to make a 1997 profit on its stock.
Morgan Stanley said: \"Gillette removed \'P\' from predictable things . \"
Analyst Brenda Lee Landry said: \"This is a concern for long-term issues.
\"This is partly because Gillette\'s slow sales in the German and Japanese Borang divisions have raised questions about Gillette\'s reliance on foreign markets to maintain growth.
However, Gillette\'s 1997 issue may not be a sign as it was initially feared.
Revenue has also been hurt as it is a transitional year and the company has absorbed Duracell, although it has slowed shipments of old razor products due to the expected release this year.
Landry believes people are overreacting to last summer\'s income correction.
As many major investors remain bullish, the stock has almost fully recovered to $100.
Jay Friedman of Lincoln Capital, an institutional shareholder, said: \"Their prospects are spectacular . \".
Zeien\'s strategy is based on the three major advantages of Gillette.
He plans to launch the most ambitious product in the company\'s history, and razor is just the beginning.
Next is the new toothbrush from Oral.
B and a row of women-
The $0. 25 billion razor is designed very friendly.
At the same time, he also hopes that the battery will break through and put the energetic rabbit in trouble.
Second, to ensure revenue continues to exceed revenue growth, Zeien plans to continue cutting manufacturing costs by 4% a year, giving Gillette a huge advantage in the low-inflation era.
Third, Zeien relies on Gillette\'s global advantage to achieve growth overseas.
Indeed, turmoil in Asia and a stronger dollar could slow those gains for the time being.
But in the long run, few companies are in a better position. Some 1.
Now 2 billion people around the world use at least one Gillette product a day, up from 0. 8 billion in 1990.
As many of them now buy the cheapest product Gillette sells, Zeien says the company can induce them to trade over time.
Gillette\'s future depends on what its executives call the \"Gillette\" business process.
The product came with sensors, and even some Gillette executives were worried that the blade would become a commodity, dominated by cheap one-time products.
Sensors reverse this trend by proving that consumers may be induced to pay high fees
A technical shaving system that provides superior performance.
Since 1990, sensor and Sensor Excel has taken a leading share of 27% in the U. S. market.
Lesson: at all costs, gain technical advantage in a category and then produce innovative products that attract consumers, even if they are expensive.
Gillette must overcome major challenges in order to achieve this commitment. Since King C.
Gillette invented the safety razor as early as the 20 th century, and the simple shaving action provided Gillette with motivation.
But after the acquisition of Duracell International Inc.
Only 29% of sales and 52% of operating profits come from blades, the lowest level ever.
Now, at least half of Gillette\'s growth has to come from other businesses. -
Like battery toothbrushes and toiletries-
In this case, it faces more intense competition and is far from successful in creating profits.
Meanwhile, Gillette is facing a major transformation.
The 67-year-old is coming to an end.
His employment contract was extended for one year.
Zeien refused to be nailed to the question of when he would step down, saying only \"it depends on the board \".
\"But he is sorting out his number carefully.
President Michael C.
Holly, 59, has the highest position.
When Zeien retires, Gillette will suddenly fall into the hands of a man who, while highly valued internally, is largely unknown externally.
Zeien\'s leadership has always been a key factor in Gillette\'s success.
1985 of profits were flat and sales have barely increased since 1980.
\"There seems to be no sense of urgency. . .
To expand, set tough goals and take strong steps to placate restless shareholders, \"Gordon Mack wrote in The New History of Gillette, published by Harvard Business School Press in January. 25.
Gillette is very vulnerable and faces the acquisition of Ronald O.
Perelman fought 1988 agents in 1986.
The battle of those narrowly won is a \"wake-up call\"
Zeien said: \"call, he took over in early 1991 and was determined to mess things up.
He insists Gillette must be a world leader in all of its core businesses, or have plans to be a leader.
He also ordered that at least 50 cents per dollar of operating profit be re-invested in the three growth drivers of R & D, capital expenditure and advertising. The results?
Gillette currently leads the world in 13 product categories, accounting for 81% of its 1996 sales-
It rose from 50% in 1991.
Although partly because of the acquisition, sales have more than doubled since 1991 to $96.
Net profit jumped 7 billion at $ 189%. 2 billion.
All in all, it has released double for 29 quarters
This brought Gillette\'s market value to $56 billion, 14 times that of Rader perelli in 1986. ENGLISH BORN.
The new shaver will be the first major test for Gillette\'s continued use.
In order to increase sales in the mature shaving market, Gillette must convince men to pay a huge premium for the new shaver ---
Probably 15% to 25% more than the current $5. 25 U. S.
Retail prices for five months
The package of the sensor is very good.
Satisfy such a product
The challenge of development, Gillette is committed to 2.
Its annual sales of 2%, or R & D revenue of more than $0. 2 billion, are about twice the average sales of consumer goods.
The company then uses strict processes to refine its ideas.
For example, the initial concept of the sensor appeared as early as 1979.
Gillette then developed seven different versions under the code name flag.
On top of the original ideas, the winner absorbed many of the ideas of the six losers and 22 patented innovations.
In the same way, Gillette has set up three competitive teams to identify where it has broken.
Gel deodorant, driving the business to 21 products. 5% of the U. S.
The highest level in 20 years.
Prototype of the new razor ---
It was born in the lab of Reading, UK. -
Had to compete with two or three other competitors.
In the process, the shaver has been tested for shaving more than 15,000 times.
Innovation is, of course, the goal of all major consumers.
But Gillette\'s approach can make a difference, and perhaps it\'s better to explain it verbally.
Gillette acquired B in 1984.
At that time, \"No one was engaged in research and development and no new toothbrush has been introduced since 1957,\" said Jacques Legder, executive vice president
President in charge of supervising spoken languageB.
Today, Gillette has a team of 150 researchers, \"more than any company in the world,\" he boasted.
It has produced a batch of new products. -
From dental floss made of proprietary fiber to its topof-the-
Line Advantage toothbrush for $3.
49, compared to 99 cents for brushing your mouth --B sold in 1984.
This makes the sales of Ole B.
B. increased from $0. 548 billion in 1984 to $0. 11 billion. But Oral-
B is only half the story.
In 1989, researchers from German consumer Braun
Appliance giant Gillette was acquired in 1967, bringing their expertise to Oral-
B brush hair to create an electric toothbrush. The result --the Braun Oral-
B. remove plaque--
Now the world leader with annual sales of over $0. 4 billion.
Since the market is still small, Gillette\'s overall speaking level can be doubled.
By marketing to the aging baby boomers, the healthcare business reached $2 billion in five years. \"TWO DWARFS.
\"Because only the best ideas can pass through the innovative process of Gillette,\" they are one of the few consumers --
Suzanne Hogan, a senior partner of marketing consultant Lippincott & Margulies Inc. , said: \"Really pick your own product company . \"
Instead of \"coming out with a new razor every year,\" she added, \"They waited until something meaningful was available and then went to the market in a drumbeat.
\"But unlike the sensors in 1990, Gillette\'s new shaver will not have its own field this time. Warner-Lambert Co. \'s Schick--
A distant second-
The biggest advertising campaign in history will soon be launched to promote its new Schick protector shaving system. The bright-
The red protector wraps the blade with thin wires to prevent scratches and cutting.
Even so, \"You see Godzilla.
\"The two dwarfs,\" Hek and Bic
Said Jack Trout of Greenwich. Conn. )
Even Dick Jordan, schke\'s deputy.
The president of global business management acknowledged Gillette as a strong competitor.
\"Gillette, however, is more than just a new-
Similarly, it is also an expert in ways to make them cheaper.
4% cost per year
To achieve cutting goals, engineers never stop looking for ways to run machines faster and more efficiently.
Since 1993, this incremental benefit has helped reduce the manufacturing cost of sensors by 30%, while reducing the cost of oral sensors.
B has an advantage of 60%.
At the same time, due to increased competition among suppliers, material costs have been reduced by 10% to 15%.
However, when Gillette launched the product, the real great harvest of the manufacturing industry came.
Rosabeth Moss Kanter, a professor at Harvard Business School, said few companies \"combine product and process innovation\" to the same extent as Gillette.
For example, after Zeien was told that the new Shaver was too expensive to produce using the device Gillette used to make cartridges since its launch in 1971, he ordered engineers to invent a new one.
The executive vice president said it was an amazing business and asked Gillette to \"bring in 196 different devices, each of which we basically designed\"
President Robert G. King.
The new system will spit out ink cartridges twice as fast as the manufacturing sensor, enabling Gillette to roll out the shaver in more than two years, half the time it takes for the sensor.
Zeien has not sorted everything out yet.
Biggest Failure: unable to gain an advantage in writing for nearly $1 billion --
Gillette bought Parker in 1993 for $0. 458 billion, creating a low price including
Expensive Paper Mate and top
Finish the sailor pen.
But it hasn\'t found a home yet. run product.
\"This is a more challenging area than shaving \". John C.
Terry, director of the Boston research and development laboratory.
Some critics believe it\'s time to get out of the business, but Zain insists the new product will save the day.
Braun also continued to drag down Gillette\'s performance.
Despite some success, it still bears a slow burden.
Mobile products such as electric razors were a big factor in the decline in revenue last summer.
In order to solve this problem, Braun is more and more hoping for faster
Growth products such as electric toothbrushes and personal toothbrushes
Perhaps the most pressing challenge is Duracell, who bought the company in 1996 for more than $7 billion in stock.
Duracell is already the world\'s leading alkaline battery producer with nearly 50% market share in the US. S. market.
Now, according to Edward F, Gillette is determined to \"upgrade growth to a level beyond that \".
Deputy Secretary-General Degra
The president who took office in early 1997.
The cost of research and development of alkaline batteries is three times that of the original.
DeGraan said the goal is to make such a superior battery that the Duracell name will get the same effect as the \"Intel Inside\" logo.
But this is essentially a commodity market, a huge challenge that most outsiders are skeptical about.
\"I don\'t expect any breakthroughs,\" said Martin Hersch, a battery expert at Freedonia Group . \".
Even if he is right, Gillette can provide the impetus for Dulak by selling more of its products worldwide. Duracell--
In 1996, it sold only 20% of sales in North America and Europe. -
There is \"no international organization\" to take advantage of this opportunity, Zeien said.
But Gillette has
That\'s why one of Gillette\'s initial moves was to include the dealerships in the ranks of its global giants.
To be sure, Gillette has little immunity to global turmoil. \"Our growth [in Asia]
Probably less than the next year or two, \"admitted Jurgen Wedel, executive vice president
President of Gillette International Group.
But he believes Gillette\'s impact will be much smaller than most companies.
Gillette\'s sales in Asia are still under 10%.
Gillette achieved success in difficult times.
Take the former Soviet Union, one of the most challenging markets in the world.
When Gillette first opened
In 1992, Russian consumers knew nothing about it, selling only $150,000 a month.
Gillette\'s billboards and color ads on buses quickly caught consumers\' attention.
Then they put their \"best men can get\" sports TV sports.
Today, Gillette\'s name is recognized by about 80% of Russian cities.
Gillette has a 50% share of the Russian blade market.
Gillette is expanding its marketing focus to promote batteries, toiletries and toothbrushes.
Wedel predicts sales in Russia will soar to $0. 5 billion in five years from $0. 2 billion now.
Holly admits that as Gillette enters the brave new market, Gillette \"will encounter some setbacks along the way \".
But most observers believe it still has a long way to go.
Wall Street analysts expect Gillette\'s revenue to grow by 18% over the next five years, \"slightly more than double the S & P 500 index,\" said Charles Hill, director of First Call company research.
Most people recommend the stock.
There is no guarantee, of course.
If Gillette\'s management becomes too confident and complacent, it will start to slip away and miss opportunities as it did in its early 80 s.
But for Al Zeien, he has laid a solid foundation for continuing excellence.
It is now carried out by Holly and his successor. —