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Journal of Economics and Public Finance
Article . 2019 . Peer-reviewed
License: CC BY
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Journal of Economics and Public Finance
Article
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Journal of Economics and Public Finance
Article . 2019 . Peer-reviewed
License: CC BY
Data sources: Crossref
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Journal of Economics and Public Finance
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The U.S. Women’s Razor-Blade Market: A Competitive Profile

Authors: Y. Datta;

The U.S. Women’s Razor-Blade Market: A Competitive Profile

Abstract

This paper follows the path of six studies: the U.S. Men’s Shaving Cream, the U.S. Beer, the U.S. Shampoo, the U.S. Shredded/Grated Cheese, the U.S. Refrigerated Orange Juice, and the U.S. Men’s Razor-Blade markets.Porter associates high market share with cost leadership strategy which is based on the idea of competing on a price that is lower than that of the competition. However, customer-perceived quality—not low cost—should be the foundation of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher, to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. Quality, however, is a complex concept consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation as a symbol of quality.In 2008 sales in the U.S. were $83 million for the Women’s Razors, and $192 million for the Women’s Blades. In both markets there were two major players. In the Women’s Razors market P&G’s Gillette had a 58% market share, followed by Schick, a distant second, with a 31% share. Likewise, in the Women’s Blade market, Gillette had a 61% share, and Schick a 35% share.We tested two hypotheses: (1) That a market leader is likely to compete in the mid-price segment, and (2) That the unit price of the market leader is likely to be somewhat higher than that of the nearest competition. Employing U.S. retail sales data for 2008 and 2007, we found that for 2008 the market leader in the Women’s Razor market—Gillette Venus Embrace—was not a member of the mid-price segment, but the super-premium segment. Likewise, in the Women’s Blade market, the market leader—Gillette Venus Original (Note 1)—was part of the premium segment, not the mid-price segment.Several arguments can be offered to explain this deviation: (1) There is not much competition in this market with only two major players, (2) The technology of producing Razors and Blades has become more complex and consequently more expensive, (3) Producers are now offering many more new feature—and benefits—than ever before that further raise the cost of production, and (4) For many American women, having smooth armpits and legs is an important social norm they must observe for which they are willing to pay a premium price.Based on Gillette Fusion, the first men’s five-blade Razor, Gillette introduced Venus Embrace, a first five-blade Razor for women. Whereas Gillette had positioned itself as a premium brand in the past, it moved up the ladder and placed Venus Embrace in the super-premium segment in 2008.We also found strong support for the idea, that relative price is a strategic variable.Finally, we discovered three strategic groups in the industry.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
2
Average
Average
Average
gold