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I think one thing that often gets overlooked in these types of things is whether or not Gillete just executed on other parts of their business plan better than
by brc 16y ago
I think one thing that often gets overlooked in these types of things is whether or not Gillete just executed on other parts of their business plan better than their competitors. Maybe their sales force was twice as good, maybe their distribution was more reliable, maybe it was just more effective marketing. Perhaps they just figured out a way to manufacture blades 20% cheaper than their competitors.
For while the razor/razorblades story gets the headlines, for a lot of other products there is one company dominating the category for no apparent reason. Coca Cola, for instance, doesn't have any real benefit over other drinks, but they have a fearsome salesforce, marketing and distribution.
All I'm saying is that perhaps Gilletes main competitive advantage is kept quiet because everyone thinks it's their razor+blades strategy, and the company likes it that way because it stops people looking at other parts of the business to copy.
- Untitled 16y ago> Coca Cola, for instance, doesn't have any real benefit over other drinks, but they have a fearsome salesforce, marketing and distribution. Not as simple as that. Firstly, it is extremely difficult to enter the drinks market (setting up a countrywide distribution network, etc...). What Coke also does (in some countries) is giving the owner of Cafes, garages and small shops a fridge (loan on permanent basis). The condition of the fridge is simple - the owner can only stock it with Coke-a-Cola products. So right there the retailer is locked in - to distribute a smaller competitor's drinks, he would have to buy a whole fridge (or the competitor must provide a fridge). This is not likely - hence the lock-in. The customer is not locked in, the distributor is. Another thing that Coke does is prevent competition between small retailers. You must sell Coke’s products at their recommended price (otherwise you have to pay more). They also sell the products to larger retailers at a lower price (and they in turn may not sell it at the reduced price to smaller retailers). If Coke wants to launch a new product, they basically force small retailers to carry their product (whether they want to buy it or not). So, yeah, Coke is a pretty nasty company. Luckily for the guys in the USA, there is actual competition (Pepsi).
- napierzaza 16y agoIs that really lock in? It's the benefit of selling Coke over other drinks. Free fridge. Cold drinks drive sales and you might go for it. "Lock in" has a built in negative connotation. Cancel your service, return the fridge, what's the lock in? You want the fridge, sell the product, or don't. If Coke is the only company that offers a free fridge, and you really need it, I suppose you're locked in.
- brc 16y agoEverything you have said confirms that Coke has a fearsome sales force and distribution business. And that proves my point - it's not the taste of the drink but the way in which it is put in front of everyone that might be thirsty that makes them successful.
- JoeAltmaier 16y agoFrito for instance guarantees 100% shelf service - you will never run out of chips. Legendary stories of the extent they will go to keep mom & pop store stocked etc. Builds loyalty.