Most everyone has heard about the razor/razor blade business model. But a recent set of Gillette TV commercials has me wondering if Gillette has taken that model too far.
Back in 1901, King Gillette had a business breakthrough when he came up with his business model of selling safety razors. He would sell the razor once, but it was the disposable blades that people had to keep buying over and over where you really made your profits.
This became known as the “Razor and blades” business model, and you can see it in many industries. For example, wireless companies gave away millions of cell phones for free because they knew they would make the money back on the call plans.
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But today I’m going to talk about the razor and blades model, with actual razors and blades.
First, a quick history:
For many years, Gillette and Schick battled back and forth with claims of having the best razor. In 1998, Gillette came out with the Mach3, the first triple-blade cartridge razor.
Five years later in 2003, Schick responded with the Quattro, the first four-blade cartridge razor. In 2004, The Onion came out with a foretelling article predicting that Gillette would not match Quattro’s 4 blades, but rather say “F*** Everything, We’re Doing Five Blades.”
Their vision was right on target, as Gillette released the Fusion Model in 2007 with, you guessed it, five blades. According to Gillette it cost less than the $680 million it spent to develop the Mach3.Â So what does that mean… $500 million dollars? That’s a lot of cash.
But my point today is to look at the two commercials that they are currently running.
1) Gillette Champions: Step up to Fusion Power
This ad features Tiger Woods, Roger Federer, and Thierry Henry, a trio who no doubt didn’t come cheaply, hitting golf balls, tennis balls, and soccer balls into the face of men that are shaving with the Mach 3.
No longer are they convincing people to change from Schick to Gillette, they’re telling their own customers that the Gillette blade they’re using isn’t good enough.
The tag line is: “Sometimes you need a little push, to let go of your Mach3 razor, until you discover Gillette Fusion Power.”
Really? Are they that cocky or is Schick no longer considered a competitor? I mean, I understand the concept of pushing customers along an upgraded product line. For example, my first Apple purchase was an iPod. I enjoyed the iPod, I stopped into the Apple store to look at new iPods, and while I’m there I check out the Macbooks.
Eventually, when it’s time to buy a new computer, I will also consider a Macbook. Then, when I’m happy with my Macbook, I’ll consider their new iPhone. But at least these are complementary products.
BUT THIS IS ROGER FEDERER HITTING A TENNIS BALL INTO THE MAN’S FACE AND EFFECTIVELY SAYING “DON’T USE THAT GILLETTE PRODUCT WHICH YOU ARE HAPPILY USING, USE A BETTER ONE INSTEAD.”
What other ad campaign did this agency work on??? A man is happily driving down the street in his Honda Civic, and then he stops at a light and Mike Tyson opens the door, drags him out of the car and punches him in the head and tells him to upgrade to the more expensive Honda Accord?
2) Talking Blade
The second type of commercials they are running are urging consumers to replace their blades more often. In one called “Talking Blade,” an animated razor tells its owner that he has to change the blade more often (thus effectively committing cartoon suicide, as the guy ejects him into the trash). The tagline is “Fresh Blade, Better Shave.”
Gillette Video: “Talking Blade” commercial.
A similar commercial called “Money well spent” urgently tells users that you can shave for only $1 a week.
So what’s going on here?
Well, it’s very clear to me what’s happening, because I’ve done it myself. There are 2 key factors:
1) The blades have gotten very very expensive
2) The blades have improved greatly in giving a great shave.
The result of this is that I am stretching the amount of time I spend in between replacement blades, sometimes weeks longer than I used to.
This has to be freaking Gillette out.
I would love to see a stat that shows the average number of times a man uses a blade vs. the cost of the replacement cartridges. I have to believe Gillette has this, and the correlation is that the more expensive the blades, the more likely a guy is to say, “You know, it’s getting a little dull, but I bet I can get another shave or two out of it.”
That’s also why these commercials are highlighting the built-in indicator strip that turns color over time, telling you when to switch to a new blade. Hmmm …. I wonder what the accuracy is like on that thing.Â Do you think that is more likely to encourage you to change your blade a little bit BEFORE it’s time, or after.
Do the numbers bear out this theory? Yes.
Note… for comparison, I’m going to use the battery-operated “Power” version of these two models, and look at retail prices, not sale prices. Prices vary dramatically so you want to make sure you get your blades on sale. You don’t know how frustrating it is to run out and need to buy blades and are forced to pay full retail.
When looking at the cost of the Mach3 Power vs. the Fusion Power, they both run about $12-$14. So in other words, the razors themselves are about the same.
But in looking at the blades, in comparing the retail prices at 4 locations, an 8 count of Mach 3 Power runs about $23.50 while an 8 count of Fusion Power runs about $28.75.Â With tax that’s $30 for an 8 count!
Breaking it down and rounding off, that’s $3 a blade for the Mach 3, and $3.50 a blade for the Fusion.
Why is Gillette a) competing with itself and openly telling people in their ads to upgrade and then b) replace their blades more often?
Easy… just do the math on an extra 50 cents of revenue per blade for each man they can convert, every time he shaves, over a lifetime. Big money.
Let me end this rant by saying something that might surprise you. I LOVE my Gillette Fusion Power razor. The shave IS the smoothest ever. I NEVER ever cut myself. And while I’m not happy to shell out $30 for replacement cartridges, by extending the number of shaves a bit and catching a sale, I understand that in a way I am subsidizing the half a billion dollar R&D effort they expended to fit all this technology into such a neat package.
I just don’t know how they’ll top it. Six blades? Seven? Do I hear double digits?
Are we heading toward a package of replacement blades hitting $50? Either way, King Gillette would be proud.
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