Gillette has always believed that continuous new product development resulting from extensive R&D is necessary to differentiate itself from competitors. True to its corporate mantra of 'innovation is Gillette', the company has introduced so of the most successful and widely acclaimed innovative products in the consum products industry. Its product range, protected by trademarks, is legendary with such brands as Sensor, Sensor Excel, Mach 3 and Gillette for Women Venus. The company's policy is to generate 40% of its sales from products launched within the last five years. One reason for Gillette's strong focus on new product development is that the competition has successfully learned to copy its produc very quickly. For example, Schick (part of Warner-Lambert, later taken over by Pfizer but known as Wilkinson Sword in many parts of the world) had imitated Gillette's Trac II twin-blade razor within five months of the product's launch. Further product launches have added to the brand value of Gillette. It has succeeded, in some markets, in making razors less of a commodity product - which consumers just buy on price and convenience considerations – but a branded consumer product that customers will pay a premium price for. Answer the following questions: (1) Define the following terms: innovative products; trademarks. (2) Explain how the use of innovative products and trademarks can add to the value of a company such as Gillette. (3) Analyse the importance of companies such as Gillette continuing to spend large sums on R&D even in a global downturn. (4) Evaluate the factors that determine the level of innovation in an industry.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Transcribed Image Text:1. GILLETTE: MANAGING PRODUCT INNOVATION Gillette has always believed that continuous new product development resulting from extensive R&D is necessary to differentiate itself from competitors. True to its corporate mantra of 'innovation is Gillette', the company has introduced son of the most successful and widely acclaimed innovative products in the consume products industry. Its product range, protected by trademarks, is legendary with such brands as Sensor, Sensor Excel, Mach 3 and Gillette for Women Venus. The company's policy is to generate 40% of its sales from products launched within the last five years. One reason for Gillette's strong focus on new product development is that the competition has successfully learned to copy its product very quickly. For example, Schick (part of Warner-Lambert, later taken over by Pfizer but known as Wilkinson Sword in many parts of the world) had imitated Gillette's Trac II twin-blade razor within five months of the product's launch. Further product launches have added to the brand value of Gillette. It has succeeded, in some markets, in making razors less of a commodity product - which consumers just buy on price and convenience considerations – but a branded consumer product that customers will pay a premium price for. Answer the following questions: (1) Define the following terms: innovative products; trademarks. (2) Explain how the use of innovative products and trademarks can add to the value of a company such as Gillette. (3) Analyse the importance of companies such as Gillette continuing to spend large sums on R&D even in a global downturn. (4) Evaluate the factors that determine the level of innovation in an industry.

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