TSP5 — How P&G’s narrow focus allowed them to cover all corners in men’s grooming space at a fast pace and low price tag
At 50 billion USD, Gillette was one of P&G’s major acquisitions that allowed it dominate the shaving space. Gillette’s products were revolutionary and brought in huge revenues for the parent at margins touching 30% — closely competing P&G’s household product margins.
Customers loved them and Gillette continued to be leader in its category.
But one tiny space was left uncatered to in the P&G universe — The premium customer. Someone who doesn’t mind spending north of 200–250 USD on personal care.
The volumes would have been a question but personal preferences were taking centerstage.
P&G faced a choice of leveraging the Gillette brand and come up with premium products to catch the category. But that would have challenges owing to Gillette’s mass appeal and brand associations.
They could do surveys, research and get a new product in next 2–3 years. But this was a big risk.
They narrowed the problem down — the only thing they needed was something that allowed them to enter the premium male shaving segment; more than a product they needed a brand identity.
So they bought The Art of Shaving, a premium men’s grooming company, at ~60 million USD. For a fraction of Gillette’s acquisition price, P&G got itself a brand that it could now scale using its super strong distribution and CRM network.