Answer:
Gillette: The 11-Cent Razor, India, and Reverse Innovation:
1. The razor-and-blades business model is introducing low-margin product sby selling at initial low prices. This creates and stimulates demand for higher-margin blades with higher revenue.
2. The US razor consumers differ from the razor consumers in India in many ways. US consumers, like consumers in other advanced countries, enjoy high income and go for premium products to match their income levels, convenience and quality tastes. On the other hand, most consumers in low-income countries, like India and Brazil, cannot afford the premium brands. Therefore, they prefer the lower cost products and brands to the higher cost brands.
3. Gillette, after several studies of Indian men and their shaving habits, decided to innovate the Gillette Guard in India instead of innovating it in the US or other rich countries. This model is known as Reverse Innovation. It does not follow the Traditional Innovation model, where the product's R&D is conducted in rich countries and then the product is introduced into the low-income countries.
4. Gillette should not release the Gillette Guard in the US. The US consumers are used to high quality Gillette brands. They do not have any problem of affordability. To introduce a cheaper brand may dilute the brand quality image, to the detriment of its competitiveness, revenue, and profitability.
However, it should and can release the Gillette Guard in other low-income countries beside India. This decision must take into account the culture and preferences of the particular country's consumers. Some consumers in supposedly low-income countries appreciate quality and would prefer to pay more for the quality. A case-by-case approach should be considered.
Explanation:
The trading of goods and services among different countries is known as international marketing. The procedures for the planning and execution of international trade, promotion and distribution of products and services, are the same worldwide. But there are cultural nuisances which must not be neglected. A case in point is the Gillette Guard innovated in India for Indians. Assuming that Gillette did not factor in the peculiarities of the Indian consumers, it could have failed woefully if it had introduced Gillette Fusion ProGlide instead.
