To successfully sell products overseas, particularly in developing markets, companies must tweak them so they're relevant to the people who live there. And often, that means rethinking everything from the product's design to its cost.
More companies will have to consider this balancing act as they increasingly move into emerging markets such as India, China and Brazil to offset slower growth in developed regions such as the US.
Ali Dibadj, a Bernstein analyst who follows P&G, said the Guard razor, which has been used by more than 50 million men in India, serves as a roadmap for companies seeking to court emerging markets.
India long has been an attractive country for US companies looking for growth. It has 1.24 billion people. And its economy is bustling: India's annual gross domestic product growth was 3.2 per cent in 2012, according to the World Bank, compared with 2.2 per cent in the US the same year.
Still, India's widespread poverty presents challenges for companies used to customers with more disposable income. India's per capita income is just about US$124 a month, compared with US$4154 in the US.
Gillette has sold razors in India for over a decade. The company had 37.3 per cent market share in 2007, but wanted more. To do that, P&G executives would have to attract the nearly 500 million Indians who use double-edged razors, an old fashioned T-shaped razor that has no protective piece of plastic that goes between the blade and the skin when shaving.
Carvalho, who spearheaded the company's effort to grow market share in India, didn't want to rush into designing a product, though. Gillette had stumbled once before with its early version of the Vector in 2002.
A new version of that razor had a plastic push bar that slid down to unclog the razor. The bar was added because Indian men have thicker hair and a higher hair density than their American counterparts. Adding to that, they often shave less frequently than American men, so they wind up shaving longer beards.
Gillette, which is based in Boston, wanted to test the product among Indian consumers before launching it, but instead of making the costly trip abroad, they had Indian students at nearby Massachusetts Institute of Technology test the razor. "They all came back and said 'Wow that's a big improvement,"' Carvalho recalls.
But when Gillette launched the razor in India, the reaction was different. Executives were baffled about why the razor flopped until they travelled to India and observed men using a cup of water to shave. All the MIT students had running water. Without that, the razor stayed clogged.
Carvalho said: "That taught us the importance that you really need to go where your consumers are, not just to talk to them, but observe and spend time with them to gather the key insight."
In 2008, Carvalho decided to bring 20 people, ranging from engineers to developers, from Gillette's US headquarters to India for three weeks.
They spent 3000 hours with more than 1000 consumers at their homes, in stores and in small group discussions. They observed people's routines throughout the day, sometimes staying late into the evening.
They learned that families often live in huts without electricity and share a bathroom with other huts. So men shave sitting on their floors with a bowl of water, often without a mirror, in the dark morning hours.
As a result, shaving can take up to half an hour, compared with the five to seven minutes it takes to shave in American households. And Indian men strain to not cut themselves.
With that knowledge, the Gillette team started making a new razor for the Indian market.
The resulting Guard razor has one blade, to put the emphasis on safety rather than closeness, compared with two to five blades on US razors.
One insight from filming shavers was that Indians grip the razors in many different ways, so the handle is textured to allow for easy gripping. There's also a hole at the handle's base, to make it easier to hang up, and a small comb by the blade since Indians hair growth tends to be thicker.
The Guard costs about one third of what it costs to make the Vector, Gillette's low-price Indian razor before Guard. Gillette sells the Guard for 15 rupees (29c), and each razor blade is 5 rupees.
The company's strategy seems to have worked. P&G says with 9 per cent market share, Guard has grown share faster than any other P&G brand in India. And Gillette's market share for razors and blades in India has grown to 49.1 per cent.
- AP
