Gillette's New Edge
Procter & Gamble Co. (PG ) didn't advertise in the Super Bowl in 2005. But after acquiring Gillette last fall, it's going long on the glitzy gridiron: two ads for its new Fusion five-blade razor at a cost of more than $6 million.
The ad, competing against Budweiser's (BUD ) Clydesdales and Careerbuilder.com's office monkeys for post-game buzz, begins with a helicopter screaming across the Mojave Desert to a lab where two scientists disembark, insert canisters into consoles, and set off "the miracle of fusion." The image couldn't be more fitting for two companies trying to showcase how melding their strengths was worth the $57 billion P&G paid for the king of blades.
Executives from both sides say Gillette developed Fusion on its own. Its team led the marketing launch, too, right down to casting the scientists instead of using Gillette's high-priced pitchman, soccer star David Beckham.
But make no mistake: P&G's clout kicks in once Fusion hits stores on Jan. 27. Gillette is blanketing stores with 180,000 displays in the first week, coverage it took a year to achieve with the Mach3 razor in 1998. Later, P&G will take Fusion into China and Eastern Europe, where Gillette is weak. "You'll see Fusion absolutely everywhere you go," predicts Peter Hoffman, president of global grooming who is heading the campaign.
Achieving double-digit revenuegrowth in the razor business, where Gillette has a 72% market share, is the main attraction, but P&G hopes to do more. Gillette has been second banana in the U.S. shaving cream market and lags in the growing men's grooming market. To reverse that, P&G has folded the shave-prep products group into its beauty-care unit and made it "an extremely high priority," says P&G CFO Clayton C. Daley Jr. And for the first time, Gillette is rolling out grooming products with its new razor under the same brand, including Fusion HydraGel shaving gel.
Comics no doubt will have a field day with Fusion, mocking the lawnmower effect of five blades. But consider that Fusion, including an $11.99 battery-operated version, will command 30% higher prices than Mach3 products at a time when P&G can't raise prices on Tide or Crest. Morgan Stanley predicts Fusion will grab 15% of U.S. market this year, boosting P&G's earnings by $120 million. That's what P&G was betting on when it bought Gillette. Now all Hoffman has to do is deliver -- and justify entering P&G in the big game.
By William C. Symonds, with Robert Berner in Chicago
— With assistance by Robert Berner