Dollar Shave Case Study

The Dollar Shave Club case is an ideal example of how company’s can penetrate a new market and disrupt the processes used by its competitors. When DSC entered the shaving and hair removal market, the major player in the market was Gillette. The company (Gillette) was however struggling to attract new customers especially with the growing competition from new entrants in the market. Despite this however, DSC was able to penetrate the market and disrupt processes and practices that presented shaving as a luxurious and expensive lifestyle (Anderson et al, 2018). The disruption caused raised problems for Gillette as consumers placed more value on the convenience provided by DSC over the lifestyle product presented by Gillette. This in turn shifted demand towards DSC, reducing the demand and market share for Gillette.

            DSC’s uses a subscription service business model where the consumer receives the products and services at their doorstep depending on the nature of subscription made. The company’s value proposition is expressed through the slogan “Shave time, shave money” which guarantees the consumer access to products and services that are timely and cost friendly (Anderson et al, 2018). Gillette on the other hand relies on a Business to Consumer business model and the value proposition is tagged in the phrase “the best a man can get” (Anderson et al, 2018). The two differ in that Gillette presents its products as a luxurious necessity. DSC presents its products as daily necessities that should be accessed with ease.

            DSC’s business model was disruptive in that, it introduced a new approach to reach the target audience and excelled where its competitors had failed. Despite Gillette’s failure to make its products available through ecommerce, DSC was able to rely on subscription services to ensure that consumers could access its shaving products without having to visit vendors, retailers or other physical shops (Anderson et al, 2018). The subscription services employed by the company enabled it to reach consumers and establish repeat buying in the early stage of launching its products, something other organizations had failed to achieve.

            Despite making losses during the launch period, Uniliver was willing to spend one billion dollars to acquire DSC. Despite making loses in the initial phase, DSC’s market entry strategy has introduced a new platform for reaching consumers through subscriptions, ensured repeat purchases as the packages are renewed monthly, and disrupted the business models used by other competitors (Anderson et al, 2018). The company is therefore likely to gain more market share and gain a competitive edge before the competition can adapt to the new processes introduced.

            The Dollar Shave Club is worth one billion dollars because it has penetrated an already dominated market and established a strong brand that is associated with customer value and efficiency. The company has disrupted processes that present shaving products as luxuries and thereby lowered prices for the consumer. The strong brand established and the company’s value proposition will guarantee constant demand for the company’s products and services.

            The company’s worth is further increased by the decision made to diversify its products and further target both men and women. Gillette’s value propositioning suggests that the company mostly targets male consumers. However, DSC has diversified its products and targets female consumers as well. The women targeted by DSC buy products not only for themselves, but also for their spouses and children, thereby increasing demand for DSC products and services.

            Lastly, DSC is worth 1 billion dollars because it has established a functioning infrastructure that allows it to save on cost while ensuring that its products are available to the consumer at the highest level of convenience. The company relies on manufacturers and warehousing to make and store its products while shipping is handled by a third party. The company therefore saves on the cost for manufacturing and delivering the products and storing them before they are purchased. Consumers are required to create an account on DSC website and input information about how often they require the products. Deliveries are then made to the designated location, ensuring efficiency and convenience throughout the shopping experience. The information collected will be helpful to compile data on how to be innovative and when launching new products and thus proving that DSC is worth the money offered by Unilever.

            Gillette can however engage in different strategies in response to DSC’s entry into the market. One of the strategies that the company could use is product diversification to target both men and women. This will ensure Gillette enlarges its market share and has more demand for its products and services. Gillette should however pursue a re-branding strategy that will change its image and value proposition. The new brand should present Gillette products as being affordable and convenient rather than luxurious as is the case with the company’s current image. The disruption caused by DSC has shifted the target audience’s perception of shaving and hair care. In order to recover, Gillette must change its image and brand identity to on that places emphasis on how the company offers value for money.

Reference

Anderson J, Quetard K and Tavassoli T, (2018) “Dollar Shave Club: Disrupting the shaving industry” London Business School,