Dollar Shave Club’s value proposition and how does it differ from Gillette’s
One of the major factors explaining DSC’s success is the unique approach to working with clients and the company’s value proposition. It presupposes a fair price and a client-centric service focused on the increased level of satisfaction among clients. The brand’s strategic decision was to reduce the razor price and eliminate the monopoly in the given segment by introducing a cheap subscription, only $1 per month in return for a stable supply of required razors and blades. In such a way, the price becomes much lower if compared with Gillette, which has another value proposition and offers high-quality razors that cost a lot and should be bought periodically. This radical difference preconditions the fast evolution of DSC and its success.
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In which ways is DSC’s business model a disruptive one
The model employed by DSC can be described as a disruptive one because of several factors. First of all, it does not follow patterns accepted in the industry and used by giants such as Gillette. Instead of spending giant resources on advertising, developing new products and types of blades, and guaranteeing the presence of products in different parts of the world and various retail locations, the company offers a subscription model that does not presuppose this sort of spending and works differently. Customers are attracted not by new items or ads; instead, they benefit from cheap prices guaranteed by subscription, which destroys schemes accepted in the market and used by other significant actors.
The strategic options open to Gillette in responding to DSC and which of these options should Gillette pursue
Because of DSC’s success and the loss of market share to 54%, Gillette has to respond to a new threat and introduce new offerings. The company has already launched the Gillette-On Demand service providing an opportunity to order new blades and razors using the internet; moreover, there are free extra offerings. However, the brand should continue pursuing Internet resources and exploiting its dominant position in the market. Membership in the Gillette club can be rewarded by special discounts and the provision of items required by clients. Additionally, it should reduce the price of its razors via the shift of focus from advertising to online presence. It will help to remain in touch with clients and guarantee the firms’ ability to compete.
Why would Unilever spend $1billion to acquire loss-making DSC?
Unilever’s decision to enter the razor market was followed by DSC’s acquisition and $1billion purchase. There are several factors explaining the deal. Low prices come from cheap blades provided by the company to its clients. However, regardless of this fact, DSC and the model used by it can be viewed as the future of the sphere as it presupposes the value disruption and the employment of new models that are more effective in the modern business environment. Under these conditions, the given deal is a great success for Unilever as it offers multiple opportunities in the given market segment, and DSC can be used as a platform for growth.
What general implications can be drawn from this case with respect to the consumer goods industry as a whole
The case demonstrates the importance of using new models to shake the market and disrupt other companies’ value propositions. DSC changes the game rules by suggesting cheap blades for only $1 per month, which strikes Gillette and other rivals, which sell extremely expensive items to their clients popularized by various ads. Additionally, it is vital to monitor the current clients’ preferences to understand whether they are ready for a value disruption or not and integrate a new approach.