THE CASE METHOD:Société BIC

Define the problemFormulate alternative courses of

actionEvaluate the alternativesChoose and recommend a course of

action

Analyze Environment

EconomicSocialPolitical LegalTechnologicalOPPORTUNITIESTHREATS

Trends in disposables

HygenicPrivateGlobalizationTechnological

advances

Analyze Industry

CompetitorsNew EntrantsSubstitutesStrong SuppliersStrong Buyers

BIC vs the industryBIC within the

industry

Analyze Industry: Competitors

PriceAdvertisingSales PromotionNew ProductsServiceStrategiesSTRENGTHSWEAKNESSES

Gillette Double price “Gillette Daisy” Without guard Small ad budget Not aggressive Innovative Good brand equity Market leader

Analyze Industry: Competitors

PriceAdvertisingSales PromotionNew ProductsServiceStrategiesSTRENGTHSWEAKNESSES

American Safety Razor

Higher price “Flicker”Without guardSmall ad budgetNot aggressiveNot well known

Analyze Industry: New Entrants

Financial Requirements

Brand EquityEconomies of Scale

Not likely becauseFinancial

requirementsBIC & Gillette

namesBIC & Gillette’s size

Analyze Industry: Substitutes

Brand IndustryFormGeneric

Strong brand substitutes

Strong industry substitutes

No generic substitutes

Analyze Industry: Suppliers & Buyers

Strong Suppliers: Forward Integration

Strong Buyers: Backward Integration

No strong suppliers (no apparent sign of integration)

Some strong buyers (intermediaries) (no apparent sign of integration)

Analyze Company

QuantitativeQualitative Management

Philosophy

FinancesOrganizationCultureSTRENGTHSWEAKNESSES

Société BICMarcel BichGrowing fastExtending lineWorldwideStrong financesDedicated business

philosophy

Société BIC Story: Facts & Figures

Founded in France by Marcel Bich

Salesman (office supplies)

Branded after his name

Still CEO; in Paris

Growing (1976 vs 1975)

Non US: sales 40%, earnings 100%

US: sales - 50% of non US;

earnings - 80% of non US; growing at 45%

Société BIC Story: Facts & Figures

Sales in 90 countries

Plants in 4 countries

Mass producer/seller produces 9 million pens/day (33% of world market)

sells 800 thousand lighters/day (20% market share)

50% market share in pantyhose in France

Société BIC Story: Business Philosophy

Cheaply made

Briefly used

Disposable

1953 – 1976:

Pen, lighters, pantyhose, razor

Société BIC Story: Business Philosophy

No interest in inventing

Strong capacity to improve

Strong capacity to make things worldwide

Extreme interest in quality

Never promote unless equal to #1 in market

Finance until beating competition in quality

“Even disposables cannot sell unless their quality is high” Marcel Bich

BIC Lady Shaver: Facts

To be launched in April 1978

BIC Pen US invests $11 million promoting shavers

Wet shave market: $350 million

Gillette dominates

BIC has 5%

BIC aims 10%

BIC Lady Shaver: Facts

BIC Lady: 2 for $0.49 ($0.245 each)

Gillette Daisy: 2 for $1.19 ($0.595 each)

American Safety Razor Flicker: 5 for $1.69 ($0.338 each)

Work on brand name - BIC Lady! (Silky Touch!)

First lady’s product at a “good price”

High safety features

BIC Lady Shaver: Promotion

Magazine ads

No TV to protect BIC Shaver

Will emphasize use

Close-up pictures

“Office Legs”, “Beach Legs”, “Bedroom Legs”

Very large budget

Couponing, sampling, premiums

Shampoo and roll-on premiums not relevant

Analyze Marketing Strategy: Facts, Opinions & Assumptions

Fit with Corporate Strategy

Competitive Advantage

Segments & Targets

Total Marketing Mix

BIC Lady ShaverPerfect with

corporate strategyAdvantages:

GuardPriceAggressiveness

Consistent mix

Analyze Problems & Their Core Elements

DON’T REPEAT THECASE STORY!

Case Material

Synthesis

Generalizations

Implications

BIC story & shaver story

Justification of strategy

Mix decisionsSuggestions

Formulate & Evaluate Alternative Courses of Action

List AlternativesEvaluate Each

AlternativeChoose the Best

AlternativeDetail the

Implementation

BIC Lady Shaver

Formulate & Evaluate Alternative Courses of Action: List Alternatives

Generate 3-7alternatives.

Don’t enterEnter: penetrateEnter: skim

Alternative Strategies

InnovationSkim creamingPrestige pricingBroad product line

Formulate & Evaluate Alternative Courses of Action: Evaluate Alternatives

CostsTimeMoneyResourcesOpportunity Cost

Product is readyR&D incurredWill consume

promotion budgetCan spend more on

other products

Formulate & Evaluate Alternative Courses of Action: Evaluate Alternatives

BenefitsSalesProfitCustomer

SatisfactionGoodwill

Good sales potential Good profits potential Will ride on current

success Will help existing

success Favorable customer

satisfaction Favorable goodwill

Formulate & Evaluate Alternative Courses of Action: Choose Alternative

Making Decisions Under Uncertainity

Developing Assumptions

Enter: penetrate Assume: competition

skimming Assume: competition

not aggressive Assume: lighter

competition in lady’s market

Strategy: Marketing vs Corporate

Mass consumptionDisposabilityElastic demandUniversal usageConvenienceEase of loss

Entry through emulation (imitation with development)

Penetration pricingSaturated marketsHeavy advertising

Basic Strategy!

How Important Is A Basic Strategy for Success?

Société BIC’s “reason for being.Main success factor.All enterprises need a basic strategy.Basic strategy is subject to review.