Introduction
Transformations in the razor industry have been significant over the past few decades. Innovative technologies, new market entrants and generally more consumer friendly business approaches have resulted in increasing need for industry players to be proactive in coming up with new ideas. Shaving and other hair removal products form a fast growing market and have continued to evolve. The Dollar Shave Club (DSC) disrupted the industry significantly, through its unique marketing model which gave the company an edge above the already existing market giants. Having been in operations since 2012, the company presented a different value proposition to customers relative to those presented by their major competitors such as BIC and Gillette. While the early entrants into the market focused on improving product superiority while also increasing product prices, DSC focused on a discounted model of business, in which they give customers the value they need and no more.
Dollar Shave Club (DSC) Success
DSC came into the shavers market at a time of prolific growth by the already existing market giants. With the big dream of having more than 3.5 million members and surpassing the $ 200 million every year by 2016, the company focused on a more concrete growth strategy compared to the existing giants (Anderson, Kollenz-Quetard & Tavassoli, 2018). The company started by using third party contractors to handle supplies and also using the contractors for the warehousing and shipping activities. With a growing membership base, DSC managed to build its opportunities for cross-selling and to expand the product range, taking up female shaving products as well. The core strategies of the company have been mainly based on a robust marketing system, a shift in focus in terms of the customer messaging and direct to customer marketing activities.
The initial concept for DSC was to provide a shaving product that would give customers value for money. The starting point for DSC’s growth was the recognition that the existing shaving products promised customers higher value, yet were also costly and resulted in the wastage of a lot of time, which customers did not have (Anderson et al., 2018). Through the value proposition of a cost saving and time saving product, DSC has managed to push its progress into the markets with extraordinary results in a short while. The impacts of DSC’s value proposition are aligned to the concept of utility in marketing in the sense that customers choose products that give them the value they desire. The primary objective of any customer intending to buy a shaving product is for hair removal. The recognition that customers would focus on this value in any shaving product they intend to buy, helped DSC to develop products at a cheaper cost and to market effectively. In this way, the company differentiated its product and thus created competitive advantage in w market where it had just entered (Porter, 1985). The differentiation disrupted the industry norms in which companies focused on adding technologies that would not be very useful to customers to their shaving products. For instance, companies such as Gillette added torches to their shaving products while some made powered shaving products. By focusing on the customer need rather than providing value that the customer does not need, DSC created an automatic competitive advantage, which contributed significantly to growth.
The differentiation approach to competitive advantage as practiced by DSC also led to the development of cost leadership as a further source of competitive advantage (Porter, 1985). The mentality that drove cost leadership based on the reports by Dubin was that DSC was focusing on “just regular American guys who don’t like getting ripped off and who value their time (Anderson et al., 2018).” This implies that with just the shaving technology in the company’s shavers, there was no time wasted during use on the basis of using other technologies, which the customers definitely did not need during shaving. At the same time, the company’s shavers resulted in the incurrence of lower manufacturing costs relative to those of other shavers in the market as a result of the fewer technologies used. For this reason, it was possible for DSC to charge lower for the razors, hence resulting in cost leadership. The company’s offers were also structured based on a monthly subscription model, in which customer interactions were online and flexible enough to enable them make decisions such as whether to renew their subscription, change the characteristics of the subscription and also terminate their subscription at will (Anderson et al., 2018). At a time when technology advancements have been utilized extensively for product marketing and e-commerce, it can be deduced that the company makes optimum use of its available resources.
Additionally, DSC maintained its product focus, which helped to market to a specific market segment and to expand the operations to cater for the needs of all existing customers. With an online interactive system in which all the customer complaints were recorded and reviewed frequently, the company managed to continuously deliver customer value while maintaining its operations at minimum costs (Anderson et al., 2018). This combination of differentiation, cost leadership and focus has helped the company to continuously grow, delivering value to the customers.
Key Marketing Channels and Techniques
Currently, DSC focuses on its website and online channel for marketing operations. The company does not use traditional marketing channels such as through televised adverts, print media or radios. Also, there is limited use of social media platforms by DSC, with the company focusing on giving its customers as much information as possible through its YouTube channel. For DSC to continue prospering in the markets in which it operates, the company needs to diversify its marketing practices to include the traditional channels, as these are used frequently by those who have been in the industry for long. The key advantage of traditional media is an increase in visibility. These traditional media are mostly used by the elderly individuals in the society, most of whom do not use higher visibility channels such as the social media (Paquette, 2013). As such, televising the company adverts can help to improve the profitability of the company. Moreover, the company’s promotional activities currently focus on video usage based on the belief that videos have a more powerful impact on ensuring customer information retention. While YouTube exposes the company’s promotional videos to the younger generations, the elderly would also obtain the same information through televised videos, creating an even greater impact.
The social media can also contribute significantly to the growth of a company, particularly where the focus of the company is on the manufacture and distribution of household products. The social media can be a good platform for the company’s marketing due to its focus on a direct-to-customer relationship model. This model requires constant communication, obtaining feedback from the customers and focusing on the customer needs as a driver for change. In the use of social media, customers are given the opportunity to express their feelings and attitudes towards particular products. In fact, Paquette (2013) opines that the social media has given immense power to consumers and distributors, resulting in an equal communication platform for smaller and larger companies alike. In most cases, customers create communities of fans for particular products, who are then able to disseminate information about that product to others, and eventually increase organic social media value for the entire organization. The use of social media increases interaction with customers and may also give DSC an opportunity to surpass the greatest market leaders by boosting the outcomes associated with their direct to customer relationship. With a combination of the traditional and the most commonly used marketing platform in the social media, DSC is bound to increase its performance significantly.
Competitive Responses from Gillette/ P&G
The objective of marketing by any company is to increase its product visibility. This implies that while DSC does its marketing via the traditional media and the social media, it is bound to expect changes in the approaches used by competitors such as Gillette and P&G. The two main competitors are a threat to DSC in terms of the magnitude of their operations, their longevity in the market and the intensity of marketing. Gillette already uses traditional televised media for marketing only. On the other hand, P&G has been less involved in marketing across all platforms although it frequently engages customers on various social media platforms. With the proposed marketing techniques, it is expected that the two companies will also focus on social media marketing. P& G is also likely to be more active in the use of the traditional media for marketing purposes.
Alternatively, Gillette and P& G are also likely to focus on their existing markets and on differentiation. While DSC focuses on the regular American, P7G and Gillette may opt to compete against themselves in the luxury product category, selling to the high end society. In this way, all the three companies will have differentiated their operations. It will however be difficult for P&G and Gillette to emphasize cost leadership during its sales activities. Moreover, the two companies may also change their marketing messages to reflect new value propositions that DSC does not offer. In this way, there will be stronger competition for DSC.
Measuring Marketing Success
While engaging in social media and other media marketing, the company should just be careful to ensure that there is actual progress towards the target objectives. Measuring marketing success is a key practice in any social media and general advertisement practices. The first step towards measuring success is to clarify the marketing goals and objectives. Without a clear goal, it would be impossible to determine whether there is movement towards the goal or not. According to Gregory (2018), committing to a goal is imperative no matter what project one is working on. This should be followed with a clear statement of the time frame in which the goals are to be achieved. A timeline will give the company an opportunity to define its marketing activities within a specific period and to set the parameters for comparison over a period of time (Saura, Palos-Sanchez, & Suarez, 2017). Determining success factors can also help in measuring progress towards success.
In order to register a quantitative progress towards the set goals within the set time lines, the company can use specific metrics to monitor their progress towards the goals set. One of the metrics that can be used to effectively indicate progress is the website traffic. All company marketing efforts should focus on driving traffic towards the website since it acts as the home base for interacting with the clients (Saura et al., 2017). By increasing the social media visits, it will be inevitable for the company to note progress in marketing impact. Additionally, the company can measure progress by clarifying the traffic by source. The source of website traffic matters nearly as much as the traffic itself. By monitoring which source generates higher traffic, it will be possible for the company to focus its marketing activities on the sites that generate higher traffic. The company can also compare the new visitor traffics to previous visitor traffic. This can help in determining whether the company is acquiring new customers and/ or just retaining existing customers.
Conclusion
Marketing in a competitive business environment can be very challenging. For a company like DSC which came into an already competitive business environment, managing to develop a business strategy that creates inexistent value proposition can be instrumental in attaining consistent growth. Over the years, DSC has managed to create a name for itself as the cost effective and time conscious shaver manufacturer, through the combination of product differentiation, cost leadership and market focus. For the company to continue growing, there is however need to diversify its promotional activities from the current focus on the website as a marketing tool to the use of traditional marketing methods and social media approaches to marketing. Each of these will be able to help the company grow its customer base and strengthen the communities with which it is associated. Moreover, the company can monitor marketing success by specifying a goal and a timeline, and then using metrics such as website traffic as the measures for success.
References
Anderson, J., Kollenz-Quetard, K. & Tavassoli, N.T. (2018). Dollar Shave Club: Disrupting the shaving industry. London Business School.
Paquette, H. (2013). Social media as a marketing tool: A literature review. Major Papers for Master of Science Students, Paper 9. Retrieved from digitalcommons.uri.edu/cgi/viewcontent.cgi?article=1001&context=tmd_major_papers
Porter, M. E. (1985). Competitive Advantage. The Free Press. New York. Print.
Saura, J.R., Palos-Sanchez, P. & Suarez, L.M.C. (2017). Understanding the digital marketing environment with KPIs and web analytics. Future Internet, 9(76). Retrieved from res.mdpi.com/futureinternet/futureinternet-09-00076/article_deploy/futureinternet-09-00076-v2.pdf?filename=&attachment=1