Innovation & Design

A Competitive Edge in a Cutthroat Market


Global Gillette (as the brand is now known since the sale of the Boston, Massachusetts-based Gillette Company to Procter & Gamble (PG) was finalized in October 2005) controls over 70 percent of the global wet-shaving market, with its top products being the Mach3 Turbo and M3Power razors. The St. Louis, Missouri-based Energizer Holdings (ENR) -- the company behind the drum-beating Energizer Bunny -- has a market share of around 18 percent with its Wilkinson Sword brand. As in any line of business that is dominated by two big players, like sportswear (Adidas and Nike (NKE) ), soft drinks (Coca-Cola (KO) and Pepsi (PBG)), and aviation (Airbus) and Boeing (BA)), rivalry is particularly strong, especially when the market leader loses shares to the archrival.

In 1998, Wilkinson Sword (whose products are distributed under the Schick brand in the US) objected to the mass distribution of free Gillette Sensor Excel shavers via mail to German households, calling it an improper sample offer, as the samples would cover demand for wet shavers for a considerable period of time. The District Court of Cologne, Germany, pointed out that a competitively undue demand coverage required at least 100,000 free samples and rejected the suit; Gillette had sent only 22,000 sample shavers.

The next gauntlet was thrown by Wilkinson Sword in August 2003, when it announced that it planned to introduce the first four-bladed razor, Quattro. Just hours after the announcement, Gillette filed a patent infringement lawsuit against Wilkinson's parent company, Energizer Holdings, charging that the Quattro razor illegally incorporated the blade technology of the three-bladed Mach3 system. But the District Court of Massachusetts denied Gillette's request, and Quattro went on sale in September and instantly gained market share. Ever since, Gillette and Wilkinson Sword have been very aggressive at attempting to impede the sale of each others' products around the globe.

In May 2004 Gillette released M3Power, the first battery-operated shaver, and launched a global campaign with testimonial superstar David Beckham. Late November 2004, the District Court of Hamburg, Germany, granted an interim injunction against Gillette and in favor of Wilkinson Sword. In the challenged M3Power advertising campaign, Gillette claimed that the new M3Power wet shaver uses electrical micropulses and guarantees a closer shave than any other wet shaver. Wilkinson Sword presented test results that showed a thoroughness advantage of 0.0143 mm of the M3Power compared to the Quattro; however, the resulting time advantage of 1.27 hours in 24 hours using 0.27 mm daily beard growth as a base is neither visible nor noticeable to the consumer, and therefore too slight to justify a superiority claim. The District Court of Hamburg judged this superiority claim as misleading and competitively undue, and released a cease and desist order concerning Gillette's advertising campaign.

A superiority claim is admissible and not misleading if it is based on facts, if the advertiser has a distinct lead over competitors, and if this lead is of certain duration.

Wilkinson Sword filed a similar lawsuit in the Netherlands, whereupon Gillette reacted with a countersuit attacking Wilkinson's Dutch ads for the Quattro shaver, which said "Independent tests and consumer research have shown that no other shaving system shaves smoother and softer than Quattro." The judge allowed both ads, but said they would not necessarily be believed. "By a good legal tradition, some exaggeration is permissible, as long as it is not misleading in nature, because it will be skeptically received by the average consumer," Judge Schepen said in his ruling, adding that the buying public has become practically immune to the tendency for commercials to use claims of superiority to sell their products.

Last December the patent panel of the District Court in D??sseldorf, Germany, handed down its decision in a ??20 million patent dispute between Gillette and Wilkinson Sword. The court ruled that Gillette's patents for the Mach3 three-bladed progressive exposure were not infringed by Wilkinson's four-bladed Quattro shaver. Gillette's counsel contended that Gillette's three-blade patent also covers shavers with four blades because even with four blades the shaver makes use of the three-step solution patented by Gillette. Wilkinson contended that the Gillette patent was restricted to a three-blade shaver only, and proved that the fourth blade of the Quattro shaver is no dud but in fact effective, hence using a different technique than Gillette's Mach3. The judge in the case followed this opinion and dismissed Gillette's claim for damages.

In an innovation-driven business like the wet-shaving market, it seemed only a question of time before the first five-bladed wet shaver was launched. As if on cue, Gillette introduced a five-blade shaver in September 2005, called Fusion. (The more blades, the better the shave is a formula that is not quite smooth. German independent research institute Stiftung Warentest conducted research that showed that every additional blade increases the danger of skin injuries.)


American Apparel's Future
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