Gillette: Cutting Prices to Regain Share

After losing market share to low-priced competitors such as Harry’s and Dollar Shave Club for several years, Gillette decided to fight back by launching new products and increasing advertising. When these efforts failed to stem the losses, Gillette decided to cut the prices on its razors and blades in April 2017. Bonnie Herzog, an equity analyst at Wells Fargo, must assess how the recently announced price cuts are likely to affect Gillette’s earnings and its parent company’s earnings (Procter & Gamble owns Gillette). As part of her analysis, Herzog must estimate the price elasticity of demand for Gillette’s razors and blades. The case contains scanner data which allows students to calculate both price elasticities for a sample of Gillette products, and sufficient data to estimate the financial impact.