There is such a thing as too much innovation after all. Eight months after Gillette launched Fusion, a five-blade razor, sales have been disappointing and marketing analysts suspect Gillette has hit the wall on product innovation. Alan Middleton, professor of marketing at York University’s Schulich School of Business, says the lesson here is “just improving a product without staying close to the consumer is never a good idea.”
That’s a nice way of saying Gillette is out of its mind if it thinks guys are going to fork over nearly $20 for replacement blades. Middleton doesn’t doubt there’s a “marginal improvement” with Fusion over its previous incarnation, the three-blade Mach-3. But at a cost of $16.99 for the battery-operated razor and $17.99 for a four-pack of refills, “Is it worth the extra price? No.”
Herein lies the problem with product innovation: The more technologically advanced a product gets, the more expensive it becomes. And when it comes to consumer packaged goods, consumers aren’t willing to pay big bucks for basic goods.
In the case of Fusion, media reports say the razors themselves are selling much faster than refill blades, suggesting that “after that initial splurge, (consumers) are not buying refills; they’re going back to Mach 3 or something a little bit cheaper,” says John Hallward, director of global product management at Ipsos Reid-ASI in Montreal. Sales for Procter & Gamble’s razor and blade division in the U.S. fell 5% in its most recent quarter, which the company attributes to a reduction in inventories. P&G declined to be interviewed by Marketing for this story.
However, product innovation can work, says Hallward. For example, when P&G came out with Crest SpinBrush, an electric toothbrush that sells for about $7, “people bought it because there was value. It worked.” Another example is Tropicana, which “just blew the doors off Minute Maid orange juice” when it came out with a not-from-concentrate product at a premium price.
The problem with innovation, says Hallward, is “it’s hard to innovate every six months… And if you could, you’d end up with a second problem, which is you over-engineer.”
Consider premium-price diapers. “If you dropped one of these things into a bathtub, it soaks up half the water in the bathtub,” says Hallward. “Why does this thing need to absorb a gallon of water? The problem is that as they try to make diapers more and more absorbent, they become more and more expensive.” When Wal-Mart and Zellers came out with store-branded diapers, “they said we’re good enough, we absorb more than you need anyway, and we’re cheaper. People go ‘Yeah, that’s a good point. It’s good enough.’ All the innovation for these products essentially hits the wall.”
Where does Gillette go from here? While Fusion may not be hitting sales targets, “if it makes more money for them (they’ll) keep going,” says Middleton. “But can they just keep adding blades? The answer is no.”
