Fast moving consumer goods (FMCG) companies have been struggling to sustain historical growth rates over the past couple of years. A recent study by a global management consultancy indicates FMCG companies\u2019 growth in TRS lagged the S&P 500 by 3% from 2012 to 2017 [1]. Procter & Gamble (P&G) is no exception and recently announced another round of restructuring to streamline the business [2]. FMCG companies have an increasing difficulty inspiring and connecting with their customers. One of the reasons frequently mentioned by industry insiders to explain this is the disruption of mass-market product innovation and brand building [1]. Millennials are looking for more unique experiences and products in their lives. They prefer new brands. Small consumer-goods companies capitalize on this trend to grow very fast [1]. The razor industry in which P&G\u2019s subsidiary Gillette operates, has suffered badly from new entrants such as Dollar Shave Club [2, 3]. While P&G was trying to attract new customers with an arms race to add extra blades and features every year, Dollar Shave Club offered convenience and savings through a low-cost subscription service [4]. They were able to capture ~8% of the razor market in only a couple of years [4].<\/p>\n
Mass customization is a trend which has been increasingly adopted by FMCG companies to (re-)connect with customers. And it works. Research has proven it increases brand loyalty significantly [5]. A widely popular example is the \u201cShare a Coke\u201d campaign of The Coca-Cola company where consumers could buy cans showing the first name of friends, family members or simply themselves [6]. Additive manufacturing has huge potential to bring mass customization to the next level, renew brand loyalty, and initiate a new wave of growth for FMCG.<\/p>\n
Only a couple of weeks ago, Gillette launched \u201cRazor maker\u201d: it \u201cgives consumers the power to create and order customized 3D printed razor handles, with the choice of 48 different designs (and counting), a variety of colors, and the option to add custom text\u201d [7]. The online tool allows consumers to fully customize their razor handle to make it fully \u201ctheir own unique piece\u201d. The goal is clear: strengthen customer loyalty to protect and recapture market share in a market which is under attack from a series of smaller niche players. P&G tested the waters of 3D printing before [8], but the Razor Maker is their first \u201cbig bet\u201d in 3D printing. Moreover, according to Formlabs, P&G\u2019s 3D manufacturing partner, Razor Maker serves as one of the first examples of direct-to-consumer, end-use 3D printed parts worldwide [7]. This was made possible only due to recent technological advances. Printer heads can now deposit plastic material at 12 to 25 times the speed that was possible three years ago [9]. Many believe 3D printing could quickly become a dominant force in the economy [9].<\/p>\n
As one of the world\u2019s leading FMCG companies desperate to regain relevance with its customers, P&G is making the right move by exploring opportunities for mass customization with 3D printing. Due to strongly intensified competition, it makes sense to start in their grooming product line. I recommend P&G\u2019s management to build on this momentum with two further actions. First, I recommend P&G to quickly evaluate Razor maker\u2019s influence on brand loyalty and, if found positive, explore mass customization through 3D printing in other business lines as soon as possible. P&G\u2019s grooming business has had a big decline. By moving to mass customization through 3D printing in other business lines now, before these are attacked by new market entrants, P&G might avoid similar sales declines in these segments. I believe management should deploy the technology both for mass customization of products of longer usage (e.g. toothbrush handles of Oral-B could be personalized just like razor handles) as well as mass segmentation [9] of packaging for mass-produced products (e.g. lids of shampoo bottles could be adapted to specific regions, events or groups of consumers). Second, I strongly recommend management to form a strong strategic partnership with a 3D manufacturer such as Formlabs. There is a huge benefit for the first mover in launching mass customization of certain product categories like razor handles. Only one company can be first. A strategic partnership with certain exclusive rights ensures P&G has access to faster and more precise 3D printers first and allows them to innovate with their brands.<\/p>\n
With Razor maker, Gillette is one of the first brands of big FMCG companies that bets on mass customization through 3D printing. It\u2019s a bold but much-needed move to revert the trend of losing market share and declining brand loyalty. Yet, will this be sufficient to win the hearts of millennial consumers? And if so, given 3D manufacturing costs are dropping quickly, why could this trend not turn against them and further empower small niche players?<\/p>\n
Word count: 795<\/p>\n
[1] Greg Kelly et al., \u201cThe new model for consumer goods\u201d, McKinsey and company, April, 2018, https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/the-new-model-for-consumer-goods<\/a>, accessed November 2018<\/p>\n [2] Lauren Hirsch, \u201cP&G to restructure company as maker of Gillette razors simplifies business units\u201d, CNBC, Nov 8, 2018, https:\/\/www.cnbc.com\/2018\/11\/08\/pg-to-restructure-company-as-maker-of-gillette-simplifies-units.html<\/a>, accessed November 2018<\/p>\n [3] Scheherazade Daneshkhu, \u201cConsumer goods: big brands battle with the \u2018little guys\u2019\u201d, The Financial Times, February 27, 2018, https:\/\/www.ft.com\/content\/4aa58b22-1a81-11e8-aaca-4574d7dabfb6<\/a>, accessed November 2018<\/p>\n [4] Steven Davidoff Solomon, \u201c$1 Billion for Dollar Shave Club: Why Every Company Should Worry\u201d, The New York Times, July 26, 2016, https:\/\/www.nytimes.com\/2016\/07\/27\/business\/dealbook\/1-billion-for-dollar-shave-club-why-every-company-should-worry.html<\/a>, accessed November 2018<\/p>\n [5] Elizabeth Spaulding and Christopher Perry, \u201cMaking it personal: Rules for success in product customization\u201d, Bain and company, September 16, 2013, https:\/\/www.bain.com\/insights\/making-it-personal-rules-for-success-in-product-customization\/<\/a>, accessed November 2018<\/p>\n [6] Jay Moye, \u201cShare a Coke: How the Groundbreaking Campaign Got Its Start ‘Down Under’\u201d, The Coca Cola Company, September 25, 2016, https:\/\/www.coca-colacompany.com\/stories\/share-a-coke-how-the-groundbreaking-campaign-got-its-start-down-under<\/a>, accessed November 2018<\/p>\n [7] Formlabs, \u201cGillette Uses 3D Printing to Unlock Consumer Personalization\u201d, October 17, 2018, https:\/\/formlabs.com\/blog\/gillette-uses-3d-printing-to-unlock-consumer-personalization\/<\/a>, accessed November 2018<\/p>\n