Editorial: Gillette spends smart on Fusion

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Gillette spent over $750 million on research, development and manufacturing, secured 35 patents and unveiled the biggest marketing campaign in its history to launch "a quantum leap in shaving": Mach 3.

Turns out 1998's tripled-bladed Mach 3 wasn't the best a man can get, for now Gillette is readying the six-bladed Fusion. "The future of shaving," says CEO Jim Kilts. That's hype-and probably the truth, for Gillette has the power to redefine the market.

Therein lies the lesson: 1) Marketing moves markets. 2) It's possible to innovate in mature categories. 3) Innovation needs to produce an actual consumer benefit.

Gillette, to this point, has succeeded on all three. It convinced men that Mach 3 was worth a 35% premium over its then-reigning blade runner, SensorExcel. A four-pack of Fusion cartridges will go for $13, double Mach 3's original price.

Whether Gillette can keep delivering on point 3-consumer benefit-is to be determined. It took Gillette 70 years to go from one blade to two; 27 years to go to three; and seven years to go to six. The result, as Jack Neff wrote in Ad Age last week, is a shaver "reminiscent of `Saturday Night Live' parodies."

But credit Gillette with spending what it takes to design and define the best shavers. It's poured $1.2 billion into R&D since introducing Mach 3 and could spend more than $1 billion to market Fusion to the world's 3.2 billion males.

This isn't to overstate Gillette's reliance on engineering types. Last year, it spent $209 million-2% of sales-on R&D and 11% on advertising. Biotech giant Amgen, virtually the same size, spent $2 billion-19% of revenue-on R&D-and less than 1% on advertising. Amgen would like to cure cancer; Gillette needs only a cure for 5 o'clock shadow.

Gillette's priorities are in sync with those of Procter & Gamble, which pumps money into R&D (3% of sales) and advertising (10%) to bring category-defining products to market. The merger, of course, is all about fusion: a nuclear reaction that forms massive nuclei with the simultaneous release of energy. Just don't produce any bombs.

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