Gillette (NYSE:G) unveiled a shaving revolution yesterday. It introduced its Fusion line of handheld and battery-powered razors, featuring a new five-blade system that aims to reduce irritation by placing the blades 30% closer together than those in its popular three-blade Mach 3 system. The line will hit the market early next year, and it raises the bar for systems like the four-blade Quattro, a product of rival Energizer's (NYSE:ENR) Schick.
Gillette, in the process of being acquired by Procter & Gamble (NYSE:PG), is hoping to win back some market share lost after Quattro's debut last year. After all, the company has a lot at stake in this $10 billion global market. If the consumer figured that Quattro's four blades were better than three, logic would dictate that Gillette Fusion would, upon release, be the new top dog. Right?
Well, it doesn't exactly work that way. The Mach 3 has continued to fare well despite the Quattro's presence. Last month, Gillette reported that quarterly profits climbed 17% higher on a 13% spike in sales. Then again, you have to like it when a company is willing to take innovative chances while the going is good, instead of waiting for its world to crumble.
Because the disposable-razor niche is relatively cheap, putting out something new is bound to give it a fair shot with the curious. Gillette Fusion will retail for $9.99. An enhanced battery-powered model will sell for just $2 more.
The key, quintessentially, is to win over new users by selling the razors dirt-cheap and making it up with the blade cartridges. It's the same mindset that has gone on to power the laser printer and video game console industries. Just ask companies like Hewlett-Packard (NYSE:HPQ) and Sony (NYSE:SNE).
Procter & Gamble will be hoping that Gillette's new entry is a hit. It announced its intention to acquire the shaving-products specialist for a whopping $57 billion back in March, and P&G's shareholders don't take kindly to uncertainty. They've been spoiled by 51 consecutive years of dividend hikes. That's the kind of consistent payout improvement that may be appealing to subscribers of our Income Investor newsletter service.
The shareholders probably don't need to worry. Executed properly, Gillette's new products will be a hit. That is, of course, until I roll out my own six-blade razor and take the market by stubbled storm.
Oh, if only it were that easy.
Longtime Fool contributor Rick Munarriz will probably never be remembered as a pioneer in shaving. Poor, scruffy Rick. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
