Strategic variants of the razor and blade business model: an inspiring benchmark

IF 4.5 Q1 MANAGEMENT Benchmarking-An International Journal Pub Date : 2023-08-03 DOI:10.1108/bij-04-2022-0262
S. Balasubrahmanyam, Deepa Sethi
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Abstract

Purpose Gillette’s historically successful “razor and blade” business model (RBM) has been a promising benchmark for multiple businesses across diverse industries worldwide in the past several decades. The extant literature deals with very few nuances of this business model notwithstanding the fact that there are several variants of this business model being put to practical use by firms in diverse industries in grossly metaphorically equivalent situations. Design/methodology/approach This study adopts the 2 × 2 truth table framework from the domains of mathematical logic and combinatorics in fleshing out all possible (four logical possibilities) variants of the razor and blade business model for further analysis. This application presents four mutually exclusive yet collectively exhaustive possibilities on any chosen dimension. Two major dimensions (viz., provision of subsidy and intra- or extra-firm involvement in the making of razors or blades or both) form part of the discussion in this paper. In addition, this study synthesizes and streamlines entrepreneurial wisdom from multiple intra-industry and inter-industry benchmarks in terms of real-time firms explicitly or implicitly adopting several variants of the RBM that suit their unique context and idiosyncratic trajectory of evolution in situations that are grossly reflective of the metaphorically equivalent scenario of razor and recurrent blades. Inductive method of research is carried out with real-time cases from diverse industries with a pivotally common pattern of razor and blade model in some form or the other. Findings Several new variants of the razor and blade model (much beyond what the extant literature explicitly projects) have been discovered from the multiple metaphorically equivalent cases of RBM across industries. All of these expand the portfolio of options that relevant entrepreneurial firms can explore and exploit the best possible option chosen from them, given their unique context and idiosyncratic trajectory of growth. Research limitations/implications This study has enriched the literature by presenting and analyzing a more inclusive or perhaps comprehensive palette of explicit choices in the form of several variants of the RBM for the relevant entrepreneurial firms to choose from. Future research can undertake the task of comparing these variants of RBM with those of upcoming servitization business models such as guaranteed availability, subscription and performance-based contracting and exploring the prospects of diverse combinations. Practical implications Smart entrepreneurial firms identify and adopt inspiring benchmarks (like razor and blade model whenever appropriate) duly tweaked and blended into a gestalt benchmark for optimal profits and attractive market shares. They target diverse market segments for tied-goods with different variants or combinations of the relevant benchmarks in the form of variegated customer value propositions (CVPs) that have unique and enticing appeal to the respective market segments. Social implications Value-sensitive customers on the rise globally choose the option that best suits them from among multiple alternatives offered by competing firms in the market. As long as the ratio of utility to price of such an offer is among the highest, even a no-frills CVP may be most appealing to one market segment while a plush CVP may be tempting to yet another market segment simultaneously. While professional business firms embrace resource leverage practices consciously, amateur customers do so subconsciously. Each party subliminally desires to have the maximum bang-to-buck ratio as the optimal return on investment, given their priorities ceteris paribus. Originality/value Prior studies on the RBM have explicitly captured only a few variants of the razor and blade model. This study is perhaps the first of its kind that ferrets out many other variants (more than ten) of the razor and blade model with due simplification and exemplification, justification and demystification.
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剃须刀和刀片商业模式的战略变体:一个鼓舞人心的基准
在过去的几十年里,吉列历史上成功的“剃须刀和刀片”商业模式(RBM)已经成为全球不同行业的众多企业的一个有前途的基准。现存的文献很少涉及这种商业模式的细微差别,尽管这种商业模式的几个变体被不同行业的公司在大致相当的情况下实际使用。本研究采用数理逻辑和组合学领域的2 × 2真值表框架,充实了剃刀和刀片商业模式的所有可能(四种逻辑可能性)变体,以供进一步分析。这个应用程序在任何选择的维度上提供了四种相互排斥但总体上详尽的可能性。两个主要方面(即提供补贴和企业内部或外部参与剃须刀或刀片的制造或两者兼而有之)构成本文讨论的一部分。此外,本研究综合并简化了来自多个行业内和行业间基准的创业智慧,根据实时公司明确或隐含地采用几种适合其独特背景和特殊进化轨迹的RBM变体,这些变体大致反映了剃刀和循环刀片的隐喻等效场景。通过不同行业的实时案例进行归纳研究,以某种形式的剃刀和刀片模型为核心共同模式。从跨行业的RBM的多个隐喻等效案例中发现了剃刀和刀片模型的几个新变体(远远超出了现有文献的明确项目)。所有这些都扩大了相关创业公司可以探索和利用的选择组合,因为它们具有独特的背景和特殊的增长轨迹。本研究通过提出和分析一个更具包容性或更全面的明确选择的调色板,以RBM的几种变体的形式为相关的创业公司进行选择,从而丰富了文献。未来的研究可以将RBM的这些变体与即将到来的服务化商业模式(如保证可用性、订阅和基于绩效的合同)进行比较,并探索不同组合的前景。实践启示聪明的创业公司识别并采用鼓舞人心的基准(如剃须刀和刀片模型,只要合适),适当地调整和混合成最佳利润和有吸引力的市场份额的格式塔基准。他们针对不同的细分市场,以不同的客户价值主张(cvp)的形式,针对具有不同变体或相关基准组合的捆绑商品,这些产品对各自的细分市场具有独特和诱人的吸引力。在全球范围内,对价值敏感的客户从市场上竞争公司提供的多种选择中选择最适合他们的选择。只要这种报价的效用与价格之比是最高的,即使是无装饰的CVP也可能对一个细分市场最具吸引力,而豪华的CVP可能同时对另一个细分市场最具吸引力。专业商业公司有意识地接受资源杠杆实践,而业余客户则下意识地这样做。考虑到他们的优先事项,在其他条件相同的情况下,每一方都下意识地希望获得最大的收益比作为最优的投资回报。原创性/价值先前对RBM的研究明确地只捕获了剃刀和刀片模型的几个变体。这项研究可能是同类研究中的第一个,它通过适当的简化和例证,证明和去神秘化,找出了剃刀和刀片模型的许多其他变体(超过十种)。
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来源期刊
CiteScore
10.40
自引率
16.10%
发文量
154
期刊介绍: Benchmarking is big news for companies committed to total quality programmes. Its enthusiastic reception by many prominent business figures has created high levels of interest in a technique which promises big rewards for co-operating partners. Yet, like total quality itself, it must be understood in its proper context, and implemented single mindedly if it is to be effective - this journal helps companies to decide if benchmarking is right for them, and shows them how to go about it successfully.
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