Online Upstart Harry's Razor Jumps Into Gillette's Turf
by: Saron Terlep and Khadeeja Safdar
Nov 11, 2016
Click here to view the full article on WSJ.com
by: Saron Terlep and Khadeeja Safdar
Nov 11, 2016
Click here to view the full article on WSJ.com
TOPICS: Microeconomics
SUMMARY: When Target opened its razor aisles to online upstart Harry's Razor, Gillette paid the price. Within weeks, Harry's grabbed a 10% share of the retailer's cartridge sales and about 50% of razor handle sales.
CLASSROOM APPLICATION: Students can evaluate three issues: (1) entry into an established market, (2) whether a retailer should have multiple or single suppliers of products, and (3) the relationship between products sold by a retailer and the prices of the products.
QUESTIONS:
1. (Advanced) Should a retailer create competition among suppliers? Alternatively, should a retailer have a dominant supplier? What are the benefits of having a sole supplier of a product? What are the benefits of having multiple suppliers?
2. (Advanced) What opportunity did Gillette create for Harry's? That is, does Gillette produce an inferior product? Does Gillette earn positive economic profit?
3. (Introductory) Do retailers like Target earn lower profits on razor blades in order to sell complementary products?
1. (Advanced) Should a retailer create competition among suppliers? Alternatively, should a retailer have a dominant supplier? What are the benefits of having a sole supplier of a product? What are the benefits of having multiple suppliers?
2. (Advanced) What opportunity did Gillette create for Harry's? That is, does Gillette produce an inferior product? Does Gillette earn positive economic profit?
3. (Introductory) Do retailers like Target earn lower profits on razor blades in order to sell complementary products?
Reviewed By: James Dearden, Lehigh University
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