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FREE AS A BUSINESS MODEL

105
Razor & Blades : Gillette
The form of the bait & hook pattern known as KP KA VP CR CS PATTERNS
the razor and blades model derives from the
marketing
built-in
way the fi rst disposable razors were sold. In r&d "lock-in"
1904 King C. Gillette, who commercialized the logistics razor handle
fi rst disposable razor blade system, decided to
manufacturers
customers
customerstomers
sell razor handles at a steep discount or even cus
retailers KR
give them away with other products in order to CH
create demand for his disposable blades. Today brand blades retail
Gillette is still the preeminent brand in shaving patents
products. The key to this model is the close link
between the inexpensive or free initial product
and the follow-up item—usually disposable—on C$ marketing R$ 1 x handle purchase
1 x handle purchasechasechase
1 x handle pur
1 x handle pur
which the company earns a high margin. Con- manufacturing frequent blade replacementsquent blade replacements
fre
frequent blade replacements
trolling the “lock-in” is crucial to this pattern’s logistics, r&d
success. Through blocking patents, Gillette
ensured that competitors couldn’t offer cheaper This pattern is popular in the business world
blades for the Gillette razor handles. In fact, and has been applied in many sectors, includ-
today razors are among the world’s most heavily ing inkjet printers. Manufacturers such as HP,
patented consumer products, with more than Epson, and Canon typically sell printers at very
1,000 patents covering everything from lubricat- low prices, but they generate healthy margins on
ing strips to cartridge-loading systems. subsequent sales of ink cartridges.

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