Gillett's Innovation: The Safety Razor
In 1847, an English inventor named William Henson invented the "hoe" style razor with the blade perpendicular to the shaft of the razor, like the garden implement. This replaced the straight steel razors, which dulled easily and were bulkier and less manageable.
The Kampfe Brothers (Frederick, Richard, and Otto) patented the Star razor, which is credited as the first safety razor in 1880. The razor had a fixed blade that required stropping, but it was slightly less painful and dangerous to use than a hoe razor because of the thin wire guard on the blade. The patent expired in 1897.
King Camp Gillette
Around this time a salesman named King Camp Gillette gets the idea for a safety razor with disposable blades. Gillette initially shaved with the Star Safety Razor from the Kampfe Brothers, and he wanted to improve on it. He searched for backers with capital and toolmakers with experience. With the help of William Nickerson, an engineer from MIT, he applied for a patent on December 3, 1901 and began production in 1903. Around this period several competitors introduced Safety Razors with resharpenable blades, and Gillette was the lone seller of disposable blades. Gillette's innovation was so popular because for the first time, average people were able to shave themselves safely without needing to go to the barber.
Gillette's blade was made from stamped carbon steel which could be produced on a large scale cheaply. Men liked the idea of not needing to remove and strop the blade before each use, which saved time but also took some of the skill out of shaving. Men were more confident that they could handle shaving safely on their own, rather than stop by the barbershop on the corner to be shaved.
A New Era of Shaving
The real genius behind Gillette's innovation was his introduction of the "loss leader" marketing technique, which is still popular today. He was willing to keep the price of his razors low, even potentially selling at a loss, because he would more than make up for it with continual sales of disposable blades to this captive audience. Once a man purchased a Gillette Safety Razor, the only company he could buy more blades from was Gillette, so margins on blade sales were very healthy.
In 1903, Gillette's sales were 51 razors and 168 blades.
By 1904, sales for razors and blades had jumped to 90,000 and 123,000, respectively.
Gillette's sales continued to grow, and men were leaving barbers and becoming independent with the Safety Razor. King Camp's biggest breakthrough was a huge deal with the United States Military at the outset of World War I. All men who were getting shipped off to Europe were issued Gillette razors and blades, which was great publicity not only within our armed forces, but globally the Gillette name was a familiar one.
Loss Leader Marketing
Throughout the 20th century into the 2000s, the loss leader business model has been used on large and small scale campaigns. Standard Oil's John Rockefeller used it when his company expanded to China. Eight million kerosene lamps were given away or sold cheaply, and Standard Oil was then the provider of fuel for those lamps. Telecommunication companies have recently begun to give away the tangible hardware involved in their products to acquire profits through service contracts with monthly or periodical fees. Computer printers are often bundled into computer sales at a cost to the producer of the printer because once a consumer has a printer, he or she has a fairly inelastic demand for ink.