CASE STUDY 1

CLEAN EDGE RAZOR

BY SARAH MOHAMAD NOR

UTM KL
PRESENTATION OUTLINE
Introduction
Issues
Analysis of Marketing Strategy
Razor Market Analysis
Marketing Strategy Analysis

Marketing Solutions
INTRODUCTION
Non-Disposable Razor Market
Consumer
Frequent brand switching
Replacement cycle shortened since
consumers trying new products &


67%
Involved Non-Disposable Razor Users



Market Trend
5% growth per year
In sales of Non-disposable Razors from
2007 to 2010

Significant growth in
Super-Premium Segment
Driven by product innovation


Male-specific personal
care products
became more mainstream



Competitor
Continuous Innovation
in non-disposable razor category

Expansion of Advertising and
Promotion Expenditures

Intensify competition to
obtain retail space

Distribution
Channel
Outlets Increase Shelf
Space
for non-disposable razor category.

Shift of distribution
channel from Food & Drugs stores to
Mass Merchandisers




THE DILEMMA
Primary Issues
Where should the
Clean Edge Razor
be positioned?



ISSUES
Niche
Main Stream
Secondary Issues
Brand name
positioning of
Clean Edge Razor

Separating Clean Edge
from existing Product Line
Associating Paramount to
the brand as part of overall
Corporate Strategy to build
Paramount brand equity
Clean Edge by
Paramount

Paramount Clean
Edge
RAZOR MARKET COMPETITIVE MAPPING
Benet & Klein
Vitric Advanced
Vitric Master
Prince
Cogent
Cogent Plus
Radiance
Naiv
Simpsons
Tempest
Benet & Klein
Vitric
Paramount
Paramount Pro
Paramount
Paramount Avail
Market Share - by Market Segment



RAZOR MARKET ANALYSIS
Market Share by Brand



Super
Premium,
36.4%
Moderate,
38.5%
Value,
4.9%
Source: Exhibit 5
RAZOR MARKET ANALYSIS
Sales by Segment



Source: Table B
Product Segment Volume
(%)
Dollar
(%)
Volume to
Dollar Ratio
Super-premium 25 34 1 : 1.4
Moderate 43 44 1 : 1.0
Value 32 22 1 : 0.7
Although Moderate Market captures the highest percentage of volume and dollar value,
the super-premium gives the higher return in terms of dollar value per volume produced.
On the other hand, value market segment gives lower market value per volume
produced.
RAZOR MARKET ANALYSIS
SWOT Analysis
Strength



Opportunity



1. Established brand that consumers already trust and hold
strong and positive association with.
2. Paramount can afford $19 million in advertising
3. Best product in the market (Technologically advanced and
tested)
4. Nothing currently in the market like it.


1. Growth in the super premium segment
2. Mainstream market is highly profitable.
3. Increased in mens grooming.
4. Uninvolved razor users (maintenance users) is untapped
consumer base.


Weakness



1. Launching the Clean Edge Razor in the wrong segment
could potentially canabilise the Paramount Pro.
2. Does not hold a position in the super premium segment of
the mainstream market which accounts for 37.2%of the
total non-disposable razor market.
3. Competitors in the market may released similar products.
4. Naiv, a competitor brand of non-disposable razor has
similar vibrating technology to Clean Edge.




Threat



1. Positioning in the Mainstream market could lead to
cannibalization of existing Paramount product
2. Super-premium market segment is highly influenced by
market and technology changes on razor functionality
and design.


MARKETING STRATEGY ANALYSIS
Year 1 Year 2 Year 1 Year 2
Unit Sales Razors 1 1.5 3.3 4
Dollar Sales Razors 9.09 $ 13.64 $ 25.84 $ 31.32 $
Unit Sales Cartridges 4 10 9.9 21.9
Dollar Sales Cartridges 29.40 $ 73.50 $ 61.58 $ 136.22 $
Total Dollar Sales 38.49 $ 87.14 $ 87.42 $ 167.54 $
Production Cost Razor 5.00 $ 7.50 $ 15.64 $ 18.96 $
Production Cost Cartridges 9.72 $ 24.30 $ 22.18 $ 49.06 $
Capacity Cost 0.61 $ 0.87 $ 1.71 $ 2.45 $
Advertising & Promotions 15.00 $ 16.00 $ 42.00 $ 39.00 $
Total Cost 30.33 $ 48.67 $ 81.53 $ 109.47 $
Operating Profits 8.16 $ 38.47 $ 5.89 $ 58.07 $
Profits as % of Sales 21% 44% 7% 35%
Cost of Cannabilisation Razors 0.62 $ 0.92 $ 3.48 $ 4.22 $
Cost of Cannibalisation Cartridges 3.92 $ 9.80 $ 16.63 $ 36.79 $
Total Cannibalisation 4.54 $ 10.72 $ 20.12 $ 41.02 $
Profits After Cannabilisation 3.62 $ 27.74 $ (14.23) $ 17.06 $
Niche Mainstream
Profit and Loss Forecast for Clean Edge Under Niche and Mainstream Scenarios (in $ Millions)

Profit Projection as Percentage of Sales

21%
44%
7%
35%
0%
10%
20%
30%
40%
50%
Year 1 Year 2
GP Margin (%)
Niche
Mainstream
MARKETING STRATEGY ANALYSIS
Niche positioning offers higher projected profit comparatively to
Mainstream Positioning.
Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning



MARKETING STRATEGY ANALYSIS
Advertising and Promotion is projected to take up approximately 40% of
the Total Cost. Based on the projection, Mainstream market positioning
strategy requires three times more marketing effort (budget) as
compared to Niche market positioning strategy.
Operating Cost Niche Mainstream
Projection Year 1 Year 2 Year 1 Year 2
Advertising & Promotions $ 15.00 $ 16.00 $ 42.00 $ 39.00
Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

Advertising and Promotion Effort ($ Million)



MARKETING STRATEGY ANALYSIS
Cannibalisation rate for Niche Positioning = 35%
Cannibalisation Rate for Mainstream Positioning = 60%
Cannibalisation Niche Mainstream
Projection Year 1 Year 2 Year 1 Year 2
Total Cannibalisation $ 4.54 $ 10.72 $ 20.12 $ 41.02
Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

Cannibalisation Rate ($ Million)

MARKETING SOLUTIONS
To launch Clean Edge as niche technology product for the first two
years, and subsequently as a mainstream product.
This will benefit Paramount to:
1. Tap higher profit margin
2. Win over shelf space at distribution channel
3. Reduce cannibalisation effect of existing products
4. A soft entry approach to super-premium segment through
niche positioning
Where should the Clean Edge Razor be positioned?



Brand name positioning of Clean Edge Razor




As a niche product, Clean Edge should be distinguished from
other brands, as well as Paramount existing line.
Therefore, Clean Edge by Paramount will attract customers
and reduce the cannibalisation impact to the Paramount Avail
and Paramount Pro.