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A case analysis on

Clean Edge Razor: Splitting Hairs in Product


Positioning

Prepared by;
Name Roll no Email Program
Rajendra Patidar 1613048 rajendra.p.imba16@ahduni.edu.in Syimba

Renickkumar Mehta 1611170 renikkumar.m.bba16@ahduni.edu.in Sybba

Ashish kabra 1611027 ashish.k.bba16@ahduni.edu.in Sybba


Summary & Introduction.

Paramount Health and Beauty Company, known as Paramount, is a global consumer products
giant with four corporate divisions including Health, Cleaning, Beauty and Grooming. Paramount
entered the non-disposable razor market in 1962 and quickly became a market leader. By 2009,
the company realized $13 billion in worldwide sales and $7 billion in gross profits, with the non-
disposable razors and refill cartridges in the U.S. contributing $170 million in revenue, gross profit
of $92 of $ 26 million.
Paramount offers two products, the Paramount Pro in the moderate segment of the million,
and operating profit product market and the Paramount Avail, which was considered the value
offering market. With these two products the company enjoys 23.3% of the retail share; however,
until now, Paramount has not introduced significant technology or new products in the last five
years.
The company has developed their newest non-disposable razor, Clean Edge, which is
currently undergoing review by market testers. The design of Clean Edge is to provide superior
performance by utilizing a vibrating technology to stimulate hair follicles and lift the hair from the
skin, allowing for a more thorough shave. To back these claims, Paramount enlisted a third party
lab to provide scientific testing. Jackson Randall is Paramounts product manager for Clean Edge;
he is responsible for recommending product position, brand name, and marketing budget
allocations for the launch.

The issues Paramount faces are primarily product positioning to remain a market
leader in non-disposable razors. The current top competitor in the non-disposable razors
includes Prince and B&K. Prince sells Cogent and Cogent Plus which are two super-
premium products, while B&K sells the Vitric line, including the Vitric in the mainstream
category and the Vitric Master and Vitric Advanced in the super-premium category. Two
new companies to enter the market are Simpsons, which released Tempest to the super-
premium market and Radiance which is planning on releasing Naiv to the super-premium
market in 2010.

The other issue faced by the company is to positioning are the branding and marketing
budget allocation for launch. Paramount executives are at odds whether to brand the
product with an emphasis on Clean Edge, such as Clean Edge by Paramount or to keep
the company out front first with Paramount Clean Edge.
Paramount is looking to reduce its marketing expenses in all product categories.
Therefore, if the budget were to remain the same then marketing for Clean Edge may
require a budget allocation from other product budgets. Marketing for Clean Edge in the
niche market would require $15 million while marketing in the mainstream market would
be considerably 4 higher at $42 million. Although, mainstream razor markets are expected
to capture three times that of the niche market, it would require approximately three times
the marketing expense over the niche market. Additionally, it would require approximately
$4 million in consumer promotion, such as coupons.

This case analysis would answer the five questions and provide a solution from the analysis
from the case.
Provide initial reactions to key decision in the case.
The company has developed new technology in the non-disposable razor market and the
executives are celebrating the achievement of its Research and development department. The
success of any company does not only depends upon what kind of people are working or
machinery, but actually depends upon the innovations that company offers to consumers. In
the meeting there are some questions raised by the executives about the marketing strategy,
branding, competition, product positioning, brand name, and marketing budget allocations for
the launch. Jackson Randall is Paramounts product manager for Clean Edge; he is
responsible for recommending product position, brand name, and marketing budget
allocations for the launch.

The company has seen considerable growth in their non disposable razor category and also
constant growth in their retail sales.

The consumer market is segmented into super premium, moderate and value. The key
decision of launching the product as niche product is fruitful to company in attracting new
consumers and offering value to them. Also the other benefit of launching as niche product
would reduce the cost of marketing which would be higher is launched in mainstream market.

The company is also able to curb the cost of cannibalization which could have occurred if it
was launched as mainstream product and the brand name of product as clean edge by
paramount would differentiate clean edge from other products of paramount.

It is expected that by following the proper positioning strategy and branding the company
would be able to give tough fight to its competitors like Benet & Klein and Prince.
What changes are occurring in the nondisposable razor
category? Assess Paramount's competitive position. What are
the strategic life cycle challenges for Paramount's current
products as well as for Clean Edge?
The following changes are occurring in non-disposable razor categories:
Clean Edge contended in the nondisposable razor and refill cartridge classifications.
The development in nondisposable classification has expanded by 5% every year
from the year 2007-2010, while 2% in cartridge class.
There are new advancements and new items presentation in this market. Clean Edge's
enhanced outline gave predominant execution by using a vibrating innovation to
invigorate hair follicles and lift the hair from the skin, taking into account a more
intensive shave.
There is steady development in retail deals. The retail deals has expanded from 178$
of every 2005 to 218$ of every 2010
In the most recent decade, the industry had encountered huge development in the
super-premium segment. Various item advancements in the super-premium segment
(e.g., 5-edge innovation, float strips, foam bar, low protection cutting edge covering,
and so forth.) filled the development.
22 new stock keeping units are being presented between the year 2008 and 2009, the
vast majority of these new SKUs were line expansions focused at the super-premium
section and advanced advantages from progresses in innovation.
The total expenditure on advertising and promotions for Nondisposable paramount
razors has increased by 9.03% from 2009 to 2010 with spending in media, consumer
promotions and trade promotions.
Shelf space in the distribution outlets for the product category has also increased.

Paramount's competitive position in this industry is:


Paramount is a global consumer product giant with $13 billion worldwide sales and
$7 billion in gross profits in the year 2009.
There are three multinational players in the non-disposable razors and refill cartridge
market - Paramount, Benet & Klein and Prince. The new entrants are Radiance and
Simpson.
Paramount pro and avail has allowed paramount to capture the unit volume market
leader position in 2009 with 23.3 %retail unit share.
There are basically three consumer segments for non-disposable razors
1.Value- in this segment paramount is having a monopoly. there are no direct
competitors.
2. Moderate- There is only one other brand vitric by B&K so both are having 50-50
market share.
3. Super premium - in this market there is huge competition but clean edge is unique
and is able to capture this segment.

Strategic lifecycle challenges.


Paramount's existing products are - paramount pro and paramount avail. Paramount
pro is having increasing sales but there are no new innovations in this category from
the previous 5 years so it is on the stage of decline. Paramount avail's sale is declining
year by year so it has already reached the final stage of product lifecycle.
Clean edge is a unique product and is having an upper hand of being one of its kinds.
But it is in the introduction stage so it will take some time to earn profits
How is the nondisposable razor market segmented?
Examine consumer behaviour for nondisposable razors.
The U.S. razor market includes several categories, and Clean Edge belongs to the non-disposable
razor and refill cartridge category. The non-disposable razor market is in a rapid growth stage
(approximately 5% per year from 2007 to 2010), while the refill cartridges market is growing less
(approximately 2% growth per year from 2007 to 2010). Also, the male-specific grooming and
personal care product market grew more during these years than the growth of the womens beauty
market .

Consumer Behavior

Non-disposable razors customers are classified into three categories: social/emotional shavers,
aesthetic shavers, and maintenance shavers. Both social/emotional shavers and aesthetic shavers are
considered the involved razor users, who are more willing to search for and experience new products.

Social/emotional shavers (39%) search for products based on the function and messaging of the
product. They care about the overall shaving experience. Shaving makes them feel more attractive and
confident.

Aesthetic shavers (28%) search for the products based on effectiveness, because they care more
about the cosmetic results. They shave to achieve their desire in smooth skin.

Lastly, maintenances shaver (33%) do not spend time on searching for shaving products. They view
all products as the same.

Consumer behavior Segmemtation

33
39
Social/emotional shavers
Aesthetic Shavers
Maintenance shavers

28
What are the arguments for launching Clean Edge as (a) a
niche product and (b) a mainstream brand? Which would you
recommend? What are the strategic implications of your
recommendation?
Clean Edge razor as a Niche Product
If Paramount went with the niche decision it will complement their portfolio as they only
serve both moderate and value segments. By analyzing the marketing expenditures it was
found that Paramount will need about $ 15 million for the first year compared to $ 42 million
if decided to go with the mainstream strategy in the first year.

On the other hand; Paramount will introduce the new technology and product for only a
small consumer base which will definitely reflect on the sales and revenues of this product
which will be small.

In addition to the new razor introduced four months earlier by Radians (Naiv razor) which
encounters the same technology.

Also the current products (Avail and Pro) are in the maturity phase and the expected sales
for Paramount Pro will be declining which will affect the loyal customer base as they may
revert to more innovative brands in the market.

Clean Edge razor as a Mainstream Product.


The advantage of applying Clean Edge razors in the mainstream market is that Pro, the
current backbone of the company, is in the mature phase of the product lifecycle and has
possibility to decline in the near future. Therefore, in order to keep the current Paramount pro
loyal customers, Clean Edge, with its innovation technology, should position in the
mainstream market to prevent current customers to go for other competitive innovation
products. That is to say, since Paramount already has a customer base in the mainstream
market, when they launch Clean Edge there might be more interest in Paramounts other
razors and products. Also, the volume sales are higher in mainstream market compare to
niche market and Clean Edge has relatively fewer competitors in the mainstream market
(only Paramount Pro and Vitric exist).

The drawback of standard technique (mainstream) are: the cannibalization rate is 60%
(specialty procedure is just 35%), the extensive showcasing speculation will be required, and
profits add up to benefits following two years will be only $2.82 million (niche market
position will be $31.37 million).

Conclusion
In conclusion of all the above statistics, market observations, trends and assumptions; it
comes clear that it was a successful move to start the R&D process to achieve the new
technology in Clean Edge razor. First, it will fill the gap in Paramounts market portfolio
(super premium) category. In addition it will provide paramount with a leading competitive
edge due to the technology introduced in this product. It is recommended that Paramount go
with introducing the product as a Niche to benefit from the distinction from other products.
Based on your positioning strategy, what brand name and
marketing budget allocations would you advise?
Ans. Should initially be launched as niche product,
As a niche product, Clean Edge should be distinguished from other brands, as well as
Paramount existing line. In this manner,

"Clean Edge by Paramount"

Or

"Clean Edge foremost" will pull in clients and lessen the cannibalization effect to the
Paramount Avail and Paramount Pro.

Naming the product Clean Edge by Paramount would separate it from the other products that
paramount currently produces. Paramounts main products currently are in the moderate and
value markets. To establish a niche market and establish it as a unique product, the
Paramount name should be secondary to the new innovation offered by the Clean Edge

Positioning

The new Clean Edge razor has a high developed technology which introduces it in the super
premium market segment. It can be introduced either as a niche product for sophisticated
customers or as a mainstream product to provide the closest possible shave. Each decision
has its parameters and outcomes.

Budget allocations

The marketing budget for mainstream segment would 4 times higher than the niche product.
Although it is believed that in mainstream product would able to capture the larger market
but on the other side if product is launched as niche would reduce marketing expense and
consumer promotion. Marketing for Clean Edge in the niche market would require $15
million while marketing in the mainstream market would be considerably 4 higher at $42
million.
Conclusion.
In finish of all the above statistics, advertise perceptions, patterns and assumptions; it
comes clear that it was a fruitful move to begin the R&D process to accomplish the new
innovation in Clean Edge razor. In the first place, it will fill the gap in Paramount's market
portfolio (super-premium) class. Due to development of new technology, it would help
paramount to lead in the razor market and would be able to compete with other
competitors.
Paramounts management is divided on the decision that whether new clean edge razor
should be launched as mainstream or niche and from the above analysis we recommend to
launch it as niche product and by doing so the company would also expand it share in
super premium segment of the razor market.
The above case analysis is also able to answer the question about positioning strategy,
branding name and budget allocation where launching product in niche segment, with
using brand name as Clean Edge by Paramount would help the company and also curb
the problem of cannibalization. The advantage of launching in niche is that its marketing
expense would be $15 million, where in main mainstream would cost 4 times. Hence we
can conclude by adding that above are the some recommendations which can be
implemented.