Clean Edge Razor

Case Analysis

1-Synopsis:
1.1-Paramount’s Core Business
Paramount is a Health, cleaning, grooming and beauty company. It is a leading global
consumer product company. Paramount is leading in producing nondisposable razors since
1962. It generates two lines: Paramount Pro which is positioned in the moderate segment
and Paramount Avail in the value segment.
1.2-Problem raised in the case
On August 9, 2010, a group of executives from Paramount Health and Beauty Company
were testing out and discussing Paramount’s newest technologically advanced
nondisposable razor Clear Edge that provide superior performance. Jackson Randall, Product
Manager, Should present a clear marketing analysis to recommend:

 How should Clear Edge razor enter the Market: Super Premium, Moderate or Value
 Positioning strategy : Mainstream or Niche
 Brand Name: “Clean Edge by Paramount “or “Paramount Clean Edge”
 Market Budget for promoting Clean Edge: increase in overall budget

1.3-Field of Decision

To be able to have the best result, we need to assess competitors, positioning,

cannibalization and customer behavior.

2-Facts Findings:

2.1-Company Overview:

Paramount is a Health, cleaning, grooming and beauty company. It is a leading global

consumer product company. It produces 13 billion dollars as worldwide sales and 7 billion
dollars as gross profits in 2009. Paramount is leading in producing nondisposable razors
since 1962. It generates two lines: Paramount Pro which is positioned in the moderate
segment and Paramount Avail in the value segment. By 2009, these nondisposable razors
generated 170 million dollars as revenue, 92 million dollars in gross profit and 26 million
dollars in operating profit.

2.2- US Razor Market:

Between 2008 and 2009, 22 new SKUs in the nondisposable sector and refill cartridge were
launched and targeting the super-premium segment that is rapidly increasing for the past
ten years due to product innovations. These sectors were dominated by three leading
brands: Paramount, Prince and Bent&Klein. The three segment attributed by those
companies to their nondisposable razors are: value, moderate and super premium based on
the quality and price. Many razors categories are included in the US razor market. Clean
Edge has its place in the nondisposable razor that shows a fast growth stage about 5% per
year from 2007 to 2010 and in the refill cartridge group that showed growing of 2% per year
from 2007 to 2010. (See exhibit1)

2.3- Consumer Purchase Behavior:

Distinct segmentation in terms of products benefits and consumer behavior. “Maintenance

Shavers” 33% were almost completely disinterested in the product category. Users involved
in experiment new technology are divided into two categories: “Social/Emotional
shavers”39% are involved by the overall shaving experience, while “Aesthetic shavers” 28%
were more interested in cosmetic results.

2.4- Competitors Overview and analysis:

Disposable razors (low price and low innovations) and electric shavers (occupy 27% of the
razor market by having easy handle and low skin irritation characteristics) are the direct
competitors for the nondisposable razor and refill cartridge market.

In the nondisposable razor and refill cartridge market, Paramount’s main competitors are
prince, Benet&Klein and two new entrants Radiance and Simpsons. Since the 1950s, Prince
has dominated the nondisposable razor market with the super-premium brand category
named Cogent and Cogent Plus. Prince held the number one position in terms of retail dollar
sales in the nondisposable razor market. Since 1985, Benet& Klein joined the nondisposable
razor and refill cartridge market with the brand name Vitric (moderate), Vitric Advanced
(super premium) and Vitric Master (Super Premium). Simpsons used Tempest (Super
premium) as the brand name to join the nondisposable razor and refill cartridge market.
Radiance right now is Paramount’s strongest competitor because of the launching of the
new brand name Navi razor in September 2010, which adopts similar technology as Clean
Edge and will also be positioned in the super premium segment (see exhibit2). Most of the
current nondisposable razors brands are in the super premium segment (see exhibit 3) ,
however Paramount does not have any brand name in this segment. Paramount’s product
with the brand name Paramount pro is classified in the moderate segment and Paramount
Avail is classified in the Value segment.

Most of the current nondisposable razor brands are positioned into super-premium
Segment. However, Paramount’s current products – Paramount Pro and Paramount Avail are
only targeted to the moderate and value markets. Cogent (super-premium) from Prince had
the highest unit and dollar market share in 2009, followed by Vitric (moderate) from B&K.
However, according to market share forecasting of 2010, both Cogent and Vitric will lose
their market share due to the new brand launches of Navi and Tempest.

3-Swot Analysis:
Strength Weakness
 Paramount is a historical global  Cannibalization may Occur
consumer product company
 Paramount Pro had strong market share  Marketing budget of Clean Edge has
in the business Limitations
 Paramount was the unit volume market
leader in 2009
 Clear Edge Razor carried new
breakthrough technology.
 Opportunities Threats

• Nondisposable razors sales had • The accelerate rate of new-product

experienced approximately 5% growth introductions for nondisposable razors

annually from 2007 to 2010. and refill cartridges in these years.

• In the last decade, the industry had • The new launched Navi made from

experienced significant growth in the Radiance had similar new technology

Super-premium segment. with Clean Edge.

• The growth of super-premium segment • There are many substitute products

was caused by the product innovations. available.

• The purchase and replacement cycle of • The nondisposable razor market is

razors and replacement were shortening high competition.

• In the last five years, there was no

significant technology innovations

Introduced by Paramount.

• Male-specific grooming products

became the mainstream in the market.

4-Positioning Analysis (Pros and Cons):

4.1-Niche Market

According to P&L forecasting, more profits will be gained for Paramount after
cannibalization (28.55 million dollars more than mainstream positioning scenario after two
years).
More consistency with the marketing message of promoting product’s high technology and
innovation. It requires less marketing expenditures (15 million dollars) compare with
mainstream positioning (42 million dollars) as well as advertising and promotions
expenditures (31 million dollars in niche vs. 81 million dollars in mainstream for 2 years).
Cannibalization will be low with Pro/Avail (35%) comparing with mainstream strategy (60%).
Clean Edge will be the first product in Paramount to target the niche market which is not
saturated and has potential to grow in the future; by this way the company will have
products in each market segments. As per Paramount’s senior executive’s preferences,
Clean Edge will be placed in the super premium segment and the niche market is suitable to
better fit its pricing strategy.

The disadvantage is that the volume sales in the niche market are relatively less than the
mainstream market.

4.2-Mainstream Market

Pro Paramount’s main product is in the maturity phase and has the possibility to decline in
the future. For this reason, clean edge with its innovation technology can be a good
replacement to maintain Paramount’s current and loyal customers. The volume sales are
higher in the mainstream market than in the niche market and Paramount’s competitors are
fewer in the mainstream market (only Paramount Pro and Vitric exist).

The disadvantage of mainstream strategy are: cannibalization rate is higher (60%) than in
the niche market (35%). Marketing allocations are very high but the total profits after two
years will be only 2.82 million dollars but in the niche market the profit will be 31.37 million
dollars.

5- Suggested Recommendations:

5.1-Suggested Decision

Based on the P&L forecasting analysis, Clean Edge could be more profitable if positioned
into niche market (targeting social/emotional shavers and aesthetic shavers) than
mainstream market. The total profit after two years is 31.37 million dollars in niche markets.
2.82 million dollars in mainstream market. (See exhibit 4)
5.2-Brand Name Suggestion

Positioned in the niche market the brand name should start with “Clean Edge” and followed
“by paramount” for the reason to differentiate the product and focus on its technology
innovation to stand out from Paramount’s others product lines which have less technology
and target lower price market. By Highlighting “Clear Edge”, less brand recall will occur and
it might reduce cannibalization with Paramount’s others products lines and create
customer’s new brand preference. On the other hand, by keeping the company name as
part of the brand name, Paramount’s royal customers might still buy its new products to try
it.

5.3-Communication, Advertising strategies and Media Selection

Communication will highlight Clean Edge breakthrough technology (25% increase on overall
hair removal and improve skin condition), aesthetic design and its high quality. It will be
framed as an exclusive, stylish, high-tech and high end razor for social/emotional and
aesthetic customers. For new product launch, free media coverage will be the best chance
to introduce the new technology to the public.

Based on both target audiences characteristics and product segmentation the media
selection of Clean Edge by Paramount advertisements will include TV(55%), print
magazine(30%), and online social media(15%). All media channels chosen by Paramount
have more male viewers than women, the main targeted gender to use Clear Edge.

5.4-Promotion Plan

Coupons are essential for product launch. Cents off coupons, free razor coupons, bonus
packs, as well as free cartridge coupons will be used to stimulate consumers purchase
intentions. In store displays and feature ads will be applied to have a better position of shelf
space.Hosting a trade show will be a good chance to promote Clean Edge within retailers.

P-O-P displays and co-op advertising will be also effective to increase the product visibility
and to reinforce customer’s impressions toward Clean Edge.
5.5-Marketing Budget Allocation

According to the marketing budget forecast for 2011 and 2012 from Paramount, positioning
Clean Edge in the niche market will require $15 million overall in the first year, and $16
million in the second year. For the second year, advertising and consumer promotions will
be the same; however, the trade promotions will add on $1 million to maintain a high
exposure rate in the retail stores and keep the brand awareness in front of customers (See
exhibit 5).

Exhibit 1. Current Nondisposable Market:

Brand Brand Names Segments Dollar MKT share (09) Dollar MKT Share E (10)
Paramount Paramount Pro Moderate 18.5% 18.5%
Paramount Avail Value 4.9% 2.9%
Prince Cogent Super- 29.4% 21.3%
(1962) Cogent Plus Super- 1.3% 4.9%
B&K (1985) Vitric premium
Moderate 17.8% 15.8%
(1950s) premium
Vitric Advanced Super- 0.7% 0.1%
Vitric Master Super- 0.7% 5.2%
Radiance Naiv premium
Super- 2.6%(2010) 2.6%
premium
Simpsons Tempest premium
Super- 1.1% 5.7%
(2010)
Other x premium
More in Value 22.8% 23.0%
(2009)
Exhibit 2. Current Nondisposable Market Positioning:

Exhibit 3. Current Nondisposable Razors Segmentation:

Value
10%

Moderate
20%
Super-­­premium
70%
Exhibit 4. Clean Edge Razor Pro Forma Income Statement

Clean Edge Razor Pro Forma Income Statement

Niche Mainstream
Year 1 Year 2 Year 1 Year 2
Razor Unit Volume 1 1.5 3.3 4
Razor Manufacturer Price $9.09 $13.64 $25.84 $31.32
Cartridge Unit Volume 4 10 9.9 21.9
Cartridge Manufacturer Price $29.40 $73.50 $61.58 $136.2
Total Revenue $38.49 $87.14 $87.42 $167.54

Razor Production Price $5.00 $7.50 $15.64 $18.96

Cartridge Production Price $9.72 $24.30 $22.18 $49.06
Capacity Price $0.61 $0.87 $1.71 $2.45
Advertising & Promotion $15.00 $16.00 $42.00 $39.00
Total Expenses $30.33 $48.67 $81.53 $109.47

Operating Profit $8.16 $38.47 $5.89 $58.07

Cannibalized Razors $0.62 $0.92 $3.48 $4.22

Cannibalized Cartridges $3.92 $9.80 $16.63 $36.79
Total Cannibalization $4.54 $10.72 $20.12 $41.02

Total Income after Cannibalization $3.62 $27.74 -$14.23 $17.06

$ $
Profit After 2 years 31.37 2.83
Exhibit 5. Marketing Budget Recommendations on niche positioning strategy ($ in millions):
First Year First Year Allocation Second Second Year Allocation
estimated year
budget estimated
budget
Advertising $7 TV $3.85 $7 Same as the first year
Magazine $2.1
Internet $1.05
Consumer $6 Coupons $3 $6 Same as the first year
Promotions Events $1.2
Bonus Packs $0.9
Store $0.6
Displays
Feature Ads $0.3
Trade $2 Trade Shows $1.1 $3 Trade $1.8
Promotions Allowances
P-o-p $0.6 P-o-p $0.9

Co-op Ads $0.3 Co-op Ads $0.3

To: DR. Elie Sayegh

From: Abir Oueiss

Case Analysis of Clean Edge Razor

Presented on Monday, April 1, 2019

 Table of Content

1-Synopsis
1.1- Paramount’s Core Business
1.2- Problem raised in the case
1.3- Field of Decision
2- Facts Findings
2.1- Company Overview
2.2- US razor Market
2.3- Consumer Purchase Behavior
2.4-Competitors overview and analysis
3- Swot Analysis
4- Positioning Analysis
4.1- Niche Market
4.2- Mainstream Market
5- Suggested Recommendations
5.1- Suggested Decision
5.2- Brand Name Suggestion
5.3- Communication, Advertising strategies and Media Selection
5.4- Promotion Plan
5.5- Marketing Budget Allocation