Case study - Clean Edge Razor: Splitting Hairs in Product Positioning

Paramount Health and Beauty Company

 Paramount Health and Beauty Company, a leading name in consumer products including Health, Cleaning, Beauty and Grooming is all set to launch a new non disposable razor with cutting edge technology to improve mens shaving experience. The design provides superior performance by the use of a vibrating technology. The new product is to be launched in the Super premium segment, which is the first product in this segment by Paramount. The issue at hand is the decision regarding this products positioning which could be done either in the highly involved Niche market or in the main stream aesthetic shaver market.

 The US Razor market has several categories namely nondisposable razors, refill cartridges, disposable razors, shaving cream and depilatories. In the period 2007 to 2010, the growth of non-disposable razors is approximately 5% and that for refill cartridges 2% per annum. Paramount was a global consumer products giant with $13 billion in sales. Its portfolio includes health, cleaning, beauty and grooming products. Paramounts non-disposable razor and refill cartridges division contributed $170m revenue with a gross profit of $92m and an operating profit of $26m in 2009. Paramount currently offers two products, Paramount Avail and Pro in this category and the new product clean edge which is to be introduced

o The non-disposable razor and refill cartridges market can be divided into three segments based on the price of the product and the quality: value, moderate and super-premium. o In the super-premium segment, there have been numerous innovations and this segment is growing at a fast pace. o The frequency of purchasing non-disposable razors and refill cartridges is also increasing as the replacement cycle has been shortened. o There are three types of consumers as per their involvement with the product: Aesthetic shavers - (involved and motivated by the cosmetics results). Social/emotional shavers- (involved and motivated by the overall shaving experience). Maintenance shavers - (completely disinterested).

 There have been numerous product introductions in nondisposable razors and refill cartridges category (22 new SKUs were introduced from 2008-2009). Purchase volumes are not high, but the margins tend to be considerably higher compared to other personal care products. Distribution also started to shift outside the traditional food and drug stores with the former being the main distributors followed by mass merchandisers. There was also a shift toward mens grooming with more media attention and less stigma associated with it.

 The Team of Randall and representatives of R&D, Marketing and Production evaluated several new design and determined that a vibrating, ultra-thin five bladed design would be revolutionary product Paramount needed to establish themselves as an innovation leader. One AAA battery was housed in the handle of the razor which provided vibrations that stimulated hair follicles. In addition, the larger, heavier handle allowed for better balance, grip and control while shaving, and the advanced ultra-thin blade design reduced irritation. Clinical trials indicated Clean Edge achieved 25% increase in hair removal versus other leading nondisposable razor brand. Trials also proved benefits to overall skin condition with more even skin tone and improved skin texture.

 Competition for non-disposable razors included both Direct competitors as well as Substitute products. Substitute products include Disposable razor, Electric shavers, Depilatory creams, Waxing and Laser hair removal. In 2010 non disposable razor was dominated by three multinational player: Paramount Prince Benet & Klein (B&K)

Conti
New entrants were: Radiance Health Inc. Simpsons

These two were creating buzz in market with their product Tempest (Radiance) and Naiv (Simpson).

 Randall with his different executives determined the product name as Clean Edge by Paramount, who felt that product should stand apart from the current lines with an emphasis on Clean Edge. In opposition few executives preferred the name Paramount Clean Edge , who thought Paramounts name should receive top billing as this was consistent with overall corporate strategy of building the Paramount brand name equity.

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super-premium segment, Randall had two option of recommending Clean Edge for a niche product position focusing on Highly involved, Fastidious groomers looking for a superior shaving experience, or a mainstream position focusing on the broad advantage of offering the closest possible shave mainstream positioning strategy will dilute the brand power for our bread-and-butter product, Pro. A niche strategy makes more sense. It will complement our existing product portfolio perfectly. So Niche positioning would be better.

As

 On the basis of pro forma profit and loss, we conclude that it would be highly beneficial for paramount to launch the product in the Niche market. Also, we propose name the product as Clean Edge by Paramount.