Clean Edge Razor

Splitting Hairs in Product Positioning

MBA8145-Marketing Management

Alpharetta, Summer-2011

GSU

Individual Case Analysis

Situation at Paramount

Paramount had established itself as a global consumer products giant with over $13 billion in

worldwide sales and $7 billion in gross profits for 2009 since it’s entry in the market in 1962. In

2009, Paramount had established itself as unit-volume market leader in 2009 based on non

disposable razor product sales. The Non disposable razor category market is entering a new

phase with technology products and new entrants posing a threat to capture Paramount’s Market

Share. From the target market positioning perspective the challenges can be broken down as

below:

Competition: Paramount’s main competitor in non disposable razor category in 2010 are

Prince, B&K, Radiance health and other substituted products. Prince sold non disposable

razors in super-premium category. Prince had gained #1 spot in terms of retail dollar

sales up until 2009. Notable feature of B&K another competitor was that they entered the

market in this non disposable razor category only in 1985. However, they managed to

reach #3 in market share and unit-volumes by superior technology and releasing super-

premium products. New entrants were coming to market with super premium products,

technology and greater advertising dollars to gain market share. Paramount’s clean edge

should compete with Radiance Naiv in test markets. Naiv had already acquired 13%

market share in test markets. Radiance and Paramount were fierce competitors and

Paramount had to launch a new technology in Super Premium segment to regain market

share and continue to exist as a global leader in this category.

Product Positioning: While Paramount had established as a unit-volume leader in 2009,

the non disposable razor market had a significant growth only in Super-Premium

segment. The rate of increase in total media advertising expenditures in this category is

greater than the rate of increase in retail market sales as shown in Appendix A. Main

reason for this is numerous product innovations in Super-Premium segment and advances

in technology. Paramount had developed a new product in this category called “Clean

Edge” based on superior technology and 5 blade designs. This new product would give

Paramount much needed boost to position itself as a leader in Super-premium segment

and technology giant for non disposable category. If Paramount decides to position and

market “Clean Edge” in mainstream positioning, then it will have to cannibalize existing

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Paramount Pro and Paramount Avail products. This could potentially reduce loss of

revenue and eliminate these products from Paramount offering resulting in losses due to

“Clean Edge”. Paramount is currently not sure as to where to place this product, “niche”

or “mainstream” positioning.

Price: Based on the data given in this case and price set by Randall and his team for

Clean Edge in either niche or mainstream positioning, I do not see any challenge for

Paramount. The reason is that they are positioning this product in Super-premium

segment and suggested retail unit price is $12.99 for Razor and $10.50 for cartridge in

niche positioning, $11.19 for Razor and $8.89 for cartridge in mainstream positioning.

This price is lower than current price in the same segment across Paramount’s competitor

and even lesser when compared to Cogent Plus.

Place: I don’t see any issues with Coverage, Assortment, Inventory, Transport or

Locations in US market. However, distribution started to shift outside traditional food

and Drug Stores. In 2000, food and drug stores sold over 50% of all razors, but by 2009 it

was only 42%. So, how should Paramount leverage this shift and gain advantages to

increase its sales via retail channels?

Promotion: Paramount as a corporation had decided to curb excessive marketing

expenses in all product categories. With the introduction of “Clean Edge” as a new

product, Randall and his team has to convince executive leadership to allocate necessary

dollars needed to establish a marketing campaign that will position “Clean Edge” as a

revolutionary Super premium and technologically advance Razor into the market. The

marketing campaign for “Clean Edge” has to be carefully planned in such a way that the

message reaches the target market with great success and also satisfy the executive team.

Branding: Paramount executives have different opinions when it comes to branding this

revolutionary “Clean Edge” product. However, Randall and Paramount has a challenge to

name come up with a name that provides the necessary boost for “Clean Edge” branding,

and not cannibalize Paramount Pro and Avail products.

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Paramount studies showed that consumers purchased razors and replacement cartridges more

frequently than ever before in the history of Non disposable razors. Also, Paramount’s consumer

research indicated that one category of consumers called “Maintenance users” that made up 33%

of consumers were not interested in Superior technology. A very important finding that cannot

be ignored for Paramount. Based on the data in the case and my analysis, below are my

alternatives that can be used to develop a market strategy that will position Paramount as a

market leader in Non Disposable razor category with “Clean Edge” product launch:

1) Launch “Clean Edge” as a “mainstream” technology product to be a market leader.

2) Launch “Clean Edge” as a “niche” revolutionary technology product to be a market leader.

3) Create a new strategy to market “Clean Edge” as a revolutionary technology product and

gain market share in Super-Premium segment.

4) Create a new branding strategy that will give consumers a household name called

“Paramount” with technology superior product and continue to retain and gain market share

with “Maintenance users”.

5) Develop a new incentive and rewards program to target “Maintenance users” and gain

market share with this user segment.

6) Establish contracts with the new retail channels such as mass merchandisers and club stores

so that Paramount non disposable razors can be placed at the right eye level for the users to

choose Paramount products.

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Analysis of Alternative Solutions

The evaluation of alternative solutions was based on the following criteria:

Research and analysis studies by Paramount.

Marketing and sales data across Paramount and its competitors.

Key Product differences and similarities between Paramount its competitors in non

disposable razor category.

Feasibility of implementing an alternative solution suggested.

Costs involved in implementing an alternative solution.

Costs such as manufacturing, production, advertising, marketing and any cannibalization

that could result with marketing strategy adopted by Paramount.

Benefits Paramount will receive by implementing an alternative solution. Benefits such

as increased market share with target customers resulting in increased profitability,

enhanced brand name equity for Paramount and utilizing Paramount existing products to

gain market share among “Maintenance users”

Please refer to

1) Appendix B for evaluation of above alternatives

2) Appendix C for quantitative analysis of Financial Forecasts based on Exhibit 7

3) Appending D for quantitative analysis of Financial Forecasts based on Exhibit 7, but

identical unit volumes between “Niche Positioning” and “Mainstream Positioning”

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Recommendation

Based on my analysis, I recommend a strategy that will launch the new product with

tremendous success to reach #1 position in terms of product sales, revenue and operating profits

for Paramount. This strategy will also retain Paramount Pro & Avail existing products and go

after “Maintenance users” that make up 33% of consumers. The branding concept launched with

this product will make Paramount a house hold name and give the necessary return on

investment for Paramount.

1) Launch “Clean Edge” as a “niche” revolutionary technology product to be a market leader.

This will enable Paramount to as a technology and revolutionary leader in non disposable

razor segment. The Super-Premium category will enable Paramount for higher pricing. This

will not cannibalize it’s existing products. Based on quantitative analysis from Appendix D

and Appendix E, I see that he profit before taxes for niche positioning is higher than

mainstream positioning. Also, when I modified the numbers to match unit volume sales

across niche and mainstream category, I noticed losses in Year 1. This is the most important

learning and observation from forecasted numbers that suggests that Paramount should

launch in niche positioning.

2) Create a new strategy to market “Clean Edge” as a revolutionary technology product and

gain market share in Super-Premium segment. The marketing budget allocated should be

carefully planned so that it will give the necessary boost in sales for the new product and also

retain enough marketing dollars for other product categories in the company.

3) Create a new branding strategy that will give consumers a household name called

“Paramount” with technology superior product and continue to retain and gain market share

with “Maintenance users”.

4) Develop a new incentive and rewards program to target “Maintenance users” and gain

market share with this user segment.

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5) Establish contracts with the new retail channels such as mass merchandisers and club stores

so that Paramount non disposable razors can be placed at the right eye level for the users to

choose Paramount products.

APPENDIX A

Non Disposable Razor Media Advertising $$ Increase Rate By Company From 2009 - 2010

Company Increase Rate (%)

Benet & Klein 4.54%

Prince 5.04%

Paramount 5.76%

Simpsons 533.33%

Non Disposable Razor Sales Increase Rate by Retail Channel From 2009 - 2010

Company Increase Rate (%)

Food Stores 1%

Drugstores 2%

Mass merchandisers 1%

Club Stores 1%

Other 0%

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APPENDIX B- Evaluating Alternative Solutions1) Launch “Clean Edge” as a “mainstream” technology product to be a market leader.

PROS: Increased profits and market share. Opportunity for higher profit margin with new “premium” product launched across

larger percentage of user segment.

CONS: Potentially could result in elimination of Paramount Pro and Avail products from

paramount product offering. Opportunity to utilize existing products and gain increased sales by rewards and

incentives is lost. Paramount will not be focusing “Maintenance users” with new product lines.

2) Launch “Clean Edge” as a “niche” revolutionary technology product to be a market leader.

PROS: Increased profits and market share. Opportunity for higher profit margin with new “premium” product launched with

Super-premium segment. Existing products can be retained and used to target “Maintenance users” Branding strategy can be carefully planned and deployed for maximum success and

household name recognition.

CONS: Increased marketing budget costs to launch the new product and provide incentives to

“Maintenance users”

3) Create a new strategy to market “Clean Edge” as a revolutionary technology product and

gain market share in Super-Premium segment.

PROS: Increased profits and market share. Consumers will change Paramount image and will be established as a technology

leader. Opportunity to enter in Super-Premium segment with big bang.

CONS:

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Increased marketing budget costs to launch the new product and provide incentives to “Maintenance users”

4) Create a new branding strategy that will give consumers a household name called

“Paramount Clean Edge” with technology superior product and continue to retain and gain

market share with “Maintenance users”.

PROS: Provide the right brand name and image to Paramount. Paramount name will now be part of all of its products..

CONS: Paramount has to maintain the Quality of all these products since now all are

associated with the company name. Any deterioration in the quality could potentially hurt sales of other products.

5) Develop a new incentive and rewards program to target “Maintenance users” and gain

market share with this user segment.

PROS: Gain greater market share and sales revenue utilizing existing products. “Maintenance users” are given importance and Paramount is not loosing it’s existing

product..

CONS: Paramount will have to continue to revolutionize Paramount Pro and Avail with new

introductions to compete in this segment and target “Maintenance users”.

6) Establish contracts with the new retail channels such as mass merchandisers and club stores

so that Paramount non disposable razors can be placed at the right eye level for the users to

choose Paramount products.

PROS: Gain appropriate product placement that could potentially increase sales across any

consumer looking at Non disposable razors. Utilize the new retail channels in targeting users due to recent shifts in distribution.

.

CONS: Increased costs to establish contracts with new retail channels.

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