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    Group 6 Section A MKTMG Clean Edge

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    Atri Roy
    Clean Edge Razor is a new product from Paramount Health and Beauty Company that uses advanced vibrating blade technology. There are three options for positioning Clean Edge Razor: as a mainstream product, as a niche product, or as a super premium product. Financial projections show that positioning it as a niche product for the first two years would minimize losses from cannibalizing existing razor sales, as niche positioning results in lower expected cannibalization rates. The recommended strategy is to position Clean Edge Razor as a niche product initially and then potentially expand to broader positioning later.

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    Group 6 Section A MKTMG Clean Edge

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    Atri Roy
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    Clean Edge Razor is a new product from Paramount Health and Beauty Company that uses advanced vibrating blade technology. There are three options for positioning Clean Edge Razor: as a mainstream product, as a niche product, or as a super premium product. Financial projections show that positioning it as a niche product for the first two years would minimize losses from cannibalizing existing razor sales, as niche positioning results in lower expected cannibalization rates. The recommended strategy is to position Clean Edge Razor as a niche product initially and then potentially expand to broader positioning later.

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    Clean Edge Razor is a new product from Paramount Health and Beauty Company that uses advanced vibrating blade technology. There are three options for positioning Clean Edge Razor: as a mainstream product, as a niche product, or as a super premium product. Financial projections show that positioning it as a niche product for the first two years would minimize losses from cannibalizing existing razor sales, as niche positioning results in lower expected cannibalization rates. The recommended strategy is to position Clean Edge Razor as a niche product initially and then potentially expand to broader positioning later.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    136 views5 pages

    Group 6 Section A MKTMG Clean Edge

    Uploaded by

    Atri Roy
    Clean Edge Razor is a new product from Paramount Health and Beauty Company that uses advanced vibrating blade technology. There are three options for positioning Clean Edge Razor: as a mainstream product, as a niche product, or as a super premium product. Financial projections show that positioning it as a niche product for the first two years would minimize losses from cannibalizing existing razor sales, as niche positioning results in lower expected cannibalization rates. The recommended strategy is to position Clean Edge Razor as a niche product initially and then potentially expand to broader positioning later.

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    of 5

    CASE STUDY

    Clean Edge Razors: Splitting hairs in product positioning

    ABSTRACT
    An analysis of the case Clean Edge Razors: Splitting hairs in product positioning.

    Atri Roy, B13016 Amol Khavaskar, B13009 Rashmi Torgalmath, B13046

    BM (2013-15) | Term 2 | MKTMG - II

    Case Study Clean Edge Razors:

    Section A|Group 6

    1. Company overview and industry analysis


    Company Overview Paramount Health and Beauty Company is a global consumer products giant with corporate divisions including health, cleaning, beauty and grooming. It currently offers two lines of non-disposable razors and refill cartridges and the market is segmented into value, moderate and super premium. The offerings of Paramount currently are Paramount Pro Positioned for moderate segment Paramount Avail Considered to be a value offering

    Latest Developments Clean Edge Razor is a latest technological innovation providing superior consumer experience by using advanced technology never before seen in razors. The razor uses a vibrating ultra-thin five-blade design achieving 25% increase in hair removal versus the conventional razor blades. The company now wants to decide where to position this new product in the market. The product could be positioned in the super-premium segment and lose out on the possible gains if the product has mass market potential. The product could also be directly positioned in the mainstream market and risk the chance of its other products namely Paramount Pro and Paramount Avail being cannibalized. Industry Analysis The various products available in the US Razor market can be broadly categorized into nondisposable razors, refill cartridge, disposable razors, shaving cream, and depilatories. Nondisposable razors recorded an average growth of around 5% during the period 2007 to 2010. While in the same period disposable razors and refill cartridge recorded growth of approximately 3% and 2% respectively. Innovations in the products and improvement in the existing features has been the driving force for the growth. Nondisposable razors and refill cartridge market is broadly classified into three segments namely value, moderate and super premium based on price and quality. Paramounts consumer research identifi ed distinct segmentation in terms of product benefits and consumer behaviour. 39% of nondisposable razor users are segmented as Involved Razor users, social/emotional shavers; 28% as Involved Razor users, aesthetic shavers and 33% as Uninvolved Razor users, maintenance shavers. Studies from 2009 showed that the retail sales of nondisposable razors and refill cartridge came from 25% volume of super-premium, 43% of moderate and 32% of value segments. New product introduction in the nondisposable category has increased over years. The year 2008-09 saw as high as 22 products being introduced in the market. These new products were mostly in the super premium segment with advanced technology and better benefits. To stimulate the market for the new products there is an increase in the advertising spend in this category and is expected to grow further.

    Page 1|4

    BM (2013-15) | Term 2 | MKTMG - II

    Case Study Clean Edge Razors:

    Section A|Group 6

    2. Competitor analysis
    Competition Competition came from direct competitors as well as substitute products. Substitute products include disposables razors, electronic shavers, depilatory creams, wax and laser hair removal. In 2009 the market was dominated by three multinational single players, namely, Paramount, Prince and Benet & Klein. New entrants like Radiance Health Inc. and Simpsons were creating buzz in the market with their new products Tempest (Radiance) and Naiv (Simpsons) and poised to eat away the existing share of Paramount in their current segments which showed greater need for the new product in the pipeline
    COMPETITOR PRODUCT Cogent Super Premium Maturity/Declining stage Cogent Plus Super Premium Introduction/Growth Stage Vitric Moderate Maturity/Declining stage Vitric Advanced Super Premium Decline Stage Vitric Master Super Premium Introduction/Growth Stage Tempest Super Premium Introduction/Growth Stage REMARKS Market leader No. 1 position of $ sales Global presence

    PRINCE

    Not differentiated Good technology deployed

    BENET & KLEIN

    SIMPSONS

    RADIANCE

    The Naiv Super Premium Introduction/Growth Stage

    PARAMOUNT

    Avail Value Declining Stage Pro Moderate Growth/Maturity stage Clean Edge Super premium To be launched in 2011 Technologically superior

    Presence in deodorant market with good brand recognition New entrant in razor industry Brand association likely to extend to razors market Band presence in other product sectors New entrant in razor industry Aggressive advertising Similar vibration technology as that of Clean Edge Market Leader Has not innovated in the last 5 years Operating profit not as good as industry standards

    Page 2|4

    BM (2013-15) | Term 2 | MKTMG - II

    Case Study Clean Edge Razors:

    Section A|Group 6

    3. Positioning of Clean Edge Razors


    Segments in the U.S. Razor market
    Based on price and quality Super premium One of the fastest growing segments in the last decade with growth being primarily driven by technological innovations like 5-blade technology, glide strips, lather bar etc. Moderate Value Based on behavior of users Involved razor users o Social/emotional shavers 39% of non-disposable razor users Treats shaving as an essential part of grooming to be more socially acceptable o Aesthetic shavers - 28% of non-disposable razor users Functional shavers who are more concerned about removal of unwanted hair Uninvolved/Maintenance - 33% of non-disposable razor users Treat shaving as a chore, have an irregular schedule and are indifferent to experience Mainstream positioning

    Mainstream positioning

    Razors

    Year 1 Year 2 Capacity 3.3 4 Manufacturer price 7.83 7.83 Total Revenue 25.839 31.32 Production cost per unit 4.74 4.74 Total production cost 15.6 18.96 Cannibalization cost 3.48 4.224 Capacity Manufacturer price Total Revenue Production cost per unit Total production cost Cannibalization cost Capacity Cost Advertising Consumer promotions Trade promotions 9.9 6.22 61.578 2.24 22.176 16.632 1.71 19 17 6 101.6448 87.417 -14.2278 21.9 6.22 136.218 2.24 49.056 36.792 2.45 17 14 8 150.482 167.538 17.056

    Cartridges

    Total Cost Total Revenue Final Margin *Cannibalization percentage 60%

    Page 3|4

    BM (2013-15) | Term 2 | MKTMG - II

    Case Study Clean Edge Razors:

    Section A|Group 6

    Niche positioning

    Niche positioning Capacity Manufacturer price Total Revenue Production cost per unit Total production cost Cannibalization cost Capacity Manufacturer price Total Revenue Production cost per unit Total production cost Cannibalization cost Capacity Cost Advertising Consumer promotions Trade promotions Total Cost Total Revenue Final Margin *Cannibalization percentage 35%
    Recommended positioning strategy

    Year 1 1 9.09 9.09 5 5 0.616 4 7.35 29.4 2.43 9.72 3.92 0.61 7 6 2 34.866 38.49 3.624

    Year 2 1.5 9.09 13.635 5 7.5 0.924 10 7.35 73.5 2.43 24.3 9.8 0.87 7 6 3 59.394 87.135 27.741

    Razors

    Cartridges

    Given the above projected financials it is better to position the product as a niche product for the first couple of years to minimize the losses which will occur due to cannibalization.

    Page 4|4

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