Konnor George

MKT 487-002

Clean Edge Razor Written Case

Dr. Houston

March 11, 2016

Table of Contents

Executive Summary

Industry and Company Overview 2-3

Strategie Issues 3

Options -

Recommendations 3-4

Implementation 4
Justification 4-5

Industry and Competitive Analysis

Appendix A: Dominant Economic Characteristics 5-6

Appendix B: Strategic Group Map 7

Appendix C: Market Segmentation Variable Analysis 8

Appendix D: 5 Force Competitive Analysis 9-11

Appendix E: Driving Forces -

Appendix F: Key Success Factors 12

Internal Analysis

Appendix G: Current Value Proposition 13

Appendix H: Current Marketing Strategy 13-14

Appendix I: Financial Analysis 14

Appendix J: Resources, Capabilities & VIRN Analysis 15

Appendix K: Weighted Competitive Strength Analysis 16

Appendix L: Strategic Group Map 17

Executive Summary

Company Overview

Paramount established itself in global consumer products with divisions in the health,

cleaning, beauty and grooming industry. Beginning in 1962, Paramount started producing in the

non disposable razor market and became a well-respected brand overnight. They offered two

brands of non disposable razors: The Paramount Pro and the Paramount Avail. The Pro focuses

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in the middle of the product segment, while the Avail is more of a value offering to price-

conscious consumers.

In 2009, Paramount was successful and reported $7 billion in gross profits to go along

with $13 billion in worldwide sales. From there non disposable razors in the United states alone,

Paramount generated $170 million in revenue, $26 million in operating profit, and $92 million in

gross profit. This is accompanied by Paramount owning 23.3% of the retail share in the non

disposable razor category.

Industry Overview

The United States razor market as a whole can be represented into five distinct

categories: non disposable razors, disposable razors, refill cartridges, shaving cream and

depilatories. WIthin the non disposable razor category, recent innovations and new product

introductions have led to a 5% growth per year between 2007 and 2010, and a 2% per year

growth in the refill cartridges razor category.

WIthin the growing non disposable razor and refill cartidge category, there are three

segments based on quality and price: value, moderate and super-premium. A shift in consumer

preferences within the last ten years led to increasing growth in the super-premium segment.

Strategic Issues

1. Lack of positioning strategy for Clean Edge Razor: with the availability of the Clean Edge

Razor to be released, Paramount is unclear on whether to brand it as a niche or

mainstream product.

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 2. Clear Segment Presence Non-Existent: Paramount has razor products in the non

disposable razor industry in both the value and the moderate segments. WIth a rise in

the super-premium industry, Paramount needs to consider consolidating its focus.

Options

Paramount could launch the Clean Edge Razor as a mainstream product, which would

appeal to all razor users, or as a niche product, meaning it would appeal to a specific segment

segment of razor users.

Recommendations

It is recommended that Jackson Randall, product manager of the clean edge razor,

launch the product as a niche product over a mainstream product.

Implementation

The Pure Edge razor should be released as a super-premium blade, as opposed to the

value and moderate segment which Paramount is already in. The price should be placed around

the same price as Prince’s Cogent Plus ($12.50) and be marketed as “Clean Edge by Paramount”

and opposed to “Paramount CLean Edge”.

Justification

Niche Vs.

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 Mainstream
Niche Mainstream

Costs (millions) Costs (millions)

Razor Costs $12.50 Razor Costs $34.60
Cartridge Costs $34.03 Cartridge Costs $71.20
Ad & Promotion Cost $26.00 Ad & Promotion Cost $67.00
Trade Costs $5.00 Trade Costs $14.00
Capacity Costs $1.48 Capacity Costs $4.20
Total Costs $79.01 Total Costs $191.00

Revenues (millions) Revenues (millions)

From Razors $22.70 From Razors $57.15
From Cartridges $102.90 From Cartridges $197.80
Total Revenues $125.60 Total Revenues $254.95
Gross after

Cannibalization $59.80 Gross after Cannibalization $36.80

Net Revenue Net Revenue

(Revenue + Gross - Cost) $106.39 (Revenue + Gross - Cost) $100.75

Summary

The Clean Edge Razor posts a higher net revenue if it is launched as a niche product

rather than a mainstream. WIth a higher revenue and heavier target on the increasing non

disposable razor and an increase in the segment of super-premium razors, Paramount should

launch the Clean Edge razor as a niche product to capture this segment of the United States

razor industry.

Appendix A: Dominant Economic Characteristics

Change in Consumer Preferences

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 Customers have recently prefered a superior, higher quality blade than the disposable,

cheap blade. Each company markets a super-premium quality blade to attract this customer

segment.

Many Segments of Razors

The United States Razor industry is divided into many categories: non disposable razors,

disposable razors, refill cartridges and depilatories. WIthin the growing non disposable and refill

cartridges razor category, there are three segments: value, moderate and super-premium.

Super-premium has grown the most, and represents a significant challenge for razor companies

in introducing new products.

Summary

Consumers preferring the super-premium razors over the value and moderate razors

changes the dynamic of the razor market, calling for companies to create a product that is high

in quality, lasting and innovative

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Appendix B: Strategic Group Map (Y-Axis: Price; X-Axis: Quality)

High

Prince

B&K

Paramount

Low High

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Summary

Paramount currently focuses on value and moderate razor blades that have an

affordable price. Prince focuses solely on high-premium, higher price razors. B&M is

represented in both moderate and super-premium segments.

Appendix C: Market Segmentation Variable Analysis

The super-premium, moderate and value segments make up the non disposable razor

and refill cartridge market, with super-premium growing the most. Moderate razors still capture

the most retail sales by volume at 43%, but are not growing as fast as the super-premium

segment.

In the razor consumer market for both men and women, a segmentation exists that

divides them into three categories: Social/Emotional Shavers, who view shaving as an

experience, which makes up 39% of all non disposable razor users; Aesthetic Shavers, who care

about cosmetic results, makes up 28% of all non disposable razor users; and Maintenance

Shavers, who view products as the same, makes up 33% of all non disposable razor users.

Summary

Many shavers view the process as a routine that is essential to daily life. This and the

emphasis on a higher-quality shave changes the market segmentation for razors and promotes

innovation in the super-premium market segment.

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Appendix D: 5 Force Competitive Analysis

Threat of
Rivals:
High

Bargaining Threat of
Power of Substitute
Buyers: s: Mild-
High Plus

Threat of
New
Entrants:
Mild

Threat of Rivals: High

WIth three companies - Paramount, Prince, and Benet & Klein - dominating the market

for non disposable razor and refill cartridges, Prince’s primary focus is with personal care

products and held the number one spot for retail dollar sales in 2009 for non disposable razors,

with $224 million in revenue and $45 million in operating profit in 2009. Benet & Klein sells

personal care products along with hair products, vitamins and shaving products. Their presence

in the non disposable razor segment focuses on supported lubricating and anti-corrosive

technology, putting it along with the others companies in the super-premium razor segment.

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Threat of Substitutes: High

The United States razor industry offers substitutes within its own segments of

disposable, non disposable and refill cartridges. Within the non disposable razor category alone

are additional segments classified on price and quality: value, moderate and super-premium.

WIth so many options available within the industry, consumers have many choices of razor since

a lot of differentiation and innovation of additional products is based on consumer preferences.

THreat of New Entrants: Mild

Outside of the main three rivals in the non disposable razor segment, two new entrants -

Radiance and Simpsons - exist to pose a moderate threat due to their recently establishment in

the non disposable razor industry. Radiance posted a 0% volume in 2009, and Simpsons posted

a 0.9% volume. These percentages increased to 2% and 4.6% in 2010, but failed to capture a

significant amount of the market to be greatly competitive.

Bargaining Power of Buyers: High

With a very diverse market for razors, being able to persuade buyers to your segment of

the market is critical. In 2009, total retail sales in this industry (Shaving and Hair Removal

Products) was $1.9 billion dollars. This makes the bargaining power of buyers extremely high

and valuable.

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Summary

The United States razor market is a competitively hostile market. The threat of rivals,

substitutes and buyers are all high and pose a threat for each company. Although a diminished

threat of new entrants, companies are still entering the market and having some form of

success that could translate into long-term success.

Appendix E: Driving Forces

1. Increase in New-Product Launches:

2. Super-Premium Segment Growth
3. Consumer involvement with razors

Summary

The United States razor market has seen a lot of new products introduced due to the

increased popularity of the super-premium segment. With more consumers classifying as

different groups (Maintenance shavers, Aesthetic, Social/Emotional), companies have a wider

segment to target and turn into promoters.

Appendix F: Key Success Factors

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 1. Many Different Products: The razor industry is divided into different categories, which

can be divided into additional categories.

2. Brand Recognition: The top companies in the razor industry have established brand

recognition that helps them gain advantage against rivals.

3. Nature of Product (Replaceability): WIth an increase in the popularity of non disposable

razors, companies must now focus on building a better quality product rather than a

product that needs replacement after one or a few uses.

Summary

With many categories within the razor industry, companies have many available choices

to choose in terms of which market to focus on. Many companies have established brand

recognition that helps them promote the product, which are high-quality razors as opposed to

cheaper, disposable razors.

Internal Analysis

Appendix G: Current Value Proposition

Paramount’s current value lies in its ability to offer value and moderate segment razors

at an affordable price. The increase in popularity of super-premium razors puts Paramount at a

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disadvantage. This disadvantage should quicken the positioning of the Clean Edge Razor as a

super-premium razor.

Appendix H: Current Marketing Strategy

Price

The current prices for Paramount’s Avail and Pro are $5.75 and $9.50 respectively.

Standard refill cartridges are $4.60 and $7.55 respectively.

Product

Without the clean edge razor, Paramount currently targets the marketing segments of

value and moderate. With the growth of the super-premium segment, the clean edge razor

should be marketed as such.

Place

In 2009, most razors were sold in food stores. 42% of the market volume was sold in

food stores. 29% were sold in drug stores, 21% were sold in mass merchandisers and 5% were

sold in club stores.

Promotion

Paramount excludes the group of consumers called “Maintenance Shavers”, who view all

products as the same, and focuses on the group of shavers motivated by the overall shaving

experience (“Social/Emotional Shavers”) and the results (“Aesthetic Shavers”).

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Appendix I: Financial Analysis

2007 2008 2009

Market Share Volume Dollar Volume Dollar Volume Dollar

Paramount 20.50% 19.20% 21.80% 21.40% 23.30% 23.40%

Prince 24% 31% 24.50% 32.60% 23.10% 30.70%
B&K 20.60% 23.20% 19.80% 21.90% 19.20% 22%

Summary

Paramount owns the most market share (23.3%) in 2009, a vast increase since 2007.

Prince has excelled, but has declined slightly. B&K, although they offer more products, don’t

carry the same reputation that both Paramount and Prince have established and are therefore

significantly lower.

Appendix J: Resources, Capabilities & VIRN Analysis

Non-

Resources/Capabilities Valuable Rare Inimitable Substitutable

Clean Edge Yes Yes No Yes

Jackson Randall Yes No Yes No
Marketing Budget Yes No No No
Paramount Brand Yes Yes Yes No

Summary

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 The Clean Edge Razor gives Paramount its most valuable resource against its

competitors. The Paramount Brand, which has been established since 1962 and becoming a

respected brand, gives credibility to its products

Appendix K: Weighted Competitive Strength Analysis

Paramount Prince B&K

Measure Weight Rating Score Rating Score Rating Score

Brand Loyalty 0.35 8 2.8 9 3.15 4 1.4

Quality 0.25 7 1.75 10 2.5 9 2.25
Price 0.15 9 1.35 4 0.6 5 0.75
Differentiation 0.25 7 1.75 4 0.8 7 1.75

Total 1 7.65 7.05 6.15

Summary

Paramount is mainly focused on price and brand loyalty with its strengths prior to the

Clean Edge razor launch. They do not seem to have a presence in the super-premium market

and only focus in the value and moderate segments. Prince scores higher in brand loyalty and

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quality, but are low in price and differentiation, only focusing in the super-premium segment.

B&K is high in quality, but moderate to low in the other categories.

Appendix L: SWOT Analysis

Strengths
● Brand recognition
● Superior technology (enhanced with Clean Edge Razor)

Weaknesses
● Lack of positioning strategy for Clean Edge Razor

Opportunities
● Entrance into niche and mainstream markets

Threats
● Availability of substitutes
● Rival competition

Summary

Paramount has positioned itself for success in having established brand loyalty and

superior technology, especially with the Clean Edge Razor. It needs to focus on what positioning

strategy to use (mainstream of niche) for its Clean Edge razor, and discover the opportunities to

expand in either area. WIth its rivals and availability of substitutes, Paramount is threatened and

needs to establish itself in a segment and become the dominant force in that segment.

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