Clean Edge Razor Case

11/12/14 Clean Edge Razor Case

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Table of content

1. Executive Summary.3

2. Problem/Issue Statement..4

3. Situation Analysis.4

4. Alternatives..8

5. Evaluation of Alternatives..8

6. Recommendation(s), Action Plan/Implementation..9

7. Appendix11

1. Executive summary

As a marketing advisor, my role is to analyse the Clean Edge Razor Case in terms of the inner and external

situation, the alternative solutions and assess each solution, then give recommendations on which alternative

solution to choose, what the advantages and disadvantages are. Finally, suggest implementations that should

be taken in order to achieve the goal.



As a leader in the heath product and grooming manufacturer company, Paramount is introducing a moretechnologically revolutionary nondisposable razor into the super-premium market to maintain market share.

However, there are many competitors in this segment and Paramount is considering the proper the positioning

method to choose to gain the most market shares. Both niche positioning and mainstream positioning have

pros and cons. Niche positioning focus on specific group of male that are very concerned with the

functionality and the messaging of the razor. They seek superior shaving experience and consider shaving as

daily grooming ritual. Mainstream positioning focus on a broad market and target at the consumers that have

ordinary shaving needs. However, the key issue is that mainstream positioning may cause cannibalization

effect, triggering decline in sales of the companys old products due to the intrusion of new advanced

products. Without cannibalization, net profit is higher in mainstream positioning. However, considering the

effect of cannibalization, the result is completely different. Brand name of Clean Edge is also important since it

may affect consumer behaviour. The company hasnt reached an agreement on if the brand name shouldemphasize on the company or the product itself. The marketing budget should also be determined after the

brand name is chosen. The market budget for media advertising, consumer and trade promotions should be

proposed according to the estimate of revenue and other costs.

According to the limited information given, I recommend to use niche positioning because it makes greater netprofit than mainstream positioning in a long run. The brand name should be Clean Edge by Paramount

because it impresses the potential consumers with the product innovation, showing the consumers providesclean shaving result which directly satisfies consumer needs. Paramount should saturate the market by

expanding its distribution channel, focusing on television and online advertising to stimulate demand,encourage consumers to purchase by giving out coupons and give free samples to improve product

awareness. Sponsorship and celebrity can also help increase the product presence.

2. Problem/Issue Statement

Paramount is introducing Clean Edge Razor, a revolutionary nondisposable razor to the mens groomingmarket. This technologically advanced product is predicted to have a significant mainstream potential in thesuperior-premium market segment due to its ease to use and shaving effectiveness. However, Jackson

Randall, the product manager of Clean Edge Razor still cant come to an agreement with other companydirectors on how to position this product. There are two positioning options that are considered optimal by

the Paramount directors. One is niche product positioning, which mainly focuses on highly involved groomerslooking for a fabulous and superior shaving experience. The other one is mainstream positioning which

focuses on a broad mens market. However, both of these two positioning method have advantage anddisadvantage. Basically, niche marketing can satisfy the needs of a certain group of men who is highly

concerned with the shaving experience thus, manage to seize the superior razor market and build a highlyrecognized company reputation. However, niche marketing narrows the market size and thus, reduces the

potential sales and revenue. On the other hand, mainstream positioning can appeal to a larger group of malewith being recognized as the most effective razor in the market. However, mainstream strategy maycannibalize themselves by diluting the brand power of another Paramounts razor product Pro, which is

positioned in the moderate segment and is deemed as the companies backbone. Therefore, mainstreampositioning cannot acquire lots of new customers. The branding of Clean Edge Razor is not determined as

well. Paramount Clean Edge and Clean Edge by Paramount are two brand names that emphasize on theuniqueness of the product itself and the whole company respectively. The two different names will affect the

consumers cognitive process and consequently influence the rate of cannibalization. Last but not least, themarketing budget for the launch should be provided to the director of Paramount.

3. Situation analysis



Product characteristics

Clean Edge is a nondisposable razor that is designed by Paramount in 2007. It is a technologically advanceproduct that establish Paramount as an innovation leader in the razor market. It integrates an ultra-thin five

blades design which causes less skin irritation and a lager heavier handle that allow better grip and controlwhile shaving. But its most important feature is its vibrating technology. The vibration stimulates hair follicles.

The clinical test shows that Clean Edge achieves a 25% increase in hair removal compared with other leadingnondisposable razors and it is also beneficial to the skin condition. These innovation advantages allow Clean

Edge to stand out among its competitors, impress the consumers thus, help Paramount become a moreprofessional company in terms of the grooming expertise.

Company Overview

Paramount is a global manufacturing company that provides health, cleaning, beauty and grooming products.The company made a gross profit of 7 billion out of its 13 billion sales in total in 2009. Its flagship

nondisposable razors, Pro and Avail, along with refill cartridges contributed 170 million in revenue and agross profit of 92 million. Pro and Avail are positioned in moderate and value segment respectively and

together they captured 23.3% market shares of the unit-volume market. However, neither Pro nor Avail haveintroduced technology advance in the past 5 years. Therefore, Clean Edge will make a breakthrough and

represent Paramount in the super-premium segment which perfectly complements the companys competingterritory. Clean Edge will stand out among other less advanced razors and elevate Paramounts power to a

higher level in the razor market. Other than those people who have ordinary taste, this is a good opportunityfor Paramount to attract a new group of consumers, those who are highly concerned with the effectiveness ofthe product and seek superior shaving experience.

Background

The U.S razor market is broken up into several categories including nondisposable razor, refill cartridge,

disposable razor, shaving cream, and depilatories. Paramount Clean Edge razor competes in the fast growingnondisposable razor category and refill cartridge category. According to Table A, nondisposable razors andrefill cartridge experienced a 5% and 2% growth respectively from 2007 to 2010 due to the product

innovation. The fast growing industry will propel Clean Edge to gain popularity and succeed in the mens

grooming market.

Market characteristics

Currently, the nondisposable razor market is divided into three segments based on price and quality: value,moderate and super-premium. Clean Edge is competing in the superior-premium segment. Due to the

numerous innovations, the superior-premium segment experienced a significant sales growth of 25% in dollars

in 2009. Consumers purchased razors and cartridges more frequently than they did in previous year since

consumers are more interested in trying new products and the ceaseless advertising that suggests frequentblade replacements. There are 3 groups of razor consumers that are distinguished by the level of involvement.

According to the exhibit 1, the involved social/emotional shavers, which hold 39% of nondisposable razor

users, are those who not only care about the product functionality, but also the messaging the product isconveying. Therefore, they are most likely to purchase the products in superior-premium segment. Involved

aesthetic shavers, which hold 28% of nondisposable razor users, are those who only care about the

functionality of the product, so they are more interested in the products in moderate segment. The rest

nondisposable razor users are those who dont have consistent shaving habit and lack interest in productcategory, therefore, they probably just buy product in value segments. In summary, we can infer that the



technologically advanced Clean Edge razor will attract the attention of involved social/emotional users and

become their ideal razor option. In addition, the distribution channel of the product changed slightly over the

past 5 years. According to Exhibit 4, food stores and drug stores hold 74% retail channel, however, thisnumber decreased and a portion of it shifts to mass merchandisers.

Trends

As more and more new razor products entering the market, the number of advertising for the razors increased

quickly in the recent years in order to trigger people to buy those products. Therefore, the advertising

expenditures increased as well. According to Exhibit 2, nondisposable razor media advertising expendituresfor Simpsons and Radiance increased the most from 2009 to 2010 compared to other companies by 12.8

and 16.1 million respectively. This is because both of the Simpson and Radiance are new companies to the

razor market and they are launching new razors into the market, so they want to increase the advertising

power to propagate their new product to the target consumers and establish a good reputation in the market.Exhibit 3 shows how advertising and promotion expenditures for nondisposable razors of Paramount are

allocated in 2009 and 2010. The cost in media is increased by 1.1 million which is 8% in percentage and this

increase in lower than any other competitors. This is because that Paramount has already been established abrand equity as a mature and leading manufacturer for nondisposable razor and it already has a consumer

base. It is the source of word of mouth advertising and it helps Paramount spread their names, get the

people surround them interested and become the potential buyer. Consumer promotions and trade

promotions increased by 1.6 million (13.9%)and 1.3 million (9.5%)respectively. The total advertising andpromotion expenditures for nondisposable razors increased by 4 million which is 9%.

Competitors

Prince: Prince is a health and beauty company that sells oral and skin care products. It has been a market

leader in the nondisposable razor since 1950s and held the number one position in terms of retail dollar sales

in 2009 with 224 million in revenue and 45 million in gross profit. Its two nondisposable razor products arecalled Cogent and Cogent Plus, both focus on super-premium market. According to the line chart, we can

see that even though Cogent is the bestselling nondisposable razor in the market, it suffers a significant drop in

sales by 33% from 2008 to 2010 which indicates it is not as popular as before. Congent Plus, as an

improved product entered market in 2009 and achieved 1.3% and 4.9% market shares in 2009 and 2010respectively which complements the falling sales of Cogent. The increasing sales of Cogent plus is ok

compared to other new razors. However, the total market share Prince takes decreases from 31.7% to

26.2% in the past five years. This decrease on sales is due to the introduction of new nondisposable razors

into the market. According to Exhibit 6, both Cogent Plus and Cogent are in super-premium segment and theprice is the highest in this segment and newer product Cogent Plus is more expensive than old product

Cogent. However, Cogents market shares decrease while Cogent plus increase, therefore, we can tell that

the consumers are not price motivated, but is more interested in newly introduce advanced product.Consumers lifestyle and quality are higher. In summary, the competition in the super-premium segment of

nondisposable razor is getting tougher while opportunities exist.

Benet&Klein (B&K): B&K is a health and beauty company that sells vitamins,shaving products and hairproduct etc. It first entered the nondisposable razor market in 1985 and introduced Vitric master in 2009, a

nondisposable razor that has advanced lubricant strip, nonslip handle and superior anti-corrosive technology

blades. According to the line chart, this product gained a 5.2% market share in 2010 which is a huge

increase. However, the diminishing sale of Vitric and Vitric Advance causes the total sales of B&K droppedfrom 23.2% to 21.1%. Even though B&K works hard to introduce advanced new products and tries to

retain the market share, the sales still shrink because of new products entered the market and drew the



consumers away. According to Exhibit 6, we can see that Vitric is a value offering product which is only$5.75, but it stills cant ward off the threat of the new products. Both Vitric Advanced and Vitric Master are

in super-premium segment, the more recently launched Vitric Master achieve an increase in market share

while Vitric Advanced decreased due to the entrance of new products. Therefore, we can conclude that

consumers are more interested in the new products in the super-premium segment and they start to raise theirgrooming quality and pay more attention to the product quality as well as the experienced they get from it.

New Entrants: Simpsons launched a new product called Tempest using its deodorant brand. Tempest has an

advanced pivoting head that allow smoother shave. Radiance is also introducing its deodorant brand Naiv tothe nondisposable razor market. The product has pulsing feature which is similar to Clean Edge and it is going

to be launched in September 2009, very close to the launch time of Clean Edge. This product is predicted to

attain 13% market shares after being launched and it is the fierce competitor of Clean Edge. According to theline chart, Simpsons Tempest achieved a significant increase in market share by 5.7% which is higher than

any other new products. We can infer that its pivoting head is very popular. Naiv gained 2.6% in the first year

after being revealed which is higher than the first year increase of Tempest, Cogent Plus and Vitric Master.

According to Exhibit 6, all the new products are in super-premium segment and are achieved increase inmarket shares. This indicates that consumers are more concerned with product quality, functionality and the

message the product conveys instead of the price. Therefore, we can see that Naiv has lots of potential and is

Paramounts fierce competitor. Both Tempest and Naiv are Clean Edges big competitors.

Paramount is also very competitive in the nondisposable razor market. We can see from the line chart that the

backbone product Paramount Pro achieves a continuous increase of market shares from 2007 to 2009.

However, it stops increasing in 2010 which is a signal warning of sales decrease due to the new products.Paramount Avail show consistent decrease from 2007 to 2010. The decrease of Paramounts total market

shares shrinks 2% in 2010 shows it is also affected by the new advanced products. We can conclude that

consumers are more and more interested in the new technologically advanced products, therefore, while

every competitor is launching new products in super-premium segment, it is really necessary and urgent forParamount to launch a new superior revolutionary product Clean Edge to the market to compete with them,

satisfy consumer needs and regain the market shares.

Swot analysis: See the appendix

4. Alternatives and evaluations

Niche positioning:

Advantage: Positioning Clean Edge as niche will complement the Paramount existing product portfolio.

Targeting at the involved social/emotional users is more effective than targeting at mainstream because

involved users need not only good quality, but also fabulous shaving experience. Clean Edge can directlysatisfy all their needs. In addition, niche marketing is requires 15 million of advertising expenditure compared

to mainstream positioning with 42 million. Niche marketing is more affordable and Paramount will get the

most return out of every cent they spend because it focuses on those that are most likely to purchase. Thereare fewer competitors in the niche market. Cannibalization is 35% which is lower than mainstream 60%.

Disadvange: It will be difficult to gain high profit levels due to smaller market size. Since it only target a smaller

group of people, it would be difficult to spread the companys name to a wide audience. In addition, sincePro and Avail are both in the mature/decline phase, ignoring moderate and value segments may lose the

consumers in this segment.

Clean Edge by Paramount:



Paramount Clean Edge:

Mainstream positioning:

Advantage: Since Pro and Avail are experiencing mature/declining phase, the sales may probably decline,

therefore, mainstream positioning can prevent consumers in value and moderate segments from being wooedaway to more innovative brands thus retain the market share, dominate the market and quickly gain mass

appeal.

Disadvantage: Mainstream positioning may dilute the power of Pro and Avail due to cannibalization. The test

shows that 60% of the Clean Edge sales are from current Pro and Avail users. However, this number is only

35% for niche positioning. Cannibalization occurs when a new product intrudes the market and eats the oldproduct of the same company. Therefore, it cannot appeal to a new segment market and cannot increase the

market base. This is very bad because it forces the existing products to end prematurely. Advertising

expenditure is larger than niche.

5. Recommendation, Marketing plan and implementations

According to the income statement (Appendix), we can see that the revenue of niche (39.9 million)is higherthan mainstream (28.7 million). Thus we choose niche positioning. The target consumers are involved

social/emotional and aesthetic users, male between 30 to 60 years old that have higher disposable income

and cares about the grooming and shaving quality.

There are two options for the brand name: Clean Edge by Paramount and Paramount Clean Edge. The

former is suitable because the company wants to emphasize the product as a unique breakthrough product.

Since Paramount is using niche positioning and targets at involved male users, Clean Edge by Paramount isbetter to emphasize more on the product than the company. This product may stand out among its competitor

and impress the consumers by the innovations itself.

1. Increase the product awareness within the super-premium segment. The actions should be taken are

making more advertisement on internet and tv, saturate the market by continuous distribution in merchandise

stores, food store, drug store and health clubs. Most men in health clubs are involved users and cares about

health and grooming. Establish partnership with airlines and give free samples to the first class people who

have superior taste.

2. Ensure 1 million units of razors and 4 million units of cartridge are sold in the first year. Increase the

presence of the products in the public media. Paramount should select proper advertising method such as tv

ads and get the sponsorship of NHL. Create a website for the product and enable online shopping and give

discounts and coupons to attract more consumers.

Alternative scenarios

1. Competitor: Naiv implement aggressive promotion strategy

Solution: highly saturate in the media advertising. Focus on various distribution channels.



2. Technology: Similar products enter the mainstream market

Solution: Focus on spreading messages that Clean Edge has good quality and provide wonderful shaving

experience. Get celebrities like Brad Pitt to be the spokesman for elite status of Clean Edge.

3. Channel sales: lagging sales in distribution channel

Solutions: Give out dollar off coupons and package the razor with shaving cream sample or remove this

channel.

Implementation timeline: See appendix

Budgeting allocation: See appendix

Appendix

SWOT Analysis

Strength Weakness

Opportunities Threats



Nondisposable Razor Market share by brand 2007-2010E

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Income Statement

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-revolutionary product with ultra-thin five blades that provide complete hair removal, vibration technology that



prevent skin irritation, provide good shaving experience, better than other products in super-premium

segment

-Good company brand equity, good reputation, professional expertise

- possess large consumer base

-lack innovation experience

-Clean Edge is still not perfect; it doesnt have some features that other products have.

- not number one in the market

-so many competitors that provides similar products in the same segment

That may compete for market shares.

-Cannibalization

-consumers need not only quality product but also good shaving experience; the super-premium segment is an

opportunity to exploit.-lots of available distribution channels and media advertising opportunities

Clean Edge Razor

Jiexiu Jessie Chen212423141

Professor: Linda Reeser

March 4, 2014

Professor: Linda Reener

3/4/2014

Documents

Clean Edge Razor Case