Clean Edge Razor

Clean Edge Razor Case Analysis 1. The Non Disposable Razor Market The non disposable razor market can b e segmented by 2 ways. Firstly it can be segmented into traditional

price/quality segments of Super Premium, Moderate and Value. S econdly it can be segmented by consumer behaviour into Social/ Emotional, Aesthetic and Maintenance shavers. These 3 segments vary in consumers intensity of involvement with the product, and the Social and Aesthetic segments consist of involved users who ar e open to new technology in the market. 33% of the market is made up off Maintenance shavers, who view all products as similar and display a lack of active interest in these products. Shaving is thu s viewed as a chore to complete when ever nec essary. Social/ Emot ional users make up 39% of  the market. These users actively diff erentiate betw een available products and make purchase decisions based on the overall experienc e- the product s f unctionali ty and brand messaging. They see shaving as part of a daily ro utine that helps increase the ir confidence and attraction lev els. The r emaining 28% of the market is made up of Aesthetic  users that view consistent shaving as a

means to their desir ed smooth skin. These users actively search for product s that actively remove hair to satisfy cosmetic motivations.

2. Launch Decisions Niche Product A niche product positioning would focus on highly involved, fastidio us groomers that want a superior shaving exp eri enc e. This positioning will result in a 35% cannibalisa tion of current Paramount Pro/Avail sales. Pros y

y

The niche positioning will have a hi gher margin as compared to the mainstream positionin g by $1 per unit (see tabl e 1). It will help Paramount increase their market pres ence and possibly even mark et share in the Social/Aesthetic segments. As the male-sp ecific grooming products industry is set to grow, this affirms their position as market leaders in the industry.

C ons ons y

If

Radiance launc hes the Naiv razor (sharing similar technology to Clean Ed ge) in the mainstream market, it might adversely aff ect Clean Edge sal es. Consumers might f ee eel that both products contain similar technology and thus not f ully understand the benefits of Clean Edge over Naiv. However, Clean Ed ges suggested retail price is lower than that of Naiv, which may help reduce some of this eff ect.

Mainstream Product

A mainstream product would focus on sellin g to consumers the broad advantage of off ering the closest possible shav e. Pros y

y

y

Larger mark et available than the niche positioning. This gives Paramount the first mover advantage in the f utu re industry set to be highly influenced by technological improvements. If  th is positioning is chosen, the Pro product can be slowly introduced ov er it s maturing lif e cycl e as the new standard for Maintenanc e Users, since Pro still enjoys a much higher market volume share of 17.3% compar ed to 4.9% enjoyed by Avail. Customers in the value segment will realise this product off ers more value than other products in the market. As the male-specific grooming products industry is set to grow, this affirms their position as mainstream market l eaders in the industry, helpin g to grow market share and household name recognition.

C ons y y

y

This positioning gives a lower margin that the niche positionin g. This strategy will result in a much higher rate of cannibalisation at 60%, diluting the brand power of the current mainstream product Paramount Pro. However Pro has not s een any innovation in the last 5 years, which is not in line with consum er n eeds as consumers becom e more sophisticated and expect better technology. Launchin g Clean Ed ge as the next mainstream produ ct will thus help prevent loyal Paramount consum ers from switching t o other more innovative brands such as Radiance. There is a much higher advertising cost ($27M mor e) required to launch this positioning eff ectively. Launching Clean Edge mainstream will r equire a $42 million marketing budget to allow the product to reach f ull sales potent ial. The stee ring committee however was looking to cu rb any excessiv e marketing expens es, and if  the budget was allocated to Clean /Pro/Avail proportionately based on expected sal es, the resultant figure would not be sufficient for Clean Edge.

Cannibalisation effects

mainstream year 1 year 2

niche year 1 year 2

total unit sales for clean edge in millions

3.30

4.00

1.00

1.50

manufactur er selling price less production cost

7.83 4.74

7.83 4.74

9.09 5.00

9.09 5.00

contribution/unit for Clean Edge

3.09

3.09

4.09

4.09

contribution/unit for each PRO/AVAIL

1.76

1.76

1.76

1.76

cannibalisation % cannibalised sales from PRO /AVAIL

0.60 1.06

0.60 1.06

0.35 0.62

0.35 0.62

eff ective contribution from Cl ean edge

2.03

2.03

3.47

3.47

total contribution from Clean edge (millions)

6.71

8.14

3.47

5.21

Choice

would choose the mainstream product positioning to give Paramount the first mover advantage in setting a new standard for the industrys mainstream product. The incr eased retail volume and resultant margins will mak e up for the lower contribution margin. Mainstream razor unit volumes are also expected to capture over 3 times niche volum e in the first year. I

3. Recommendations Name I

would recomm end that Clean Edge be launched as Paramount Clean Edge. This is consistent with

their current products and allows the new product to level on the Paramo unt brand. Launched as a

mainstream product, this will also r educe conf usion amongst consumers. Most importantly, the technology that drives this product and will allow i t to dominate the mark et in f uture should be clearly linked as a Paramount product to increase brand equity. Marketing

Budget Allocations

This launch positioning requires a marketin g budget of up t o $42 million. I would firstly recomm end that

Randall request for a budget realloca tion based on an expected percentage of sales. He should then work to convince the steerin g committee to allocate a lar ger b udget giv en that this is a launch for a product that is set to be an industry standard in the f uture. Information about the increasin g advertising expenditures ov er the y ears should also b e presented. Lastly, information on Naivs launch and

advertising intentions should be pr esented. The stee ring committee should have to understand the significanc e of Naiv as a competit or giv en that they are u sing a similar technology and thu s touting similar benefits to consumers. Consumer and trade promotions are also vital to allow Clean Ed ge to comp ete on value since it is in the mainstream industry.