Clean Edge Razor Case Analysis

MARKETING MANAGEMENT
CLEAN EDGE RAZOR

Splitting Hairs in Product Positioning
An Analysis
PGP-1
Section 6
AE1
Mayukh Bhattacharya-15S626
Ridhima Modi- 15S635
Srinath Srinivasan-15S647
Tejas B N-15S649
Parinita Vijay Kumar- 15805
Questions
. What changes are occurring in the non-disposable razor category? Assess Paramounts
competitive position.
2. What are the arguments for launching Clean Edge as (a) a niche product and (b) a
mainstream brand? Which one would you recommend? Justify your recommendation.
1. The US Razor market can be divided into various segments as given below. Of the following,
Paramount is present in the market of Non disposable razors and refill cartridges.
Nondisposabl
e Razors
Refill
Cartridges
Disposable
Razors
Shaving
Cream
Depilatories
Total
2007
Segmen
t share
Growt
h
2008
Segmen
t Share
Growt
h
2009
Segmen
t Share
Growt
h
2010
Segmen
t Share
Growt
h
10.21
-11.32
10.59
5.32
10.94
5.05
11.23
4.81
43.54
0.12
43.61
1.62
43.77
2.09
43.95
2.52
25.90
4.61
26.22
2.73
26.51
2.86
26.89
3.57
14.60
5.75
100
-2.18
4.95
14.23
5.35
100
-1.12
-5.66
13.83
4.94
100
-1.13
-6.00
13.40
4.53
100
-1.14
-6.38
From the above table, we see that from 2007 onwards the market for non disposable razors have a share of
around 10.21% which gradually increases to 11.23% in 2010. The trends in the current market of nondisposable
has changed a lot in the recent year. In the last decade, the industry experienced a significant growth in the super
premium segment. Retail sales have shown a 5% increase per year from 2007 to 2010. The total retail sales for
Non-disposable Razors was $178 million in 2005 which has now increased to $218 million in 2010. Consumers
have started replacing razors and cartridges more frequently than previous years.
The growth in this market is due to innovations and new product specifications. The market for non
disposable razors can be further classified into super-premium, moderate and value with the following shares in
volume. There has been significant growth in the super-premium segment mainly due to innovations like the 5blade technology, glide strips, lather bar, low resistance blade coating etc.
The advertising spending has also increased tremendously as shown in the table:
Year
2009
2010
Percentage Increase
Razor Media Ad 84.5
117.5
39.05%
Expenditure
($ million)
It has become harder for newer and smaller players to grab the market share because of increased advertising
expenses. However, for bigger and established players it has not increased significantly. The market for male
grooming products has outpaced that of the female personal care market. Introduction of new-product for non-
disposable razors has accelerated. 22 new SKUs have been introduced in 2008 and 2009. Retailers are
receiving better margin for the product and the shelf space for them is also increasing.
Competitive Position:
Paramount entered the nondisposable razor market in the year 1962 and it gained a respectable position in the
market in quick succession. Paramount has currently positioned itself in the moderate segment with the product
Paramount Pro as well as the value offering segment with Paramount Avail. It has not yet placed itself in the
Super Premium market segment which is growing tremendously. With over $13 billion in revenue and $7
billion in profits during 2009, Paramount has become a global consumer product giant.
It is the market leader in terms of unit-volume with a 23.3% retail unit share in 2009. The company is currently
facing a threat from new entrants in the market like Radiance.
Neither Pro or Avail had introduced significant technology innovations in last five years, so these two products
are facing danger of falling into the Declining Phase. Many companies are coming up with innovative products
and moreover they are targeting the super-premium segment, which will in turn have a negative impact on the
segment which have been created by these two products.
The porters 5 competitive analysis
Threat of New Entry:

-Some economies of scale
-no technology protection
-therefore, low barriers to entry.
Supplier'
s power
Threat
of new
entrant
Competit
ive
Rivalry
Suppliers power:
Threat of substitution:
-moderate number of suppliers
-some cross product substitution
-similar products
-ability to import food
-able to substitute
-therefore, some substitution
Threat
of
-therefore, neutral supplier power
substitu
tion
Competitive Rivalry:
-many competitors
-low switching cost
-commodity products
Buyers
Power
Buying power:
-few large retail points
-homogenous products
-ability to substitute
Therefore, high buying power
Clean Edge
The non-disposable razor market is high competition and Clean Edge could face stiff competition from the new
entrants like Naiv which is supposed to be launched by Simpsons. Launching of Clean Edge will definitely
cannibalize the consumers of Paramount Pro and Avail razors, as high as up to 60% for mainstream scenario and
35% for nice positioning scenario. The others challenges are limited the marketing budget of Clean Edge and
the resistance it can face from the customers as there are there many substitute products available.
Clean Edge as a non-disposable razor acts as a POINT OF PARITY and it differentiates itself from the stiff
competition on the following POINTS OF DIFFRENTIATION- it introduces a vibrating ultra-thin 5 blade
design, larger heavier handle- better balance, grip and control. An experiment done shows that clean edge helps
customers experience the closest, cleanest and smoothest shave
2.
We would recommend Paramount to launch Clean Edge as a Niche product. Niche positioning
strategy is bound to generate a better gross margin than mainstream product. The niche strategy
going by the numbers will give good profits for years 2011 and 2012.
The advertisement spending for 1st year on niche strategy would require $ 15 million compared to
$42 million budget for mainstream position.
2011 Volume Table

2011
Particulars
Razor
Cartridge
Volume(milli
on)
Nic Mainstr
he eam
1
3.3
4
9.9
Statement of Profit and Loss for Year ending 2011 December
2012 Volume Table

2012
Particulars
Razor
Cartridge
Volume(million)
Nich Mainstrea
e
m
1.5
4
10
21.9
Statement of Profit and Loss for Year ending 2012 December
Clean Edge when positioned as Niche product will cannibalize the existing Pro and Avail market. There would
be 35% cannibalization effect for Niche position and 60% for Main Stream position. Due to cannibalization the
Clean Edge profits is recalculated as below.
The profit for 2011-12 in Niched segment $ 31.365 million whereas for Mainstream it is meagre $ 3.5692
million. The high difference also reiterates the decision to go with Niche market position.
Consolidated Profit and Loss Statement for 2011& 2012 post cannibalization

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MARKETING MANAGEMENT

CLEAN EDGE RAZOR

Threat of New Entry:

2011 Volume Table

Statement of Profit and Loss for Year ending 2011 December

2012 Volume Table

Statement of Profit and Loss for Year ending 2012 December

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