Case Brief: Clean Edge Razor Case Study

Date: February 02, 2018

Problem Statement

 Paramount Health and Beauty Company, a leading name in consumer products including health,
cleaning, beauty and grooming is set to launch a new non-disposable razor with cutting edge
technology to improve men’s shaving experience. The design provides superior performance by
the use of a vibrating technology. The new product is to be launched in the Super premium
segment, which is the first product in this segment by Paramount.
 The issue at hand involves determining product’s positioning strategy with options either to
launch the product in the niche or main stream market. In addition to product positioning, the
company also has to decide the brand name and, marketing budget allocations for the launch.

Situation Analysis

Company

 Paramount established itself as global consumer product giant with over $13 billion in
worldwide sales and $7 billion in gross profits for 2009. It entered non-disposable razor market
in 1962.
 The US Razor market has several categories namely: non-disposable razors, refill cartridges,
disposable razors, shaving cream and depilatories and between 2007 and 2010, the growth of
non-disposable razors is approximately 5%/year and for refill cartridges 2% per annum.
Paramount’s non-disposable razor and refill cartridges division contributed $170m in revenue
with a gross profit of $92m and an operating profit of $26m in 2009.
 Paramount currently offers two products, Paramount Avail and Pro in this category and the new
product Clean Edge which is to be introduced.

Customers

 The non-disposable razor and refill cartridges market can be divided into three segments based
on the price of the product and the quality i.e. value, moderate and super-premium.
 There are three types of consumers as per their involvement with the product: Aesthetic shavers -
28% (involved and motivated by the cosmetics results); social/emotional shavers - 39%
(involved and motivated by the overall shaving experience); and maintenance shavers – 33%
(completely disinterested).
 In the super-premium segment, there have been numerous innovations and this segment is
growing at a fast pace. The frequency of purchasing non-disposable razors and refill cartridges
is also increasing as the replacement cycle has been shortened.

Competitors
 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 2010 the market was dominated by three multinational single players, namely: Paramount,
Prince and Benet & Klein. New entrants such as Radiance Health Inc. and Simpsons were
creating buzz in the market with their new products named Tempest (Radiance) and Naiv
(Simpsons) and poised to take away the existing share of Paramount’s in the current market
segments which showed greater need for the new product in the pipeline. The two products have
similar features as Clean Edge and it captured 13% share, hence Paramount expectations are
high. Now Paramount is envisaging problems in the product positioning, and is in search of the
effects or consequences of each strategy for positioning.

Context

 The number of new products in non-disposable razors and refill cartridges category has grown.
The margins are higher when compared to the personal care products
 There was a shift in the market, where male grooming was given more attention and the
frequency of purchase increased due to sponsored articles regarding advantages

3. Alternatives

Positioning Statement # 1: Launch “Clean Edge” as a “niche” revolutionary technology product

to be a market leader. This will enable Paramount to remain as a technology and revolutionary
leader in non disposable razor segment. The Super-Premium category will enable Paramount for
higher pricing. This will not cannibalize its existing products

Pros:
 Increased profits and market share
 Opportunity for higher profit margin with new “premium” product launched within Super-
premium segment
 Existing products can be retained and used to target “Maintenance users”
 Branding strategy can be carefully planned and deployed for maximum success and household
name recognition

Cons:
 Increased marketing budget costs to launch the new product and provide incentives to
“Maintenance users”

Positioning Statement # 2: Create a new branding strategy that will give consumers a household
name called “Paramount Clean Edge” with technology superior product and continue to retain
and gain market share with “Maintenance users”

Pros:
 Provide the right brand name and image to Paramount.
 Paramount name will now be part of all of its products.
 Cons:
 Paramount has to maintain the Quality of all these products since now all are associated with the
company name. Any deterioration in the quality could potentially hurt sales of other products.

4. Recommendation

Based on my analysis of the data and information provided, I recommend a strategy that will
launch the new product with tremendous success to reach number one position in terms of
product sales, revenue and operating profits for Paramount. This strategy will also retain
Paramount Pro & Avail existing products and go after “Maintenance users” that make up 33% of
consumers. The branding concept launched with this product will make Paramount a household
name and give the necessary return on investment for Paramount. I recommend launching “Clean
Edge” as a “niche” and revolutionary leader in non-disposable razor segment. The Super-
Premium category will enable Paramount for a higher pricing. This will not cannibalize its
existing products. Based on quantitative analysis from the data provided, I observed that the
profit before taxes for niche positioning is higher than mainstream positioning. Also, when I
analyzed unit volume sales across niche and mainstream category, I noticed losses in Year 1.
This is the most important learning and observation from forecasted numbers that suggests that
Paramount should launch in niche positioning. Other recommendation include: to create a new
strategy to market “Clean Edge” as a revolutionary technology product and gain market share in
Super-Premium segment. The marketing budget allocated should be carefully planned so that it
will give the necessary boost in sales for the new product and also retain enough marketing
dollars for other product categories in the company; create a new branding strategy that will give
consumers a household name called “Paramount” with technology superior product and continue
to retain and gain market share with “Maintenance users”; develop a new incentive and rewards
program to target “Maintenance users” and gain market share with this user segment; and
establish contracts with the new retail channels such as mass merchandisers and club stores so
that Paramount non-disposable razors can be placed at the right eye level for the users to choose
Paramount products.

5. Implementation Plan

Product Positioning

While Paramount had established as a unit-volume leader in 2009, the non disposable razor
market had a significant growth only in Super-Premium segment. The rate of increase in total
media advertising expenditures in this category is greater than the rate of increase in retail
market sales. Main reason for this is numerous product innovations in Super-Premium segment
and advances in technology. Paramount had developed a new product in this category called
“Clean Edge” based on superior technology. This new product would give Paramount much
needed boost to position itself as a leader in Super-premium segment and technology giant for
non disposable category. If Paramount decides to position and market “Clean Edge” in
mainstream positioning, then it will have to cannibalize existing Paramount Pro and Paramount
Avail products. This could potentially result in loss of revenue and eliminate these products from
Paramount offering.

Price

Based on the data provided in this case and price set by Randall and his team for Clean Edge in
either niche or mainstream positioning, I do not see any challenge for Paramount. The reason is
that they are positioning this product in Super-premium segment and suggested retail unit price is
$12.99 for Razor and $10.50 for cartridge in niche positioning, $11.19 for Razor and $8.89 for
cartridge in mainstream positioning. This price is lower than current price in the same segment
across Paramount’s competitor and even lesser when compared to Cogent Plus.

Place

I do not see any issues with Coverage, Assortment, Inventory, Transport or Locations in US
market. However, distribution started to shift outside traditional food and Drug Stores. In 2000,
food stores sold over 50% of all razors, but by 2009 it was only 42%. Paramount would leverage
this shift and gain advantages to increase its sales via retail channels.

Promotion

Paramount as a corporation had decided to curb excessive marketing expenses in all product
categories. With the introduction of “Clean Edge” as a new product, Randall and his team has to
convince executive leadership to allocate necessary dollars needed to establish a marketing
campaign that will position “Clean Edge” as a revolutionary Super premium and technologically
advance Razor into the market. The marketing campaign for “Clean Edge” has to be carefully
planned in such a way that the message reaches the target market with great success and also
satisfy the executive team.

Branding

Paramount executives have different opinions when it comes to branding this revolutionary
“Clean Edge” product. However, Randall and Paramount has a challenge to name come up with
a name that provides the necessary boost for “Clean Edge” branding, and not cannibalize
Paramount Pro and Avail products.

References

Corey, R. (2003) Marketing Strategy – An Overview. (E-reserves)

Dr. Cannon’s video for case analysis posted

Moore, M.C & Helstein, R.L. (2007) Positioning: The essence of marketing strategy. (E-
reserves)
John.A Quelch & Heather Becham (2011) Clean Edge: Splitting Hairs in Product Positioning
(Harvard)