09-10-2019

Clean Edge Razor

Splitting Hair in Product Positioning

• What is the case about ?

– New Product Opportunities and Market Fit
– Derived demand scenario

– Related product – Razor and Blade

– New product development and its commercialization

– Customer Segmentation and Product Positioning

• Brand Management, Product lifecycle considerations and difficulties of
differentiated positioning in a crowded marketplace.

– Communication Decision

Changes in Non-Disposable Razor Category

• Dominated by large MNCs in US
• Three leading player
– Prince (Cogent Brands)
– Benet & Klein (Vitric Brands)
– Paramount
• New Entrants
– Simpson and Radiant Health Inc
• Under their deodorant brand umbrellas
– Tempest & Naiv
• Are these brand equities transferable to Razor category?

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New Product Activity

• 22 new products and line extensions were introduced in non-
disposable razor and refill cartridge category
• Increase in overall marketing expenditure
– Aggregate media and advertising expenditure expected to rise by 39% between 2009 and
2010
• From $84.5 M to 117.5M for all the players
– It’s a significant increase compared to the retail dollar sales increase of 3% in the same
period

• Increase in number of SKUs in each Brand Line

• More competition for retail shelf space
• More consumer promotions
– Sampling
– Two for one offers etc.

Consumer Level Consequences

• Consumer brand switching from one purchase to next
• Due to emphasis on trading up to higher unit margin super premium
razors

• Shortening of inter-purchase interval

– Consumer replace their razors to try new products

• Shortening of Average Usage Period

– Not known if inter purchase interval is declining faster than the
average usage period
– Reminder effect of advertising

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Consumer Level Consequences

• If inter-purchase interval is reducing faster than
the average usage period
– What will be the consequence of this phenomenon?
– Household inventory level of toothbrushes will increase

– Stockpiling might happen

– The recent category growth will be hard to sustain in the long run

• Razors can be easily stored at household level as the

household inventory rises

Trade Level Consequences

• Innovative new products in the category increases

the interest of the trade channel

• Distribution channel is broadening

– From food and drug stores to mass merchandisers

– In 2000 the food and drug stores accounted for over

half of all shaving products which reduced to about
42% in 2009.

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Paramount in Razor Category

• About 23.4% dollar share and 23.3% unit share in US
non-disposable razor market
– Leader in the market

• However, Paramount’s operating profit in razor/cartridge

category lags behind Prince’s Cogent brand
– Paramount Pro and Avail operating profit is about 15%

– Cogent’s operating profit is 20%

Paramount in Razor Category

• Paramount Avail and Pro
– Old fashioned and matured products

– Value and Moderate segments respectively

• How to maintain its category leadership?
– in market share and image both
• It needs an entry into faster growing Super Premium
Segment
– Otherwise, it could be caught in middle of the market
• Involved customers buying super premium brands vs. ininvolved
customers buying lower priced unadvertised brands or private lables

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Competitive Threat
• Radiance’s Naiv has captured 13% market share

• Test marketing of Naiv poses a strong threat to

paramount

• There is traditional rivalry between Paramount and

Radiance across several product categories

• Competitors are pursuing technology advancement

and other innovations at an accelerated pace

Product Life Cycle Considerations

• Market share for Paramount Avail has been
shriking and that of Pro is increasing steadily
» Case exhibit 5

• Indicates that
– Avail is in the Declining stage of product life cycle
– Pro is not in declining stage however it could be in the
maturity stage of PLC and it might enter the Decline
stage anytime due to heightened new product activity in
the category.

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Customer Segments & Behaviors

• Is Non-Disposable Razor a high involvement category?
– Yes or No ? Why ?

• Involved
– Social/Emotional or Aesthetics benefits
• Characteristics of Involved Consumers
– Shave more often
– Replace cartridges sooner and buy razors more often
– They are loyal to the brand but can switch if there are actual/perceived
superiority in new product
– Pay attention to category related communication and hence are more aware
– Less price sensitive
– Interested in grooming/beauty product category

• Uninvolved

Does Consumer Need another Razor?

• Does consumer need another Razor?

• Is Clean Edge the right kind of product for the

consumers?

– What is Clean Edge

• A technologically superior product
• Thoroughly researched
• Appealing to the growing social/emotional benefit segment

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Niche vs. Mainstream ?

• Define the Niche and Mainstream Segments for

Paramount

– What is a Niche here ?

– What is Mainstream?

US Non-Disposable Razor Market

Product
Market Share Benefit Segment
Type

Quantity
Dollar
/
/Value
Volume

Super-
premium

Professional

Value

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Arguments – Niche vs. Mainstream

• Why Niche ?

• Why Mainstream?

Where will the Sales of Clean Edge come from?

• Three sources of increase in sales in any new
product launch

– Increase in category demand

• Increase in overall demand for non-disposable razor category

– Your own existing Product’s Cannibalization

• Cannibalization of Pro and Avail

– Brand switching by competitors customers

• Cogent, Vitric, Tempest and Naiv customers switching to
Clean Edge

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Profit and loss forecasts for Clean Edge Razor

# Items Sources of Data Niche Mainstream
Reference Year I Year II Year I Year II
1 Unit sales - Razors
2 Dollar Sales - Razors
3 Unit Sales - Catridges
4 Dollar Sales - Catridges
5 Total Dollar Sales

6 Production Costs - Razors

7 Production Costs - Catridges
8 Capacity Costs
9 Ad & Promotion
10 Total Costs

11 Operating Profit
12 Profits as % of sales
13 Cost of Cannibalization - Razors
14 Cost of Cannibalization - Catridges
15 Profit After Cannibalization

Cannibalization Cost
• Cannibalization Cost
– % of cannibalization from Avail and Pro * unit sales *
contribution per unit
» 5th paragraph in case under positioning heading

– The contribution per unit average for Avail and Pro is

$ 1.76 for razors and $ 2.80 for cartridges
» case footnote 2 under company overview heading

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• So,

–What will be your final decision

• strategy and execution plan

Niche or Mainstream – What is your decision?

Decision Area Mainstream Niche

Unit Price

Product Line

Pack Sizes

Distribution

Advertising Copy

Promotion Mix

Brand Name

Shelf Position

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