CLEAN EDGE RAZOR: SPLITTING

HAIRS IN PRODUCT POSITIONING

Group Members:-
1. Kumar Vaibhav MP15019
2. Kundan MP15020
3. Neelam Jha MP15024
4. Sabas N Fernando MP15036
5. Sachin Kr Jha MP15037
6. Saurav Sinha MP15039
AGENDA
 ABOUT CASE
 MAIN ISSUE

 MARKET ANALYSIS

 BCG MATRIX

 FINANCIAL ANALYSIS

 RECOMMENDATION
Case Summary
Paramount Health and Beauty Company,
known as Paramount, is a global consumer
products giant with four corporate
divisions including Health, Cleaning,
Beauty and Grooming.
 Paramount entered the non-disposable razor
market in 1962 and quickly became a market
leader.
 Paramount offers two products, the Paramount
Pro in the moderate segment of the product
market and the Paramount Avail, which was
considered the value offering market.
 With these two products the company enjoys
23.3% (2009) of the retail share.
Case Summary Cont’d....

 By 2009, the company realized $13 billion in

worldwide sales and $7 billion in gross profits,
with the non-disposable razors and refill
cartridges in the U.S. contributing $170 million
in revenue, gross profit of $92 million, and
operating profit of $26 million.
 The company has developed their newest non-
disposable razor, Clean Edge, which is currently
undergoing review by market testers.
Main Issue

Positioning strategy for the Clean-Edge

Brand Name for new product

Market budget for promoting Clean-Edge

 Market Share Of Different Brands 2010 E
Brand :
Cogent : : super
premium
Paramount
Brand : Cogent Plus : Super
Avail: Value premium
Pro : Moderate Prince
[26.2%]

Brand :
Vitric : Moderate
Other B&K Vitric advanced :
[23%] [21.1%] super premium
Paramount Vitric master : Super
[21.4%] premium

Radiance
New competitor Simpsons New competitor
[2.6%]
Increasing advertising [5.7%] Aggressive advertising
budget of $16.1M
Brand : Brand :
Tempest: Super Naiv: Super premium
premium Similar to clean shave
Growth rate of US saving and hair removal
market(Sales in Million $)
Growth Rate(%) b/w 2005 to 2010
25%

20%

15%

10%

5%
Growth Rate%
0%

-5%

-10%

-15%

-20%

Conclusion : Non disposal razor market -22% growth in last 5 years

Source : Table A
NON DISPOSABLE RAZORS AND REFILL CARTRIDGE
RETAIL SALES BY SEGMENT FOR US MARKET (2009)
 Disposable RZR Non Disposable RZR

Refill Cartridges Depilatories

25%
20% Growth Rate%
15%
10%
5%
0%
Growth Rate%
-5%
-10%
-15%
-20%
PRODUCT LIFE
CYCLE
 Analysis of non disposable razor unit and dollar
market share by brand
% Share Volume % Share Revenue
Cartridge Razor Segment Product 2007 2008 2009 2010E 2007 2008 2009 2010E
Super
$ 10.00 $ 12.50 Premium Cogent Plus 0.0 1.0 3.7 0.0 1.3 4.9
Super
$ 9.45 $ 11.80 Premium Naiv 0.0 2.0 0.0 2.6
Super Vitric
$ 8.99 $ 11.20 Premium Advanced 2.5 1.6 0.7 0.2 2.7 1.9 1.1 0.1
Super
$ 8.89 $ 11.19 Premium Cogent 24.0 24.5 22.1 16.1 31.7 32.6 29.4 21.3
Super
$ 8.75 $ 10.99 Premium Tempest 0.0 0.9 4.6 0.0 1.1 5.7
Super
$ 8.65 $ 10.85 Premium Vitric Master 0.0 0.7 4.0 0.0 0.9 5.2
Paramount
$ 7.55 $ 9.50 Moderate Pro 12.0 13.7 16.9 17.3 12.6 15.2 18.5 18.5

$ 7.00 $ 8.89 Moderate Vitric 18.1 18.2 17.8 15.2 20.5 20.0 20.0 15.8
Paramount
$ 4.60 $ 5.75 Value Avail 8.5 8.1 6.4 4.9 6.6 6.2 4.9 2.9

Others 34.9 33.9 33.5 32.0

Analysis of non disposable razor Market
Share(%) of Different Brands
Analysis of non disposable razor Revenue
share(%) of Different Brand
Interpretation of product
measure
Market Share as well as Revenue of
Paramount Avail is in declining phase.
 Market Share as well as Revenue of
Paramount Pro is in maturity phase but
there is no significant increase in revenue
down the year.
 Even increase in marketing expenses will
lead to flat revenue

 Paramount Pro & Avail MUST BE

Cannibalised by Clean Edge, otherwise they
will lose to the emerging products
launched.
Source : Exhibit 5
 Financial measure -Income statement analysis
Year 1 Year 2
Niche Mainstream Niche Mainstream
UoM Positioning Positioning Positioning Positioning
Millions of
Planned Capacity- Razor unit Volume
units 1 3.3 1.5 4
Razor: Production per unit cost $ 5 4.74 5 4.74
Production cost: Razor $ in million 5 15.642 7.5 18.96
Millions of
Planned Capacity- Cartridge unit Volume
units 4 9.9 10 21.9
Cartridge: Average Production per unit
cost $ 2.43 2.24 2.43 2.24
Production cost: Cartridge $ in million 9.72 22.176 24.3 49.056
Capacity Cost $ in million 0.61 1.71 0.87 2.45
Advertising $ in million 7 19 7 17
Consumer Promotion $ in million 6 17 6 14
Trade Promotion $ in million 2 6 3 8
Total Cost $ in million 30.33 81.528 48.67 109.466
Razor: Manufacturing Price $ 9.9 7.83 9.9 7.83
Razor: Total Manufacturing Price $ in million 9.9 25.839 14.85 31.32
Razor : Suggested price $ 12.99 11.19 12.99 11.19
Cartridge: Average Manufacturing Price $ 7.35 6.22 7.35 6.22
Cartridge: Total Manufacturing Price $ in million 29.4 61.578 73.5 136.218
Cartridge : Average Suggested price $ 10.5 8.89 10.5 8.89

Total Revenue $ in million 39.3 87.417 88.35 167.538

Total Cost 30.33 81.528 48.67 109.466
Profit 8.97 5.889 39.68 58.072
Interpretation of Income Statement

 In Year1, Niche positioning gives more

profit than Main Stream.

 When we see the profit trend from year 1 to

Year 2, Mainstream gives more profit than
Niche.
4P’S
Product
Market Leader
Volume Promotion
Value: Consumer
Operating profit Promotion
lagging behind
competitors Trade Promotion
NO innovation in
last 5 years

Place
Food Stores Price
Drug Stores Paramount Pro
Mass : $9.50
Merchandise Paramount
Club Stores Avail: $5.75
Other
How is the Non-Disposable Razor market
segmented?

 Segmented by gender (male/female), price &

quality (value, moderate & super-premium) &
consumer behaviour (Maintenance shavers,
social/emotional shavers, and aesthetic
shavers).
 “Maintenance” shaver constitute 33% of
market and can be regarded as low
involvement consumers. These consumers are
price sensitive & easily switch brands.
How is the Non-Disposable Razor market
segmented? Cont’d......

 “Social/emotional” user make up 39%of the

market. These users are actively differentiate
between available products & make purchase
decisions based on the overall experience .They
shave regularly & therefore, replace cartridges
sooner & buy razors more often.
 The remaining 28%of the market is made up of
“Aesthetic” users that actively search for
products to fulfil cosmetic motives.
 Both social/emotional & Aesthetic users can be
considered as high involvement consumers,
who place higher value on product features and
brand .They may act as innovators or early
adopters of new product.
Recommendation

 Positioning Strategy : From Financial analysis we conclude that

Clean Edge Razor should be launched in mainstream(Increase
in profit from Year 1 to Year 2 is higher as compared to Niche).
If we consider year 1 only then Niche will have edge.

 Paramount Pro & Avail must be cannibalised by Clean Edge,

otherwise they will lose to the emerging products launched.

 Clean edge is based on superior technology & 5 blade designs.

Paramount could milk the profits from pro to fund clean edge.

 Brand Name : Clean Edge “we save”.

 Marketing Budget : Mainstream- $42 million