Clean Edge Razor: Splitting Hairs in Product Positioning MK-715
January 9, 2016 Prof. Leat Kodua Brenau University
James Davis Kristi Lee Dana Nelms
The purpose of this report is to analyze and recommend a best possible solution for the market positioning of Paramount Health’s newest non disposable razor, Clean Edge. Even though the company’s executives have agreed that the best product fit for the razor is the super-premium market segment, the primary issue concerning the product is deciding whether to specifically place it within the mainstream or niche market of this segment. Also, since the Clean Edge isn’t the only item in Paramount’s product catalog, their decision regarding its placement could have a negative impact on it other product offerings. Depending on the direction leadership takes, inappropriate positioning of the Clean Edge could result in cannibalization of resources and clientele from other Paramount products such as: the Paramount Pro razor and the
Paramount Avail. In addition to this, positioning their newest arrival may strain the company’s already limited financial resources, while also contributing to an ongoing conflict concerning whether emphasis should be placed on product name or company brand.
Based on both market and product constraints/advantages such as: cannibalization, budget availability, technology, and brand strength; we are persuaded that the product should be launched into a niche market as: Clean Edge by Paramount. A niche based, product focused delivery not only promotes higher differentiation of the product from its competitors, but also guarantees a fiscally sound advertising plan. Even more so, such a strategy would be able to strongly establish Clean Edge’s presence in the super premium, non disposable razor market, without jeopardizing the market offerings of Paramount’s other products.
In order to fully understand the problems and constraints surrounding the launch of Paramount’s Clean Edge product; one must be fully aware of the external and internal influences which possibly inspired its development.
Joseph Krutch noted that “technology made large populations possible; large populations now make technology indispensable”, and in regards to technology; the non-disposable razor industry is no different. Whether it was via the development of multi-blade, glide strip, and/or lather bar technology, the evolution of the disposable value razor into a super-premium shaving tool fueled the growth of mainstream shaving around the world. It fueled it so much that the entire non-disposable razor industry saw a 15% spike in growth from 2007 to 2010 (Quelch & Beckham, 2011) As a tenured industry giant, representing over 20% of the non-disposable razor market, such a growth opportunity could hardly go unnoticed by Paramount Health. As a
response to the surge in interest, the company may have started laying the foundation for what would become its vibration based Clean Edge technology.
However, the most significant external influence on the razor market was not technological; it was social. Prior to the 21st century, the primary definition of heterosexual masculinity depicted men as hairy primal beings. Yet, around the turn of the century, the
traditional animalistic depiction of men gave way to a more aesthetically refined and egalitarian image of the modern man; an image and culture that readily embraced the idea of
“Manscaping1”(Boice, 2012) .
Another external factor that may have drove the Clean Edge’s development was the presence of product competition. Despite 40+ years of industry success, Paramount wasn’t the
top contender in the non-disposable razor market. For over 50 year the Prince Corporation had been a global leader in personal care products; with its Cogent razors outpacing Paramount products in revenue by at least 5% from 2007 - 2010. This very close struggle to be at the top of the non-disposable hierarchy may have driven the Paramount Company to improve in order to beat its oldest competitor. However, it may have been the arrival of its newest competitor, Radiance, which inspired the company to innovate. In 2010 Radiance announced the launch of its Naiv razor, touting its advanced vibration technology which promised a cleaner shave by stimulating and lifting the hair follicles off the skin. Despite their similar function and very close product launch dates, it’s difficult to determine whether Paramount or Radiance applied the concept of vibrational technology first.
Nevertheless, one thing that was certain was the fact that Paramount Health was overdue for technological change. According to Quelch & Beckham, since the launch of their Pro and Avail razor lines in 2004, Paramount “had not introduced significant technology innovations in over 5 years.” Unlike the previously listed external reasons, the creation of the Clean Edge product could have been an internal response to a lapse in innovation.
Section II: The Core Problem: Product Positioning
Paramount faces numerous issues in the market from competition to product development and wants to become the industry leader with their new product. The major core problem being faced by Randall Jackson, product manager for Paramount’s new product Clean Edge, is how to properly position their newest non-disposable razor Clean Edge in order to capture the highest returns. Executives at Paramount would like to positon Clean Edge in the super-premium segment, while others would prefer to launch the new product in the mainstream segment of the
market. In either case the product will have strong competition to overcome as many different companies have started to launch products in this industry. The idea of men using health and beauty products has increased as the stigma surrounding men’s grooming habits has declined; causing exceptional growth in the market (Razing Prices, 2013).
Paramount’s leading competitor is Prince who has two products in the super premium segment, Cogent and Cogent Plus. Both products are in different stages of their product life cycle, varying from mature to nascent growth, which has created room for new products in the market. Additional competition will come from B & K who has products in the super premium segment as well as the mainstream segment, all under the brand name Vitric. There is continued growth in the marketplace with new companies such as Simpsons and Radiance getting into the mix with newer technology. The real challenge to Clean Edge will be seen in the launch of Radiance’s Naiv non-disposable razor. Due to it is similar design and availability in market nearly four months prior to the Clean Edge, positioning their new product will be vital to Paramount’s success.
Paramount controls the market share currently with twenty-two percent (22.2%), but they come up lower in overall revenues, with Prince taking the lead in generating sales. The lead comes from Prince’s ability to market their products with high dollar investments in advertising campaigns and promotions. Something that Paramount will have to match if they want to be a contender in the super premium market. Radiance’s new product Naiv has already shown signs of increasing their market share by over thirteen percent (13%) with the data back on early market tests. The presence of this strong competition makes the decision for Mr. Randall even tougher as he tries to position Clean Edge in the market.
Section III: Secondary Problems
Product positioning may be the core problem, but there are secondary problems that Mr. Jackson must also take into account as he is making is decision on market segment. One of the first is how to market Clean Edge without cannibalizing Paramount’s other products in the market. Paramount has two other products Paramount Pro and Paramount Avail. The product manager for Paramount Pro is Howard Rosenberg and he has strong opposition to positioning Clean Edge in the mainstream segment because it will remove business from Paramount Pro at nearly sixty percent (60%) resulting in the decline of an already mature product that he manages. Mr. Rosenberg would like to see Clean Edge positioned in a niche market to allow both products to generate revenues for Paramount. Niche markets allow for innovative products to target specific smaller groups of people within a market segment (Kotler & Keller, 2012). Mr.
Rosenberg believes a niche market positioning would align the Clean Edge to meet the needs of a smaller audience that is looking for quality products that deliver a closer shave, an ultra-thin blade, easy handling, while overall improving skin texture.
Another secondary problem faced by Mr. Randall revolves around the marketing budget for the coming fiscal year. Paramount wants to maintain a steady marketing budget for the coming fiscal year. If an increase in budget dollars is not possible, Mr. Randall will need to find a way to market Clean Edge with limited resources or get additional money from other product areas, which will create conflict with the other product managers. Mr. Randall has completed pro formas for each plan to anticipate costs for the Clean Edge if positioned in the niche or the mainstream markets. If Mr. Randall goes with the mainstream positioning he will need to spend nearly $42 million in order to successfully launch the product. However when compared to a
niche market strategy, not only would Randall end up spending less for the marketing campaign ($15 million), he could reduce the likelihood of cannibalization of Paramount Pro. Thus a major impact on Paramount’s revenues. In the long run the mainstream market should bring in higher returns than the niche market, so the higher advertising and promotion expenses may offset.
The final secondary problem that needs to be handled is how to brand the new product. In the past Paramount has always used their name in conjunction with the product since they have a long standing history of providing quality products in the market. Unfortunately, in the situation the executives are split. The traditionalist believe the should lead with their strong brand by calling the new product Paramount Clean Edge. Whereas others believe the name should stand out as a new innovative product, so they want to go with Clean Edge by Paramount. Branding a product can bring in consumers who are loyal to the company, so in either case the Paramount name should be associated in some way to help consumers recognize the quality being offered to them (Kotler & Keller, 2012).
Section IV: Constraints and Limiting Factors
The market competition from Radiance will be a major factor in how well Clean Edge can perform; not to mention, how much advertising investment will needed in order to have a successful product launch. The technology behind Clean Edge with the new vibrating head, heavier handle, and ultra-thin blade will help to establish its superior design over the traditional non-disposable razors, but Radiance will beat Paramount to the market by almost four months. Paramount will need to tap into additional marketing dollars in order to overcome Radiance’s market campaign and steal away those sales. Consumer promotions such as coupons and buy one get one campaigns have been proven techniques to increase sales and if Paramount goes with
a mainstream positioning strategy they will need to invest almost $4 million in these types of promotions in the first year (Clemons, Nunes, & Reilly, 2010).
Another limiting factor will be the political issues within Paramount, especially in how much Clean Edge will likely cannibalized the other products. The pro formas, done based on mainstream and niche positioning strategies, show significant cannibalization of the other products within Paramount; which could lead to significant political battles between managers and executives over advertising dollars. The biggest battle will come from Mr. Rosenberg who handles paramount Pro a mature product that will likely lose anywhere from thirty-five to sixty percent of sales to Clean Edge. Mr. Rosenberg has been a long time employee with Paramount and has significant political power with some executives, so he could potentially prevent a successful launch by not allowing additional advertising dollars be transferred between his products and Clean Edge. Clean Edge will impact all existing products regardless of which market segment it goes into, and it will require a significant amount of the advertising budget to be successful.
Another limiting factor can be seen in how Paramount has conducted business over the past five years. Paramount has not introduced a new product in those five years; instead they have invested in advertising and pushing their current line of products that are now starting to mature in the market. Most of the competition has been developing and introducing new products, with almost twenty-two new products reaching the market during those five years and this has taken business away from paramount. Now Paramount faces the challenge of
recapturing lost consumers and pushing a new innovative product into the market. Paramount executives are unclear on how to proceed in a manner that will be successful and may not be willing to invest the required resources to make Clean Edge their new brand image. During the
last five years consumer choices have also changed with an emphasis on high quality with a bargain price (Razing Prices, 2013). This change in consumer taste means that they are moving away from the super-premium market and looking at a more mainstream market with a focus on disposable razors, which can be seen in second quarter sales data for 2013. The drop was nearly ten percent (10%) and can really put constraint on Clean Edge’s sales projections.
Section V: Alternative Solutions
A solution is to place Clean Edge into the mainstream market along with their other products, Paramount Avail and Paramount Pro razors. Clean Edge would be offered as the higher quality product and priced higher than the existing products; while careful marketing would applied to help the consumers differentiate between the various products. However, this could be costly, and could eventually cannibalize the existing Paramount products. There are already numerous competitors in the mainstream market; the most direct being Prince which is the leader in sales. This is due to Prince’s high investment in advertising, marketing and promotions involving their products. Paramount will need to spend much of their advertising budget creating innovating ways to out-advertise their competition.
Another solution is to launch the Clean Edge into a niche market, based on the fact that Paramount already has successful products in the mainstream market. This would expand their product base among three market segments, which in turn would attract new consumers. Marketing cost would be less, according to the profit-and-loss forecast; $15 million has been allotted for advertising in the niche market as compared to $42 million in the mainstream market. To successfully promote a product in a mainstream market, heavy advertising in the form of
media, trade promotions and promotions need to occur. This would allow marketing funds to still be available to promote their exiting mainstream products.
Section VI: A Beneficial Solution: Niche Positioning
The recommended solution is to launch the Clean Edge in the niche market as being a super-premium razor; while promoting the product’s technology and high-quality. The appeal would be to the consumer who wants shaving to be an experience and not a daily chore (Razing, 2013). The profit-and-loss forecast indicates that by being in this market, Paramount will have a profit of $31.7 million, much greater than $2.82 million if it was in the mainstream market. The product should be branded as “Clean Edge by Paramount”, which will allow it to stand alone as a premium product having the branding endorsement of the Paramount company. This will appeal to the consumer who desires a superior shaving experience via a unique and innovative
technology.
This solution should appeal to Mr. Rosenberg, who desired to launch Clean Edge into a niche market. He felt that this product would appeal to a sub-set in the niche market of those who are looking for specific and specialized qualities in a product (Kotler & Keller, 2012). Appeasement to the executives and managers can come from the cost savings in advertising dollars and forecasted increase revenue.
Section VII: Justification of Strategy
The recommendation would place Clean Edge into the super-premium niche of the razor market. There are several competitors such as Radiances’ Navi, however it could be an advantage to promote a known brand such as Paramount into the market. Fortunately with 22.2% of existing market share, consumers are likely to choose a familiar brand over a competitor’s product. In addition, pricing the razor and cartridges at the higher end of the market, will give it the perception of the consumer getting a higher quality and unique product due to the higher price (Razing, 2013).
Placing Clean Edge into the niche market would also eliminate the issue of being their own competitor in the mainstream market. This would also allow for an increased market share by distributing their products over three consumer economic markets.
References:
Boice, R. A. (2012). The age of manscaping: Controlling bodies and defining manhood in the 21st Century. UNIVERSITY OF COLORADO AT DENVER.
Clemons, E. K., Nunes, P. F., & Reilly, M. (2010, May 24). Six Strategies for Successful Niche Marketing: How to Win Big by Thinking Small. The Wall Street Journal. Retrieved December 29, 2015, from
http://www.wsj.com/articles/SB10001424052748704130904574644084205858424 Kotler, P., & Keller, K. L. (2012). Marketing Management (14th ed. ed.). Upper Saddle, NJ:
Prentice Hall.
Razing Prices. (2013, August 13). Economist. Retrieved December 29, 2015, from http://www.economist.com/blogs/schumpeter/2013/08/male-grooming
Quelch, J. , Beckham, H. (2011, January 19). Clean Edge Razor: Splitting Hairs in Product Positioning. Harvard Business Publishing
