Clean Edge Razor Case Study

CASE STUDY

1

CLEAN EDGE RAZOR

BY SARAH MOHAMAD NOR

UTM KL

PRESENTATION OUTLINE

 Introduction

 Issues

 Analysis of Marketing Strategy



Razor Market Analysis



Marketing Strategy Analysis

 Marketing Solutions

INTRODUCTION

Non-Disposable Razor Market

Consumer

Frequent brand switching

Replacement cycle shortened since consumers trying new products &

67%

Involved Non-Disposable Razor Users

Market Trend

5% growth per year

In sales of Non-disposable Razors from 2007 to 2010

Significant

growth

in

Super-Premium Segment

Driven by product innovation

Male-specific

personal

care products

became more mainstream

Competitor

Continuous Innovation

in non-disposable razor category

Expansion of

Advertising and

Promotion Expenditures

Intensify competition to

obtain retail space

Distribution

Channel

Outlets Increase Shelf

Space

for non-disposable razor category.

Shift

of

distribution

channel

Primary Issues

Where should the

Clean Edge Razor

be positioned?

ISSUES

Niche

Main Stream

Secondary Issues

Brand name

positioning of

Clean Edge Razor

Separating Clean Edge

from existing Product Line

Associating Paramount to

the brand as part of overall

Corporate Strategy to build

Paramount brand equity

Clean Edge by

Paramount

Paramount Clean

Edge

RAZOR MARKET – COMPETITIVE MAPPING

Benet & Klein

Vitric Advanced Vitric Master

Prince

Radiance

Simpsons

Benet & Klein

Vitric

Paramount

Paramount Pro

Paramount

Market Share - by Market Segment

RAZOR MARKET ANALYSIS

Market Share – by Brand

Super Premium, 36.4% Moderate, 38.5% Value, 4.9% Source: Exhibit 5

RAZOR MARKET ANALYSIS

Sales by Segment

Source: Table B

Product Segment

Volume

(%)

Dollar

(%)

Volume to

Dollar Ratio

Super-premium

25

34

1 : 1.4

Moderate

43

44

1 : 1.0

Value

32

22

1 : 0.7

Although Moderate Market captures the highest percentage of volume and dollar value,

the super-premium gives the higher return in terms of dollar value per volume produced.

On the other hand, value market segment gives lower market value per volume

produced.

RAZOR MARKET ANALYSIS

SWOT Analysis

Strength

Opportunity

1. Established brand that consumers already trust and hold strong and positive association with.

2. Paramount can afford $19 million in advertising

3. Best product in the market (Technologically advanced and tested)

4. Nothing currently in the market like it.

1. Growth in the super premium segment 2. Mainstream market is highly profitable. 3. Increased in men’s grooming.

4. Uninvolved razor users (maintenance users) is untapped consumer base.

Weakness

1. Launching the Clean Edge Razor in the wrong segment could potentially canabilise the Paramount Pro.

2. Does not hold a position in the super premium segment of the mainstream market which accounts for 37.2%of the total non-disposable razor market.

3. Competitors in the market may released similar products. 4. Naiv, a competitor brand of non-disposable razor has

similar vibrating technology to Clean Edge.

Threat

1. Positioning in the Mainstream market could lead to cannibalization of existing Paramount product

2. Super-premium market segment is highly influenced by market and technology changes on razor functionality and design.

MARKETING STRATEGY ANALYSIS

Year 1

Year 2

Year 1

Year 2

Unit Sales Razors

1

1.5

3.3

4

Dollar Sales Razors

$

9.09

$

13.64

$

25.84

$

31.32

Unit Sales Cartridges

4

10

9.9

21.9

Dollar Sales Cartridges

$

29.40

$

73.50

$

61.58

$

136.22

Total Dollar Sales

$

38.49

$

87.14

$

87.42

$

167.54

Production Cost Razor

$

5.00

$

7.50

$

15.64

$

18.96

Production Cost Cartridges

$

9.72

$

24.30

$

22.18

$

49.06

Capacity Cost

$

0.61

$

0.87

$

1.71

$

2.45

Advertising & Promotions

$

15.00

$

16.00

$

42.00

$

39.00

Total Cost

$

30.33

$

48.67

$

81.53

$

109.47

Operating Profits

$

8.16

$

38.47

$

5.89

$

58.07

Profits as % of Sales

21%

44%

7%

35%

Cost of Cannabilisation Razors

$

0.62

$

0.92

$

3.48

$

4.22

Cost of Cannibalisation Cartridges

$

3.92

$

9.80

$

16.63

$

36.79

Total Cannibalisation

$

4.54

$

10.72

$

20.12

$

41.02

Profits After Cannabilisation

$

3.62

$

27.74

$

(14.23)

$

17.06

Niche

Mainstream

Profit and Loss Forecast for Clean Edge Under Niche and Mainstream Scenarios (in $ Millions)

Profit Projection as Percentage of Sales

MARKETING STRATEGY ANALYSIS

Niche positioning offers higher projected profit comparatively to

Mainstream Positioning.

Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

MARKETING STRATEGY ANALYSIS

Advertising and Promotion is projected to take up approximately 40% of

the Total Cost. Based on the projection, Mainstream market positioning

strategy requires three times more marketing effort (budget) as

compared to Niche market positioning strategy.

Operating Cost

Niche

Mainstream

Projection

Year 1

Year 2

Year 1

Year 2

Advertising & Promotions

$ 15.00 $ 16.00

$ 42.00 $ 39.00

Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

Advertising and Promotion Effort ($’ Million)

MARKETING STRATEGY ANALYSIS

Cannibalisation rate for Niche Positioning = 35%

Cannibalisation Rate for Mainstream Positioning = 60%

Cannibalisation

Niche

Mainstream

Projection

Year 1

Year 2

Year 1

Year 2

Total Cannibalisation

$ 4.54 $ 10.72

$ 20.12 $ 41.02

Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

Cannibalisation Rate ($’ Million)

MARKETING SOLUTIONS

To launch Clean Edge as niche technology product for the first two

years, and subsequently as a mainstream product.

This will benefit Paramount to:

1.

Tap higher profit margin

2.

Win over shelf space at distribution channel

3.

Reduce cannibalisation effect of existing products

4.

A soft entry approach to super-premium segment through

niche positioning

Where should the Clean Edge Razor be positioned?

Brand name positioning of Clean Edge Razor

As a niche product, Clean Edge should be distinguished from

other brands, as well as Paramount existing line.

Therefore,

“Clean Edge by Paramount” will attract customers

and reduce the cannibalisation impact to the Paramount Avail

and Paramount Pro.