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 Market Trend Competitor
Frequent brand 5% growth per year Continuous Innovation
In sales of Non-disposable Razors from in non-disposable razor category
switching 2007 to 2010
Replacement cycle shortened since
consumers trying new products &
Expansion Advertising
of
Significant growth in and Promotion
67% Super-Premium Expenditures
Involved Non-Disposable Razor Users Segment
Driven by product innovation
Distribution Intensify competition to
Channel obtain retail space
Male-specific personal
care products
Outlets Increase Shelf became more mainstream
Space
for non-disposable razor category.

Shift of distribution
channel from Food & Drugs
stores to Mass Merchandisers
THE DILEMMA…
ISSUES

Primary Issues

Where should the

Niche
Clean Edge Razor
be positioned? Main Stream
Secondary Issues
Clean Edge by
Brand name Separating Clean Edge
Paramount
from existing Product Line

positioning of
Associating Paramount to
Clean Edge Razor the brand as part of overall Paramount Clean
Corporate Strategy to build Edge
Paramount brand equity
RAZOR MARKET – COMPETITIVE MAPPING
Prince
Cogent
Cogent Plus

Benet & Klein

Vitric Advanced
Vitric Master

Benet & Klein

Vitric

Paramount mium
re
Paramount Pro
e r-P
p
Su Radiance
Naiv

Paramount ra te
d e
Paramount Avail
Mo
Simpsons
Tempest

lu e
Va
RAZOR MARKET ANALYSIS
Market Share – by Market Share - by Market
Brand Segment
Value
6%

Super Premium
46%
Moderate
48%

Source: Exhibit 5
RAZOR MARKET ANALYSIS
Sales by Segment
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

Source: Table B

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

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

Profit Projection as Percentage of

Sales
GP Margin (%)
50%
44%
40%
35%
30%

20% 21%

Niche
10%
7% Mainstream

0%
Year 1 Year 2

Niche positioning offers higher projected profit comparatively to

Mainstream Positioning.
MARKETING STRATEGY ANALYSIS
Key Highlights from Profit and Loss Forecast for Clean Edge in two (2) different Brand Positioning

Advertising and Promotion Effort ($’ Million)

Operating Cost Niche Mainstream

 Projection Year 1 Year 2 Year 1 Year 2

Advertising & Promotions $ 15.00 $ 16.00 $ 42.00 $ 39.00

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

Cannibalisation Rate ($’ Million)

Cannibalisation Niche Mainstream

 Projection Year 1 Year 2 Year 1 Year 2

Total Cannibalisation $ 4.54 $ 10.72 $ 20.12 $ 41.02

Cannibalisation rate for Niche Positioning = 35%

Cannibalisation Rate for Mainstream Positioning = 60%
MARKETING SOLUTIONS
Where should the Clean Edge Razor be positioned?
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

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.