Clean Edge Razor Case Analysis

Clean Edge Razor Case Analysis

Arti Munshi

1. What changes are occurring in the non-disposable razor category? Assess Paramount's competitive position. What are the strategic life cycle challenges for Paramount's current products as well as for Clean Edge?

Changes in Non-Disposable Razor Category:

• Non-disposable razors experienced approximately 5% growth per year from 2007 to 2010 due to innovations and new product introductions
• 22 new SKU’s were introduced between 2008 and 2009
• As a result of new product introductions, total media advertising expenditures had been rising faster than retail market sales.
• Consumers engaged in more brand switching. The purchase intervals had shortened as consumers were trying out new products.
• There was more competition for retail shelf space. Therefore distribution started to shift outside the traditional food and drug stores.

Competitive Position:

• Paramount has established itself as a global consumer products giant with over $13 billion in worldwide sales and $7 billion in gross profits for 2009 since its entry into the market in 1962.
• Paramount established itself as unit-volume leader in 2009 (23.3% Unit market share) based on non-disposable razor sales. It also had the second highest dollar market share of 23.4% after Prince.
• Paramount’s current positioning is in the Value and Moderate segments.
• Prince sold super-premium non-disposable razors and was a fierce competitor.
• Radiance’s Naiv, which was due for launch in September 2010 posed a threat to Paramount as it used a technology similar to the one used in Clean Edge.
• The non-disposable razors market faced competition from direct competitors as well as substitute products (depilatories, waxing, etc.)

Strategic Life Cycle Challenges:

• It is seen that the market share for Paramount Avail has been declining, while market share for Paramount Pro experiences a steady increase.
• Paramount has developed a new product for the super-premium category – Clean Edge, which is based on superior technology and 5 blade designs. Paramount could milk the profits from Pro to fund Clean Edge.
• The increasing introduction of new products with superior technology and benefits, by competitors, tends to shorten the product life cycle.

1. How is the non-disposable razor market segmented? Examine consumer behavior for non-disposable razors.

• The non-disposable razor market is segmented by gender (Male/Female), price and quality (value, moderate, and super-premium), and consumer behavior (Maintenance shavers, social/emotional shavers, and aesthetic shavers)
• “Maintenance” shavers constitute 33% of the market, and can be regarded as low involvement consumers. These consumers are price sensitive and easily switch brands.
• “Social/ Emotional” users make up 39% of the market. These users actively differentiate between available products and make purchase decisions based on the overall experience. They shave regularly and therefore, replace cartridges sooner and buy razors more often.
• The remaining 28% of the market is made up of “Aesthetic” users that actively search for products to fulfill cosmetic motives.
• Both Social/Emotional and 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.

1. What are the arguments for launching clean air as (a) a niche product; (b) a mainstream brand? Which would you recommend? What are the strategic implications of your recommendation?

1. Niche Product:

• Lower rate of cannibalization
• Benefits of Clean edge may not appeal to the whole market
• Marketing investments are lower
• Once the technology matures, the product can be made to appeal to the mainstream.

1. Mainstream Brand:

• Appear to be an innovative replacement for Paramount Pro
• Available to a larger market
• Advertising and promotion costs are higher
• Higher cannibalization

Recommendation: Niche Market

Strategic Implications:

• Establish Clean Edge as a super-premium brand capitalizing on new technology features.
• Assess profitability of the product
• Study the product life cycle for possibilities of moving into mainstream.
• Lesser financial risk
• By introducing Clean Edge in the niche market, Paramount would have a market share in each market segment.

1. Based on your positioning strategy, what brand name and marketing budget allocations would you recommend?  

Brand Name:

In order to target the niche market, I would recommend Clean Edge by Paramount as the brand name. This brand name will differentiate Clean Edge from the other products of Paramount, highlight the new super-premium position, and emphasize on the technology innovation. It will therefore, stand out from the current products of Paramount, which are less advanced technologically, and hence attract the high involvement segment.