Paramount Health and Beauty Company has developed a new razor called Clean Edge. Paramount needs to decide between launching this razor in a niche or mainstream position. After analysis, we recommend that Paramount launch Clean Edge in niche position. Analysis of Clean Edge
Launching Clean Edge as a niche product would require significantly less ad expense compared to attempting a mainstream positioning, $15 million compared to $42 million, respectively. Furthermore, there would be significant cannibalization of sales to our current product offerings if Clean Edge were positioned as a mainstream product. 60% of Clean Edge sales would come from Paramount Pro and Avail sales if launched in a mainstream position. While 35% of Clean Edge sales would come from Pro and Avail if launched with a niche positioning. Assuming gross profit stays consistent with 2009 levels, this leads to a total net profit of $58.8 million in year 1 and $79.8 million in year 2 across all lines when Clean Edge is launched in niche position. If launched in a mainstream position total net profit across all lines is $55.5 million and $69.9 million respectively. Consumer Segments
There are 3 segments of consumers in the arena of non-disposable razors. Social emotional shavers make up 39% of the population and look for products that are differentiated while still being functional for their essential daily grooming ritual. This is the target for a niche positioning. Which is also the single largest segment. Aesthetic shavers populate 28% of the market and search for products that most effectively remove hair to meet their desire of smooth skin. This segment is mainly the target of the mainstream positioning strategy. Maintenance shavers make up 33% of the market and lack interest in the shaving experience. These customers view shaving as a chore and finish as quickly as possible. This segment is a target of a mainstream...