Paramount is planning to launch a non disposable razor ‘Clean Edge’. This company is a market leader in the non disposable razor market. Currently it is offering Paramount pro and Paramount Avail. The product based categorisation in hair removal market is non disposable razor, disposable razor, cartridges, shaving cream and depilatories. The non disposable razor and refill cartridge market is divided into three segments based on price and quality – Moderate, Value and Super premium. Based on product benefits there are three groups of people- maintenance shavers, Social or emotional shavers and Aesthetic shavers. The super premium category has the highest growth among the three categories. Paramount doesn’t have an offering in the super premium segment. Clean edge was developed after a thorough research and is a technologically superior product. The company is not sure how to best position clean edge. They have 2 options, either to position it as a niche product targeting highly involved fastidious groomers looking for superior shaving experience or to position it as a main stream positioning focussing on the broad advantage of the closet possible shave. The factors to be considered are the volumes, cost of production, impact of cannibalization and advertisement cost.
• This will increase the diversity of the portfolio.
• Less cannibalization of sales from existing products.
• Sales volumes for the product will be high.
• Existing sales and distribution suitable for this segment.
• 60% cannibalization of sales of the existing products.
• Advertising expenditure is high.
Financial Analysis of the options available
The cost of cannibalisation is calculated from the data given below
60% of Clean Edge sales...