Secondly, after deducting the cannibalization effect, the profit come from “Paramount’s new customers” who buy Clean Edge Razor under niche strategy scenario in Year 1& 2 is $30.3 million, bigger than $25.6 million under mainstream strategy scenario. In other words, although the sales volume is evidently large by using mainstream strategy which William Kim suggests, Paramount can earn more money from new customers if it chooses to use niche strategy.
Though the profit generated by “new customers” under niche strategy scenario is $4.7 million more than mainstream strategy, it is still necessary to look into the additional profit generated from exist customers who switch from Paramount’s other products to Clean Edge Razor. Unfortunately, the case does not provide the sales volume and margin profit of Paramount’s other products, therefore can not calculate the additional profit due to the switch. But if the additional profit using mainstream strategy is $4.7 million bigger than niche market strategy, this could suggest overall the mainstream strategy can generate more profit compared to niche market strategy.
3. Other issues
To minimize the cannibalization effect and attract more new-user under niche market strategy scenario, Randall should use “Clean Edge by Paramount”