Clean Edge Razor Splitting Hairs in Product Positioning
MBA8145-Marketing Management Alpharetta, Summer-2011 GSU
Individual Case Analysis
Situation at Paramount
Paramount had established itself as a global consumer products giant with over $13 billion in worldwide sales and $7 billion in gross profits for 2009 since it’s entry in the market in 1962. In 2009, Paramount had established itself as unit-volume market leader in 2009 based on non disposable razor product sales. The Non disposable razor category market is entering a new phase with technology products and new entrants posing a threat to capture Paramount’s Market Share. From the target market positioning perspective the challenges can be broken down as below: •
Competition: Paramount’s main competitor in non disposable razor category in 2010 are Prince, B&K, Radiance health and other substituted products. Prince sold non disposable razors in super-premium category. Prince had gained #1 spot in terms of retail dollar sales up until 2009. Notable feature of B&K another competitor was that they entered the market in this non disposable razor category only in 1985. However, they managed to reach #3 in market share and unit-volumes by superior technology and releasing superpremium products. New entrants were coming to market with super premium products, technology and greater advertising dollars to gain market share. Paramount’s clean edge should compete with Radiance Naiv in test markets. Naiv had already acquired 13% market share in test markets. Radiance and Paramount were fierce competitors and Paramount had to launch a new technology in Super Premium segment to regain market share and continue to exist as a global leader in this category.
Product Positioning: While Paramount had established as a unit-volume leader in 2009, the non disposable razor market had a significant growth only in Super-Premium segment. The rate of increase in total media advertising expenditures in this category is greater than the rate of increase in retail market sales as shown in Appendix A. Main reason for this is numerous product innovations in Super-Premium segment and advances in technology. Paramount had developed a new product in this category called “Clean Edge” based on superior technology and 5 blade designs. This new product would give Paramount much needed boost to position itself as a leader in Super-premium segment and technology giant for non disposable category. If Paramount decides to position and market “Clean Edge” in mainstream positioning, then it will have to cannibalize existing
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Paramount Pro and Paramount Avail products. This could potentially reduce loss of revenue and eliminate these products from Paramount offering resulting in losses due to “Clean Edge”. Paramount is currently not sure as to where to place this product, “niche” or “mainstream” positioning.
Price: Based on the data given in this case and price set by Randall and his team for Clean Edge in either niche or mainstream positioning, I do not see any challenge for Paramount. The reason is that they are positioning this product in Super-premium segment and suggested retail unit price is $12.99 for Razor and $10.50 for cartridge in niche positioning, $11.19 for Razor and $8.89 for cartridge in mainstream positioning. This price is lower than current price in the same segment across Paramount’s competitor and even lesser when compared to Cogent Plus.
Place: I don’t see any issues with Coverage, Assortment, Inventory, Transport or Locations in US market. However, distribution started to shift outside traditional food and Drug Stores. In 2000, food and drug stores sold over 50% of all razors, but by 2009 it was only 42%. So, how should Paramount leverage this shift and gain advantages to increase its sales via retail channels?
Promotion: Paramount as a corporation had decided to curb excessive marketing expenses in all product categories. With...
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