Clean Edge Razor Case

Problem Statement rife has become a grocery store draw in global consumer products except slams that innovation is vital to continue success. paramount has used technology to establish an innovative s cede, but wants to make sure that it is positioned effectively. Situation Analysis * Customers Male consumer products demand been trending upward in the last decade. The client segments atomic number 18 broken up into three areas social/emotional, involved s welcome users, and unaffectionate or maintenance users. Social/emotional are responsible for 39% of Nondisposable razors, Involved is for 28%, and maintenance users account for 33%.In 2009 consumers razors and replacement cartridges at a higher rate than ever before. * Competitors disceptation includes direct competition as well as substitutes for Nondisposable razors. In 2010 the three major players were prevalent, Prince, and Benet & Klein (B&K). Prince generally focuses on super-exchange premium products. B&K enter ed the Nondisposable commercialise in 1985. at that place are also in the raw entrants which account for the rest of the market. In 2010 dominant is expected to have a 21. 4% dollar market share. * Comp each Paramount is a large consumer products company with $7 billion in gross benefit in 2009.The current Nondisposable razor line has products in both the market and value customer segments. The Clean meet shave is the depression Nondisposable razor produced by Paramount that has a proficient innovation. Paramount is relying on the Clean adjoin razor to increase sales and collect to a greater extent market share in the Nondisposable razor category. * Context In 2011 the effects of a recession are becoming less drastic than in years before. Customers have more disposable income and companies have more money to spend on investments such as media/advertising and R&D. Collaborators (retailers) In 2009 food stores represented 42% of all razors and cartridges. Other distributo rs include drug stores, cumulus merchandisers, club stores, and other distributors. As SKUs increase, shelf space is increased to accommodate for all of the different products. Distributors are pass oning to increase shelf space because the margin on razors is high compared to other consumer products. Alternatives Position the Clean edge razor as a ceding back product for highly involved groomers looking for a superior shaving experience. Pros * less(prenominal) cannibalization. Social shavers right now arent interested in the Pro or assistant razor. Paramount is concerned with the overall meshability of all the razor lines. By side the Clean Edge razor as a niche product, the check off equity of Pro and Avail wont be as affected as if the Clean Edge shave was positioned as mainstream. The current customer segment for emotional shavers is 39%. With over 1/3 of the customer segment involved with emotional razor purchases there is a decent sized market that could use the ben efits of the Clean Edge razor. * The net operating(a) profit based on financial analysis is higher than the mainstream positioning strategy.There are advantages of positioning the as a niche product. Advantages * One advantage is that customers will be more involved, so they will precede the prison term to research the product. After the consumer investigates the Clean Edge Razor, he will be able to secernate that there is a clear advantage and the Clean Edge Razor is the best option. * Another attainable advantage could be that Paramount could increase the size of the social/emotional market. Cons * Clean Edge Razor is losing out on potential sales because the market is much smaller. * Another con is the negative grass awareness.Even if Paramount created the greatest razor of all time, the brand wouldnt become stronger because only people who know about razors would know that Paramount is making technological innovations. Through a niche market Paramount would need to rely on their other razors to remain relevant to the mass market. This could prove to be effortful as other companies continue to come out with new razors. Disadvantages * The investment spent on R&D to create the Clean Edge Razor was substantial it will take longer to earn back the money spent on developing the Clean Edge Razor.Position the Clean Edge Razor to the Mass Market Pros * More people will be undetermined to the product. This will lead to greater sales. This will also improve brand equity. Through this positioning strategy Paramount will have a razor in each segment. * Although not as profitable, this positioning strategy will settle down make a profit and build brand equity. Advantage * Paramount will be viewed as innovative and keeping up with competition. A company that is stagnant falls behind. Through marketing this razor to everyone, Paramount will be viewed as taking the next step to create the best razor.Currently Paramount isnt working on any other innovative razors s o this technology will have to be available to all different types of customers. Cons * One con is that not everyone will know how the thrill will help prevent a better shave. There are also a visual modality of people who dont need a superior razor they are content with the razor the way it is. * Another con is that the razor will have to be priced lower than if it were a niche position due to competition. * Money spent on advertising. establish on the pro forma it would cost roughly $12million more to advertise to the mass market.This is risky if the Clean Edge Razor doesnt do as well as forecasted. Disadvantage * Cannibalization. Currently Pro and Avail have 22. 2% of the volume of razors sold, the largest of any pair or razors. Introducing a razor in the same market with more features will defame the sales of both the Pro and Avail. * This will also negatively impact the brand power of Paramount when the numbers are revealed and it shows that Pro and Avail are not doing as well as expected. * ground on financials this is the worst strategy to pursue. Recommendation It is important for Paramount to grow the Clean Edge Razor as well as the Pro and Avail.I recommend that the company position the Clean Edge Razor for one year as a niche position and then position the Clean Edge Razor as a mass-market razor for everyone to use. Pros * Through utilize a bit of both positioning strategies Paramount will receive the best of both worlds. One pro is less cannibalization of Pro and Avail in the number 1 two years while consumers are adapting to the Clean Edge Razor. By the time the Clean Edge is positioned as a razor for everyone the 39% of people who have already been exposed to the Clean Edge will be able to differentiate this razor from the Pro and Avail.The cannibalization after the first two years wont be as severe because people will have already been exposed to the Clean Edge Razor. * A lower price when the product is positioned differently will lead t o a larger share of social shavers. The social shavers that have been paying a premium price will be happy to pay less money. The other social shavers that dont use the Clean Edge will be more likely to use the shaver because the price will be lower meaning the consequence of the razor not meeting expectations will decrease. The sales will increase dramatically after the second year due to more potential customers. Based on my financial statements the net profit is slightly larger than the niche positioning strategy by itself. * Growing brand equity and positive word of mouth advertising through social shavers vocalizing friends and family Cons * Regardless of the positioning strategy there will still be some cannibalization. * Social shavers may see the change in positioning as a shift in quality and value that a lower price will equate to a bad razor. * The incremental net profit may be too similar to the niche positioning strategy to risk damaging brand power. Implementation P lanOn January 1, 2011 I will tell production to manufacture the Clean Edge Razor just as if we were pursuing a niche positioning strategy. We will spend the $14 Million dollars in advertising on specialty male health and fitness magazines, television shows, and piano tuner stations. We will also be relevant on social media sites such as Twitter and Facebook. There will be contests with our razors and customers will get the opportunity to spread word-of-mouth about the Clean Edge Razor. Paramount expects to make over $52 million, with most of that coming in the second year because the first year is mainly niche positioning.It is safe to say that $20-$23 million will be make in the first year. During September we will launch a new campaign positioning the razor as the everyday mans razor with advanced technology. During this time we will also outpouring a smaller ad campaign for the Pro and Avail marketing the razors as reliable and a staple of the razor market. This is why advertis ing increases overall in the combination strategy. Paramount is expecting cannibalization regardless, but using a mix of both strategies will help offset the large cannibalization from just using the mass marketing strategy.This will benefit Paramount as a company because Clean Edge Razor will be exposed to every customer segment while still trying to watch the brand power of Pro and Avail. This strategy will benefit the brands as much as possible. Also, the financials in the Appendix support this strategy over the niche and mass marketing positioning strategies. Cannibalization is inevitable but it is vital that customers from all segments see that Paramount is an innovative company determined to find new shipway to benefit their customers. Appendix