TAPMI

Clean Edge Razor: Splitting Hairs in Product Positioning

Group 23-W18/3/2012

Clean Edge Razor: Splitting Hairs in Product Positioning

About Paramount

Paramount was a global consumer products giant with $13 Billion in product sales. Paramount is basically into Health, Cleaning,Beauty and grooming. Paramount entered the non-disposable razor market in 1962 and they are a respected brand in the industry. The Non disposable market is entering into a new phase with advent of new technology and new entrants into the market segments.

Situation Analysis

Company:

1. Non-disposable razors and cartridges from 1969 onwards.2. Mainly two products – Paramount Pro in moderate segment and Paramount Avail

in value segment (combined market share of 23.3%)3. They were the market leaders in non-disposable razor segment in 2009.4. It is the only company to provide scientific testing by a third party lab to back its

claims.5. The company had an executive steering committee, which had the final word

before new product launches.6. Since, the razor market was moving towards a commodity market pattern with

increasing repeat sales due to technical innovations, the company had decided to come up with a technically advanced product which would stand-out in the product line and increase sales.

Collaborators (Distribution channel):

1. Food Stores2. Drug Stores3. Mass merchandisers4. Club stores

Customers:

1. The overall market size of Non-disposable Razors is $218 million and for Cartridges is $853 million and the market is expected to grow at 5% for Non-disposable Razors and 2.5% for Cartridges.

2. Customers have basically 3 market segments to choose from:Super-Premium,Moderate and Value Segment, divided on the basis of price and quality.

3. Paramount’s research findings basically divided the consumer into 3 groups mainly: Social/Emotional Shavers (39%), Aesthetic Shavers (28%) and Maintenance Shavers (33%), with the consumer impulse pattern described below.

4. The retail channel consists Food stores, drug stores, mass merchandisers and Club stores, however, recent trends shows that there is a increase in sales percentage from last two retail channels.

5. The consumer obtains the product information through various advertising and promotional activities carried out by Paramount.Infact Paramount spent around 41.8% of their total Advertising and Promotional Expenditure ($48.3 million) on Media segment.

6. Recent trends show that male-specific grooming products have been on the upward trend.

7. There is a high rate of acceptance for any technological innovation (or improvement) to the present array of products.

8. Good retail margins ensured the non-disposable razors presence into the retail channel, although demand was not as high as compared to other category of products.

Competitors:

1. Prince had been a market leader in non-disposable razors and held the number one position in terms of retail dollar sales in 2009.

2. Prince sold non-disposable razors and refill cartridges under the brand names Cogent and Cogent Plus. Both these products are in super premium segment.

3. Radiance competes with Paramount in several product categories and it is also expected to launch a non-disposable razors in the super premium segment in Sept 2010.This product is expected to compete with Clean Edge Razor.

4. Electric Shavers, depilatory creams, waxing, and laser hair removal are potential substitutes.

5. The below table shows Brand, Segment and Market Share

Products Brand Segment Market ShareCogent Plus Prince Super-Premium 1.30%Cogent Prince Super-Premium 21.40%Vitric Benet & Klein Moderate 20.00%Vitric Advanced Benet & Klein Super-Premium 1.10%Vitric Master Benet & Klein Super-Premium 0.90%Naiv Radiance Super-Premium 0.00%Tempest Simpsons Super-Premium 1.10%Paramount Pro Paramount Moderate 18.50%Paramount Avail Paramount Value 4.90%

6. Behaviour segmentation of Consumers

Involved Razor UsersSocial/Emotional

ShaversInvolved Razor Users

Aesthetic Shavers

Uninvolved Razor Users

Maintenance Shavers

(39% of Nondisposable Razor Users)

(28% of Nondisposable Razor Users)

(33% of Non-disposable Razor

Users)Differentiate among products. Search for products based on

both functionality and messaging.

Search for products that most effectively

remove hair.

View products as the same. Lack of interest in product

category.

Shaving as an essential part of a daily grooming ritual.

Shaving is consistently done to remove unwanted hair.

Shaving routine is inconsistent.

Shaving makes them feel more attractive

and confident.

Shaving is a means to smooth skin they

desire.

Shaving is a chore they try to finish as quickly as possible.

Context:

1. Society Trends indicated that men’s grooming routines moved well beyond the aftershave, this indicated a strong growth in men’s segment in coming years in the beauty industry

2. The consumer consumption in the recent past showed acceptability among the masses for new technological innovation in the razor blade industry.

Estimated Profit Year 1(Million $) Year 2(Million $)

Niche Product 8.205 38.465

Mainstream Product 5.89 58.07

Recommendation:

1. Launch “Clean Edge” as a “niche” technology product for first two years and then launch it as a mainstream product. This will enable Paramount for higher-pricing and will reduce cannibalizing effect on older products.

Niche (Million $) Mainstream (Million $)Estimated Increase in Market Share

35.74 50.29

2. This will also enable Paramount to try their hands in SUPER PREMIUM segment.

3. The new product should be launched as “Clean Edge by Paramount” so that it will attract customers from other brands as well without much affecting our own sales.

4. Free Coupons or Reward programs for Paramount Pro and Paramount Avail consumers, this is done to make sure that existing market shares of these products doesn’t get eroded.

5. Position the Clean Edge razor preferably in Club houses and Mass merchandiser as they cater to specific consumer that are sure to upgrade to Clean Edge and leave the old brands.