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Clean Edge Razor Case Study Analysis

Clean Edge Razor Case Study Analysis

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Published by binzidd007
Case Study – Clean Edge Razor

Section C – Group 11

Clean Edge Razor Case Analysis Section - C Group – 11
Name Aman Srivastava Deepak Sudhakar Krishna Bajaj Prasanna Patange Richa Singh Saikiran Pollamarasetty Vivek Gupta Roll Number PGP2011532 PGP2011617 PGP2011696 PGP2011770 PGP2011823 PGP2011843 PGP2011944

PGP 2011-13

Page 1

Case Study – Clean Edge Razor

Section C – Group 11

Product Characteristics In 2007 Paramount developed ‘Clean Edge’, a technologically advanced nondisposable razor
Case Study – Clean Edge Razor

Section C – Group 11

Clean Edge Razor Case Analysis Section - C Group – 11
Name Aman Srivastava Deepak Sudhakar Krishna Bajaj Prasanna Patange Richa Singh Saikiran Pollamarasetty Vivek Gupta Roll Number PGP2011532 PGP2011617 PGP2011696 PGP2011770 PGP2011823 PGP2011843 PGP2011944

PGP 2011-13

Page 1

Case Study – Clean Edge Razor

Section C – Group 11

Product Characteristics In 2007 Paramount developed ‘Clean Edge’, a technologically advanced nondisposable razor

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Published by: binzidd007 on Dec 16, 2012
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07/29/2013

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Case Study
 –
Clean Edge Razor Section C
 –
Group 11
PGP 2011-13 Page 1
Clean Edge Razor Case AnalysisSection - CGroup
 –
11
Name Roll NumberAman Srivastava PGP2011532Deepak Sudhakar PGP2011617Krishna Bajaj PGP2011696Prasanna Patange PGP2011770Richa Singh PGP2011823Saikiran Pollamarasetty PGP2011843Vivek Gupta PGP2011944
 
Case Study
 –
Clean Edge Razor Section C
 –
Group 11
PGP 2011-13 Page 2
Product Characteristics
In 2007 Paramount developed ‘Clean Edge’, a technol
ogically advanced nondisposable razor ina bid to establish the company as an innovation leader. This new razor had an ultra-thin five-blade design but its most important characteristic was its vibration technology.The vibrations stimulate hair follicles and lift the hair from the skin. This facilitates a thoroughclean shave. The vibrations were generated with an AAA battery housed in the handle of therazor. The handle, therefore had to be large and heavy, and in this in turn provided better grip,balance and control while shaving.The advanced ultra-thin blades reduced irritation and was 25% more efficient in hair removalvis-à-vis other leading non disposable brands. Trials also showed that use of Clean Edge wasbeneficial to overall skin condition, tone and texture.
Market Characteristics
Products available in U.S. Razor market are nondisposable razors, refill cartridge, disposablerazors, shaving cream, and depilatories. Nondisposable razors recorded average growth of about 5% in retail sales during the period 2007 to 2010 whereas refill cartridge and disposablerazors recorded growth of approximately 2% and 3% respectively for the same period.Innovations and new product introductions are the prime factors for the growth.Nondisposable razors and refill cartridge market is broadly classified into three
segments namely value, moderate and super premium based on price and quality. Paramount’s
consumer research identified distinct segmentation in terms of product benefits and consumerbehaviour. 39% of nondisposable razor users are segmented as Involved Razor users,social/emotional shavers; 28% as Involved Razor users, aesthetic shavers and 33% asUninvolved Razor users, maintenance shavers. Studies from 2009 showed that the retail salesof nondisposable razors and refill cartridge came from 25% volume of super-premium, 43% of moderate and 32% of value segments.
Competition
In the last decade, the industry has experienced significant growth in the super premiumsegment. Product innovation and new technology is leading this sector for a number of newentrants. In 2008-09 the rate of new product innovation lead to 22 new SKUs to be introduced.
Impact Of Competition On Consumers
- The consumers have started buying more razors andcartridges replacement than they had in previous years. The replacement cycle is shorteneddue to consumers trying out new products and being more involved through advertising andsponsored articles and looking for more innovative products in the category.
 
Case Study
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Clean Edge Razor Section C
 –
Group 11
PGP 2011-13 Page 3
On Trade
- The retail margins associated with the razors is considerably higher and thereforewith a large number of new entrants the distributors are responding to the growth byincreasing their shelf space for the product category. Distribution is also reaching out from foodand drug stores (42%) to mass merchandisers (21%) and club stores (5%).
On Media Expenditure
- As per 2009 data the total media expenditure (excluding trade andconsumer promotion) is $103.6 m while this number is expected to reach $137.7 m in 2010, arise of 33% in a year.Looking at some of the prime
competitor’s
figures we get- Revenues for PRINCE are $224 m,operating profit $ 45 m, media expense $27.8 m in 2009 and expected $ 29.2 in 2010. For Benetand Klein the media expense is $35.2 m in 2009 and expected $36.8 m in 2010. For Paramountthe revenue for 2009 is $170 m, operating profit is $26 m and total media advertisementexpense is $ 44.3 m. Thus the immense competition has lead to over promotion and mediaexpenditure by the companies which is difficult to maintain given the operating profit margins.
POSITIONING:
Clean Edge’s improved desig
n provided superior performance. Within the super-premiumsegment, Clean Edge could be positioned either as Niche product focusing on high involvement,fastidious groomers looking for a superior shaving experience, or a mainstream productfocusing on the broad advantage of offering the closest possible shave. Each positioning has itsown pros and cons.
Niche positioning
:
Pros
:Positioning Clean Edge as niche will comp
lement company’s existing product portfolio perfectly.
 
From the exhibits, it’s visible that it will result in high and consistent profit margins for the
company and the risk involved will be less. Apart from that Niche positioning will require $15million in total marketing expenditures in the first year as opposed to $42 million in mainstream
Cons
:First of all it has a limited consumer base and secondly
the company’s current products Pro and
Avail had not introduced any innovations in the last five years. Pro is in the mature phase and
there’s a high probability of its sales declining soon. Therefore by launching in this segment
Paramount will lose their loyal customer base which is there with Pro and Avail.

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