Recommendations & Conclusion

The recommendation is to introduce the Clean Edge into the marketplace as a niche product capitalizing on the innovative design and customers willingness to switch to this razor even at a premium price. This positioning does not cannibalize existing niche market nearly as bad only taking about thirty five percent of the existing product line. With appropriate advertising and promotion the new product should take away market share from competitors. Exhibit 8 directly supports this recommendation and shows that even though unit sales are less than mainstream sales, the operating profit and the operating profits as % of sales is higher. In both year one and year two, this niche market is profitable and growing. It is here that Paramount should focus its efforts on product introduction and positioning for the Clean Edge Razor.

Execute NICHE market positioning strategy Randall should use the niche market positioning concept. As the case points out, both niche and mainstream strategy will help Paramount to raise its market share in superpremium non disposable razor segment. But the niche strategy will enables Clean Edge Razor to contribute profit and at the same time, limit the effect of cannibalizing Paramounts existing products. Two reasons Randall should use the strategy are presented below: Supporting analysis, from Exhibit 7 we see the total estimated profit generated by mainstream strategy in Year 1 & 2 is $64 million, bigger than $46.6 million generated by niche market strategy. However, because Paramount only have the budget totalled $48.3 million on advertising and promotions in 2010, it means if Randall requires $42 million to use mainstream strategy to promote Clean Edge Razor, the expense will account for 87% of the companys annually marketing budget, which will definitely squeeze the budget of Paramounts other cash cow products, and thus cause the tremendously potential risks on other products competitiveness in Moderate and value market. Deducting the cannibalization effect, the profit come from Paramounts 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 Paramounts other products to Clean Edge Razor. Unfortunately, the case does not provide the sales volume and margin profit of Paramounts other products, therefore cannot 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. To minimize the cannibalization effect and attract more new-user under niche market strategy scenario, Randall should use Clean Edge by Paramount. The branding concept launched with this product will make Paramount a house hold name and give the necessary return on investment for Paramount. 1) Launch CLEAN EDGE as a NICHE revolutionary technology product to be a market leader. This will enable Paramount to as a technology and revolutionary leader in non disposable razor segment. The Super-Premium category will enable Paramount for higher pricing. This will not cannibalize its existing products. Based on quantitative analysis from Appendix D and Appendix E, I see that he profit before taxes for niche positioning is higher than mainstream positioning. Also, when I modified the numbers to match unit volume sales across niche and mainstream category, I noticed losses in Year 1. This is the most important learning and observation from forecasted numbers that suggests that Paramount should launch in niche positioning. 2) Add tagline such as Electric Razors Really Are Better (for the Environment) 3) Create a new strategy to market CLEAN EDGE as a revolutionary technology product and gain market share in Super-Premium segment. The marketing budget allocated should be carefully planned so that it will give the necessary boost in sales for the new product and also retain enough marketing dollars for other product categories in the company.

4) Create a new branding strategy that will give consumers a household name called Paramount with technology superior product and continue to retain and gain market share with Maintenance users. 5) Develop a new incentive and rewards program to target Maintenance users and gain market share with this user segment. 6) Establish contracts with the new retail channels such as mass merchandisers and club stores so that Paramount non disposable razors can be placed at the right eye level for the users to choose Paramount products.

Conclusion
On the basis of profit and loss, we conclude that it would be highly beneficial for Paramount to launch the product in the Niche market. The advertisement and promotion costs are justified at $15m and $16m for year 1 and year 2 respectively. This way the overall budget of $48.3mis also not exceeded. Also, we propose to name the product as Clean Edge by Paramount.

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