Clean Edge Razor Splitting Hairs in Product Positioning

MBA8145-Marketing Management Alpharetta, Summer-2011 GSU

Individual a!e Anal"!i!

Situation at Paramount
#aram$unt had e!ta%li!hed it!el& a! a gl$%al '$n!umer pr$du't! giant (ith $ver )1* %illi$n in ($rld(ide !ale! and )+ %illi$n in gr$!! pr$&it! &$r 200, !in'e it-! entr" in the market in 1,.2/ In 200,, #aram$unt had e!ta%li!hed it!el& a! unit-v$lume market leader in 200, %a!ed $n n$n di!p$!a%le ra0$r pr$du't !ale!/ 1he 2$n di!p$!a%le ra0$r 'ateg$r" market i! entering a ne( pha!e (ith te'hn$l$g" pr$du't! and ne( entrant! p$!ing a threat t$ 'apture #aram$unt-! Market Share/ 3r$m the target market p$!iti$ning per!pe'tive the 'hallenge! 'an %e %r$ken d$(n a! %el$(4

Competition: #aram$unt-! main '$mpetit$r in n$n di!p$!a%le ra0$r 'ateg$r" in 2010 are #rin'e, B56, 7adian'e health and $ther !u%!tituted pr$du't!/ #rin'e !$ld n$n di!p$!a%le ra0$r! in !uper-premium 'ateg$r"/ #rin'e had gained 81 !p$t in term! $& retail d$llar !ale! up until 200,/ 2$ta%le &eature $& B56 an$ther '$mpetit$r (a! that the" entered the market in thi! n$n di!p$!a%le ra0$r 'ateg$r" $nl" in 1,85/ 9$(ever, the" managed t$ rea'h 8* in market !hare and unit-v$lume! %" !uperi$r te'hn$l$g" and relea!ing !uperpremium pr$du't!/ 2e( entrant! (ere '$ming t$ market (ith !uper premium pr$du't!, te'hn$l$g" and greater adverti!ing d$llar! t$ gain market !hare/ #aram$unt-! 'lean edge !h$uld '$mpete (ith 7adian'e 2aiv in te!t market!/ 2aiv had alread" a':uired 1*; market !hare in te!t market!/ 7adian'e and #aram$unt (ere &ier'e '$mpetit$r! and #aram$unt had t$ laun'h a ne( te'hn$l$g" in Super #remium !egment t$ regain market !hare and '$ntinue t$ e<i!t a! a gl$%al leader in thi! 'ateg$r"/

Product Positioning: =hile #aram$unt had e!ta%li!hed a! a unit-v$lume leader in 200,, the n$n di!p$!a%le ra0$r market had a !igni&i'ant gr$(th $nl" in Super-#remium !egment/ 1he rate $& in'rea!e in t$tal media adverti!ing e<penditure! in thi! 'ateg$r" i! greater than the rate $& in'rea!e in retail market !ale! a! !h$(n in Appendi< A/ Main rea!$n &$r thi! i! numer$u! pr$du't inn$vati$n! in Super-#remium !egment and advan'e! in te'hn$l$g"/ #aram$unt had devel$ped a ne( pr$du't in thi! 'ateg$r" 'alled > lean ?dge@ %a!ed $n !uperi$r te'hn$l$g" and 5 %lade de!ign!/ 1hi! ne( pr$du't ($uld give #aram$unt mu'h needed %$$!t t$ p$!iti$n it!el& a! a leader in Super-premium !egment and te'hn$l$g" giant &$r n$n di!p$!a%le 'ateg$r"/ I& #aram$unt de'ide! t$ p$!iti$n and market > lean ?dge@ in main!tream p$!iti$ning, then it (ill have t$ 'anni%ali0e e<i!ting

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#aram$unt #r$ and #aram$unt Avail pr$du't!/ 1hi! '$uld p$tentiall" redu'e l$!! $& revenue and eliminate the!e pr$du't! &r$m #aram$unt $&&ering re!ulting in l$!!e! due t$ > lean ?dge@/ #aram$unt i! 'urrentl" n$t !ure a! t$ (here t$ pla'e thi! pr$du't, >ni'he@ $r >main!tream@ p$!iti$ning/

Price: Ba!ed $n the data given in thi! 'a!e and pri'e !et %" 7andall and hi! team &$r lean ?dge in either ni'he $r main!tream p$!iti$ning, I d$ n$t !ee an" 'hallenge &$r #aram$unt/ 1he rea!$n i! that the" are p$!iti$ning thi! pr$du't in Super-premium !egment and !ugge!ted retail unit pri'e i! )12/,, &$r 7a0$r and )10/50 &$r 'artridge in ni'he p$!iti$ning, )11/1, &$r 7a0$r and )8/8, &$r 'artridge in main!tream p$!iti$ning/ 1hi! pri'e i! l$(er than 'urrent pri'e in the !ame !egment a'r$!! #aram$unt-! '$mpetit$r and even le!!er (hen '$mpared t$ $gent #lu!/

Place: I d$n-t !ee an" i!!ue! (ith

$verage, A!!$rtment, Invent$r", 1ran!p$rt $r

A$'ati$n! in US market/ 9$(ever, di!tri%uti$n !tarted t$ !hi&t $ut!ide traditi$nal &$$d and Brug St$re!/ In 2000, &$$d and drug !t$re! !$ld $ver 50; $& all ra0$r!, %ut %" 200, it (a! $nl" 42;/ S$, h$( !h$uld #aram$unt leverage thi! !hi&t and gain advantage! t$ in'rea!e it! !ale! via retail 'hannel!C

Promotion: #aram$unt a! a '$rp$rati$n had de'ided t$ 'ur% e<'e!!ive marketing e<pen!e! in all pr$du't 'ateg$rie!/ =ith the intr$du'ti$n $& > lean ?dge@ a! a ne( pr$du't, 7andall and hi! team ha! t$ '$nvin'e e<e'utive leader!hip t$ all$'ate ne'e!!ar" d$llar! needed t$ e!ta%li!h a marketing 'ampaign that (ill p$!iti$n > lean ?dge@ a! a rev$luti$nar" Super premium and te'hn$l$gi'all" advan'e 7a0$r int$ the market/ 1he marketing 'ampaign &$r > lean ?dge@ ha! t$ %e 'are&ull" planned in !u'h a (a" that the me!!age rea'he! the target market (ith great !u''e!! and al!$ !ati!&" the e<e'utive team/

Branding: #aram$unt e<e'utive! have di&&erent $pini$n! (hen it '$me! t$ %randing thi! rev$luti$nar" > lean ?dge@ pr$du't/ 9$(ever, 7andall and #aram$unt ha! a 'hallenge t$ name '$me up (ith a name that pr$vide! the ne'e!!ar" %$$!t &$r > lean ?dge@ %randing, and n$t 'anni%ali0e #aram$unt #r$ and Avail pr$du't!/

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#aram$unt !tudie! !h$(ed that '$n!umer! pur'ha!ed ra0$r! and repla'ement 'artridge! m$re &re:uentl" than ever %e&$re in the hi!t$r" $& 2$n di!p$!a%le ra0$r!/ Al!$, #aram$unt-! '$n!umer re!ear'h indi'ated that $ne 'ateg$r" $& '$n!umer! 'alled >Maintenan'e u!er!@ that made up **; $& '$n!umer! (ere n$t intere!ted in Superi$r te'hn$l$g"/ A ver" imp$rtant &inding that 'ann$t %e ign$red &$r #aram$unt/ Ba!ed $n the data in the 'a!e and m" anal"!i!, %el$( are m" alternative! that 'an %e u!ed t$ devel$p a market !trateg" that (ill p$!iti$n #aram$unt a! a market leader in 2$n Bi!p$!a%le ra0$r 'ateg$r" (ith > lean ?dge@ pr$du't laun'h4
1) Aaun'h > lean ?dge@ a! a >main!tream@ te'hn$l$g" pr$du't t$ %e a market leader/ 2) Aaun'h > lean ?dge@ a! a >ni'he@ rev$luti$nar" te'hn$l$g" pr$du't t$ %e a market leader/ 3)

reate a ne( !trateg" t$ market > lean ?dge@ a! a rev$luti$nar" te'hn$l$g" pr$du't and gain market !hare in Super-#remium !egment/

4D

reate a ne( %randing !trateg" that (ill give '$n!umer! a h$u!eh$ld name 'alled >#aram$unt@ (ith te'hn$l$g" !uperi$r pr$du't and '$ntinue t$ retain and gain market !hare (ith >Maintenan'e u!er!@/

5) Bevel$p a ne( in'entive and re(ard! pr$gram t$ target >Maintenan'e u!er!@ and gain

market !hare (ith thi! u!er !egment/

6) ?!ta%li!h '$ntra't! (ith the ne( retail 'hannel! !u'h a! ma!! mer'handi!er! and 'lu% !t$re!

!$ that #aram$unt n$n di!p$!a%le ra0$r! 'an %e pla'ed at the right e"e level &$r the u!er! t$ 'h$$!e #aram$unt pr$du't!/

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Analysis of Alternative Solutions

1he evaluati$n $& alternative !$luti$n! (a! %a!ed $n the &$ll$(ing 'riteria4

7e!ear'h and anal"!i! !tudie! %" #aram$unt/ Marketing and !ale! data a'r$!! #aram$unt and it! '$mpetit$r!/ 6e" #r$du't di&&eren'e! and !imilaritie! %et(een #aram$unt it! '$mpetit$r! in n$n di!p$!a%le ra0$r 'ateg$r"/

3ea!i%ilit" $& implementing an alternative !$luti$n !ugge!ted/ $!t! inv$lved in implementing an alternative !$luti$n/ $!t! !u'h a! manu&a'turing, pr$du'ti$n, adverti!ing, marketing and an" 'anni%ali0ati$n that '$uld re!ult (ith marketing !trateg" ad$pted %" #aram$unt/

Bene&it! #aram$unt (ill re'eive %" implementing an alternative !$luti$n/ Bene&it! !u'h a! in'rea!ed market !hare (ith target 'u!t$mer! re!ulting in in'rea!ed pr$&ita%ilit", enhan'ed %rand name e:uit" &$r #aram$unt and utili0ing #aram$unt e<i!ting pr$du't! t$ gain market !hare am$ng >Maintenan'e u!er!@

#lea!e re&er t$
1) Appendix B &$r evaluati$n $& a%$ve alternative! 2) Appendix C &$r :uantitative anal"!i! $& 3inan'ial 3$re'a!t! %a!ed $n ?<hi%it + 3) Appending D &$r :uantitative anal"!i! $& 3inan'ial 3$re'a!t! %a!ed $n ?<hi%it +, %ut

identi'al unit v$lume! %et(een >2i'he #$!iti$ning@ and >Main!tream #$!iti$ning@

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Recommendation
Ba!ed $n m" anal"!i!, I re'$mmend a !trateg" that (ill laun'h the ne( pr$du't (ith tremend$u! !u''e!! t$ rea'h 81 p$!iti$n in term! $& pr$du't !ale!, revenue and $perating pr$&it! &$r #aram$unt/ 1hi! !trateg" (ill al!$ retain #aram$unt #r$ 5 Avail e<i!ting pr$du't! and g$ a&ter >Maintenan'e u!er!@ that make up **; $& '$n!umer!/ 1he %randing '$n'ept laun'hed (ith thi! pr$du't (ill make #aram$unt a h$u!e h$ld name and give the ne'e!!ar" return $n inve!tment &$r #aram$unt/

1) Aaun'h > lean ?dge@ a! a >ni'he@ rev$luti$nar" te'hn$l$g" pr$du't t$ %e a market leader/

1hi! (ill ena%le #aram$unt t$ a! a te'hn$l$g" and rev$luti$nar" leader in n$n di!p$!a%le ra0$r !egment/ 1he Super-#remium 'ateg$r" (ill ena%le #aram$unt &$r higher pri'ing/ 1hi! (ill n$t 'anni%ali0e it-! e<i!ting pr$du't!/ Ba!ed $n :uantitative anal"!i! &r$m Appendi< B and Appendi< ?, I !ee that he pr$&it %e&$re ta<e! &$r ni'he p$!iti$ning i! higher than main!tream p$!iti$ning/ Al!$, (hen I m$di&ied the num%er! t$ mat'h unit v$lume !ale! a'r$!! ni'he and main!tream 'ateg$r", I n$ti'ed l$!!e! in Eear 1/ 1hi! i! the m$!t imp$rtant learning and $%!ervati$n &r$m &$re'a!ted num%er! that !ugge!t! that #aram$unt !h$uld laun'h in ni'he p$!iti$ning/
2)

reate a ne( !trateg" t$ market > lean ?dge@ a! a rev$luti$nar" te'hn$l$g" pr$du't and gain market !hare in Super-#remium !egment/ 1he marketing %udget all$'ated !h$uld %e 'are&ull" planned !$ that it (ill give the ne'e!!ar" %$$!t in !ale! &$r the ne( pr$du't and al!$ retain en$ugh marketing d$llar! &$r $ther pr$du't 'ateg$rie! in the '$mpan"/

*D

reate a ne( %randing !trateg" that (ill give '$n!umer! a h$u!eh$ld name 'alled >#aram$unt@ (ith te'hn$l$g" !uperi$r pr$du't and '$ntinue t$ retain and gain market !hare (ith >Maintenan'e u!er!@/

4D Bevel$p a ne( in'entive and re(ard! pr$gram t$ target >Maintenan'e u!er!@ and gain market !hare (ith thi! u!er !egment/

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5D ?!ta%li!h '$ntra't! (ith the ne( retail 'hannel! !u'h a! ma!! mer'handi!er! and 'lu% !t$re! !$ that #aram$unt n$n di!p$!a%le ra0$r! 'an %e pla'ed at the right e"e level &$r the u!er! t$ 'h$$!e #aram$unt pr$du't!/

APPENDIX A Non Disposa le Razor !edia Ad"ertising ## Increase Rate B$ Compan$ %rom &''( ) &'*' Compan$
Benet 5 6lein #rin'e #aram$unt Simp!$n!

Increase Rate +,4/54; 5/04; 5/+.; 5**/**;

Non Disposa le Razor Sales Increase Rate $ Retail C.annel %rom &''( ) &'*' Compan$
3$$d St$re! Brug!t$re! Ma!! mer'handi!er! lu% St$re! Fther

Increase Rate +,1; 2; 1; 1; 0;

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APPENDIX B) E"aluating Alternati"e Solutions

1) Aaun'h > lean ?dge@ a! a >main!tream@ te'hn$l$g" pr$du't t$ %e a market leader/

PR/S:

In'rea!ed pr$&it! and market !hare/ Fpp$rtunit" &$r higher pr$&it margin (ith ne( >premium@ pr$du't laun'hed a'r$!! larger per'entage $& u!er !egment/

C/NS: #$tentiall" '$uld re!ult in eliminati$n $& #aram$unt #r$ and Avail pr$du't! &r$m param$unt pr$du't $&&ering/ Fpp$rtunit" t$ utili0e e<i!ting pr$du't! and gain in'rea!ed !ale! %" re(ard! and in'entive! i! l$!t/ #aram$unt (ill n$t %e &$'u!ing >Maintenan'e u!er!@ (ith ne( pr$du't line!/ 2D Aaun'h > lean ?dge@ a! a >ni'he@ rev$luti$nar" te'hn$l$g" pr$du't t$ %e a market leader/ PR/S:

In'rea!ed pr$&it! and market !hare/ Fpp$rtunit" &$r higher pr$&it margin (ith ne( >premium@ pr$du't laun'hed (ith Super-premium !egment/ ?<i!ting pr$du't! 'an %e retained and u!ed t$ target >Maintenan'e u!er!@ Branding !trateg" 'an %e 'are&ull" planned and depl$"ed &$r ma<imum !u''e!! and h$u!eh$ld name re'$gniti$n/

C/NS: In'rea!ed marketing %udget '$!t! t$ laun'h the ne( pr$du't and pr$vide in'entive! t$ >Maintenan'e u!er!@

3)

reate a ne( !trateg" t$ market > lean ?dge@ a! a rev$luti$nar" te'hn$l$g" pr$du't and gain market !hare in Super-#remium !egment/ PR/S:

In'rea!ed pr$&it! and market !hare/ $n!umer! (ill 'hange #aram$unt image and (ill %e e!ta%li!hed a! a te'hn$l$g" leader/ Fpp$rtunit" t$ enter in Super-#remium !egment (ith %ig %ang/

C/NS: In'rea!ed marketing %udget '$!t! t$ laun'h the ne( pr$du't and pr$vide in'entive! t$ >Maintenan'e u!er!@

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4)

reate a ne( %randing !trateg" that (ill give '$n!umer! a h$u!eh$ld name 'alled >#aram$unt lean ?dge@ (ith te'hn$l$g" !uperi$r pr$du't and '$ntinue t$ retain and gain market !hare (ith >Maintenan'e u!er!@/ PR/S: #r$vide the right %rand name and image t$ #aram$unt/ #aram$unt name (ill n$( %e part $& all $& it! pr$du't!// C/NS: #aram$unt ha! t$ maintain the Gualit" $& all the!e pr$du't! !in'e n$( all are a!!$'iated (ith the '$mpan" name/ An" deteri$rati$n in the :ualit" '$uld p$tentiall" hurt !ale! $& $ther pr$du't!/

5) Bevel$p a ne( in'entive and re(ard! pr$gram t$ target >Maintenan'e u!er!@ and gain

market !hare (ith thi! u!er !egment/ PR/S: Gain greater market !hare and !ale! revenue utili0ing e<i!ting pr$du't!/ >Maintenan'e u!er!@ are given imp$rtan'e and #aram$unt i! n$t l$$!ing it-! e<i!ting pr$du't// C/NS: #aram$unt (ill have t$ '$ntinue t$ rev$luti$ni0e #aram$unt #r$ and Avail (ith ne( intr$du'ti$n! t$ '$mpete in thi! !egment and target >Maintenan'e u!er!@/

.D ?!ta%li!h '$ntra't! (ith the ne( retail 'hannel! !u'h a! ma!! mer'handi!er! and 'lu% !t$re! !$ that #aram$unt n$n di!p$!a%le ra0$r! 'an %e pla'ed at the right e"e level &$r the u!er! t$ 'h$$!e #aram$unt pr$du't!/ PR/S: Gain appr$priate pr$du't pla'ement that '$uld p$tentiall" in'rea!e !ale! a'r$!! an" '$n!umer l$$king at 2$n di!p$!a%le ra0$r!/ Utili0e the ne( retail 'hannel! in targeting u!er! due t$ re'ent !hi&t! in di!tri%uti$n/ / C/NS: In'rea!ed '$!t! t$ e!ta%li!h '$ntra't! (ith ne( retail 'hannel!/

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D%D%D

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DD%D

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