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Clean Edge Razor: Case study Analysis

Arindam Sarma Gaurav Aggarwal B13015 B13024


This analysis help us to understand the positioning and introduction strategy of a technologically advance product in the company portfolio

Yaqoot Muddasar Khan B13062

BM SEC-A

Situation analysis of Grooming market


I. Macro-environment Analysis
1. Technological: Product innovations like 5-blade, vibrating blade, glide strips, lather bar, low resistance blade coating, Increasing use of Media in Advertising, etc. 2. Demographic: Better-educated, more white-collared, more professional population; growing middle class 3. Economic: Emerging economy, increasing disposable income

II.

Micro-environment analysis
1. Company: Paramount company; non-disposable razor market 2. Substitutes: Electric shavers, depilatory creams, waxing, laser hair removal 3. Competition: Prince: Market leader, Super-premium segment Benet & Klein: Advanced offering New entrants: Advanced offerings 4. Marketing intermediaries: Distribution outlets, Food Stores, Drug Stores, Retail channels 5. Customer: Consumer markets

III.

Product Mix
1. Market: Non-disposable razors, Refill cartridges, Disposable Razors, Shaving Cream, Depilatories 2. Paramount: Paramount Pro (Moderate segment); Paramount Avail (Value segment)

IV.

New Product opportunities


Mens body spray, fragranced power gel, skin care products, etc.

V.

Segmentation
1. Demographic Segmentation Based on Mens products, Womens products, Price of products- Super premium, Moderate, Value Based on Age: Young & Old customers 2. Benefit Segmentation i. Quality: Super premium, Moderate, Value ii. Behavior Segmentation: Involved customers include Social/Emotional shavers, Aesthetic shavers Uninvolved customers include Maintenance shavers.

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Strategy Formulation using Porters Five Forces Analysis


1. Threat of New Entrants: High Simpsons and Radiance are planning advanced technology product launches at around the same time as Paramounts Clean Edge. The pulsing technology is remarkably similar to Clean Edges vibrating technology. First mover will benefit from clear positioning, distribution & volume advantages. 2. Threat of Substitute Products: Low As mentioned in Micro-environment analysis, electric shavers generally appealed to older customer looking for easier maneuvering & less skin irritation. So it has low chances of appealing to super-premium segment. 3. The Bargaining Power of Buyers: Moderate New entrants are priced at $11.8, $10.99 compared to Paramounts razors priced at $9.50 for moderate segment & Clean Edges super-premium razor at $12.99.

Positioning Recommmendation
The Paramount ClearEdge product is positioned can be positioned either as a) Niche Product focusing on high involvement, fastidious groomers looking for a superior shaving experience or b) Mainstream Product to give a broad advantage of a satisfied shaving experience at a very affordable price. The advantages of going with the Niche strategy is that will it complement the companys existing product portfolio. Also, this segment has one of the highest profits in the second year at $ 30.08ml. The disadvantage is that as Pro is in the maturity stage and both Pro and Avail have hardly had much innovations, the sales of these two products will go down drastically. The pros of going with the Mainstream Product is that it will help counter any customers of Pro going away to rival products. Pro is in the maturity stage so positioning ClearEdge as an innovative product in this section will help Paramount retain the sales. The Disadvantages is that it will lead to the dilution of the other existing brands and eventually lead to the cannibalization of them. ClearEdge can also be used to target the Super-Premium Brand as a revolutionary technology product. But these will lead to more budgeting and help gain a very small market segment.
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The product can also be targeted towards the maintenance users and help retain Paramounts existing consumers. But this will require innovation in the Avail and Pro products and might also lead to cannibalization of the product. Niche segment Consumers Year 1 Year 2 7.83 3.3 25.839 6.22 9.9 61.578 87.417 4.74 15.642 2.24 22.176 1.71 19 17 6 81.528 5.889 7 23.4 208 60 29.2 (23.31) 7.83 4 31.32 6.22 21.9 136.218 167.538 4.74 18.96 2.24 49.056 2.45 17 14 8 109.466 58.072 35 21.4 2185 60 27.99 30.08

Parameters Cost of Manufacturing Planned Capacity, Razor million Sales Cost of Manufacturing Cartridge Planned Capacity, million Sales Total Unit cost Cost of Production Unit cost Cartridge Cost of Production Razor Cost of Capacity, million Advertising Cost, million Consumer Promotion, million Trade Promotion, million Total Cost Operating profit Profit (%sales) Market Share (%) Size Cannibalization % Cost of Cannibalization Profit after Cannibalization

Mainstream Consumers Year 1 9.09 1 9.09 7.35 4 29.4 38.49 5 5 2.413 9.72 0.61 7 6 2 30.33 8.16 21 23.4 208 35 17.04 (8.88) Year 2 9.09 1.5 13.635 7.35 10 73.5 87.135 5 7.5 2.43 24.3 0.87 7 6 3 48.67 38.465 44 21.4 218 35 16.33 22.14

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When we delve into analyzing the profit after cannibalization figures, $ million, Niche Segment profit for 2 years is 13.26 and for the mainstream segment is 6.77% only. Also considering the further expenses which is required to done for the mainstream segment in terms of advertising spend, promotion costs etc. and if these costs further move towards north it will be hard to reach break-even. So it is beneficial to position the product to the niche segment.

Branding
The branding option that should be considered by Paramount is: Paramount Clear Edge. As although the product is a technological breakthrough but considering the facts provided like the concerns of the steering committee to reduce advertising spend etc. Using this brand name will give company head start in terms of recognition and acceptability by consumers, as the consumers are already connected with the Paramount brand ans clear edge will work as a product to take there shaving experience to a different level. Due to this leverage in strategy, the advertising costs will be lowered as the company will be saved from marketing an entirely new brand. Through this method, the Paramount brand is also strengthened further. Hence Paramount ClearEdge will have the maximum positive impact on the minds of the consumers and lead to maximum number of sales.

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