Case Analysis Clean Edge Razor

Paramount Health and Beauty Company, a leading name in consumer products including Health,
Cleaning, Beauty and Grooming is all set to launch a new non disposable razor with cutting edge
technology to improve0 men’s shaving experience. The design provides superior performance by
the use of a vibrating technology. The new product is to be launched in the Super premium
segment, which is the first product in this segment by Paramount. The issue at hand is the
decision regarding this product’s positioning which could be done either in the highly involved
Niche market or in the main stream aesthetic shaver market.

1. Overview

1. The US Razor market has several categories namely non-disposable razors, refill cartridges,
disposable razors, shaving cream and depilatories.

2. In the period 2007 to 2010, the growth of non-disposable razors is approximately 5% and that
for refill cartridges 2% per annum.

3. Paramount was a global consumer products giant with $13 billion in sales. Its portfolio includes
health, cleaning, beauty and grooming products.

4. Paramount’s non-disposable razor and refill cartridges division contributed $170m revenue
with a gross profit of $92m and an operating profit of $26m in 2009.

5. Paramount currently offers two products, Paramount Avail and Pro in this category and the
new product clean edge which is to be introduced.

2. Market Trends

1. There have been numerous product introductions in non-disposable razors and refill cartridges
category (22 new SKUs were introduced from 2008-2009).

2. Purchase volumes are not high, but the margins tend to be considerably higher compared to
other personal care products.

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 3. Distribution also started to shift outside the traditional food and drug stores with the former
being the main distributors followed by mass merchandisers.

4. There was also a shift toward men’s grooming with more media attention and less stigma
associated with it.

5. Branding

Paramount has two options for naming the product: “Paramount Clean Edge” & “Clean Edge by
Paramount”. The advantage of Paramount Clean Edge is that it is consistent with the overall
corporate strategy of building the Paramount brand name equity. While the Clean Edge by
Paramount allows the product to stand apart from the current lines with the emphasis on the “Clean
Edge” name.

Launching this new product in either mainstream or niche will lead to cannibalization of the existing
Pro and Avail products. Since the cost of cannibalization is really high i.e. 60% for mainstream and
35% for niche positioning, so “Clean Edge by Paramount” is a better naming strategy for better
differentiation of the product manufactured by Paramount. This will also help in lowering down the
cannibalization rate.