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Clean Edge Razor Case Analysis

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1. What changes are occurring in the nondisposable razor category? Assess Paramount's competitive position. What are the strategic life cycle challenges for Paramount's current products as well as for Clean Edge?

        

        

The main strategic life cycle challenge would have to be the continual increased production of new products by competitors. Every time a new product is released there is something better about it such as newer technology and benefits that have never been offered. These constant new innovations may pose a threat for Paramount’s products, since they are not so ‘bleeding edge’ (no new products for past 5 years). For Clean Edge, perhaps the Naiv may offer a similar threat

Competitive position: Paramount has been growing share each year (others haven’t), spends a lot less in advertising (use %s - but this may be justified by constant innovative products from others, while Paramount has been stale for 5 years)

2. How is the nondisposable razor market segmented? Examine consumer behavior for nondisposable razors.

price/quality: value, moderate, super-premium

        consumer behavior (behavioral segmentation): don’t care, aesthetic & emotional shavers (behavior change -> traditionally first group but trend is for latter two to become the norm - use Tabels and exhibit 1 for numbers)

3. What are the arguments for launching Clean Edge as (a) a niche product and (b) a mainstream brand? Which would you recommend and what are the strategic implications of your recommendation?

        Niche - more profit per dollar, much less marketing expenses (following Paramount pattern), profit after cannibalization much higher (if cannibalization is correct), Paramount does not have niche products yet (territory marking), easier to shift to mainstream later, doesn’t cannibalize current products as much, more consist positioning with product’s marketing message as the current peak in technology and innovation, fits trend (males are invested in searching and spending for the best solutions), more consistent with the launch price (just a little over the competitors to make people think ‘hmm just a little bit more for the latest innovation, might be worth it’), rapid growth market where competitors are trying to gain profit from - use Exhibit 6 to prove this and previous point -, although both options might make current products (especially Pro) seem outdated, niche might reduce that perception (if positioned in mainstream, it will send out a clear message that Pro’s time is gone - do we really want to do that? It’s not declining, yet at least) BUT will sell less. HOWEVER this option might mitigate risks | Strategic implications: Profitability (and other stuff) must be carefully and closely assessed throughout time to check if transition to mainstream market must be done sooner than expected

        Mainstream - more profit (before cannibalization; if cannibalization estimates are wrong final profit is indeed bigger),  can successfully replace current products (respective life cycles’ peak may be soon gone - quote case on this and use Exhibit 5 to prove it with share fluctuations) and be an absolute leader in its segment (not nearly as much competition) BUT requires so much marketing budget (leaves almost nothing for other products which are the current cash cows - more risky possibly)

WHY CHOOSE NICHE MARKET?

The niche market will complement their other products and avoid cannibalism of the existing products.

It requires less immediate expenditures in areas of promotions and advertisements expenditures.

Since Clean Edge is the first product that Paramount has in the niche market, Paramount will have market shares in both mainstream and niche positions which will diversify its income from multiple sources.

BUT: There will be fewer sales, and suggested price will be a dollar higher than if it’s in the mainstream

WHY CHOOSE MAINSTREAM MARKET?

Mainstream market is projected to sell three times more units as niche strategy in the first year.

Since the current premium brand, Paramount Pro, is at its mature phase, the perfect replacement is Clean Edge to retain loyal customer

BUT: It requires more advertising expenditures to promote the product in order to set it apart from its competitors. Cannibalism and elimination of the existing products in the mainstream will be occur.

        

4. Based on your suggested positioning strategy, what brand name and marketing budget allocations would you advise?

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