The expenses of advertising increased a lot because of the need to promote new benefits from advances in razor technologies. Changes in retail channel distribution have also been noted in the category. Male-specific grooming products seemed to be a bright spot in the industry from 2007 to 2010 and the segment saw much more growth because shaving became more than just shaving – it started to include body spray, fragranced shower gel and skincare lines proliferated. Channel distribution for the razor category has become increasingly important through the Exhibit 4. It has been quite demand for male-grooming products.
Competitive Position: Paramount has been a global consumer products giant with over $13 billion in worldwide sales and $7 billion in gross profits for 2009 since it entered the nondisposable razor market in 1962. Paramount established itself as unit-volume market-leader in 2009 based on nondisposable razor sales. The nondisposable razor category market is entering a new phase with technology products and new competitors entering the market, it’s a threat to Paramount. Strategic Life Cycle Challenges: Consumers are becoming more experienced and always looking for new technologies.
Namely, they want to spend more money and buy products which are satisfy the necessity of a smooth shaving experience. In other words, through the Exhibit 1, there is a category of consumers called “Maintenance users” that made up 33% of consumers; they were not interested in buying products with superior technology. These consumers cannot be ignored. So, to the challenges, it should provide a product with good cost x benefit but with a short life cycle for the 33% called “Maintenance users” keeping these users buying their products and interested in their brands. And then, launch the Clean Edge product with a longer life cycle. Meanwhile, making this product profitable creating a high quality from the consumer when they buy cartridges for refill.
2. The nondisposable razor market is segmented to three parts base on price and quality which are: value, moderate and super-premium. From 2009, consumers purchased razors and replacement cartridges more frequently and they were distinct to “Maintenance Shavers”, “Social/Emotional” and Aesthetic”. The “Maintenance Shavers” who almost not interested in the product category. The “Social/Emotional” shavers were motivated by the overall shaving experience and “Aesthetic” shavers were interested in cosmetic results.
3. Niche| Mainstream| Pros| Cons| Pros| Cons| Increase profits and market share| Increased marketing budget costs to launch the new product and provide incentives to “Maintenance users”| Increase profits| Potentially could result in elimination of Paramount Pro| Existing products can be retained and used to target “Maintenance users”| | Increase market share| Paramount will not be focusing “Maintenance users” with new product line| Branding strategy can be arefully planned and deployed for maximum success| | Help prevent loyal Paramount customers form being wooed away to more innovative brands| Opportunity to utilize existing products and gain increased sales| Through the pros and cons, I will recommend the Clean Edge for a niche strategy. Because Rosenberg said that they will siphon off consumers if he considered a mainstream positioning strategy. A niche strategy will make more sense.
4. | Niche| Mainstream| Planned capacity Razor (Year 1)| 1. 0| 3. 3| (Year 2)| 1. 5| 4. 0| Razor: Production per unit cost| $ 5. 00| $ 4. 74| Razor: Manufacturer price| $ 9. 09| $ 7. 83| Razor: Suggested price| $ 12. 99| $ 11. 19| Revenue (Year 1)| 9. 09| 25. 84| (Year 2)| 13. 64| 31. 32| Production Costs (Year 1)| 5| 15. 64| (Year 2)| 7. 5| 18. 96| | Planned capacity Cartridge (Year 1)| 4. 0| 9. 9| (Year 2)| 10. 0| 21. 9| Average Production unit cost| $ 2. 43| $ 2. 24|
Manufacturer price| $ 7. 35| $ 6. 22| Suggested price| $ 10. 50| $ 8. 89| Revenue (Year 1)| 29. 4| 61. 58| (Year 2)| 73. 5| 136. 22| Production Costs (Year 1)| 9. 72| 22. 18| (Year 2)| 24. 3| 49. 06| | Capacity costs (Year 1)| $ 0. 61| $ 1. 71| (Year 2)| $ 0. 87| $ 2. 45| Advertising (Year 1)| $ 7| $ 19| (Year 2)| $ 7| $ 17| Consumer (Year 1)| $ 6| $ 17| (Year 2)| $ 6| $ 14| Trade promotions (Year 1)| $ 2| $ 6| Year 2)| $ 3| $ 8| Subtotal of Other Costs (Year 1)| 15. 61| 43. 71| (Year 2)| 16. 87| 41. 45| Total Costs (Year 1)| 30. 33| 81. 53| (Year 2)| 48. 67| 109. 47| Trough the chat above which compares the revenues and costs, it’s easily to find out the Niche is the better one. About the marketing budget, through the comparing, the advertising and promotion of Clean Edge Razor is $15m and $ 16m, and we can reduce the budget for existing products of advertising.
Because the consumers become more sophisticated and the research shows that these will be the mature phrase of the product life cycle in the future. I consider that if it launch the product to the Niche market, it will bring a huge profit to Paramount. So, I want to make the brand name called The Clean Edge Razor by Paramount.
By the time, consumers really purchased razors and replacement cartridges more frequently than they than in any year previously. It’s no doubt that the Clean Edge has huge potential in the super-premium segment.
It should keep developing by the Niche strategy and this will bring the biggest benefits and profit to the company and beat the other competitors.
- S. E. Smith, “One Tool, Many Uses: Single Edge Razor”, (Aug 02, 2012), http://www. networx. com/article/one-tool-many-uses-single-edge-razor
- Jeremy Pingul, “Paramount Health & Beauty: The Clean Edge Razor”, (2012, January), http://prezi. com/pjd6evuzfndc/paramount-health-beauty-the-clean-edge-razor/