Razor Edge Case

There have been many changes in the recent history of non-disposable razors. These changes for Paramount to deal with include competition, new products, and a change in customer perception as far as grooming goes. While these changes include challenges it also provides opportunity.

Paramount has two steady competitors being Prince and Benet Klein. Two new competitors have emerged over the last few years being Simpsons and Radiance. Prince has been traditionally the industry leader in non-disposable razors. They also are in the deodorant and skin care market.They are more than likely Paramount’s chief competitor in the non-disposable razor industry. They have not had great advances as far as technology or new products in this industry.

BK (Benet Klein) has been in this market since 1984. While they have not been in the market as long they have introduced advancements in the field. They are probably more positioned in the higher end of this market. Tempest has introduced a new pivot for razors which is similar to the angle that BK has taken in respect to razor enhancement. Radiance is also new and has a new pulsing razor that is similar to Paramount’s new product.Customer perception has also changed recently.

As stated in the article there is less of a stigma attached with being very well groomed. This would indicate a potential growth in the super premium market segment. Paramount has not been in the super premium segment but is now considering to market to this segment with their Clean Edge product. The competition in this area would more than likely include Prince but they appear to be potentially week in this area as their main product is on the downside of it’s life cycle. Their newer product does not have a description in this article as far as what advantages it has.BK and Simpsons are probably pushing toward this segment but with a different type of product.

BK, while spending the most money in advertising has not been able to get their newer product Vitric Advanced off the ground. Their appears to be promise from the Vitric Master but the technology iin this razor is not identical to that of the Clean Edge razor. Radiance will be Clean Edge’s main competition should Clean Edge decide to market in this segment. They both have the same type of product being released at the approximate same time and will be competing to gain the market share in this area.Since it is a new product initial marketing will be crucial as far as who will have a steeper sales curve.

Accelerated sales in the beginning of the product launch will be critical to determine profit and market share. As far as Paramount’s more traditional product which competes in the value and and moderate segment the competition is remaining steady between Paramount and Vitric. Paramount has had the edge in this area but this market would appear to be shrinking with less of a stigma attached to excessive grooming. This would mean that additional marketing in this area will not boost sales much.

In fact, they probably need to focus less of their marketing efforts in this area due to customers already knowing what they are getting with this product. Even though this may cause turmoil within the company, it needs to be addressed to make Paramount as profitable as possible. 2 Based on price and quality the non-disposable market is divided into three groups: value, moderate, and super premium. Consumer behavior was described as maintenance, social/emotional, and aesthetic. As shown in exhibit 1 social/emotional shavers look for new and improved products. They also feel that shaving makes them more confident and they enjoy it.

His market includes 39 percent of the market. This percentage is likely increasing due to a perception change among customers. This market segment is likely to purchase in the super premium category. Aesthetic shavers represent 28 percent of the market and shave consistently to remove unwanted hair.

This group is probably going to dwindle as they move into the social/emotional group. The last group is the maintenance shaver. These shavers want to get done as soon as possible and do not care about the product so much. This group will probably remain the same as far as percentages go due to their overall unwillingness to shave.The percentage of this group is at 33 percent of the market and are more likely to buy value or moderate products.

Paramount is already leader in the value and moderate categories. This means that their overall percentage of market share would fall if they do not get more involved in the super premium category. That is where the Clean Edge comes in as a necessary product to match the trends of the marketplace. 3 There are good arguments for both marketing Clean Edge as a niche and as mainstream. The niche angle would argue that as a company you will siphon sales from your existing products.

Paramount Pro has been a very successful product and many within the company believe that this product is what makes the company basically saying don’t kill the goose that lays the golden egg. The mainstream approach would point out the change in the market. Currently Paramount is not successful in selling to the super premium customer. The Clean Edge product has an opportunity to push into this market and gain market share.

It was estimated that a mainstream approach will take result in 60 percent of their sales coming from current Paramount customers while using a niche strategy would siphon about 35 percent.To determine the best plan of action we should investigate the potential sales of both plans. The total cost of going to a niche marketing strategy would be 30. 33 million dollars in year one and 48.

67 million dollars in year two according to estimates. The total profit in year one would be 8. 16 million dollars. In year two the total profit would be at 38.

465 million dollars. Due to not having the full information on the other Paramount products production costs and capacity we can not make an exact comparison to profit lost.However, we will assume the profit ratio would have been close and we will multiply these totals by . 65 to represent the 35 percent profit that was already in place. This gives us a year one profit of 5.

304 million dollars of additional profit compared to doing nothing. Year two would add 25 million dollars of additional profits. Year 1 total profits for a mainstream approach are 81. 53 million dollars. Year 2 would yield a profit of 109.

47 million dollars. Next we would have to multiply these numbers by . 4 to represent 60% being siphoning sales. Year one would result in a total profit of 32.

1 million dollars and year 2 recorded a total 43. 79 million dollars. Due to these results it should be evident that the mainstream approach should be executed. Not only would Paramount generate larger profits but would also penetrate the super premium group of clientele at a larger rate. The bottom line should determine action in marketing and not the feelings of managers who don’t have numbers to support them.

4Due to marketing the clean edge as a super premium mainstream product we should name the product as Clean Edge by Paramount and emphasis the name Clean Edge.This is for two reasons. The first is due to the fact that Paramount is known more in the moderate and value segment. This could portray to customers that the product is not up to the quality standards of their competitors in the super premium segment. Also, by emphasizing the Clean Edge name will reduce siphoning sales from other Paramount products. The lower we get from the 60 percent estimate the better.

This may also smooth over disagreements within the company as others are very worried about losing sales within the company.