Clean Edge Razor: Splitting Hairs in Product Positioning

Clean Edge Razor: Splitting Hairs in Product Positioning

Case Study Analysis

Marketing Management

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T. A. Pai Management Institute

Manipal, Karnataka

Introduction

Paramount Health and Beauty Company, also known as Paramount, is a global consumer products giant with $13 billion in worldwide sales and $7 million in gross profits for 2009. It entered the non-disposable razor market in 1962 and currently offers two products, Paramount Pro (positioned in moderate segment) and Paramount Avail (positioned in value segment). Using new technological innovations, the company has developed a new non disposable razor, Clean Edge, and wants to position it in appropriate market segment for the launch.

Changes occurring in the market

• Sales of non-disposable razors has grown about 17% and that of refill cartridges has grown about 9% over a period of 5 years (2005 to 2009).
• There has been a significant growth in super premium segment because of numerous product innovations in this segment (5-blade technology, glide strips, lather bar, low-resistance blade coating, etc.)
• Advertising expenses has been constantly increasing, especially by new entrants.
• There has been ‘Variety Seeking’ (low involvement, significant difference between brands) buying behavior (according to Henry Assael Matrix) from the consumers.
• There have been changes in retail channel distribution. Consumers are buying lesser from food (2007 - 41%, 2009 - 42%), drug stores (2007 - 32%, 2009 - 29%) and more from mass merchandisers (2007 - 19%, 2009 - 21%)  and club stores (2007 - 1%, 2009 -5%).
• Male-specific personal care products are outpacing the growth in women’s beauty market.

Consequences of the changes

As the consumers of Paramount are “Split Loyal” towards the company, they look for variety and switch between 2-3 major market players providing high value. Due to the growing potential in the mainstream market segment, other competitors are entering the market, leading to decrease in market share of existing Paramount products. Also, new entrants are expected to have aggressive marketing strategy. For example, Simpson’s Tempest marketing budget is expected to rise over 6 times from $2.4 to $15.2 million and Radiance’s Naïve expected to have budget of $15.2 million whereas Paramount’s total marketing budget across all product portfolios is only $20.2 million.

Segmentation

The non-disposable razor and refill cartridge market is segmented based on following variables

• Demographic – Prime focus is male-specific grooming products.
• Behavioral and Psychographic – According to Freud’s Theory, needs of consumers are hidden. By showcasing certain feature in the product, its benefit and the value delivered to the customer, we can differentiate social/emotional shavers, aesthetic shavers and Maintenance shavers.

• Social/Emotional Shavers- Shaving is an essential part of their daily grooming
• Aesthetic Shavers- Shaving is consistently done to remove unwanted hair
• Maintenance Shavers- Shaving routine is inconsistent

• Based on price and quality- Super-premium (Mainstream, Niche), Moderate, Value

Changes in the consumer behavior

• Consumers are being inclined to try out new products at par with the increasing rate of new-product introductions
• Frequent cartridge replacement and shorter average usage period for the blades boosted by advertisement
• More brand switching(mostly to Super-premium)
• Shorter inter-purchase intervals
• Consumers becoming more sophisticated and expecting more advanced technology

Target Market Pattern: Selective Specialization

Concerns for positioning Clean Edge in Niche vis-à-vis Mainstream segments

For Niche Market:-

• Cannibalization- In this scenario, 35% of sales would come from Pro/Avail customers
• $15 million for 1st year as marketing budget needed
• Razor’s suggested price is $12.99 which would make it the costliest in the market

For Mainstream:-

• Cannibalization- In this scenario, 60% of sales would come from Pro/Avail customers
• $42 million for 1st year as marketing budget needed

Randall’s Strategy of Positioning Clean Edge:

Frame Of Reference: To introduce under Brand Name “Clean Edge by Paramount” in the Non-disposable razor market competing Radiance’s Naiv. The target consumers are Social/Economic shavers who look for a superior shaving experience.

Points of Difference:-

• Vibrating, ultra-thin five-blade design leading to reduced irritation
• Larger, heavier handle for better balance, grip and control
• AAA battery present in the handle to provide vibrations that stimulated hair follicles

Points of Parity:-

• Effectively removes hairs
• Provides smooth skin