Paramount, a well established and globally recognized personal care product company has developed their latest and highly innovative non-disposable shaving razor called Clean Edge. The Paramount senior executives were sure that Clean Edge would bring great satisfaction for consumers due to the 5% growth in the non-disposable razor product has experienced in the past 4 years (2007-2010). In fact, according to the case study, although with respect to non-disposable razors, price and quality were segmented into three dimensions such as value, moderate and super premium, the senior executives of Paramount unanimously had agreed to price Clean Edge razors in the super-premium segment since the razor industry as a whole has seen dramatic growth in the super premium segment for the past 10 years. In addition, the super premium segment was high in demand due to many new innovative features found in razors such as five blade technology, glide strips and lather bar, thus, innovation and new technological advances were the catalysts for astounding increase in production of 22 new stock keeping units (SKU) between 2008-2009 alone. Moreover, the growth in non-disposable SKU's also ignited the advertising expenditures, leading to an increased shelf space for this product by the distribution outlets. Yet, at the same time distribution was also beginning to move outside of the traditional food and drug stores with an 8% drop in sales revenue between the years 2000 and 2009.
However, in 2010, Paramount was one of three globally-based giants that dominated the non-disposable and refill cartridge market along with Prince and Benet & Klein. In fact, Prince had been in the non-disposable razor market since 1950's and currently sold both refill cartridges and non-disposable razors under two brands called Cogent and Cogent Plus-both considered to be super premium. On the other hand, Benet & Klein had entered into the non-disposable razor market 30 years after Prince (in 1985), however its newly created non-disposable razors and refill cartridges were based on innovative technology, possessing lubrication strips, non-slip handles and anti-corrosive blades. In addition, two other new comers Radiance and Simpsons had joined the competition and were considered to be well-established personal care product companies, which added to an already fiercely competitive market. For example, Radiance had launched a new product called Naiv that was very similar in design to Clean Edge -- it also featured a vibrating affect and it acquired 13% of the market share in the test markets as well. Indeed, Radiance and Paramount were both very fierce competitors. However, Paramount had managed to stay ahead of the rest by creating products that satisfied all three segments of the market thus appealing to value, moderate and super premium markets yet other competitors simply satisfied one or two of market segments. For instance, Paramount Pro-secured the moderate segment, Paramount Avail targeted the moderate segment, and finally Clean Edge covered super premium segment. In addition, compared to Cogent or even Victric (made by Simpsons) Clean Edge had 25% increase in hair removal, thus clearly demonstrating better overall performance of the product as well as consumer satisfaction in terms of improvement seen in skin tone and textures after product use.
Although Paramount's innovative flare had shown promising results for its latest invention (Clean Edge), its current products including Clean Edge had some challenges in terms of their life cycle. For instance, both Pro and Avail products were at their mature stage of the life cycle and were as a result of losing product positioning. In fact, in the past 5 years no new product were introduced for either one of these lines. Moreover, due to the fierce competition for new and more innovative and technologically advanced product demand, Paramount not only needed to deal with how to best position and brand its new products (i.e. Clean Edge) during the launch phase, but it also needed keep up to even stay ahead of the competition by introducing new products as well. Thus, in this case, the demand for cutting edge and innovative products certainly shortened the life cycle of their product lines.
As previously mentioned, the non-disposable razor market has been segmented in three sections: value, moderate and super premium. Indeed, these segments correlate with the type of consumer and consumer behavior that best suits the appropriate category segments in the non-disposable razor market. For instance, those consumers who are considered to be moderate in terms of quality and pricing tend to differ among products and having is considered to be essential part of daily grooming, and in fact may even associate shaving to feeling attractive and confident. Therefore, such users may be inclined to pay a little more than average to avoid getting nicks and cuts by having a relatively durable and better performing product. These consumers are still motivated by cost yet, how they feel about the shaving experience ultimately is the deciding factor. The involved aesthetic shaver are those consumers that search for products that effectively remove hair and thus, such consumers essentially are relying mainly on performance and results as the deciding factor. In this case, premium quality and pricing will be the core components of the decision making process. Indeed, the case study refers to these types of consumers as highly involved groomers looking for a superior experience and ones who seek to have the closest possible shave. Finally, the uninvolved maintenance shaver is the value-based consumer who is not interested in the brand but rather more driven by cost as the ultimate deciding factor. They shave based on necessity and therefore they seek to get the job done with minimal hit to their pocket book. Money is the driver in this case.
Based on reviewing the cost analysis and in looking at different positioning scenarios for Paramount's Clean Edge product, launching Clean Edge to a niche market will provide the consumers with a product that is more sophisticated and advanced in terms of technology and performance which fulfills the concept of innovative branding. It also minimizes the financial impact that the company would most likely face should they decide to first go mainstream (see Appendix 1). As shown in appendix 1, the niche market has less negative impact than compared to mainstream market by as much as 15.3% (year 1, 3.2% less than mainstream and year 2, 12.1% less) total for the two years combined! Although the initial profit would be less, the financial impact is also less. However, the overall profit in the long run will be constant and steadily growing. This means that for niche market the profit will be at 33% by second year where as in the mainstream market will be at 35%, thus there is a 2% difference in growth margin between niche vs. mainstream markets, yet the risks are also greater by going mainstream immediately as well. For example, if the Paramount decides to launch the product to the mainstream market instead, this may dilute the brand power for Pro-which essentially may lead to cannibalization by 60%. On the other hand, it also may provide opportunity for Paramount to introduce the Clean Edge product to the value based and moderate-based consumers thus shifting their perception and behavior, ultimately increasing the volume of products sold. Moreover, since Paramount already has distribution channels in place for Pro and Avail, it would serve fruitful when introducing a new product line for example in this case Clean Edge. Indeed, if using promotions as a means to reach masses, the company can increase their profit margins for the premium product line if it is introduced to more consumers. It also increases brand visibility and awareness, thus elevating perceived quality of the product in this face.
Based on the data in the case and the analysis presented above, the following alternatives can be used to develop a market strategy that will position Paramount as a market leader in non-disposable razor category with "Clean Edge" product launch: 1) Launch "Clean Edge" as a "mainstream" technology product to be a market leader. 2) Launch "Clean Edge" as a "niche" revolutionary technology product to be a market leader. 3) Create a new strategy to market "Clean Edge" as a revolutionary technology product and gain market share in Super-Premium segment. 4) Create a new branding strategy that will give consumers a household name called "Paramount" with technology superior product and continue to retain and gain market share with "Maintenance users." 5) Develop a new incentive and rewards program to target "Maintenance users" and gain market share with this user segment. 6) Establish contracts with the new retail channels such as mass merchandisers and club stores so that Paramount non-disposable razors can be placed at the right eye level for the users to choose Paramount products.
The evaluation of alternative solutions was based on the following criteria: Research and analysis studies by Paramount, marketing and sales data across Paramount and its competitors, key product differences and similarities between Paramount and its competitors in non-disposable razor category, and feasibility…