Paramount Clean Edge Razor Harvard Case Solution & Analysis

Company Overview

Paramount is a global consumer giant with $13 billion in worldwide sales and $7 in gross profits for 2009. It has four divisions which include Health, Cleaning, Beauty and Grooming. It entered the non-disposable razor market in 1962 and became a prestigious brand quickly. The revenue from non-disposable razors and refill cartridges in U.S contributed $170 million in revenue, gross profit of $92 million, and operating profit of $26 million in 2009.

Paramount has two product lines including non-disposable razors and refill cartridges, the Paramount Pro and Paramount Avail.  Both the brands are placed in the different segments of the market. Paramount Pro is targeted at the moderate segment of the market while Paramount Avail is targeted at Value Offering segment of the market. Both of these brands have allowed Paramount to achieve the unit-volume market leader position in 2009 with a 23.3% retail share.

Problem Statement

Recently, a new product is launched by the company and there is a debate going on the methods to launch it. The executives of Paramount have different views on brand positioning, brand name strategy and the allocation of market budget.

All executives agree that the brand should be placed in the super - premium segment of the market, however, there are conflicting views that whether the brand should be differentiated by positioning it in the niche market or it should be introduced as a mainstream entry in the market.

The marketing budget allocation problem arises due to the problem of brand positioning. If the product is placed in niche market, it would cost up to $15 million as compared to $42 million if introduced in the mainstream market. However, the unit sales expected to be fetched from the mainstream market would be three times higher as compared to the strategy of placing it into niche markets.

Lastly, there is a dispute about the name of the brand.  Some executives prefer that the razor should be differentiated from the current lines and the emphasis should be on the “Clean Edge” name (e.g. Clean Edge by Paramount). On the other side, executives argue that the Paramount’s name should be given top priority such as the name could be “Paramount Clean Edge”.

Analysis

The analysis is conducted by considering the strategic analysis of the company by SWOT analysis. Then, the critical analysis of both strategies, niche and mainstream, is conducted to know about the advantages and disadvantages of both approaches. Then the analysis of industry, competition and target is also conducted. Then, advantages of niche and mainstream strategy is also present. Finally, the recommendations for brand positioning, brand name and market budget as well as the contingency plan are provided.

Industry Analysis

The razor market consists of many products including non-disposable product, refill cartridges, disposable razors, shaving creams and depilatories. Non-disposable, Disposable razors and refill cartridges have experienced growth in from 2007 to 2010. Most of the growth has taken place due to innovations and the introduction of new products. Clean edge is a non-disposable razor with a vibrating technology allowing for a more thorough shave.

The market of non-disposable razor and refill cartridges is divided into three segments of super-premium, moderate and value based on the price and quality of the product. The Super premium, moderate and value segments account for 34%, 24% and 22% in sales value for the industry. The development of non -disposable razors and refill cartridges have increased in recent years. For instance, 22 new stock-keeping units were introduced between 2008 and 2009.

Paramount Clean Edge Razor Case Solution

The trend of media advertising expenditure has been rising to increase demand of different products. In 2009, Benet & Klein have topped the table for advertisement with $35.2 million, followed by Prince ($27.8 million), Paramount ($19.1million) and Simpsons ($2.4million) as shown in Exhibit 2.

Distribution outlets have increased their shelf space to accommodate the rising number of razors. Although razors are not sold frequently, however, they have high margins, therefore they attractive for retailers.

Male specific products are gaining popularity in the industry. Products such as men’s body spray, shower gel and skin care lines have penetrated into the market in the recent years. The growth of men's personal care products is more than the growth in women’s beauty products.

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