1. What changes are occurring in the non-disposable razor category?

Ans. Initially, the supply of non-disposable razors was limited to traditional food
and drug stores only. But from 2007 to 2010, there is an interesting trend of the
changing distribution of non-disposable razors from food and medicine stores to
mass merchandisers and club stores. Razors were not a traffic creator for stores but
retail margins related with the products tended to be substantially greater than other
personal care products like toothpaste.
Non-disposable razor market is growing gradually as more and more consumers are
becoming aware of technology. Demand for technologically forward and innovative
razors has led to growth of this market. This market is flourishing at the rate of 5%
approximately from year 2007-10. In U.S., the sales of non-disposable razors
increased from $178 million in 2005 to $218 million in year 2010. All the
manufacturers in this market are organizing to intensify the advertising media
disbursement which interprets that the market is rising at its full potential. The
advertisement expenditure of Paramount has been increased from 19.1 million
dollars in 2009 to 20.2 million dollars in 2010. Also, distribution retailers are
responding to the expanding demand by increasing the shelf space for the product
category. To serve this increasing demand, 22 new stock keeping units (SKUs) were
established between 2008 and 2009 for non-disposable razors and refill cartridges.
Most of these new SKU’s promotes the benefits from advancement in technology.
2. What is Paramount’s competitive position?
Paramount is a global consumer products company with international sales of 13
billion and a total of 7 billion gross profit in 2009. Paramount’s company
divisions are Health, Cleaning, Beauty and Grooming. In 1962, Paramount
entered in non-disposable razor market and became a reliable brand in the
industry. The company’s sales of Non-disposable razors in the U.S. is $170
million in revenue, $92 million in gross profit and $26 million in operating profit,
indicating the importance of these products for the company. The company’s
products Pro and Avail were presently unable to cater the demand for
technologically forward and innovative products. These two products allowed
Paramount to capture 23.3% retail unit share. Due to strong competition in the
industry, competitors produced innovative products in the premium segments.
The company has no product from where it can earn a high profit margin. They
must innovate to produce highly advanced products to maintain and increase its
positioning and brand image.
Competition for non-disposable razors included both direct competitors and
substitute products like electric razors, depilatory creams, waxing and hair removal.
Multinational players Paramount, Prince and Benet & Klein dominated the non-
disposable razor and refill cartridge market. The new entrants Radiance Health Inc.
and Simpsons had recently increased the competition. Clean Edge is the new
introduction in this industry. To prevent Clean Edge from joining the stage of decline
with its other two products, they should expand the maturity stage of its two products
along with strongly strengthening Clean Edge to move quickly from the entry stage
to the growth stage.
3. How is the non-disposable razor market segmented?
Presently, non-disposable razors and refill cartridges are divided into three sections
namely: value, moderate and super-premium by the industry experts. There has been
a substantial growth in the super-premium segment. Innovation in this segment like
5 blade technology, glide strips, low resistance blade coating, etc. led to this growth.
A 2009 study shows retail sales of non-disposable razors received from each
segment: 25% volume from super-premium, 43% volume from moderate and 32%
volume from value. Super-premium contributes 34% in retail sales of non-
disposable razors while moderate and value contributes 44% and 22% respectively.
In addition to these conventional segments, Paramount did market segmentation in
terms of consumer behavior which were held true for both men and women. The
company’s study indicated three segments: Maintenance shavers, Social/Emotional
shavers and aesthetic shavers. Maintenance shavers are those have least interest in
the product category and consider shaving as a daily task which they to perform.
Social shavers are the ones who are motivated by the experience of shaving and
consider it as a daily routine. Aesthetic shavers are interested in only cosmetic
outcomes and they try to find the best product to get those results.
4. What are the arguments for/against Clean Edge being positioned as a niche
product or mainstream brand?
Following arguments will elucidate the pros and cons of positioning of Clean
Edge as a niche or mainstream brand:
Niche Product:
Pros:
a) Niche strategy complements company’s existing product portfolio
thoroughly.
 b) Launching it as a niche product involves less investment in marketing than
if it is done as a mainstream brand i.e., $15 million in first year as compared
to $42 million for establishing mainstream brand.
c) Likely to earn more profit after cannibalization (According to a Profit and
Loss study, the company will earn $28.55 million more if positioned niche
than mainstream positioning after two years)
Cons
a) By launching Clean Edge as a niche product will result in less innovation
like its other two products Pro and Avail.
b) Less volumes sales as compared to mainstream positioning.
Mainstream positioning:
Pros
a) Mainstream positioning is expected to apprehend thrice the volume of
niche positioning. Due to this, Clean Edge will move quickly from the
entry stage to the growth stage.
b) Positioning as a niche product is more difficult due to numerous
competitions as compared to mainstream positioning.
c) If Clean Edge is positioned Mainstream, it is implied that it a product
with higher quality.
Cons
a) More and more expenditure (around $42 million) and support is required
to target huge masses.
b) Cannibalization rate is 60% in mainstream positioning while it is only 35%
in niche positioning.

5. What are the Product Life Cycle considerations and the challenges of Clean
Edge being positioned as a niche product or mainstream brand?