Paramount Health and Beauty Company tested their new product, Clean Edge; non-disposable razor and through encouraging results, concluded that theirs is a premium product.With the new and improved technology, paramount wants to capture a large chunk of the market but needs to first align its strategy with respect to segmentation and positioning in the market. Itsgoal is to serve both the male and female customers, but needs to prioritize how, what and wherethe product will bring more success. The major issue to unfold is the best course action for CleanEdge and how well the strategy to launch it would be, followed by a careful analysis of theindustry as well as the company and how best to elude the competition and maintain its edgewith the better technology and consumer perception keeping brand equity and positioning issuesat the forefront.
The core problem at Paramount Health and Beauty in the case is to decide
“How to position Clean Edge Razor in the market”
The company has decided to launch it as the super-premium brand but there are twooptions in the super premium segment which are either to
Launch it as the mainstream brand in the super premium segment
Adopt a niche strategy and to launch it for the most intensely involved consumers inthe super-premium segment.
In addition to the product positioning the company also has to decide for the
Brand name and,
Marketing budget allocations for the launch
Clean Edge Razor Section C
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- The retail margins associated with the razors is considerably higher and thereforewith a large number of new entrants the distributors are responding to the growth byincreasing their shelf space for the product category. Distribution is also reaching out from foodand drug stores (42%) to mass merchandisers (21%) and club stores (5%).
On Media Expenditure
- As per 2009 data the total media expenditure (excluding trade andconsumer promotion) is $103.6 m while this number is expected to reach $137.7 m in 2010, arise of 33% in a year.Looking at some of the prime
figures we get- Revenues for PRINCE are $224 m,operating profit $ 45 m, media expense $27.8 m in 2009 and expected $ 29.2 in 2010. For Benetand Klein the media expense is $35.2 m in 2009 and expected $36.8 m in 2010. For Paramountthe revenue for 2009 is $170 m, operating profit is $26 m and total media advertisementexpense is $ 44.3 m. Thus the immense competition has lead to over promotion and mediaexpenditure by the companies which is difficult to maintain given the operating profit margins.
Clean Edge’s improved desig
n provided superior performance. Within the super-premiumsegment, Clean Edge could be positioned either as Niche product focusing on high involvement,fastidious groomers looking for a superior shaving experience, or a mainstream productfocusing on the broad advantage of offering the closest possible shave. Each positioning has itsown pros and cons.
:Positioning Clean Edge as niche will comp
lement company’s existing product portfolio perfectly.
From the exhibits, it’s visible that it will result in high and consistent profit margins for the
company and the risk involved will be less. Apart from that Niche positioning will require $15million in total marketing expenditures in the first year as opposed to $42 million in mainstream
:First of all it has a limited consumer base and secondly
the company’s current products Pro and
Avail had not introduced any innovations in the last five years. Pro is in the mature phase and
there’s a high probability of its sales declining soon. Therefore by launching in this segment
Paramount will lose their loyal customer base which is there with Pro and Avail.