Clean Edge Razor

Clean Edge Razor

Paramount Health and Beauty Company, known as Paramount with corporate divisions included Health, Cleaning, Beauty and Grooming. In 1962, Paramount entered the nondisposable razor market and soon became a well-known brand. The U.S Razor market includes nondisposable razors, refill cartridges, disposable razors, shaving cream, and depilatories. Nondisposable razors and refill cartridges have become the most popular products in the U.S Razor market.

Paramount competes in the market for nondisposable razors and refill cartridges with two other leading brands: Prince and Benet & Klein (B&K). Both companies have nondisposable razor lines in the super-premium market segment, Prince having its brands Cogent and Cogent Plus, and B&K having its brand Vitric. Two new entrants, Simpsons and Radiance have recently emerged as strong competitors, set to release their Tempest and Naiv nondisposable razor lines respectively. The Naiv razor has comparable features to Paramount’s Clean Edge razor, and is predicted to acquire a 13% share, making it one of Clean Edge’s stronger competitors.

            Marketing segmentation can be concluded a super-premium, moderate and value based on price and quality. Products in the moderate segment occupy the largest proportion of the U.S. Razor market. Value offerings take up 22% in the dollar value of market segmentation, and super-premium products take up 34%. In recent years, there are more frequent purchases of razors and shorter replacement cycle. In the moderate segment, Paramount offers the Paramount-Pro. Paramount Avail is regarded as an offering in the value segment. Besides, the super-premium segment experiences innovation.

Paramount is now testing their latest nondisposable razor, Clean Edge, and participants feel good about the product with the new technology. While targeting men and soon after, the women’s market, Paramount is trying to figure out the market positioning for the new product Clean Edge, and work on brand name and allocating marketing budget. Paramount’s Clean Edge razor was determined to be priced in the super-premium segment of the market, and now face the decision between two positioning strategies, mainstream entry and niche strategy, both of which have pros and cons.

If Paramount goes with the niche positioning strategy, their brand power will be strengthened. Albert Rosenberg, Paramount Pro product manager, thinks that niche strategy could avoid cannibalization.

After analyzing the Exhibit 7, it can be seen that niche strategy has a lower investment cost than mainstream strategy and higher gross profit. While, Paramount Pro is in the moderate market segmentation, Clean Edge would be the super-premium offering. Niche strategy could make Paramount’s products more appealing to a wider range of customers, because it will now have a product line in each market segmentation. Additionally, the niche strategy will cause less cannibalization than mainstream, having a higher profit after cannibalization than that of mainstream. However, niche strategy regards the three products as equal and it is possible that Clean Edge, as a new product, could not attract customers as much as it could.  

If Paramount goes with the mainstream positioning strategy, their customer loyalty will increase. Although the mainstream positioning will likely lead to cannibalization of Paramount’s razor line Paramount Pro, Paramount Pro is in the mature stage of its product life cycle. As Paramount’s competitors such as Simpsons and Radiance launch their new non-disposable razor lines, Paramount will lose customers to these brands as its Paramount Pro line goes into decline. Positioning its Clean Edge line as mainstream will allow Paramount to retain its customers.The mainstream positioning however, has a higher investment cost and a lower forecasted gross profit margin in the first two years after its release. It causes greater cost of cannibalization, leading to a lower profit after cannibalization for the first two years after its release.

Based on analysis of the mainstream and niche positioning strategies, we recommend that Paramount chooses the mainstream positioning for its Clean Edge Razor brand. Firstly, it is costly for companies to develop new products. For Paramount, Clean Edge, as the new product with advanced technology, is worthwhile to be given more attention in developing and promoting, so customers could be aware that Paramount recommends a new, better and innovative product. Loyal customers of Paramount would have interest in trying the new product, and discover that Clean Edge is a good product. Secondly, the mainstream approach will profit greater after cannibalization than the niche approach would. Paramount is worried about the problem of cannibalization, as 60% total sales of Clean Edge come from the original products under the mainstream strategy and only 35% total sales of Clean Edge possibly come from the original products under the niche strategy. Although mainstream generates lower profits after cannibalization than niche does, mainstream profit is likely to grow faster than that of niche, having a greater difference between its profit from the first year and its profit from the second year. Choosing the mainstream position will also allow Paramount to retain its customers and maintain their interest in the Paramount name. As said previously, Paramount is expected to lose customers as the Paramount Pro brand declines and the competitors release their new brands into the market. If Paramount were to choose the niche market strategy, it will not be able to convert its Paramount Pro users to Clean Edge users as they begin to leave Paramount Pro’s customer base, as there would be little overlap in the two razor lines types of users. Choosing the mainstream approach will allow Clean Edge to appeal more to users of Paramount Pro, leading to a higher customer retention.Thirdly, in the U.S Razor Market, from 2007-2010, nondisposable razors and refilled cartridges experience growth per year. Importantly, the keywords for growth is “innovation” and “product introductions”. Paramount can keep loyal customers satisfied by putting an emphasis on the new product Clean Edge with new advanced technology. At the same time, advanced technology could build a larger consumer base. Lastly, mainstream strategy allows higher volume of sales compared to niche product, the suggested price of Clean Edge being $11.19. Although the price of Clean Edge is higher, it is still reasonable for many targeting customers. Based on the behavioral segmentation of Nondisposable Razor Consumers, 67% consumers care about how to choose razors. Thus, large portions of consumers are willing to choose razors in a good quality.