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Clean Edge Razor Case Study

Students: Nancy Clark Gonzalez, Jennifer Frost, Marty Webb

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Summary of the background and facts
This case study, while based on real events, is a fictional case that represents a possible
scenario managers in todays business environment may encounter. The individuals and
companies used in this case are also fictional.
Paramount Health and Beauty Company, known as Paramount, is a global consumer
products giant with four corporate divisions including Health, Cleaning, Beauty and Grooming.
Paramount entered the non-disposable razor market in 1962 and quickly became a market leader.
By 2009, the company realized $13 billion in worldwide sales and $7 billion in gross profits,
with the non-disposable razors and refill cartridges in the U.S. contributing $170 million in
revenue, gross profit of $92 million, and operating profit of $26 million.
Paramount offers two products, the Paramount Pro in the moderate segment of the
product market and the Paramount Avail, which was considered the value offering market. With
these two products the company enjoys 23.3% of the retail share; however, until now, Paramount
has not introduced significant technology or new products in the last five years.
The company has developed their newest non-disposable razor, Clean Edge, which is
currently undergoing review by market testers. The design of Clean Edge is to provide superior
performance by utilizing a vibrating technology to stimulate hair follicles and lift the hair from
the skin, allowing for a more thorough shave. To back these claims, Paramount enlisted a third
party lab to provide scientific testing. Jackson Randall is Paramounts product manager for
Clean Edge; he is responsible for recommending product position, brand name, and marketing
budget allocations for the launch.

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Statement of Core Problem(s) of the Case
The issues Paramount faces are primarily product positioning to remain a market leader
in non-disposable razors. The current top competitor in the non-disposable razors includes
Prince and B&K. Prince sells Cogent and Cogent Plus which are two super-premium products,
while B&K sells the Vitric line, including the Vitric in the mainstream category and the Vitric
Master and Vitric Advanced in the super-premium category. Two new companies to enter the
market are Simpsons, which released Tempest to the super-premium market and Radiance which
is planning on releasing Naiv to the super-premium market in 2010.
Paramounts two products create the highest volume percentage of market share at
22.2%; however that results in being second to Prince in terms of retail dollar sales. B&K is not
far behind with 19.4% of the volume and 21.1% of the retail dollar sales. Early results of market
testing for the Radiance Naiv show a 13% gain in the market. With this close of competition, it
would be beneficial to Paramount to release this product in the right position the first go around.
Secondary Problems
Secondary issues to positioning are the branding and marketing budget allocation for
launch. Paramount executives are at odds whether to brand the product with an emphasis on
Clean Edge, such as Clean Edge by Paramount or to keep the company out front first with
Paramount Clean Edge.
Paramount is looking to curb excessive marketing expenses in all product categories.
Therefore, if the budget were to remain the same then marketing for Clean Edge may require a
budget allocation from other product budgets. Marketing for Clean Edge in the niche market
would require $15 million while marketing in the mainstream market would be considerably

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higher at $42 million. Although, mainstream razor markets are expected to capture three times
that of the niche market, it would require approximately three times the marketing expense over
the niche market. Additionally, it would require approximately $4 million in consumer
promotion, such as coupons.
Howard Rosenberg, the product manager for Pro has voiced his objection to Clean Edge
being introduced as a mainstream market product. His objection to Clean Edge competing with
his product, the Pro, in the mainstream market marks the issue of lifecycle for the Pro.Rosenburg
believes the Pro is the backbone of the companys non-disposable razor and releasing Clean
Edge to mainstream instead of niche markets would directly compete and ultimately move
consumers from Pro to Clean Edge.
Constraints and Limiting Factors
Although Paramounts Clean Edge razor will be the first of its kind on the market, a
competitor, Radiance, will also be launching a similar razor four months prior to Paramounts
planned launching of the Clean Edge. Radiance will also be implementing a major media
advertising campaign. This situation may adversely impact a successful launch of Clean Edge.
The current projections of Paramount cannibalizing its own products, the Pro and Avail,
is estimated at 60% if the razor is marketed mainstream, and 35% if the razor is marketed niche.
No matter what the scenario, the new sales of the Clean Edge will decrease the sales of Pro and
Avail. The Pro, likely being at its mature phase in the product lifecycle, may limit the
detrimental effect of this cannibalization.
Additionally, there is disagreement of strategies between the marketing director, Kim, and
product manager of the Paramount Pro, Rosenberg. In that Rosenberg has significant political

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capital in his division, he may be able to influence other executives into limiting the marketing
budget for Clean Edge. If Rosenberg gets his way, there would not be the funding available to
successfully launch a mainstream strategy. Further, the steering committee is looking to curb
excessive marketing expenses in all product categories. Bottom line, Clean Edge would need
87% of the total marketing budget to launch mainstream ($42 million of the $48.3 million total
marketing budget).
An additional limitation is that Paramount has not been keeping up with new product
development. Twenty two new SKUs were issued in 2008-2009 mostly in the super-premium
razor segment; Paramount has not had a new product in over five years. While other companies
have been active in placing products in this segment, Paramount is only now getting to launch its
new product.
Further, the market segment may be changing. The Economist (2013) reports that
consumer trends may be changing. Either due to the recession or because consumers are at their
limits to what they will spend on shaving; it is not expected that the trend toward super-premium
razors will continue. Many consumers are returning to disposables and increasing the number of
times they use them before replacing them. This is evidenced by a drop in sales of men's razors
by a major razor manufacturer by 10% in the second quarter of 2013.
Alternative Solutions
Marketing funds can be allocated from the Pro razor to fund the launching of the Clean
Edge into the super-premium segment of the mainstream market. It would come in with midrange pricing among the competitors alternatives. This alternative would severely limit the
amount of marketing funds available to continue to market the Pro razor. However, to

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successfully launch into the mainstream, it is predicted that large media, consumer, and trade
promotions will need to be funded.
An alternative solution would be to establish a niche market for Clean Edge. Pricing
would be at the highest for super-premium razors. Currently, Cogent Plus is priced at $12.50 for
razors and $10.00 for cartridges. Additionally, Radiances Naiv will have been on the market for
four months and it is expected that it is very similar to the Clean Edge. By bringing Clean Edge
razor in at the highest price in the super-premium market at the proposed suggested retail price of
$12.99 and cartridges at $10.50, the perceived value pricing would give the impression that
Clean Edge is better than the alternatives. Further, Paramount would build a subjective
perception of their product that makes its product seem unique (Johnson, n.d.). Clean Edges
launch into this niche market would be less competition and result in less cannibalism on
Paramounts other products the Pro and Avail.
Best Solution
The best solution is to sellClean Edge in the market category that will result in optimum
growth for Clean Edge with the least amount of loss to the Pro. Since the company has not
released any significant technology innovations for the last five years, it is important the
organization makes the right move in market position.
Randall should choose to position the Clean Edge in the super-premium market niche
instead of the mainstream market. Further, it is recommended that the new razor be named Clean
Edge by Paramount.

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Justification
Research suggests positioning Clean Edge in the mainstream market would cause a 60%
cannibalism of the Paramount Pro while positioning in the niche market would minimize
cannibalism of the Pro to 35%. Placing Clean Edge in the super-premium niche market would
allow the Pro to retain consumers in the mainstream market where there is only one other
competitor, B&Ks Vitric. Further, current predictions would indicate that Pros lifecycle will be
prolonged as recessionary constraints continue.
Additionally, niche marketing strategies target a particular product to meet the specific
needs of individual customers, resulting in the better chances you have to generate interest,
satisfy those needs and create, sustain and grow profitable customer relationships (Biasi, 2012).
An example of a successful niche marketing strategy is Toms Toothpaste (Keller & Keller,
2012). Purchased by Colgate-Palmolive, it is marketed for its natural ingredients and donations
to charity. Although owned by a large corporation, its niche marketing appeals to consumers
who want to purchase from a small company (Keller & Keller, 2012). Consumers also pay a
premium price for the product compared to other mainstream toothpastes that Colgate produces.
Paramount can achieve similar success with this niche marketing strategy by placing Clean Edge
into the upper subset of the super-premium razor market. By doing this, the appeal will be to the
consumer wanting a superior shave using the most innovative methods.
Naming the product Clean Edge by Paramount would separate it from the other products
Paramount currently produces. Paramounts main products currently are in the moderate and
value markets. To establish a niche market and establish it as a unique product, the Paramount
name should be secondary to the new innovation offered by the Clean Edge.