* Case: “Clean Edge Razor: Splitting Hairs in Product Positioning” * Writing task: Recommend a strategy to Paramount Health and Beauty Company about the best positioning plan for the new product Clean Edge. The plan should include the brand name and marketing budget in order to launch the product. The best course of action for the positioning of Paramount’s new Clean Edge Razor is Niche strategy with an emphasis on “the most intensely involved super-premium consumers” (Clean Edge, 2011, p. 1) for the first two years the product is in the market, then introducing it to a mainstream market.
This strategy will produce a successful product launch, “curb excessive marketing expenses” (Clean Edge, 2011, p. 6) and will have a smaller amount of cannibalism on Paramount’s existing nondisposable product lines, the Pro and Avail. Other positioning strategies would be less effective because the marketing budget will be costly, the risk of a lower return on investment, or the loss of customer loyalty by not introducing product to the mainstream market in an appropriate timeframe after the initial launch of the product.
Options There are two other alternative ways Paramount can position the Clean Edge Razor for the upcoming product launch: 1. Paramount can launch the product to a mainstream target audience. This would require a higher marketing budget in order to reach the larger target and would increase the risks of cannibalization from the Pro and Avail product lines by 25%. But it would result in overall higher revenue. 2. Paramount could also position the product to a niche market and never introduce it as a mainstream product line.
In the short run, this positioning strategy would have a smaller marketing budget and would lead to about 35% cannibalization on existing product lines. However in the long run, this strategy would not produce as much revenue as a mainstream positioning strategy. Selection Criteria and Proof Paramount would like to accomplish the following items, not only from the launch of Clean Edge, but also throughout the entire company: * A successful launch of the Clean Edge Razor. * To cut down on all excess marketing expenses. * To be aware of the possible cannibalization to the Pro and Avail in the
Clean Edge product launch. A niche position strategy should be used for the first two years that Clean Edge is in the market. Then introduce it to a mainstream audience will be the best way to achieve the three points of criteria presented above. Compared to the competition, Paramount is the only company that currently does not have a nondisposable razor in the super-premium category and is almost as successful as companies with two products in the super-premium category. Paramount can expect their sales to increase with the introduction of the Clean Edge Razor in the super-premium category.
Paramount expects consumers to switch from the super-premium razor they already use because of the new technology that Clean Edge is introducing. The niche positioning will cost about $27 million less than mainstream positioning in the first year because less money will be used for promotions and other marketing tools. Paramount will also be able to sell the Clean Edge Razor and refill cartridges for $2 more per razor. Although fewer units are expected to be sold in the first two years, the increase in price will be profitable. As far as cannibalization goes, there is an estimated 25% decrease from a niche position than mainstream.
Consumer research also shows that the members of the niche market are willing to experiment with new technologies in razors. A big risk that Paramount would face with doing a mainstream position from the beginning is the expectation that current users of Paramount razors would switch to the Clean Edge. Paramount expects that 60% of the first year sales will come from current users of the Pro and Avail, if customers turn out to be loyal to the razor they currently use Paramount will have spent more money of marketing promotions for a lesser turnaround.