group 1.Case #2

1.(3Q)Q: What changes are occurring in the non-disposable razor category?The traditional market consisted of disposable and non-disposable razors, but within the last few years, a new trend has emerged. With the increased emphasis on the beauty products for men, there has been a growing movement among male consumers who are gravitating toward premium shaving products. The non-disposable razor category has seen changes in the recent years. A 5% growth per year from 2007 to 2010, attributed to innovations and product introductions, has to be the biggest change that the category has seen.Advertising expenditures increased significantly for several non-disposable razor companies over the last couple of years because of the need to promote new benefits from advances in razor technologies.Changes in retail channel distribution have also been remarkable. Male-grooming products seemed to be a bright spot in the industry from 2007 to 2010 and became more than just shaving – it started to include body spray, shower gel and so on. Channel distribution for the razor has become increasingly important, and with the recent re-introduction of Old Spice there has been a huge demand for male-grooming products.Q: Competitive Position:Paramount has established itself as a global consumer products t with over $13 billion sales and $7 billion in gross profits for 2009 world widely since its entry into the market in 1962. It is also interesting to note that Paramount has increased its market share each year since 2007, while the competitors have not increased their market penetration. Until 2009, Paramount gains a 23.3 percent share of the non-disposable razor market; compare Klein (B & K) at 19.2 percent Paramount still the leader of whole industry. However with technology products and new competitors entering the market, it will be a threat to Paramount.Q: What are the strategic life cycle challenges for paramount’s current products as well as for Clean Edge?Non-disposable-Introduction to GrowthChallenges faced is out of date styles, scents, shapes, features, and overall appeal.Refill Cartridges-Growth heading towards Maturity due to less growthChallenges faced is line extensions losing interest and in long run costing more to produce a variety of cartridges.Disposable Razors- Introduction into GrowingChallenges faced is the male-specific grooming products, maintaining an update line of both male and female.Shaving Cream-Decline, sales are droppingDepilatories-Decline,sales are dropping2. (2Q)Q: How is the nondisposable razor market segmented?The U.S. Razor is very diverse. According to the case, it can be divided into non-disposable razors, refill cartridges, shaving cream, and depilatories. There are three segments in the no disposable razor and refill cartridge market segment. The segments are based on price and quality, and are divided up into the following categories: value, moderate, and super-moderate. Moderate razors hold a majority of the volume and dollar percentage of current retail sales by segment, followed by value, and super-premium. Super-premium’s dollar percentage is higher than Values dollar percentage. In addition to these market segments, it has also been determined that these segments can be further refined to both men and women segments. Among men and women, there are “maintenance” shavers, “social/emotional” shavers, and “Aesthetic” shavers. Each group was motivated by a different trait that the product possessed.Q: Discuss consumer behavior for nondisposable razors?Consumer behavior show that consumers are becoming more partial to super-premium razors, over the last ten years. The reason behind this can be attributed to new technology, glide strips, lather bars, and low resistance blade coating. Consumers are also purchasing razors and replacement cartridges more frequently, and experts have determined that this has been caused by marketing efforts explaining the benefits of replacing blades more often.3. (2Q)Q: What are the arguments for launching Clean Edge as a (a) niche product and as (b) a mainstream brand?a- For the product to launched as niche product it will complement their existing product portfolio. It also would be cheaper for the company to launch it as niche product because you have to consider all to many they would have to spend on advertising and consumer promotions and trade promotions. Jackson Randall the product manger for clean edge did summarized financial forecast that clearly showed that to launch it as mainstream would require significantly more marketing and financial support as supposed to launching it as niche product. For advertising alone when Randall compared the two, mainstream was 19 million and 7 million for niche.b- The pro's product manager Albert Rosenberg who had been a respectable manager in grooming division for over decade believes that a mainstream strategy would dilute the brand power for their bread and cannibalize themselves. And on the other hand the new hired corporate marketing director William Kim says that a research shows that their customers are becoming more sophisticated and expect more advanced technology that pro does not provide. He also says that pro is in the mature phase of the product life cycle which means there will be a decline In profit. Kim believes that mainstream strategy will help prevent loyal paramount customers from being steered away to more innovative brands.Q: Which would you recommend? What are the strategic implications of your recommendation?I would recommend Niche Market Position Strategy. From exhibit 7, mainstream razor unit volumes were expected to capture over three times niche volumes in the first year, and reaching the masses would require an extensive advertising campaign. In the other hand, niche positioning is much cheaper. Niche positioning is also flexible and would be much easier for Clean Edge in moving to mainstream than the other way around. Paramount can use niche market as a test market as it capitalizes on new technology features. After a few years whether the demand for premium features begin to decrease, or there is an increase in expenditures, Paramount can monitor the brand to mainstream. Niche market positioning strategy could be less profitable but it will eliminate risks better. By taking this route, Paramount can avoid direct competition with both existing and new competitors through differentiation. This strategy would not cannibalize its other products and help Paramount to become a revolutionary leader in non-disposable segment.4.Develop forecasted Profit and Loss pro-forma statements for Clean Edge under Niche and Mainstream Scenarios for the two years. Use Exhibit A.。