Paramount Health and Beauty wants to launch a new razor into the market currently referred to as “Clean Edge.” The project team recommends that the company should position the product as a distinct mainstream product, dubbing it “Clean Edge by Paramount” in order to produce growth in sales from new product innovation. The importance of placing the product in a mainstream position is to successfully launch an innovative product creating more market share for Paramount and for Clean Edge to become the most sought out razor in the industry. Failing to take this route and deciding to position the product in a niche would only give the new product a limited amount of consumers, preventing Clean Edge from reaching its …show more content…
Disadvantages of Recommended Options
Rosenberg assumes that cannibalization of Paramount’s own customers, in the super-premium segment, will occur. The Paramount Pro customers may shift to purchasing the Clean Edge Razor, therefore siphoning off customers from Pro to Clean Edge. Randall’s team runs potential scenarios of product cannibalization, which point to the Clean Edge Razor taking 60% of sales from the Paramount Pro and Paramount Avail lineup. Using Rosenberg’s suggestion, 35% of sales are taken from the Paramount Pro and Paramount Avail lineup.
One way in which we will mitigate this problem is to stress to Rosenberg that the different segments in which we are targeting with our products. The Paramount Pro (priced at $9.50 for the razor, $7.55 for the refill) targets the moderate segment of shavers, who may be slightly more price conscious but still want to enjoy a smooth, clean shave. Whereas the Clean Edge Razor targets the super-premium segment (priced at $11.19 for the razor and $8.89 for the refill) who are more concerned with the functionality of their razor and are less price-sensitive.
Another possible disadvantage to positioning Clean Edge in a mainstream way concerns the allocation of the marketing budget. The steering committee is considering curbing excessive marketing expenses in all product categories. The mainstream position will