Case Study #2
Non-Disposable Razor Category:
The Non-Disposable razor market has seen numerous changes in the last couple of years. From
2007 to 2010 there has been a yearly growth of 5%. This growth is due in part to innovations, technology enhancements and new product introductions. With the rate of new product introductions enhancing in recent years; media advertising expenditures had to try and keep up. This trend helped retail market sales, the retail market distribution stores expanded shelf space for those products. These products were usually sold at traditional food and drug stores. With the emergence of this category, distribution of the products were also being sold in non-traditional outlets. Also, with more media attention on male grooming products, the industry is poised for growth.
Paramount’s competitive position and the strategic life challenges for Paramount’s current products as well as for Clean Edge?
Paramount is a global consumer products giant with $13 billion in worldwide sales and $7 billion in gross profits for 2009. Paramount has been in the non-disposable razors market since 1962. Paramount’s non-disposable razors and refill cartridges sales in the U.S. contributed $170 million in revenue, as well as a gross profit of $92 million and $26 million in operating profits for 2009. Before introducing the Paramount Clean Edge, they offered two lines of non-disposable products in this category. Those two products were the Paramount Pro and the Paramount Avail. The Paramount Pro is positioned in the moderate segment and the Paramount Avail was positioned in the value offering segment. With little to none technological changes in the last five years, both products were still able to be the market leader with over 23% in retail unit share.
Paramount did face direct competition from other competitors as well as substitute products. Other competitors included the following companies, Prince, Benet & Klein, Simpsons and Radiance. The non-disposable razor market was entering a new phrase with technology advancements and new competition entering the market. This could pose a threat to Paramount, if they don’t act fast enough. Consumers were becoming more aware of other products being featured and were looking for new technology and innovations. While assessing the competition you can’t leave out the fact that 33% of the consumers in this market are made up of “Maintenance Users”. Those consumers are not interested in the product category and view every product as the same regardless of their features.
Based off of the information provided above, the strategic life cycle challenges for Paramount would be to first provide a product that has a great price range/ cost benefit. This product shouldn’t have a long cycle span, so the “Maintenance Users” will continue to keep purchasing their product and re-use the same brand. Then Paramount can launch their Clean Edge product with a long cycle span. The Clean Edge product can appeal to the involved razor users and can become profitable by creating a strong brand in which the consumers become loyal and devoted to the product. They will then continue to purchase the cartridges for their refills.
The non-disposable razor market segment(s) and the consumer behavior for non-disposable razors.
The non-disposable razor market is broken down into three segments. Those three segments are price /quality, value/moderate, and super-premium. Within the last decade the industry has experienced significant growth in the super-premium segment. Paramount should focus more on the super-premium market. With such innovations in this segment as 5-blade technology, glide strips, lather bars and low resistance blade coating have propelled this growth. Table B in the case study shows the retail sales in 2009 for Non-disposable Razors and Refill Cartridges by Segment. Provided is the table