Clean Edge by Paramount Product Marketing Plan, Study Guides, Projects, Research of Marketing Business-to-business (B2B)

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Jennifer Chiang

A p r i l , 2 0 1 4

Clean Edge by Paramount

Product Marketing Plan

Table of Content

• 1. Situational Analysis…….……………………………...…………
• 2. SWOT Analysis…………………………………………….……..
  • 3. Strategic Marketing Plan Recommendations……..……..……..
  • 4. Strategic Communication Plan Recommendations…...………..
    • 5. Marketing Budget Allocation Recommendations…………….

Between 2008 and 2009, there were 22 new stock-keeping units (SKUs) launched in the nondisposable razors and refill cartridges market. Most of the newly launched products emphasized their advanced technology and aimed to target the super-premium segment. Currently, the nondisposable razor and refill cartridge market are dominated by three international brands: Paramount, Prince, and Bent & Klein. These companies divide their nondisposable razors into three segments: value, moderate, and super-premium, based on the different price and quality. The super-premium market has been rapidly increasing for the past ten years, due to the new product innovation (See Exhibit 1). Consumers Purchase Behavior Overview: Current nondisposable razors customers (male and female) can be understood as fitting into three categories: social/emotional shavers, aesthetic shavers, and maintenance shavers. Both social/emotional shavers and aesthetic shavers are considered the involved razor users, who are more willing to search for and experience new products. Social/emotional shavers (39%) search for products based on the function and messaging of the product. They care about the overall shaving experience. Aesthetic shavers (28%) search for the products based on effectiveness, because they care more about the cosmetic results. Lastly, maintenances shaver (33%) do not spend time on searching for shaving products. They view all products as the same. The study of changing markets shows that consumers across these categories are becoming more open to buying new razors and replacing blades due to the realization of the benefits of shorten replacement cycle. Competitors Overview and Analysis: In the overall razor market, the direct competitors for the nondisposable razor and refill cartridge market are disposable razors and electric shavers. Disposable razors are relatively low price but provide less technological innovations on products.

Electric shavers occupy approximately 27% of the razor market. The characteristic of easy handle and low skin irritation are appealing to older customers in this market. In the nondisposable razor and refill cartridge market, Paramount’s main competitors are Prince, Benet & Klein, and two new entrants – Radiance and Simpsons. Since the 1950s, Prince has dominated the nondisposable razor market with the brand name Cogent and Cogent plus, which were considered super-premium product categories. Prince held the number one position in terms of retail dollar sales in the nondisposable razor market. Benet & Klein (B&K), with the brand name Vitric, Vitric Advanced, and Vitric Master, joined the nondisposable razor and refill cartridge market in 1985. Vitric is considered moderate, and both Vitric Advanced and Vitric Master are considered super-premium. Simpsons used Tempest as the brand name to join the nondisposable razor and refill cartridge market last year. Tempest was positioned in the super- premium category. Radiance right now is Paramount’s strongest competitor, because Radiance will launch their new Navi razor in September 2010, which adopts similar technology as Clean Edge and will also be positioned in the super-premium segment (See Exhibit 2). Most of the current nondisposable razor brands are positioned into super-premium segment (See Exhibit 3); however, Paramount’s current products – Paramount Pro and Paramount Avail are only targeted to the moderate and value markets. Cogent (super-premium) from Prince had the highest unit and dollar market share in 2009, followed by Vitric (moderate) from B&K. However, according to market share forecasting of 2010, both Cogent and Vitric will lose their market share due to the new brand launches of Navi and Tempest.

2. SWOT Analysis (See Exhibit 4 ): Strength: Paramount is a respected global consumer products company and entered the nondisposable razor market in 1962. In 2009, Paramount was the unit-volume market leader

premium segment. Also, there are many substitute products and competitors, like electric shavers and disposable razors. Navi, made by Radiance, has similar new technology as New Edge, and will be launched in September 2010, which is four months earlier than New Edge.

3. Strategic Marketing Plan Recommendations According to the profit-and-loss (P&L) forecasting analysis, Clean Edge could make much more profits when position into niche market than mainstream market: the total profit after two years: $31.37 million in niche market vs. $2.82 million in mainstream market (See Exhibit 5 ). Therefore, Clean Edge is recommended to be positioned into the niche market and target involved razor users (both social/emotional shavers and aesthetic shavers). (1) Positioning Analysis (Pros and Cons): Niche Market: Paramount will get a lot of advantages by positioning in niche market. First, according to the P&L forecasting, niche market positioning scenario will earn more profits for Paramount after cannibalization (Paramount will earn $28.55 million more than mainstream positioning scenario after two years). Second, niche market could provide more consistency with the marketing message of promoting product’s high technology and innovation. Third, niche positioning requires relatively less marketing expenditures ($15 million) compare with mainstream positioning ($42 million) as well as advertising and promotions expenditures ($ million in niche positioning vs. $81 million in mainstream positioning for two years). Fourth, the niche strategy can lower the cannibalization rate with Pro/Avail (35%) compare with applying mainstream strategy (60%). Fifth, currently, Paramount product lines were not creating any products to target the niche market; therefore, if Clean Edge could position into niche market, Paramount will have product lines in each market segments, especially, niche market is less saturated, and has potential growth in the future. Lastly, Paramount senior executives already had

preferences to price Clean Edge somewhere in the super-premium segment; therefore, the niche market will fit better the Clean Edge pricing strategy. The disadvantage is that the volume sales in the niche market are relatively less than the mainstream market. Mainstream Market: The advantage of applying Clean Edge razors in the mainstream market is that Pro, the current backbone of the company, is in the mature phase of the product lifecycle and has possibility to decline in the near future. Therefore, in order to keep the current Pro loyal customers, Clean Edge, with its innovation technology, should position in the mainstream market to prevent current customers to go for other competitive innovation products. That is to say, since Paramount already has a customer base in the mainstream market, when they launch Clean Edge there might be more interest in Paramount’s other razors and products. Also, the volume sales are higher in mainstream market compare to niche market and Clean Edge has relatively fewer competitors in the mainstream market (only Paramount Pro and Vitric exist). The disadvantage of mainstream strategy are: the cannibalization rate is 60% (niche strategy is only 35%), the large marketing investment will be required, and total profits after two years will be only $2.82 million (niche market position will be $31.37 million). (2) Target Customers Examine: The male involved razor users (67% of total nondisposable razor users) will have more possibilities to be the main target customers for Clean Edge, because those users care about the product differences, and are willing to spend time to search for the best-fit products for themselves. Unlike those uninvolved razor users, they only regard shaving as part of their routine, involved razor users care about the overall shaving experiences as well as the cosmetic results. Therefore, to highlight the high technology and innovation of Clean Edge will make perfect sense for those involved razor users. After comparing the results of the both P&L forecasting (See exhibit 5), overall pros and

By highlighting the “Clean Edge” name, the risk is that it might have less linkage with Paramount (less brand recall); however, it might have a chance to reduce the cannibalization rate of Clean Edge with Paramount’s existing product lines and create customers’ new brand preference. On the other hand, the company name will still keep as part of brand name; therefore, for those Paramount’s royal customers, they might still be willing to purchase Clean Edge to try out Paramount’s new products. (2) Communication and Advertising Strategies: Clean Edge by Paramount is a high-class nondisposable razor, which target super-premium market. Therefore, the overall communication strategy will highlight its breakthrough technology, aesthetic design, and its high quality. For example, Clean Edge by Paramount will be framed as an exclusive, stylish, high-tech and high- end razor for those customers who are either searching for the extremely high quality shaving experiences or want to enjoy the overall stylish grooming process. In details, the communication strategies will be differentiated from different target shavers: those social/emotional shavers will be emphasized by the Clean Edge’s social and emotional benefits toward users, for example to highlight the confortable experience of using Clean Edge, and the attractiveness after using Clean Edge. The high involvement transformational content of advertisements is recommended to target this group. On the other hand, those aesthetic shavers will be emphasized by Clean Edge’s breakthrough technology, like 25% increase on overall hair removal and improve overall skin condition after shaving. Some high involvement/ informational advertisements will be used to highlight the Clean Edge’s revolutionary technology and its effectiveness toward hair removing. Additionally, celebrity endorsement will be strongly suggested for targeting niche market, especially for those social/ emotional shavers, they think shaving can make themselves

more attractive. Therefore, to link those stylish celebrities with Clean Edge will create a halo effect on the product, and highlight its revolutionary technology and design, ultimately to attract more target customers. Press releases and press conferences will be included in the communication plan. For new product launch, releasing press release and hosting a conference can be the best chance to officially introduce the new technology to the public and win free media coverage. (3) Media Selection and Allocation: Based on both the target audiences characteristics and product segmentation, the media selection of Clean Edge by Paramount advertisements will include TV (55%), print- magazine (30%), and online- social media (15%). TV commercials will run on particular channels, like ESPN and FTV Men, which have more male viewers. Print ads will be included in some male-focused magazines, like GQ and Motor Trend. Online ads will include banner ads in some male-focus (fashion) website, like Men’s Journal and askmen. Lastly, social media will be applied in many ways to not only promote the products, but also create customer relationships via Facebook, Twitter, Instagram, Youtube, and Pinterest. (4) Promotion Plan: Coupons will be a essential promotion strategy for new product launch. Cents-off coupons, free razor coupons, as well as free cartridge coupons will be used to stimulate consumers’ purchase intentions and inspire them to try new products. Bonus packs will also be implemented to entice consumer savings. Moreover, event promotions create buzz, increase brand awareness, and win media coverage. Paramount will host a roadshow to demonstrate Clean Edge and to let those visitors (potential customers) experience the effectiveness of shaving with Clean Edge. In-store-displays and feature ads will be applied to have a better position of shelf space, and the use of proper ads in the store will increase customers’ purchase rate as well as brand awareness. Hosting a trade show in the first year will be a good chance to promote

Exhibit 2. Current Nondisposable Market Positioning: Brand Brand Names Segments Dollar MKT share (09) Dollar MKT Share E (10) Paramount (1962) Paramount Pro Moderate 18.5% 18.5% Paramount Avail Value 4.9% 2.9% Prince (1950s) Cogent Super-premium 29.4% 21.3% Cogent Plus Super-premium 1.3% 4.9% B&K (1985) Vitric Moderate 17.8% 15.8% Vitric Advanced Super-premium 0.7% 0.1% Vitric Master Super-premium 0.7% 5.2% Radiance (2010) Naiv Super-premium 2.6%(2010) 2.6% Simpsons (2009) Tempest Super-premium 1.1% 5.7% Other x More in Value 22.8% 23.0% Exhibit 1. Current Nondisposable Market:

Exhibit 3. Current Nondisposable Razors Segmentation: Exhibit 4. SWOT Analysis: Super-­‐premium 70% Moderate 20% Value 10% Strength Weakness

• Paramount is an historical global consumer products giant.
• Clean Edge Razor carried new breakthrough technology. It could be a revolutionary product, which appeals to a growing market.
• Paramount was the unit-volume market- leader in 2009.
• Current product line-Paramount Pro had strong market share in the current business. - The potential cannibalization might occur - The marketing budget of Clean Edge has limitations.

Razor Sales $9.09 $13.64 $25.84 $31. Cartridges Unit Volume (^) 4.0 10.0 9.9 21. Cartridges Manufacture Price

Cartridges Sales (^) $29.4 $73.50 $61.58 $136. Total Sales (^) $38.49 $87.14 $87.42 $167. Niche Mainstream Year 1 Year 2 Year 1 Year 2 Razor Unit Volume (^) 1.0 1.5 3.3 4. Razor Production Unit Cost (^) $5.00 $4. Razor Production Cost

Cartridges Unit Volume (^) 4.0 10.0 9.9 21. Cartridges Production Unit Cost

Cartridges Sales (^) $9.72 $24.30 $22.18 $49. Capacity Cost (^) $0.61 $0.87 $1.71 $2. Advertising (^) $7 $7 $19 $ Consumer Promotion (^) $6 $6 $17 $ Trade promotion (^) $2 $3 $6 $ Total Cost (^) $30.33 $48.67 $81.53 $109.

Niche Mainstream Year 1 Year 2 Year 1 Year 2 Operating Profit (^) $8.16 $38.47 $5.89 $58. Exhibit 6. Marketing Budget Allocations: TV Magazie 55% 30% Internet 15%

Advertising Expendatures (1st/2nd year)

Exhibit 7. Marketing Budget Recommendations on niche positioning strategy ($ in millions): First Year estimated budget First Year Allocation Second year estimated budget Second Year Allocation Advertising (^) $7 TV $3.85 $7 Same as the first year Magazine $2. Internet $1. Consumer Promotions $6 Coupons $3 $6 Same as the first year Events $1. Bonus Packs $0. Store Displays

Feature Ads $0. Trade Promotions $2 Trade Shows $1. 1 $3 Trade Allowances

P-o-p $0. 6 P-o-p $0. Co-op Ads $0. 3 Co-op Ads $0.