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CLEAN EDGE RAZOR: Splitting Hairs In Product Positioning

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cheryna mangila

on 28 November 2014

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Transcript of CLEAN EDGE RAZOR: Splitting Hairs In Product Positioning

Why Choose Mainstream Market?
Critical Analysis:
By directly entering into the mainstream market, sales from razors start from 3.3 million units and rises to 4 million units in the second year.
Total sales in first year will be $87.4 million and rises to $167.5 million
In 2010, allocated overall marketing expense is $48.3 million but Clean Edge’s mainstream position requires $39 million in total which is over 80% of the marketing budget.
In other words, the risk involved with aggressively promoting Clean Edge to the general market is high and demands excessive capital power.

IF IT'S ABOUT INCREASING MARKET SHARE, THEN MAINSTREAM IS THE DREAM!
MAIN PROBLEM:
Critical Analysis:
Production and advertising will have a total cost of $33.3 million in year 1, and a total cost of $48.7 million in year 2.
NICHE MARKET
MAINSTREAM MARKET
CONCLUSION
The most effective proposition for Clean Edge, in consideration of design, cost, and its overall influence to the company, is to become a niche product.
CLEAN EDGE RAZOR: Splitting Hairs In Product Positioning
THANK YOU!
By: Alyssa Gervasio, Jiazhao Li, Cheryna Mangila, Lorin Qin, Donovan Tait
Company
Background
Paramount Health and Beauty Company is a global consumer product giant that offers product lines in areas such as Health, Cleaning, Beauty, and Grooming.

In 1962, the company entered the nondisposable razors and cartridges industry and has since gained reputable grounds. Currently, Paramount offers two lines of nondisposable razors and refill cartridges - Paramount Pro and Paramount Avail.

Presentation Outline:
1. Company Background
2. Main Issues
- Positioning
- Brand Name
- Marketing
- Competition
3. Alternatives
4. Critical Analysis
5. Best Recommendation/Conclusion
Paramount has developed a new razor named Clean Edge and due to it's uniqueness and newly enhanced performance, they don't know where to position Clean Edge.
SUB-PROBLEM:
In addition, Paramount has to decide the perfect brand name
that perfectly suits Clean Edge that will fit the
chosen positioning strategy.
The niche market will complement their other products and avoid cannibalism of the existing products.
It requires less immediate expenditures in areas of promotions and advertisements expenditures.
Since Clean Edge is the first product that Paramount has in the niche market, Paramount will have market shares in both mainstream and niche positions which will diversify its income from multiple sources.
Why Choose Niche Market?
Has a capacity of 1 million units for razors in first year and increases to 1.5 million units in the second year.
cartridge capacity increases from an initial volume of 4 million units to 10 million units in the second year, doubling two and half times.
$38.5 million in sales in first year and increases to $87.1 million in sales in the second year.
Deducting production costs, the higher markup of the niche market price provides an extremely high gross profit margin of approximately 62% and a profit margin of 21% in the first year and 44% in the second year.
IF THE MAIN CONCERN IS MINIMIZING COSTS, NICHE GOT IT ALL FLOURISHED!
With a low initial investment, minimizing costs, and selling through the niche market, we have what seems like a less risky strategy, that still yields a healthy profit.
Mainstream market is projected to sell three times more units as niche strategy in the first year.
Since the current premium brand, Paramount Pro, is at its mature phase, the perfect replacement is Clean Edge to retain loyal customers
BUT...
It requires more advertising expenditures to promote the product in order to set it apart from its competitors
Cannibalism and elimination of the existing products in the mainstream will be occur.

BUT...
There will be fewer sales, and suggested price will be a dollar higher than if it's in the mainstream.
BUT
PRICE OF CLEAN EDGE IF POSITIONED IN NICHE MARKET:
It will be the most expensive super-premium razor in the market
This reflects its innovative performance and quality
Razor and Cartridge targeted to 3.3 millions of units and 9.9 millions of units in the first year, respectively, tripled and doubled the capacity volume of niche

In second year, mainstream strategy even reaches to 4.0 millions of razors and 21.9 millions of cartridges, a much higher level of market share compared to niche.
Which is perfect for Clean Edge Razor?

NICHE
OR
MAINSTREAM
Retail Sales:
In the niche market, Clean Edge is extremely profitable and it should stay in the niche market unless mainstream production becomes cheaper.
The wide profit margin provides Paramount with very high return on capital.
In the long run, Clean Edge can establish a very strong brand equity and even pricing power which competitors cannot easily dismantle by newer innovations.

END OF PRESENTATION.

THANK YOU!
Full transcript