Non-disposable razors recorded normal growth of about 5% in retail sales during the period 2007 to 2010 whereas refill container and disposable razors recorded growth of about 2% and 3% respectively for the same period. Innovations and new product introductions are the prime factors pertaining to the growth.
Non-disposable razors and refill cartridge market is extensively classified in three portions namely value, moderate and super superior based on value and top quality. Paramount’s buyer research determined distinct segmentation in terms of merchandise benefits and consumer habit. % of non- throw-away razor users are segmented as Involved Razor users, social/emotional shavers; 28% since Involved Razor blade users, artistic shavers and 33% as Uninvolved Razor users, routine service shavers. Studies from 2009 showed the fact that retail sales of non- disposable electric razors and refill cartridge originated in 25% volume of super-premium, 43% of modest and 32% of value sections. In the last decade, the sector has experienced significant progress in the very premium portion.
Product creativity and new-technology is leading this sector for a number of new entrants. In 2008-09 the interest rate of new merchandise innovation causes 22 fresh SKUs to become introduced. SWOT Analysis Strong points Paramount Into the Beauty Company’s biggest strength is that it is a well- founded brand with deep wallets and a good association with consumers.
The product- Clean Edge Razor blade, that they embarcacion released, is likewise technologically in the current market. Disadvantages best The company does not have a cut in the 37. 2% with the pie that corresponds to the super superior segment which includes immense potential.
Also we have a risk of launching the product in the wrong segment or placing it mistakenly. A wrong move could result in cannibalization of Vital Pro, one other product within their portfolio. Chances There is extremely good development in the extremely premium segment especially in men’s grooming. The market is also remarkably profitable and so vendors will be ready to stock the products.
Also, the upkeep users really are a market not really ventured by any company until date. Hence the options are huge. Threats Several competitors want to become the head in this section which is likely to grow in the near future. The opponents could also catch up with the latest echnology and to produce technologically more advanced product. Accessibility to alternatives like disposable and electric electric razors make a higher threat of substitutes.
Because of large number of products available and constant advancement in the sector it is very possible for the consumers to switch the businesses. Hence, customers have an increased bargaining electric power. Entry boundaries are reduced in the market since zero major Ur; D costs are involved in addition to no major regulations.
The bargaining power of the suppliers is low. Hence, overall the high grade segment of nondisposable razors is a stunning industry to enter into. Placing Strategy: The first strategy that we suggest is Specialized niche Positioning, targeting the high quality segment: As of this moment, the products unveiled by Very important in the non-disposable razer part, Paramount Expert and Paramount Avail are situated in the average segment and since a value -offering respectively.
Following three years of development, Extremely important Health and Beauty Company has come up with a fresh technologically advanced moving razor called Clean Border. Keeping in mind the superior technology used and the fact that Vital has not created a product targeting the high grade egment, Vital could undertake Niche Placing while launching Clean Border. However , there are specific disadvantages and advantages: Advantages: Positioning Paramount’s Clean Edge as a specific niche market will highlight the company’s product portfolio significantly. From your exhibits it truly is visible that it may result in high and consistent profit margins pertaining to the company plus the risk involved will be less.
Apart from that, the financial requirement of launching the product in the high grade segment is only 15 , 000, 000 dollars as against 40 million dollars for the mainstream targeting. Disadvantages: Because the styles suggests, learning the fact that the premium part has not been targeted significantly, almost all of Paramount’s opponents have introduced products for this segment. Likewise, for the past your five years, the company’s current products Expert and Get have not launched any new innovations because of which the customers will be moving on to other rivals.
The product expert is in the fully developed face and may need phasing out ultimately. The second strategy that can be implemented is Popular Positioning. The benefits and disadvantages of the identical are the following: Consumers are becoming more and more sophisticated daily and anticipate more advanced technology. Paramount’s bread and butter product, Expert was in the mature stage of the product lifecycle so there is a chance of decline.
Placement Clean Advantage as popular product may help prevent devoted Paramount clients from getting wooed aside to more innovative brands. Main stream razor unit volumes are required to capture above three times the volumes with the niche market in the first 12 months. Clean Border has the potential for true market domination and would quickly gain rear end appeal. Down sides: Extremely important already had product in mainstream placing -Paramount Expert so starting it because mainstream placing will thin down the brand electrical power and will result in cannibalization. More marketing support will be had to reach the prospective masses.
The corporation would need an extensive marketing campaign, considerable client promotions can be needed and thus the expenses related to them will probably be huge. To succeed in full sales potential with this placement, $42 , 000, 000 marketing price range would be essential for year one particular. Total revenue of Very important for Get and Expert for initially year (2009) and second year (2010) are determined using the market size (retail sales) and corresponding business, both actual (2009)and estimated (2010), of Paramount. The cost of Cannibalization is definitely calculated applying total sales and percentage of cannibalization given.
Studying the result, it is evident that launching the item is a successful venture; however , the cost of cannibalization may change equations. The expense of cannibalization is lower for the niche market when compared with mainstream marketplace. Although, cannibalization djustments provide us with losses intended for the initial year when it comes to both popular and specialized niche, the profit received in the second year to get mainstream is usually larger than niche market. Branding Approach The logos should be done in such a way that it emphasizes Clean Edge Razor being a unique and breakthrough item with the use of latest technology.
Nevertheless , given the tight advertising budget, it should use the well-established term of Vital rather than make a brand based on the Clean Edge. This could help potential buyers connect with the product quickly and test it. This could ensure optimum sales. Suggestions & Conclusion The advice is to present the Clean Edge in to the marketplace as being a niche merchandise since info shows that customers in the high quality segment are able to switch involving the companies.
Employing advertising and promotion from the new product we could gain market share from opponents. Exhibit 8directly suppo rts this recommendation and snows that even though unit sales are less than main stream sales, the operating income and the functioning profits because % of sales can be higher. In both year one and year two, this specialized niche arket can be profitable and growing.
It can be here that Paramount ought to focus it is efforts about product introduction and placement for the Clean Edge Razor. Once it has introduced itself in the niche portion, Randall should certainly then launch it, probably after 2 to 3 years, inside the mainstream category. As the info shows, both niche and mainstream approach will help Paramount to raise the market share in super- high quality non throw-away razor part.
But the niche strategy will enables Clean Edge Razor blade to contribute profit as well as, limit the effect of cannibalizing Paramount’s existing products.
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