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Case Study: Paramount

929 Words4 Pages

Background & Context
Paramount is a global consumer products giant with four corporate divisions including Health, Cleaning, Beauty and Grooming. Paramount entered the non-disposable razor market in 1962 and quickly gained market leadership. Sales from Paramount’s non-disposable razors and refill cartridges in the U.S. contributed $170 million in revenue, gross profit of $92 million, and operating profit of $26 million in 2009.

Paramount has two product offerings & its market share is around 23.3 % (retail share). These two products are:-
1. Paramount Pro : Moderate segment product
2. Paramount Avail : Value segment product However, until now, Paramount has not introduced significant technology or new products in the last five years. …show more content…

Paramount intends to curb excessive marketing expenses in all product categories. Marketing expenses for Clean Edge in the niche market would be around $15 million while marketing in the mainstream market would be considerably higher at $42 million. Launching the product in niche domain would generate 35% of sales from the existent customers of other products & the corresponding figure is 60% when launched in mainstream market. Also, the management is considering two branding strategies – Whether they should market the product as “Clean Edge by Paramount” or as “Paramount Clean Edge”.

Alternatives
1. Mainstream Market: This would require use of funds allocated to Paramount Pro razor as the product needs huge media, consumer & trade promotions spend for successful launch. This will reduce the budget for Paramount Pro significantly and hence this step is being opposed by other product managers. The pricing in this case would be around mid-range among the competitor products
2. Nice Market: The proposed retail price is $12.99 for Clean Edge razor & $10.5 for refill cartridges. This will generate a perception that the product is very innovative & unique. The pricing would be the highest in the segment but it will lead to much lesser cannibalization & budget would also be lower.
Cost …show more content…

In addition, if we consider advertisement and promotion costs, mainstream involves a larger spend in this segment. In case this cost has to be increased, the profit may reduce further if the investments do not translate into revenue. Hence, we can derive that positioning the product for niche market is profitable in long run.
Placing Clean Edge in the super-premium segment will lead to better retention of ‘pro’ customers in the mainstream segment where there is only one competitor. Also, since the target market for Niche segment is limited, it will result in better ROI for any promotional expenses.
The focus market is customer base wanting a superior shaving experience using most innovative methods. Since this is the only innovative product, it is poised for high growth in the coming years.
Also, since the budget requirement is lesser, it would lead to lesser impact on the marketing spend of other products.
The product should be branded as “Paramount Clean Edge” because target customer are already familiar with the brand. Also, capitalizing more on the brand name will lead to lesser advertising expenses as it would be easy to develop a connect with the

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