Razor Edge Case

2) How is the nondisposable razor market segmented? What are the crucial elements of consumer behavior for nondisposable razors?

1. What changes are occurring in the non-disposable razor category? Assess Paramount’s competitive position. What are the strategic life-cycle challenges for Paramount’s current products as well as Clean Edge?

Examining the consumer behavior for nondisposable razors, we can observe that consumers are focusing on the premium segment. Also, they are becoming more sophisticated and expecting new technologies to smooth the shaving process. Focusing on that, Paramount should invest in the premium products category. Even though that would create cannibalism for the “pro-products” which is already loosing market.

The case points out that Gillette’s competitors were quick to copy new products. The launch of Sensor will be a breakthrough in the market and will introduce a new product category the “cartridge laser cut razor with superior quality”. Therefore it is essential for Gillette to protect their new product by pursuing patent enforcement, as they already have. This way will Gillette retain its competitive advantage and will re-introduce and position itself as a technology leader.

Synopsis: Gillette has long been known for innovation in both product development and marketing strategy. In the highly competitive, but mature, razor and blade market, Gillette holds a commanding worldwide market share. The peak of its innovation occurred in 2006 with the introduction of the Fusion 5-bladed razor. Today, innovation in razors and blades is thwarted by a lack of new technology and increasing consumer reluctance to pay for the “latest and greatest” in shaving technology. Gillette must decide how to put the razor wars behind them and maintain or increase its share of the global razor market.

* Customers: Male consumer products have been trending upward in the last decade. The customer segments are broken up into three areas; social/emotional, involved razor users, and uninvolved or maintenance users. Social/emotional are responsible for 39% of Nondisposable razors, Involved is for 28%, and maintenance users account for 33%. In 2009 consumers razors and replacement cartridges at a higher rate than ever before.

•Main competitors (Oil of Olay, Pond's and, Nivea) were situated in the HBA aisles of the stores while Plenitude products were merchandised in point of sales in the cosmetics' aisles next to L'Oreal cosmetics where the consumer is looking for cosmetics not skin care. The skin care consumer is in the HBA aisles!

For this reason, Gillette has always been trying to innovate in the market with new products. But they did not want their product to be bought just because they are a novelty but because it was perceived by the customer as a good quality product and have a staying power and product loyalty. This can be illustrated by the launch of the “Fusion” product by

Present sales of the Paramount in razor industry come to $170 million and Paramount Pro contributes to this significantly. By introducing Clean Edge in the mainstream sector a 60% fall in the sales of Pro is predicted and the revenue generated by it will come down to $68 million. But it is expected that clean edge will generate a revenue of $147.8 million* and in turn Paramount can achieve a net sales of $215.8 million. Marketing cost is approximated to $42 million and Paramount will be able to generate a profit of $173.8 million. If they had positioned it in the niche segment they would lose only 35% sales of Pro. But at the same time, due to the constraints in the market clean edge can raise sales of only $52.8 million and the net sales will total to $163.3 million. Here the marketing cost is approximated to $15 million and the revenue generated will amount to $148.3 million. Thus the figures clearly indicate that concentrating the mainstream would be more beneficial. Also Paramount will be able to achieve a profit margin of $3.09 per unit even after providing distributors a margin of $3.36 per unit.

P&G is an international supplier of consumer goods it is a "global leader in health and beauty care products, detergents, diapers and food . P&G's presence in the hair care market in the U.S has been strengthened by innovative technology BC-18 and the replacement of an old brand 'Pert' with 'Pert Plus'- a mild shampoo with a fully effective conditioner. P"G decided to introduce BC-18 in Europe. Traditionally, the European market is highly competitive the main rivals are Colgate, Unileaver, and L'Oreal. The European market is segmented (i.e. value based) and

The Gillette Company has effectively entered the razor blade market in the main parts of Indonesia. Even though there is still a lot of potential for growth, it faces stiff competition, as well

In the highly competitive Japanese skin-care market, P&G¡¦s new SK-II product has proven its success as a premium and prestige offering. P&G has gained significant knowledge transfers from SK-II development and further, has successfully tapped the fickle Japanese market and has devloped a loyal user-base in Taiwan and Hong Kong. With its phenomenal success, it is only logical that P&G consider rolling-out the SK-II product-line to the international market. However, while there is significant worldwide growth potential within the $9 billion prestige skin-care industry, based on recent organizational changes, new corporate priorities, and thorough market assessment, P&G must base its decision on current resources and capabilities to

Procter & Gamble (P&G) is a world-leading producer of consumer goods. Today, it consists of over 20 million dollar brands (like Gillette) and operates in 42 countries

Gillette has been successful in convincing the world that more is better, in regards to the number of blades and other features of a razor. To be successful in the

Because of their similarities, Proctor & Gamble and Gillette are a good strategic fit. Between the two entities they have the ability to combine operations, technology, resources, distribution channels and research costs in efforts to drastically cut spending. With lower costs, and the merger complete, the collaboration of Proctor & Gamble and Gillette should achieve a 1+1=3 effect.