Clean Edge Razor

Assignment Group: 7

What should be the positioning strategy for Clean Edge

Razor?
Ans.
Niche Mainstream
 Create a one strong differentiated  Capturing a bigger market share
brand  High cannibalization as 60% market
 Low cannibalization only 35% share comes from Paramount razors
 Low marketing investment than  Higher marketing investing
mainstream positioning of only $12 requirements of $42 million
million  Lower profit margin
 Higher profit margin due to high
pricing

Why Niche positioning?

 Profitability analysis of both niche and mainstream market demonstrates more
profits in niche markets
 Low cannibalization in niche market (35%) and less resistance from management
team
 Less advertising and promotional expenses and no need to increase the overall
budget
 Low threats and uncertainty in niche market
 Even after considering profits and deducting cannibalization amount, we are getting
31.365 million $ profit in niche positioning(calculations are shown below).
 Niche Mainstream
year 1 year 2 year 1 year 2
Razor unit volume(million) 1 1.5 3.3 4
Razor unit price($) 9.09 7.83
Razor sales (million $) 9.09 13.635 25.839 31.32

Cartridge unit vol(million) 4 10 9.9 21.9

Cartridge unit price($) 7.35 6.22
Cartridge sales(million $) 29.4 73.5 61.578 136.218

Total sales(million $ ) 38.49 87.135 87.417 167.538

Razor production unit cost($) 5 4.74

Razor production cost(million $) 5 7.5 15.642 18.96
Cartridge unit producton cost($) 2.43 2.24
Cartridge production cost(million $) 9.72 24.3 22.176 49.056
capacity cost(million $) 0.61 0.87 1.71 2.45
Advertising cost(million $) 7 7 19 17
Consumer promotion cost(milliom $) 6 6 17 14
trade promotions(million $) 2 3 6 8
Total cost ($ million ) 30.33 48.67 81.528 109.466
operating profit ($ million) 8.16 38.465 5.889 58.072

Niche Mainstream
Year 1 Year 2 Year 1 Year 2
Net operating profit ( $ million) 8.16 38.465 5.889 58.072
Cannibalized Razor vol(million) 0.35 0.525 1.98 2.4
Razor contribution margin ($) 1.76
Cartridge vol. after Cannibalization 1.4 3.5 5.94 13.14
Cartridge contribution margin($) 2.8
total Cannibalization ($ million) 4.536 10.724 20.1168 41.016
profit after cannibalization( $
3.624 27.741 -14.2278 17.056
million)
Total profit after 2 years (million) 31.365 2.8282