Clean Edge Razor - Splitting Hairs in Product Positioning
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This document summarizes a case study analysis of Clean Edge's razor market positioning options. It includes market segment data showing a shift from value to premium segments. Charts project profit under niche versus mainstream scenarios, with mainstream having higher sales and profits but also higher cannibalization costs. Two recommendations are provided: (1) target the niche market to avoid cannibalization and have lower risks, or (2) enter the mainstream with a new product to replace an existing one and take advantage of market opportunities.
Clean Edge Razor - Splitting Hairs in Product Positioning
- 1. CASE STUDY: Prepared by Ershad Haekal Martha Siahaan R. Purwedi Darminto Yuvi Karauwan Marketing Management Dosen : Dr. Iin Mayasari, MM, MSi
- 2. Case Summary Main Issue Problem Statement Analysis Recommendation
- 8. PRINCE BENET & KLEIN NEW ENTRANTS
- 13. Profit and Loss Forecasts for Clean Edge Under Niche and Mainstream Scenarios ($ in Millions) Niche Mainstream Year 1 Year 2 Year 1 Year 2 1 Unit sales - Razors 1.0 1.5 3.3 4 2 Dollar sales - Razors $ 9.09 $ 13.64 $ 25.84 $ 31.32 3 Unit sales - Cartridges 4.0 10 9.9 21.9 4 Dollar sales - Cartridges $ 29.40 $ 73.50 $ 61.58 $ 136.22 5 Total dollar sales $ 38.49 $ 87.14 $ 87.42 $ 167.54 6 Production costs Razors $ 5.00 $ 7.50 $ 15.64 $ 18.96 7 Production costs Cartridges $ 9.72 $ 24.30 $ 22.18 $ 49.06 8 Capacity costs $ 0.61 $ 0.87 $ 1.71 $ 2.45 9 Advertising and Promotion $ 15.00 $ 16.00 $ 42.00 $ 39.00 10 Total costs $ 30.33 $ 48.67 $ 81.53 $ 109.47 11 Operating Profit $ 8.16 $ 38.47 $ 5.89 $ 58.07 12 Profits as % of sales 21% 44% 7% 35% 13 Cost of cannibalization - Razors $ 0.62 $ 0.92 $ 3.48 $ 4.22 14 Cost of cannibalization - Cartridges $ 3.92 $ 9.80 $ 16.63 $ 36.79 15 Profit after cannibalization $ 3.62 $ 27.74 $ (14.23) $ 17.06 (a) Cannibalization cost = % cannibalization from Avail and Pro (5th paragraph in case under Positioning heading) * unit sales * contribution per unit where the contribution per unit average for Avail and Pro is $1.76 for razors and $2.80 for cartridges (case footnote 2 under Company Overview heading) Assumes cannibalization of 35% for Niche, 60% for Mainstream
- 15. APPEALS TO MINORITY CAN BE BROADENED TO APPEAL TO THE MAINSTREAM AVOID CANNIBALIZING EFFECT CREATE A ONE STRONG BRAND MARKETING INVESTMENTS & FINANCIAL RISKS ARE LOWER
- 16. CLEAN EDGE IS A TECHNICAL INNOVATION REPLACE THE PRO SCARE OF NEW ENTRANTS TIME IS RIPE FOR A NEW PRODUCT