Study, Case

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Positioning Clean Edge razor because niche would venture nicely together with the company’s current portfolio. Looking at the demonstrates, it is obvious that applying this marketing strategy will lead to regularly high income. Furthermore, Specialized niche positioning will only require $15 million in marketing costs as opposed to $42 million in mainstream.

There are several disadvantages to using this market position, such as the fact that this could limit the consumer base and there haven’t been any kind of innovations within their current goods in the last five years.

The business may risk losing their loyal customer base by placing itself inside the niche section. Positioning the Clean Edge razor as being a niche section would bring about 35% of new sales originating from existing product lines. In regards to popular positioning, this can be an effective way for Paramount to keep its even more loyal clients. The company’s last high-end product (the Pro) had attracted consumers mainly because it was significant innovative products in the razor market.

By simply introducing an additional cutting-edge shaving technology in to the broad promoting position, it may help to keep individuals shoppers who want to stay up to date together with the most innovative products. Mainstream device volumes are required to gain over three times those of the niche market in the first year. However , the new Clean Edge razor blade has wonderful long-term potential. The down-side of going into this new item into popular would be the reality the expert is already recently been marketed mainstream, and the clean edge would risk reducing the brand power, and this might in turn bring about cannibalization.

Placing the product like a mainstream product, 60% of recent sales could come from existing product lines. Likewise, with mainstream marketing comes a need to increase marketing to be able to reach the mass sum of consumers. Regarding overall charges, it appears that Clean Edge can be competitive from this aspect, because seen in Display 7 of the watch case. As illustrated in Exhibit 6, product sales and cartridge revenue are greater in the popular position. Due to the fact that sales for both the razor and cartridges are higher in the mainstream industry, so are the expenses of production.

Therefore , the operating revenue margin as being a percentage of sales actually is less through this position within the market. Even with this greater cost, however , the mainstream market seems to carry strong till we take into consideration the effects of cannibalization. I have attached a spreadsheet showing the expense of cannibalization in both market positions. Inspecting the data for the attached spreadsheet data, the cost of cannibalization is much less for the niche marketing technique.

Even though cannibalization gives us first yr losses pertaining to both situations, we do end up with a larger profit using the mainstream technique in the second year. Looking at advertising and promotional costs, it is noticeable that these are lower in the niche marketing. Looking at the data inside the long-run perspective, it appears that the niche market will be more rewarding, especially in the event that the firm was forced to increase advertising and marketing or advertising costs.

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