Clean edge- case study

1. CASE STUDY:

3. VOLUME
VALUE
32%
SUPER-PREMIUM
25%
MODERATE
43%

4. SALES
VALUE
22%
MODERATE
44%
SUPERPREMIUM
34%

5.  PRINCE
 BENET & KLEIN
 NEW ENTRANTS

7. Market
segments
SuperPremium
Mainstream
Moderate
Niche
Value

8. Profit and Loss Forecasts for Clean Edge Under Niche and Mainstream Scenarios ($ in Millions)
Niche
Mainstream
1
2
3
Unit sales - Razors
Dollar sales - Razors
Unit sales - Cartridges
Year 1
1.0
$ 9.09
4.0
Year 2
1.5
$ 13.64
10
Year 1
3.3
$
25.84
9.9
Year 2
4
$ 31.32
21.9
4
5
Dollar sales - Cartridges
Total dollar sales
$ 29.40
$ 38.49
$ 73.50
$ 87.14
$
$
61.58
87.42
$ 136.22
$ 167.54
6
7
8
Production costs Razors
Production costs Cartridges
Capacity costs
$ 5.00
$ 9.72
$ 0.61
$ 7.50
$ 24.30
$ 0.87
$
$
$
15.64
22.18
1.71
$
$
$
9
10
Advertising and Promotion
Total costs
$ 15.00
$ 30.33
$ 16.00
$ 48.67
$
$
42.00
81.53
$ 39.00
$ 109.47
11
12
13
Operating Profit
Profits as % of sales
Cost of cannibalization - Razors
$ 8.16
21%
$ 0.62
$ 38.47
44%
$ 0.92
$
5.89
$
3.48
14
15
Cost of cannibalization - Cartridges
Profit after cannibalization
$ 3.92
$ 3.62
$ 9.80
$ 27.74
$
$
16.63
(14.23)
7%
18.96
49.06
2.45
$
58.07
35%
$
4.22
$
$
36.79
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

9. (ALBERT
ROSENBERG)
(WILLIAM KIM)

10. CREATE A ONE STRONG
BRAND
APPEALS TO MINORITY
AVOID CANNIBALIZING
EFFECT
MARKETING INVESTMENTS
&
FINANCIAL RISKS ARE LOWER
CAN BE BROADENED TO
APPEAL TO THE
MAINSTREAM

11.  REPLACE THE PRO
CLEAN EDGE IS A
TECHNICAL INNOVATION
SCARE OF NEW ENTRANTS
TIME IS RIPE FOR A NEW
PRODUCT

12. CleanEdge
CLEAN EDGE
Paramount

14. BY:
SAGAR CHHEDA
VAIBHAV JASANI