This document contains a case study analyzing market segments and profit forecasts for a company, Clean Edge, entering the razor and cartridge market. It includes a market segmentation breakdown by value and sales. Profit and loss forecasts are provided under niche and mainstream scenarios. Two executives debate whether Clean Edge should target the niche or mainstream market. The niche strategy appeals to minorities and has lower risks but may not scale, while the mainstream approach could broaden appeal but risks cannibalizing existing brands and requires more investment. In the end, Clean Edge must decide whether to launch a new niche brand or reposition their existing Paramount brand to target the mainstream market.

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