clean edge razor

CASE STUDY:

Prepared by

Ershad Haekal

Martha Siahaan

R. Purwedi Darminto

Yuvi Karauwan

Marketing Management Dosen : Dr. Iin Mayasari, MM, MSi

Case Summary

Main Issue

Problem Statement

Analysis

Recommendation

SUPER-PREMIUM

25%

MODERATE 43%

VALUE 32%

VOLUME

SUPER-PREMIUM

34%

MODERATE 44%

VALUE 22%

SALES

PRINCE

BENET & KLEIN

NEW ENTRANTS

Market

segments

Super-Premium

Mainstream Niche

Moderate Value

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

(ALBERT ROSENBERG)

(WILLIAM KIM)

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

CLEAN EDGE IS A

TECHNICAL INNOVATION

REPLACE THE PRO

SCARE OF NEW ENTRANTS

TIME IS RIPE FOR A NEW

PRODUCT

CleanEdge

CLEAN EDGE