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Group 3
Members : Aditya Sood 2013PGP020 Nupur Sahni 2013PGP263 Salil Aggarwal 2013PGP338 Sruthi Thomas 2013PGP402 Sudhir Kumar Singh 2013PGP407 Vivek Devaraj 2013PGP450
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ii.
Product innovations in the super-premium segment : In the last decade, the industry had experienced significant growth in the super-premium segment due to numerous product innovations in the superpremium segment as below: 5-Blade technology Glide strips Lather bar Low resistance blade coating
iii.
Frequency of purchase :
Clean Edge Razor Group 3 The consumers were showing a change in the frequency with which they purchased razors and replacement cartridges. The new tendency was to purchase razors and replacement cartridges more frequently than in previous years, mainly due to consumers trying out new products as well as advertising and sponsored articles that touted the benefits of frequent blade replacement.
iv.
Advertising :
As a result of new product innovations and in order to stimulate demand, total media advertising expenditures has shown a significant increase over the years. In fact, the media advertising expenditure has increased by 39.05% in the period 2009-2010 while the retail sales has only shown a growth of 4.8% in the same period. Major Brands Media Advertising Expenditure in 2009($ in million) 35.2 27.8 19.1 2.4 84.5 Media Advertising Expenditure in 2010($ in million) 36.8 29.2 20.2 15.2 16.1 117.5 % Increase in Advertising expenditure 4.54% 5.03 5.75 533.33 New Entrant in Advertising 39.05
Distribution outlets :
The accelerated growth of new product innovations in the product category had led to the introduction of 22 new SKUs in the period between 2008 and 2009, with the majority of them being targeted at the super premium segment. Distribution outlets had responded positively to this growth by increasing shelf space for the product category.
Distribution was also showing a shift from food and drug stores to other distribution outlets. While in 2007, food and drug stores jointly accounted for 87% of the total sales volume of non disposable razors, it had reduced to 71% of the total sales volume in 2010. In the same period, the sales
Clean Edge Razor Group 3 from other distribution mediums like mass merchandisers, club stores and others had increased from 23% of the total sales volume to 29%. Thus, there was a clear shift in the distribution outlets of the product category.
The market is segmented into three categories based on the price and quality as below
The elements of consumer behaviour that have been considered for this segmentation are as follows.
Based on intensity of involvement with the product, the consumers can be segmented into
Uninvolved o There was a group of consumers who were completely disinterested in the product category and labelled as Maintenance shavers
Involved o Involved users could be broken up into Social/Emotional shavers motivated by overall shaving experience Aesthetic shavers motivated by cosmetic results
Involved Razor Users Social/Emotional Shavers (39% of Non-disposable Razor users) Aesthetic Shavers (28% of Non-disposable Razor users)
4. FINANCIAL IMPACT
Table 1 given below mentions the financial impact of each strategy. The high cannibalization due to main stream and high marketing cost is a major reason for the high cost per unit, hence a low profit. As we have described above the best option for the company is to target the niche segment. Apart from this we have also mentioned above the marketing cost associated with both the methods.
(Million Dollars)
NICHE
MAINSTRE AM
(Million Dollars)
Year1 1 9.09 9.09 5 5 0.616 4 7.35 29.4 2.43 9.72 3.92 0.61 7 6 2 34.86 6 38.49 3.624
Year2 1.5 9.09 13.63 5 5 7.5 0.924 10 7.35 73.5 2.43 24.3 9.8 0.87 7 6 3 59.39 4 87.13 5 27.74 1
Year1 3.3 7.83 25.839 4.74 15.642 3.4848 9.9 6.22 61.578 2.24 22.176 16.632 1.71 19 17 6 101.64 48 87.417 14.227 8
Year2 4 7.83 31.32 4.74 18.96 4.224 21.9 6.22 136.2 18 2.24 49.05 6 36.79 2 2.45 17 14 8 150.4 82 167.5 38 17.05 6
Other Costs
Total Cost of Razors & Cartridges Total Revenue of Razors & Cartridges
Net Profit