The Razor and Razor Blade Business Model

We love stories about moneziting innovation, and we extend kudos to Mickey Meece over at The NY Times for today's Small Business Case Study profiling a shaver that combines a mini shaving cream dispenser with a razor.

The product is made by L.P.I. Consumer Products under their ShaveMate line of products.

The fun part of this column (in the print edition only): the case study is complemented by opinions proffered by marketers and entrepreneurs i.e. the strategies implemented by the highlighted entrepreneur.

I'd actually purchase this product--and aside from the many peanut gallery recommendations submitted to the NYT, they all missed the most likely silo i.e. distribution channel.
To Pete & Louis Tomassetti (L.P.I. principals)--ping me if you'd like to know my thoughts!

 Courtesy of the NY Times, here's the article:
 (click on the title link to web page that includes a long list of comments submitted by readers).
THE CHALLENGE To crack the $2.6 billion United States razor and blade market, which is dominated by Gillette and Schick.
THE BACKGROUND Louis D. Tomassetti and Peter C. Tomassetti, known as “the inventor brothers” in Pompano Beach, Fla., created and sold a line of marine signaling devices under the Safety-Sport brand. More recently, they homed in on razors because they believed shaving was getting “complicated.” They concluded, Louis said, that “the common sense thing to do is to combine the shaving cream with the razor.”
After years of research and development, engineering and patent work, the brothers took their razors to the military in 2002 because they had heard that soldiers in Iraq and Afghanistan were dry shaving. That first product was rugged and featured two blades, with the shaving cream in the handle. The military became a repeat customer.
Still, the Tomassettis found American retailers reluctant to take shelf space from Gillette and Schick. Store managers encouraged the brothers to improve their product — add more blades, they suggested. So the Tomassettis did. With six blades, ShaveMate offers one more in-line blade than its competitors, and it is the only all-in-one razor on the market with shaving cream in the handle.
When Titan 6 and Diva 6 were in prototype, the brothers took the razors to trade shows. While retailers were intrigued, they said that ShaveMate lacked brand awareness. It became clear that the brothers needed to stimulate demand by building name recognition and educating consumers on the benefits of their razors.
THE OPTIONS The brothers thought they had three options:
They could go head-to-head with Gillette and Schick with a national print, television and radio advertising campaign, supplemented by store promotions and coupons. Because the cost could easily exceed $150 million, the brothers dismissed this idea out of hand.
They could market ShaveMate on their own through shavemate.com and specialty retailers like hotels, airport stores and cruise ships, using their tagline, “The future of shaving is here.” This was the most affordable option, costing an estimated $100,000 to produce razors for the initial stock, displays and promotions, but it would take a while to build the brand and increase sales.
Finally, they could initiate a two-pronged marketing attack for about $1 million, looking for a big splash with a low-cost specific public relations effort to put ShaveMate in front of print editors and TV producers. Then they could begin a national, as-seen-on-TV campaign on cable channels to educate consumers via two-minute commercials on how their product could simplify shaving. The goal would be to have a well-known spokesman promote the razors.
THE DECISION The Tomassettis picked the two-pronged attack. All new revenue would feed the marketing beast, and the brothers hoped to build recognition quickly.
The blitz to send out samples and promotional material paid immediate dividends: ShaveMate Diva 6 appeared in the Love That section of O, the Oprah Magazine. Local news stations tested ShaveMate razors on the air. “Live With Regis and Kelly” featured Diva.
Producers of the Discovery Channel program “PitchMen,” heard about ShaveMate, and in February 2009, they invited the brothers to California to try out for the show. Billy Mays, the face of OxiClean, and Anthony Sullivan, also a pitchman, were the hosts who would decide which inventors had a marketable product.
“When we auditioned, they literally went crazy,” Louis recalled. “They said this is monster hit.” The brothers would be included on the show and Mr. Mays and Mr. Sullivan were both going to be spokesmen. Mr. Mays said, according to the Tomassettis, that he loved the product so much he was going to shave his beard with a ShaveMate on national TV. He would be the face of ShaveMate.
But last June, Mr. Mays died. His death knocked the Tomassettis off Season One of “PitchMen,” and, Peter said, “took the wind out of our sails.”
Several months went by. Mr. Sullivan assumed that “the avenue to market had expired with Billy.” Then, last fall, Mr. Sullivan said, the brothers called him back and asked if he would be their pitchman. He agreed, and his company produced the infomercials.
THE RESULTS The media attention and product exposure caught the eye of retailers like Walgreens.com, Target.com and Meijer Stores. On Feb. 1, Walgreens decided to sell ShaveMate in its stores nationally.
The first Anthony Sullivan two-minute commercial, which cost about $40,000 to produce, is scheduled to be shown on cable TV in test markets starting Monday. The Tomassetti brothers were added to Season Two of “PitchMen,” which will appear in August.
Meanwhile, Gillette and Schick are introducing their latest products: the Gillette Fusion ProGlide and the Schick Hydro, in what some analysts are calling “the razor wars.” The Fusion ProGlide, which features five blades and seven “high-precision advancements” (but no shaving cream in the handle) will be introduced June 6 in a manual version ($10.99) and a power version ($12.99). The Schick Hydro 5 ($8.99), which offers a hydrating gel reservoir (but, again, no shaving cream in the handle), hit store shelves April 6. The Hydro also sells a three-blade version ($7.99).
The Tomassettis hope their product, which costs $9.99 for a three-pack of all-in-one razors (and shower hook), will help win over customers who are paying more than that for replacement cartridges alone.
The direct marketing approach allows the brothers to pay as they go. If the test in May is successful, they expect to spend up to $100,000 a week on air time. The goal is to sell a few million of the three-packs in one year (sales are currently at about 250,000), Mr. Sullivan said, adding, “In the grand scheme of razor blades, that’s probably a drop in the ocean.”

Small Business Social Networking...and the Next Big Idea

Social Networking is necessarily the big buzz word for businesses. But, who/where can like-minded small, brick and mortar businesses owners go to for peer advice?

I'm talking about the type of advice that's centric to owners of small restaurants, car washes, dry cleaners, etc. etc. And ideally, a platform for forums, advice sharing that comes from peers within the same or nearby communities--the ones that share the same customers.

We've looked around the Web, and whether we haven't looked hard enough or deep enough, we actually haven't found anything that meets the above description.

We actually proferred this idea up to a web-based 'business broker' that specializes in bringing small business buyers and sellers together. They have a captive audience of more than 3000 "sellers", and 20,000+ qualified buyers seeking to buy an established business within their geographic area, and the value added this broker can provide by creating a forum for their audience will only make their business stickier...We'll let you know if they actually implement this idea..but its a good idea for any B2B facilitator...

Speaking of small business ideas...In a previous career, one that was considered to be a high-pressure pressure cooker (think Wall Street trading desk), several of us with glasses half empty would fantasize about a better quality of life career, and the idea that we kept coming up with was opening a franchise of bikini-waxing store fronts.

Of course, that type of idea is not surprising considering the testosterone-tainted trader mindset. And it should come as no surprise that several of us actually enrolled and became certified in the art of bikini-waxing.

But wait, before anyone lambastes us for being sexist, .now we've really hit on the next brilliant idea for brand marketers that like to baste ideas to the max: leveraging the new, and hottest trend in the bikini-waxing industry: Vajazzling.. 

Never heard of it?? Well, Jennifer Love Hewitt has recently become the unpaid spokesperson for a personal styling strategy that is, for lack of a better expression, re-purposing the most personal real estate.

Think about belly-rings in the navel, and move down a few inches. We've profiled shaving heads for advertising messages in this blog; and now...ta da!...Watch this video, and put on your brand marketing hat. Instead of simple Swarovski crystal, I'm thinking pre-packed crystal kits that are designed with corporate logos..Godiva, are you watching and paying attention?

See Me, Hear Me, Buy Me....

I'm violating rule #1; never blog more than once a day, at most. In fact, more than 2x a week is stretching the limits. Why? Your audience will be convinced that you are either (i) unemployed (at least 1 out of 10 are, so you're not alone) or (ii) under-employed (who isn't?) and/or (iii) a narcissist that craves attention and is suffering from the delusion that people want to actually tune in to your blog and read what you have to say.

But, when it comes to a topic that we're particularly passionate about, we find ourselves pontificating more frequently.

Web-based Video (for corporate application). How many times have we shouted out about this? You can search the blog archives, but I'd think you'll be seeing postings on this topic going back to the early 2000's, or thereabouts. In any case, we're compelled to point out a watershed moment from within the sometimes illiquid realm of financial services.

You see, banks and brokers haven't easily embraced web-video for several reasons. We'll overlook the issue i.e. network security, so perhaps the most relevant is that regulators that regulate the advertising of registered broker/dealers are pernicious when it comes to advertising collateral, and compliance departments at respective firms are sensitive when it comes to approving advertising content that don't have easy-to-understand rules to guide them.

To date, FINRA hasn't been able to come up with guidelines for brokers or for hedge funds when it comes to the approval process of web-video content..but now they apparently have...as illustrated by a press release put out yesterday by BarclayHedge...a media company that provides a range of services to the hedge fund world.   Here's the excerpt:


BarclayHedge, Ltd., announced the launch of BarclayHedge TV – a web-based capability that allow registered managers of hedge funds, fund of funds and managed futures funds to create and make available videotaped presentations online for current and prospective investors. BarclayHedge, which had begun accepting applications for its new BarclayHedge TV service, will arrange and oversee all aspects of its new video service, from scripting assistance to professional videotaping & editing to online hosting and updating.
“We believe this is an opportunity for funds to provide a higher level of transparency and interest among prospective institutional and high net worth investors.” Sol Waksman, founder and President of BarclayHedge, said, “We think regulators and investors alike will welcome a tool that allows them to see, hear and evaluate the people and the thinking that drives various alternative investment strategies.”


We don't know that much about Barclay's capability i.e. producing content, but we do know that NYC-based MediaPlace knows how to do this stuff better than most.

And while we're on the topic of video: today's NY Times Business section includes a half-page article profiling the evolution of Out-of-Home and In-Store Video:  "The Incidental Video Screen is Seen By More Viewers Than Prime Time," and asserting the fact that those little (and sometimes big) drop-down flat panels in doctor's office's, health clubs, lounges, and retail stores are capturing more valuable eyeballs than prime time TV--which makes that genre a superb channel for advertising to captive audiences.

Last: for those that missed the above points, sit back, watch and listen to this: 

Tweeting For Dollars...Blowback Mountain out of Molehill...

Even though Twitter announced its plan to push into paid-for-advertising back in November of last year...(we opined on that strategy on Nov 22..), according to one news media outlet, the blow back from the formal announcement yesterday illustrates that we tend to be slightly ahead of the curve..

"...Reactions to Twitter's plans to introduce adverts broke into two broad categories: relief that the site had announced a business model which might allow it to continue as a free service; and some doubts that they would be effective or popular..."

Since I'm not a shareholder in Twitter, nor do I have any investment stake courtesy of my multi-million dollar investments in private equity firms, I'm certainly not "relieved" that Twitter has finally gotten around to introducing a revenue scheme.  


For those (including myself) that remain dubious as to whether the strategy will prove effective for advertisers, or popular for those that eat tweets throughout the day, similar half-empty glasses that were around when Google introduced its advertising strategy were equally cynical when that plan was unfolded.  


Like it or not, for brand marketers, Google is to advertising what what oxygen is to breathing. You can't have one without the other. And that's what makes Sergei so happy.


Twitter says it will start with an impression-based rate card. I hate those. 


Aside from the fact nobody can actually audit impressions with any real integrity or credibility, if I wanted to pay for a mili-second's mind share, I'd buy a bill board on the FDR, on an I-95 section somewhere in between Westchester NY and Stamford CT, or similar, high-traffic stretches in LA, or maybe even Florida (The latter is a coin-toss idea unless targeting geriatrics, and unless you're smart enough to use 3 foot fonts for the shout out message). 


But for whatever reason, Twitter is following the lead of other high traffic web sites by introducing a CPM model to start, and at some point, they'll figure out how to introduce PPC; a model that smart advertisers will insist upon.


Which brings us to the topic of whether this new model will be embraced by advertisers. Of course it will. 


First of all, "social networking" is the marketing cats' pajamas. Sheep travel in packs, and those responsible for ad buying are frothing at the mouth in anticipation of sending out that memo to the EVP of Marketing to update them on the implementation of their Twitter ad campaign, and how they've already spent the first $50k allocated for Twitter ads. 


Do I think it will be an impactful way to promote a product or a service [from the consumer's perspective]? 
Nah. 
Everyone that I've canvassed has said they would never follow (click) a link to a product ad. Explaining why email marketing typically only makes money for the people that get paid to send out the messages. The ROI on email marketing has been dropping year after year for the past five years, partly because most people that have clicked on a link have found their identities lifted, or their PC's infected with malware.


I'd also argue that people that consume tweets are consuming upwards of 100 lbs of bytes a day. As a result, I'd insist their receptacles are overwhelmed, presuming their brains haven't already turned into mash potato.


That said, and as pointed out by a large audience of developers that create Twitter-compatible apps, The Kingdom of Twitter is rapidly moving away from open source to "Open-wide, it won't hurt a bit when we take it out..[for our proprietary use], and then you can close your mouth..[and fuhget about making a penny off of us..]" 


There is one Twitter ad strategy that I think is great; famous and infamous celebs are charging thousands to incorporate a product pitch into individual tweets. Brilliant idea! I know that my client will want to pay Paris Hilton $10k for tweeting about one of my favorite products