You can find them in the March issue of AIQMagazine.com
Are you aware of the “Razor blades business model”? Maybe not... But, just ask a MBA student or even any student who attended a commercial sciences course, and they will tell you about the “Razor blades business model”: a secret formula that could turn a business into a (very) profitable cash cow, or, even, into a “golden egg goose”. After having heard about it just once, students with an entrepreneurial mindset usually crave to do the same thing in their garage, dreaming to find the next idea that could follow that goldmine or “golden egg” business model.
What is needed to kick start such a business? Basically, it works like this: Take a razor handle, offer it for free (or at a low prices), make sure the blade refills only fit on YOUR razor handle, and start selling your blades at incredibly high prices. Now an “applied-to-another-industry” example: invent a printer, sell it for peanuts, make sure the ink cartridges only fit on YOUR printer, and start selling your cartridges (with a high frequency of course) at high prices. A last example: invent a new coffee machine that use cartridges, make sure these machines are installed in every office (or every house), offer the first few cartridges for free and… let the magic of business happen. Of course, some advertising can be useful. Spend a lot. Hire stars (George Clooney; who else?). Other ideas like that? Please write to me (and don’t tell your ideas to someone else…) at pdn@razwar.com. Sure, we will make a deal you and I…
The guy who invented that business model gave the name to a very famous brand. We decided to not quote the name of the brand, so I will not quote the name of the guy either. Just remember that he (truly) deserves a lot of respect and created one of the most admired companies, bought for 57 billion dollars by another company that I will not quote either. The guy (let’s call him Jack) is also the inventor of the golden egg goose…
Do you know about the “golden egg goose”? For sure, in your childhood, your parents must have told you that well renowned story, no? For the others, here is an “executive summary” of the story: A farmer found a goose and found out that that goose laid one golden egg every day. Of course, he was getting richer and richer each day, but that was not enough for him and, to try and get access to all of the golden eggs at once, the farmer killed the goose and opened its belly, to end up finding…nothing. (See also: http://en.wikipedia.org/wiki/The_Goose_That_Laid_the_Golden_Eggs).
Hence, I am just wondering if the incumbents in the “shaving” industry are not killing the golden egg goose, destroying the so-called “razor blades business model”. I succeeded in accessing some interesting market surveys that prove my point: Since several years, the market for system razors (razor handle that needs blade refills) is experiencing a slow growth in value (an average 2,5%) but a significant decrease in volume (number of units sold). (For French speaking readers, see for example: http://www.mondadoripub.fr/Mondadori_GALLERY_CONTENT//DOCUMENTS/MarketingService/Marche/rasage.pdf). The main cause of this apparently strange market behavior is the continuous and steady growth of razors and razor blade prices. Prices of razor blades are going up, as the two incumbents in the market do not want to compete on price; they are in a de facto oligopolistic market situation (I will explain what an oligopoly is in a next blog post), and would like to avoid a price war by all means.
Consider now the price structure of a razor blade. According to Sean Poulter, from Mail Online, who worked on the subject in June 2009 (Search Google: Main Online, Title “Sharp Practice…”, Sean Poulter), here is the typical price and margin structure of a cartridge of four razor heads and per razor head, for last generation razor heads. These are in-line with our observations and with other studies (I am particularly interested by all these studies related to this matter and welcome any suggestion or articles I should read or files I should study. Please also share with me your own “store checks”. Send this material to pierre@razwar.com).
Table: Margin and Price comparison for a typical “last generation” razor head (in UK)
|
| Cartridge of four | Each razor head |
| Manufacturing Cost | 20p (0,22 EUR) | 5p (0,06 EUR) |
| Packaging | 8p (0,09 EUR) | 2p (0,02 EUR) |
| Producer Profit Margin | £6,28 (6,95 EUR) | £1,57 (1,74 EUR) |
| Shop Profit Margin | £1,90 (2,10 EUR) | 47,5p (0,53 EUR) |
| VAT | £1,26 (1,97 EUR) | 31,5p (0,49 EUR) |
| Retail price | £9,72 (11,33 EUR) | £2,43 (2,83 EUR) |
Adapted from: Sharp Practice? The razor heads that cost just 5p to make, but sell for £2.43 each, Mail Online, June 2009. Exchange rate: 1 GBP=1,1080 EUR (8/03/2010)
What happens with such high prices? People (you and I) feel robbed. And, according to some shopping experts, it is actually that feeling of being robbed which is the main reason explaining why there are more and more razor robberies in grocery stores and supermarkets. This can reach such a point that in some countries (namely in Belgium, where I live) the robbery of razor blades became THE most important robbery in value in supermarkets (total amount robbed, per year, per store). Apparently the value of small thefts and robberies is so high that store chains now negotiate with the suppliers (the two “razor blades” incumbents…) to have them cover these costs. The responses to these robberies are numerous: The razor companies package their goods in even bigger packages, to diminish the possibility of hiding them under your clothes without being noticed. Razor handles and razor blade refills are often tagged with antitheft tags. Razor refills are often packed in antitheft boxes (…reminding the consumer that what they buy is extremely expensive) and, worse, in some stores, you now have to ask to the cashier to obtain your precious refills…
All these trends illustrate that the razor industry has probably gone too far in the razor business. With the envy to capture as much as profit as possible, the market is now experiencing a decrease in units sold, a sign that something important is happening. The number of robberies increases, service rendered in the stores weakens, and signs of discontentment occur here and there… The two incumbents are just killing the golden egg goose to see if there is more gold in the goose’s belly…
Will they find gold in the belly of the golden egg goose? I am not sure, and you know the story. Ah? Yes of course, we must state that Raz*War was born in the mind of a man who didn’t accept to pay such high prices for razor blades anymore (me). Another example of reaction against the too high prices of razor blades…. A “salutary reaction” we might say, as, it’s been a few months that consumers can now access an additional shaving brand: our brand http://www.razwar.com (it is also truly YOUR brand as it will not succeed without your endorsement). And the brand selling line says it all: Quality Shaving. Fair prices. That’s what we all wanted, no?
Now help me to spread the news!
Dear Raz*War Fans,
Today we are happy to announce that the leading French e-shop is selling our shaving brand,"en français dans le texte".
"Rasage Classique" introduced the complete Raz*War range in its catalogue nearby the major brands in the world of shaving.
Thank to Rassage Classique the Raz*War revolution continues...
Check it on http://www.rasage-classique.com
What is the link between Raz*War and Rugby? Both words begin with an “R”... good point. But what else? I personally feel that Raz*War has a lot more things in common with Rugby than just a simple initial. Firstly, Rugby is a somewhat of a “contact sport”, and certainly a “combat sport”. Raz*War is certainly a brand of "battle", with the notion of “fight” or “combat” inscribed in the brand name itself. Indeed, Raz*War declared war against the indecent profit margins (see a future blog post) made by the incumbents in this industry. Consumers should be aware that these prices are due to a real oligopolistic market situation, between two players that face each other and that very “wisely” do not want to offend one another, just to prevent a – surely damaging – price war. We are speaking of money, dear reader, of a LOT of money. Stock prices of the two well renowned razor companies can plunge if a price war is declared (and we would all prefer to avoid a new financial crisis triggered by the fall of the two “razor giants”! :-)Rugby specialists and the fans of the famous “All Blacks” in particular, would maybe remark that the crossing of the razor and the brush on our logo shares some similarities with the famous “Haka” gestures. At one point in their “Ka Mate”, all Black players do, indeed, cross their arms in a gesture of defiance against the other team (see ). I would love to see the “All Blacks” with a razor in one hand and a brush in the other, singing, in traditional Maori language, a special “Raz*War Haka”. We should think about that for the future! (I know we have some new Zealand Raz*War fans, they could maybe put us in contact with the famous team...)Now, let’s consider another aspect of this sport; although I know (nearly) nothing about Rugby (what complex rules!), I feel that this sport is a true example of a team sport. Collectivity is very important in Rugby, and all Rugby fans and even the Rugby-curious, will celebrate the special “team spirit” that show up when playing Rugby. I also want to remind my readers about the have-to-see movie “Invictus”, directed by Clint Eastwood, where Rugby contributes in building… an entire nation. The importance of collectivity is a key attribute of Rugby, like it is for Raz*War: Look at our logo again, and replace the razor with a hammer and the brush with a sickle… Does this not make you think of something else? Of course, we’re joking about this; do not take me seriously about that aspect of the brand. But, behind the logo, it is also true that we appeal to masses, it is true that we believe in the wisdom of crowds, and it is true that we would like to get shaving at lower prices for everyone. It is true, also, that behind Raz*War, there is a strong team. And, finally, it is also true that we do not see any discontinuity between “us” and our “brand ambassadors”. Raz*War is about “collective action”, just like Rugby is.I spoke about “fighting stance”, about “team spirit”, but I could also speak about “bravery”, about the “small versus the big”, about “entertainment”, all attributes associated with Rugby, that can also be associated with Raz*War. Maybe one key attribute that still needs further discussion is: respect. It is often said that Rugby is “a sport of offenders played by gentlemen". Have you already compared a typical match of Rugby with a match a of football? I noticed, for the anecdote, that football players adore spitting on the ground, especially in the direction of the adversary, and after a key offensive or defensive action. Ok, ok it is anecdotic. Ok, ok, I also saw some Rugby players spitting too; whatever, respect is not (only) a question of spitting or not spitting… But just look at the matches, just listen to the audience (less violence in the public, no racist songs...), just listen and look at the players: there is a lot of “mutual respect” in this sport. And I love that. And Raz*War is also a brand that would like to respects its consumers, but also its competitors (I used to work for one of them, years ago)… We are a battling brand, (with humility as we are such a small, tiny brand…), but we consider respect to be one of our key values.Now that you have started understanding why I believe that Raz*War shares things in common with Rugby, I am sure that you are also wondering why I also announced in my title “The Power of You”. Quite simple. A few days ago, I had a discussion with the management team of my son’s Rugby club. They all had the same feelings about the – for them, obvious – links between Rugby and Raz*War, and they wanted to spread the word about Raz*War. AND THEY DID IT! It’s been a few days that we are registering many sales coming from the city of Jodoigne and its surroundings. What happened is that the word started to spread. The club wanted to be associated with our brand name, and even proposed to associate both names for free…. (Another key difference between Rugby and Football: Money is not the key driving engine, entertainment is.)And that illustrates the Power of You!; the main topic of this blog post. This brand is characterized (or wants to be perceived as being characterized) by all of the above attributes: “Fight” and “Respect”, “Team spirit” and “Entertainment”, “Power to the masses”, hence, Power to You. But you – yes you, meaning YOU who is now reading these lines – you are the only one who can transform this brand into a true success. It is very simple: you like our products, our services, our stance? Then, vote for us! By speaking about us, by making sure you tweet (on Twitter) news about us, by buying our products and by sending us your feedback about them.There was a good reason why the “B West team” (http://Rugbybwest.skynetblogs.be), that small Belgian Rugby team, fell in love with the brand and immediately endorsed it: because Raz*War and Rugby share the same DNA. And there is another good reason why the messages spread so fast; because the “B West team” realized that they could act and influence things. The message I would like to convey is: DO THE SAME! Understand “The power of YOU!” and speak about us, share the good news, speak in communities and help us succeed!I just want to take the occasion of this blog post to say that I really want Raz*War to sponsor this small team (let’s first see how our sales progress… ) and that I would be really happy for Raz*War to sponsor up to 10 small Rugby teams in the world (not immediately of course, the brand is not rich enough! But at some point later on). So, managers of small and dynamic Rugby teams across the world, grab your keyboard and write to me at pierre@razwar.com and of course, don’t hesitate to already start talking about our brand!). Ah! Good news for all Rugby fans, we now have distributor in Australia and several potential distributors in New Zealand. Any small Rugby teams over there? :-)
]]>The new model introduced by Raz*War is now available on razwar.com
Thanks to #Beeshopy it is now possible to initiate your shopping process from the Facebook Fan Page of Raz*War. Check it out!
More and more articles are published on the net about "quality shaving", further developing the context in which Raz*War is growing and further nurturing our s(h)aving revolution... Among them, I came across an interesting article published by gizmodo, about the edge of razor blades when analyzed under a microscope : http://gizmodo.com/5472426/razors-under-a-microscope. Amazing pictures that illustrate how thin are the edge of our razor blades. But, as I am, with Raz*War team, more and more acquainted with "shaving science", I wanted to add that Razor efficacy is not only about the edge itself.
The kind of "head" used is also key: some people prefer more technical razors, that offers a very high quality of shaving provided they are operated carefully. Take, for example, the traditional "safety razors" or, even, the "straight razor"; these could offer very strong shaving experience, but it needs some expertise in manipulation, as, for example, the angle of the blade on the leather is key. Our "Ché" handle is a somewhat technical razor, providing a very good cut (excellent razor egde), but need to be operated in such way the angle of the razor is always optimal. Other razors, lilke our soon-to-come 5 blades, operates with another kind of head, more flexible, adapting itself to the face curvatures. The gain of efficacity is in the flexibility of the head; the difference is not about "razor edges". But, some of our consumers prefers a less flexible razor head, offering a more "straight razor" experience. That's why we have two "shaving tribes at Raz*War": the "Ché" tribe only adores the "Ché" razor while others only adores the "Fidel" razor; there is one world for each...
But did you know that even the distances between the blades is important? I guess not. It is indeed, what have shown another brand of razors, as I saw it on a patent, on "free patents on-line". A good distance between blades improve the "comfort of shaving" and reduce the risk of cuts. Good news, our two razors are very well manufactured on that topic...
Also something important: The blades got oxidated quite rapidly, which is the main reason why you should replace them; the other reason being that they get used of course. Oxidation of blades is easy to observe on electron microscopy (interested to see? Interact with me). Oxidation drastically and quite rapidly reduce the "razor edge". A lot of tips are given on the net to avoid that blade oxidation; i will discuss them in a next blog post. But, one things is clearly obvious: using shaving oil greatly reduce that blade oxidation (same principle as when you are using a drill, the oil is protecting the blades)... and this, again, can easily be shown with electron microscopy.
Hence, my advise is: Use shaving oil (there are already so many reasons why using shaving oil...) to protect your blades and to enhance their lifetime. (Lifetime can be expanded by a factor of 1,5 to 3). And... Guess what? We have a very good shaving oil in stock..
The next time (next blog post), I will explain you how to assess your razor quality, by helping you figure out what are the key elements to consider...
]]>The real confrontation of Raz*War and a Barber in Antigua, Guatemala
As an early believer in Raz*War http://www.AIQMagazine.com is once again helping us in our revolution. Watch out this very nice Ad! Thank you Dennis (once again).
