Marketing Strategies of Colgate Palmolive Ltd

A STUDY ON MARKETING STRATEGIES OF COLGATE PALMOLIVE LTD.

In the 20th century a major design advance occurred in 1938 with the launch of Dr. West’s Miracle Tuft toothbrush, the first nylon bristle brush. Until the late 1970’s toothbrushes were widely viewed by consumer as a commodity and were primarily purchases on price. The involvement remained low and the companies also treated their toothbrushes as an extension, to get their consumers to use their toothpastes. Typically in the Indian market the percentage of toothbrush users has slowly inched upwards.

As it has always been associated by the non-users as a non-essential item more so because of their fierce loyalty to the margosa twigg(Datun) and the index finger. The market of late has been the entry of several foreign players and the marketing game has assumed a totally new dimension. Companies are trying to shift to “PULL” strategy of long term returns and the inclination of consumers to shell out a few rupees extra to ensure a more wholesome care of their teeth and gum. This has resulted in rapid growth in value terms.

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Added to this is the initiative of the companies to focus on expanding the market by bringing the over 65% non-users in their consumer fold. With such vast potential to be exploited, the entry of several new players with their innovative ideas and experience in similar developing markets, the industry is likely to see a lot of action in the immediate future.

OBJECTIVE

The above of the project was manifold. ? First of all a general idea of the toothbrush industry - its competitiveness, volume and potential was to be adjudged. Next was to go on to analysis of the attitudes of a typical consumer and his/her idea/perception of this low involvement category product. ? This was to be followed up with the study of Colgate Plus toothbrush, as a typical product of the company, Colgate Palmolive and its standing in the market vis-a-vis other players, especially new entrants. ? To amalgamate all above to conclude as to what was to be the future/probable course of the toothbrush industry and Colgate Plus tooth brush in particular.

METHODOLOGY

To get an idea of the industry, I went through all the relevant literature we could lay my hands upon. This included A & M’s, Business Today’s. For consumer attitudes, I prepared a questionnaire that was circulated among 70 odd people, well spread out across the whole of Delhi. The same was done with the retailers to try and see the conformity in findings in some specific attributes. The questionnaire was to structured that an idea of brand image and relative studying of various brand could also be elicited.

The findings were synthesized, and keeping in mind the new entrants, their potential and the potential of the market, projections were made and conclusions were drawn.

COMPANY PROFILE

A household name for paste and tooth powder, Colgate Palmolive (India) was established on 23rd September 1937 as a private limited company in Bombay, as a wholly owned subsidiary of Colgate Palmolive Co. Of USA Initially it started with trading activity and later set up manufacturing operations in 1949 at Sewry (Bombay). The company became a public limited company on 5th October 1978.

In 1990-91 the company commissioned facilities for fatty acid and toilet soap at Waluj (Aurangabad). The plants at Sewri and Waluj manufacture oral care products like dental creams, tooth powder tooth brushes and personal care products like toilet soaps, shampoo, which are marketed under various brand names such as Colgate, Palmolive, Halo, Protex and Charmis. The company’s distribution network covers 1700 stockists and 4,50,000 retailers with ware house facilities in Mumbai, Calcutta, Delhi, Hyderabad, Lucknow and Madras ( and a new addition at Faridabad).

The company has its own Research and development facilities and had also been getting the R&D benefits of the parent company. It has a well established quality Control Department at Sewri & Waluj. For 40 years, since inception till 1978, Colgate was carrying on its business in India with a paid up capital of Rs. 1. 5 lakh made up of 1500 equity shares of Rs. 100 each, when it was increases to Rs. 1. 96 crore, by a bonus issue in the ratio of 130:1. To comply with the FERA regulations, Colgate Palmolive, USA diluted its share holding to 40% in the Indian company, through an offer of sale to the Indian public in October 1978.

Following FERA relaxation, the foreign shareholding was increased from 40% to 51% in September 1993. Colgate Palmolive (CP) is a global leader in household and personal care products. In 1991, it had sales of $ 6. 06 billion and a gross profit of $ 2. 76 billion, its world wide R&D expenditures were $ 114 million and media advertising expenditure totalled $ 428 million. Colgate Palmolive’s five year plan for 1991 to 1995 emphasized new product launches and entry into new Geographic markets, along with improved efficiencies in manufacturing and distribution and a continuing focus on core consumer products.

In 1921 $ 243 million was spend to upgrade 25 of Colgate Palmolive’s 91 manufacturing plants, 275 new products were introduced world-wide; several strategic acquisitions (e. g. of the Mennen men’s toiletries company) were completed and manufacturing began in China and Eastern Europe. Since 1985, gross margins had climbed from 39% to 45% while annual volume growth since 1986 had averaged 5% International sales Colgate Palmolive’s strong unit, accounted for 64% of sales and 6% of profits in 1991.

COMPANY STRATEGY - ORAL CARE AND TOOTHBRUSH INDUSTRY IN PARTICULAR

Volume is the key” says Richard Usuquen, VP Marketing Colgate Palmolive (India) Ltd. To expand the market in all ranges, CP has an ongoing RURAL VAN PROGRAMME and SCHOOL PROGRAMME covering 14 million villages and 80 million consumers, teaching people brush or even clean their teeth with the fingers. CP’s action centring around finely balancing the urban market - (59. 5%) and rural markets (68% share) . So while the company has introduced such premium packaging as stand up toothpaste tubes with flip-up caps in the urban market, it is also selling sachets of Colgate dental cream at low prices.

This focus on volumes is also evident in the toothbrush market, estimated at 400 million units per annum. C-P is the toothbrush leader in India with an approximately 60% market share, but since ‘95 it is facing challenges from HLL which has already garnered 8% market share. Usuquen says “The penetration of brushes in India is very low, so more than market share, it is important to grow the market”. To that end CP has actively introduced line extensions across all three segments - economy, middle and premium since last year.

At the entry level it has adopted the sleeve packaging, with no individual cases. The focus is on driving volumes through the price-sensitive segment. The mid-price market has been the introduction of the HIGH KLEEN range, while the upper end has seen the zig - zag and Double - Action launches. For the economy segment, a price focus has been adopted. On offer are five toothbrushes each from the CP and Cibacca stables to rural consumers, at prices low enough to generate trial. For the urban market, the focus is on maintaining novelty value by introducing new variants and added features. Whatever is new, people buy. So the idea is to accelerate choice through a variety of product features”. CP’s perception of the Indian market is of one where people welcome change but clamour for high end products at cheaply prices. The answer to this conundrum as per the company’s strategy is to “..... Optimise cost and formulation and the proceses and come up with efficient manufacturing to answer this “. CP’s strategy is to pour in a lot of investment in the Indian market in terms of capital expenditure and organizational support and each out to the deepest interiors.

SEGMENTATION

The toothbrush industry can be regarded as a component of the Oral Care industry which broadly comprises tooth paste, mouth wash and floss, besides tooth brushes and a large unorganized naturally available cleaning mediums viz. Index Finger, Neem twigs etc. But Colgate Plus need not to bothered about latter as it operates in a different category. The tooth brush industry can be segmented in the basis of social class & income group (Demographic Segmentation ), price (Product segmentation), benefit (behavioural segmentation), the last being the most important.

CONCLUSION

The present day brushing habits of the Indian society as a whole leaves a lot to be desired - 41 toothbrushes are sold for every 100 persons per year! Total units sold add u to a little over 400 million, growing at the rate of 10% p. a in volume terms and 25% in value terms (difference explained by the shift to upper end of the market). This implies not much inroad has been made into the rural and semi-urban market. Non-users constitute about 65% of total population. While the global brands try to create new markets and add new dimensions, there is much greater latent demand. Out of their stable of marketing strategies, advertising till now had been low priority for the players (this was confirmed in our survey as 88. % of respondents don’t recall the ads). This indicates companies find it formidable to change the low involvement level psyche of consumers and the route of aggressive sales promotion by way of price offs, POP displays, tied sales and generous trade margins still hold the key to increasing off take of toothbrushes. No one has made a serious attempt in the virgin territory of 65% non-users (CP’s Rural Van Programme is a recent drive). The thought of doing a Nirma to the toothbrush market has escaped everyone. Despite packaging constituting a substantial (upto 40%) of the cost of a toothbrush it has found to have influenced the purchasing decisions of the buyers.

In our survey consumers corroborated to this effect (refer to the survey findings). Companies could rethink their strategy of increasing differentiability by packaging and instead invest in product development for the same. SUGGESTIONS Some possible product improvisations Attached straight tongue cleaner cased in the toothbrush handle. Cartoons character printed on the handle to attract kids. Padding on the handle end to massage the gums. Casing the toothbrush (for kids) in a toy form. Neck with adjustable handle. Get a certificate by the Indian Dental Association (IDA) for the toothbrush, like the Colgate Calciguard Toothpaste. Segregate the toothbrush types for different age groups, e. g. ,

Children - Thicker handle for better grip, bright colours and cartoons printed on the handle. Young People of Teenager - more trendy colours and designs, like stripes or polka dotted, more vibrant colours. Adults - Simple designs and sober and decent colours. For the new entrant Introduce the product with the offer of one free toothbrush with the purchase of a brush which will help in blocking and prepointing the purchase of the buyer. As the target segment is the premium segment therefore, premium pricing of the product is necessary. Price the product at Rs. 251 -* or at Rs. 301- and not at Rs. 361 or Rs. 221- because the shopkeepers face a problem in returning small changes of Rs. 31 or Rs. 31- and Rs. 1 so they sometimes avoid the product as confessed by the shopkeeper. Add value to the product by giving tips on taking good oral care, in the back side of the package or a free pamphlet with the purchase of a brush, like brushing twice a day, flossing, polishing, regular dental check-up by your dentist, this shows a caring and concerned attitude by the company. With the purchase of a toothbrush, give a free coupons which is to be filled in by the consumer and can be used by him or her for getting a free dental check-up as when and where specified in the advertisement in the newspaper. This kind of scheme can be implemented by the company once in two three months.

However, these suggestions can be used by the big players in the market or the new entrant, who has to be a big player because a large investment is needed for such heavy sales promotion and also an attempt should be made to convert this low involvement product into a high involvement as it is concerned with personal card and hygiene and a product of daily use.

CONSUMER QUESTIONNAIRE

• AGE : ( 15-30 Years ( 30-40 Years ( 40-50 years (Above 50 years
• SEX : ( Male ( Female
• OCCUPATION : ( Govt. Service( Self-employed ( Corporate Executive ( Student ( Others (specify __________________)
• MARITAL STATUS :( Single ( Married with children ( Married without children
• AVERAGE MONTHLY INCOME/ALLOWANCE ( Rs. 20000
• Which toothbrush do you generally use?
• Name any other five toothbrushes that you can recall 12345
• Who purchases your toothbrush? ( Myself( A family member( A Subordinate
• Do you ask for a toothbrush by name? ( Yes ( No 10.

How much are you ready to spend on a toothbrush? ( Rs. 5-10( Rs. 10-15( Rs. 15-20( > Rs. 20 11. What prompted you to purchase your current toothbrush? ( Dentist’s advice ( Impressed with the advertisement ( Shopkeeper gave it to me ( A well-wisher recommended it to me ( Just bought it no specific reason. 12. How often do you replace your toothbrush? (0-1 month( 1-2 months( 2-3 months( 3-4 months ( > 4 months 13. How often do you brush your teeth a day? ( Once ( Twice ( After every meal( Not particular

BIBLIOGRAPHY

1. Business Today Library
2. A&M Issues of June ‘05, June ‘05, April ‘2006
3. CII Library
4. FORE Library
5. Kotler Philip (Principles of Marketing)
6. Kotler, Philip (Marketing Management).

ACKNOWLEDGEMENT

I would like to express my sincere thanks to Prof. N. S. Uppal for entrusting me with a challenging project and along with it, his help and encouragement has been exemplary. I wish to place my sincere gratitude to the officials of concerned organization and libraries who in spite of their busy schedule always spared their time whenever needed.

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