Colgate-Palmolive Company

Increased competition from rivals and private labels MKW 3440 Colgate-Palmolive company, simply known as, Colgate, is one of the world's largest consumer products companies by market share, with a commercial presence in more than five continents. In the past decade, particularly in the personal care and home care segments, Colgate has faced vigorous competition across the globe. Rivals include, large multinational corporations, local corporations as well as private label brands or store brands, of large retailers such as WalMart, Target, and other supermarket chains. Although Colgate's exposure to private labels is limited, the company’s primary objective remains to increase its organic growth by penetrating emerging markets.

In order for the company to accomplish this goal, it is advised that Colgate watches out, for the private label trend. According to Euromonitor International (2011), private label brands from large retailers are now considered to be highly sophisticated and an attractive alternative to customers, particularly in emerging markets, as these products, often sell at lower price points and the retailers have the point of sale data on consumer behaviour, and are therefore in a better position to understand the consumer’s behaviour. This trend, may become problematic for Colgate in the near future, as private label brands are expected to increase and be high on retailers agendas, directly affecting the company in several aspects of business, including, the pricing of its products, promotional activities, new product introductions, profitability and market share.

The growing competitiveness of some local players in China and fiercer competition in overall oral care, personal care and home care segments led to a significant decline in Colgate’s market share. For Colgate to remain competitive, it is important that it strengthens its brands, invest in ground-breaking innovative product launches, as well as defend its trademark, patents, and trade dress rights, against legal challenges that may be brought by competitors. Not capitalising in China like the market leaders in the industry Although, Colgate-Palmolive operates a diversified business operation and its largest revenue-generating regions in the world are in the emerging economies, however, the company is less dominant in China with regard to their personal care and oral care segments. Compared to other emerging markets such as Brazil, Russia, and India, China presents a strong growth opportunity for Colgate-Palmolive, as consumers increasingly perceive

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Colgate-Palmolive Company 1 Marketing Strategy MKW 3440 oral care and personal care in terms of achieving greater attractiveness, over hygienic, deodorising and antiperspirant functions. This is problematic for Colgate as its campaign for oral care has always been positioned as health products. As a result, In 2011, Procter & Gamble ranked number one in oral care, with a 21% value share. Oral care in China, is predicted to continue its growth pace over the forecast period and it is therefore important for Colgate to amend their current positioning strategy to accompany the product’s cosmetic appeal. In addition, Colgate should conduct greater segmentation of the market, where products will be aimed at agespecific groups as well as products designed specifically for men or women, or even lifestyles habits such as smokers or coffee drinkers as this will increase the market reach, profitability and the market share of the company.

Evaluation of Alternatives Given the competition and growth prospects in emerging markets, Colgate should aim to gain market share through novel technology and the creation of innovative product launches, that offer added-value to the consumer. Recently, companies have been increasing the number of “green” innovative product launches as well as products based on highpowered functionality and cost-saving measures, as they help minimise environmental impact while helping consumers save money through energy conservation. Through innovations such as these, Colgate can avoid loosing market share and revenue to local and multinational corporations. On the other hand, to stop consumers from moving to cheaper brands i. e. : keep private label brands at bay, Colgate should resort to pricing adjustments and cost management to ease pressure on margins as well as establish emotional bonds with its consumers through advertising messages centred on the concepts of luxury, at-home pampering, naturalness and sustainability.

This process, mainly involves reducing working capital and lowering selling or general and administrative costs, through lay-offs. So far, Colgate has focused on streamlining its product portfolio – e. g. in Europe, it reduced the number of household cleaners from 84 products in 2008 to 22 in 2010. Another initiative Colgate took, is to purchase Sanex, a personal care business from Unilever and sold its laundry detergent brands in Colombia, as an attempt to address the strong competition from its rivals in the industry with regards to deodorants, bath and shower soaps that account for the largest portions of its competitors profits. Colgate-Palmolive Company 2 Marketing Strategy MKW 3440 On the other hand, to capitalise on the Chinese market, the company needs to trengthen its competitive position and adapt products that will more closely meet the local consumer preferences.

The local player Shuke is expected to see strong growth over the forecast period thanks to venture capital investment and its new spokesman David Beckham. For example: by incorporating whitening functionality in all its oral care product formulas, this could help the company, defend its share against dominant local players such as Yunnan Baiyao. Products aimed at age-specific groups as well as products designed specifically for men or women, or even lifestyles habits such as smokers or coffee drinkers, are certain to be developed in the future. A strategy gap analysis is a forecasting tool used by marketing managers, to determine the shortcomings of an organisation by identifying the steps necessary for an organisation to take when trying to move from its actual performance to a desired future-state.

This difference is known as a gap. The gap can be divided into four categories: the product line gap, the distribution gap, the usage gap and the competitive gap. Currently, Colgate-Palmolive has a distribution gap with regard to the Chinese market. A distribution gap, is all about increasing exposure to current distribution channel members. Another strategic gap Colgate could optimize on, is its usage gap. A usage gap, refers to the gap between the total market potential and the existing usage by all consumers in the market. The competitive gap, on the other hand, refers to anything about a product, service, technology, capability or position that puts a company at a significant disadvantage versus one or more competitors. In the case of Colgate, this company has a competition gap as its current positioning strategy in the Chinese market is working against them.

Strategies to close gaps Strategy to close distribution gap: Localization of consumer products has been a fast-emerging trend in several consumer products markets including personal care. Colgate-Palmolive Co. , can bridge this distribution gap in China by increasing exposure to current distribution channel members and establish new distribution channels. Specific to the oral care industry, manufacturers are targeting consumers with local flavors and ingredients that suit their preferences and long-standing culture in various countries.

For instance, Colgate-Palmolive offers a unique formulation of its Colgate Herbal toothpaste for the Indian market. Since there is an increasing interest in China with whitening products including oral care, Colgate may use this information One of the breakthrough innovations featuring local ingredients is Colgate Plax Fresh Tea mouthwash for the Chinese market, which helped drive the company’s share of mouthwash market in China to a record high level during the year.

Currently, there is an increasing rate of. Strategy to close usage gap: By extending the usability of its products and targeting specific offerings as market extensions, Colgate would be able to increase its market share and profitability. Thus addressing it usage gap. through the use of either tactical approaches such as the marketing mix, Colgate can be able to promote new segments and users or encourage non-users to switch from substitute or competitor’s products. Strategy to close competitive gap: Through co-branding with local or domestic competitors such as Yunnan Baiyao, and manufacturing complementary products.

Colgate may be able to minimize its competition and risk, as there will be greater consumer trust on the product, wide scope due to joined advertising, technological benefits, better product image by association with another renowned brand, greater access to new sources of finances and as a consequence this will ultimately lead to more sales income. Colgate-Palmolive Discussion of required capabilities and core competencies Required capabilities and core competencies Discussion MKW 3440 Finance For Colgate-Palmolive to be able to implement the strategies that will ultimately bridge the gaps in the market, it needs to have finances. Likely for Colgate, this is one of its core competencies and capability, hence, the company has been able to spend a significant amount on its R&D activities in order to ensure consistent product innovation.

Through constant product innovation, Colgate will be enabled to invest in marketing, technology and its vast distribution network. Human capital refers to the knowledge, skills and social and personality attributes, including creativity, embodied in the ability for an employee of Colgate-Palmolive Co. to provide the organisation with economic value which then translates into the marketplace. It is made obvious that human capital is a required distinctive competency of Colgate as product innovation is one of its driving forces and innovation is derived from the creativity of its employees. For many companies in this industry, including Colgate-Palmolive Company, they strives to lower their input costs so that they can have that competitive edge over rivals in the industry. As all company’s in this industry use many of the same suppliers, it is difficult for companies to achieve low input costs in that area. However, Colgate-Palmolive Company tries to lower input costs by being innovative with its product designs and the utilization of its assets, along with always looking for new suppliers that might not be as big, but offers a lower prices

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