COLGATE - PALMOLIVE COMPANY: THE PRECISION TOOTHBRUSH I-SYNOPSIS In 1992, Colgate-Palmolive (CP) was the global leader in household and personal care products like toothbrushes and toothpastes. In 1991, its sales topped at $6 billion and profits at $2. 76 billion and it cornered 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. It was also the leader in retail toothbrush sales in the United States. Prior to the 1990s, consumers were satisfied with toothbrushes that were aesthetically pleasing. But the 1990s saw that baby boomers were becoming increasingly concerned with their oral health, specifically their gums.
This led to a rise in the sales of therapeutic toothbrushes. The toothbrush industry experienced a massive influx of worthy competitors and this led to the formation of a niche, super-premium market. In order to gain an edge each competitor worked on developing new toothbrush technology, forming alliances with dental professionals, expanding advertising budgets and offering promotions that would grab consumer attention. In August 1992, Colgate – Palmolive was poised to launch a new toothbrush in the United States, tentatively named Colgate Precision in the super-premium market.
Precision, was proven to be very effective in removing plaque – 35% more effective than existing brands – and in preventing gum disease. This advantage has been attributed to the innovative design, high-tech research using CAD and infrared scanning, consumer research and extensive product testing. CP’s Oral Care had been developing this technologically superior toothbrush for over three years. But the market was highly competitive with new products already in the fray. CP had to market Colgate Precision as per existing market strategies that include proposed strategies involving product, price, place, and promotion.
Order custom essay Colgate Palmolive-Precision Toothbrush Case with free plagiarism report
The issues and Challenges, Analysis and Recommendations of the case are enumerated in the succeeding paragraphs. II-SSUES AND CHALLENGES In 1991, CPs sales topped at $6 billion and profits at $2. 76 billion and it cornered 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. In the United States, the world’s largest market, Colgate-Palmolive held the number one spot in toothbrush sales with a market share of 23%. Its international sales accounted for 64% of total sales and profits account for 67% of the total profits from international operations.
The impending release of Colgate-Palmolive’s new toothbrush, Precision, may affect sales of its existing toothbrush lines. This may lead to a “cannibalization” of the Colgate Plus and Colgate Classic’s market of up by 35% to 60%. of the expected Colgate Precision sales. Since the existing toothbrush lines are the “cash cows” of the company’s oral care division, a dismal performance by the new Colgate-Palmolive Precision might drain the “cash cows” of its their resources market share altogether. Colgate-Palmolive’s media expenditure layout is very small compared to its rivals.
It spent only $7 million dollars on marketing Colgate-Palmolive Plus. Since media exposure fuels consumer demand for a new product, this is one area where Colgate-Palmolive needs to have its expenditures equivalent to that of its rivals. Colgate-Palmolive’s media expenditure layout is very small compared to its rivals. CP could be positioned as a niche product to be targeted at consumers concerned about gum disease as such; it could command the 15% premium over Oral-B and would be expected to capture 3% of the US tooth brush market by the end of first year following its launch.
Alternatively Precision could be positioned as a mainstream brush with the broader appeal of being the most effective brush available on the market. It was estimated that as a mainstream product, Precision could capture 10% of the market by the end of the first year. CP already had another toothbrush in the mainstream toothbrush, but didn’t have any in the super premium niche position. Other decisions that will follow the positioning decision would be price, distribution channels, advertising and promotion planning.
If it is positioned as mainstream right away then not only will it cannibalize Colgate Plus, which is one tier below the super-premium category, but will have leave CP without a product in the super premium category which is the largest customer segment and Oral-B is virtually unrivalled in that space. Challenges Because of the recent market saturation, the various producers of oral health care products have rushed to offer promotional incentives including two-for-one, buy-one-get-one-free and mail-in refund coupon deals.
With the increase of in-store advertising, toothbrushes and toothpastes have been found to sell 170% better when located in close proximity. The most worrisome threats to CP are from the company itself. If CP were to release the Precision brush into the mainstream market as the “Colgate Precision,” not only would it knock the children’s Plus brush off of the shelves, it would also cannibalize its flagship Plus model. III-ANALYSIS In the year 1993, budget was increased to cater for overall toothbrush ads and promotion budget by $19. 2m (80%over estimated $24m). $32. 5m was devoted to precision, $10. m to Colgate plus. The advertisements focused on prevention of gum disease, toothbrush effectiveness so as to develop superiority claim for Precision. Customers picked their brushes based on features, comfort, personal recommendation and health and hygiene. As a consequence they were willing to pay premium for products addressing these concerns.. 82% of toothbrush purchases were unplanned. 46% of adults were therapeutic brushers. 85% brushed daily. 85% used professional brush and 54% flossed regularly. Their major brands were Oral B Angle, Oral B Regular and Colgate Plus.
In 1992 CP had a principal toothbrush brand Market share of 26% and was followed by Oral B and Johnson & Johnson with market shares of 23% and 22% respectively. CP had the highest market share of 26% in Food stores and 39% in Mass merchandisers but had a dismal 17% market share in drug stores where Oral B had a highest market share of 31%. Thus CP needed to increase its focus in the drugstore channel. Colgate precision was priced at $2. 02 in the niche category and $1. 76 as a mainstream product. The manufacture cost per unit of Colgate precision was $0. 66 in the niche category and $0. 4 as a mainstream product. Industry Analysis Not only can the industry be broken down by price models (super-premium, professional, and value), it can broken down a second time into niche and mainstream offerings. Consumers of this industry can be sorted into three categories: therapeutic, cosmetic, and uninvolved. Competitive Analysis One promising conclusion that can be drawn from the competitive analysis is that every company has been caught off guard by the change in consumer behavior, emergence of new technology, and introduction of new players entering the playing field.
For example, in 1988, Johnson & Johnson introduced “new brush technology” only to phase it out by 1992. In order to get an edge, competitors, Johnson & Johnson, Oral-B, Procter & Gamble, and Smithkline Beecham (latter two are new competitors), are offering promotions in the form of coupons, mail-in refunds, and bundles. Environmental Analysis With 43% of the global toothpaste market and 16% of the global toothbrush market, CP has defined itself a leader of household and personal care products worldwide, and positioned itself as the number one retailer of toothbrush products in the United States.
Because of its good standing relationship with retail stores, it is able to position its products on the middle shelf, right between its competitors, Reach and Oral-B. Although industry players are manufacturing products to improve oral health, it has been difficult to educated consumers of the importance of preventing gum disease (which is a common motivator to improve dental care habits). One major advantage that the competitor, Oral-B is, it is recommended by dental professionals.
IV-RECOMMENDATIONS Opportunities In consumer tests, majority of consumers are willing to experiment with new brands/models, CP could make being new, different, and effective the major tenants of its marketing messaging; along with including messaging concerning their incredible ability to fight gum disease, it should have a rock solid campaign. Price Precision should be positioned as niche category in the price category $2. 29
Cite this Page
Colgate Palmolive-Precision Toothbrush Case. (2018, Jan 22). Retrieved from https://phdessay.com/colgate-palmolive-precision-toothbrush-case/
Run a free check or have your essay done for you