Colgate Palmolive-Precision Toothbrush Case

COLGATE PALMOLIVE COMPANY THE PRECISION TOOTHBRUSH I-SYNOPSIS In 1992, Colgate-Palmolive (CP) was the global leader in household and personal direction products like tooth washes and toothpastes. In 1991, its sales topped at $6 billion and profits at $2. 76 billion and it control 43% of the worlds toothpaste foodstuff and 16% of the worlds soup-strainer commercialize. It was also the leader in sell 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 mucilages.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 grocery store. In order to gain an edge each competitor worked on matureing current toothbrush technology, forming alliances with dental professionals, expanding advertising budgets and offering promotions that would grab consumer attention. In howling(a) 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 real effective in removing plaque 35% more effective than existing brands and in preventing maunder tree disease. This advantage has been attributed to the innovative design, high-tech seek using CAD and infr bed s massning, consumer research and extensive product testing. CPs Oral C ar had been developing this technologically superior toothbrush for over three years. But the market was highly agonistical 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.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 worlds toothpaste market and 16% of the worlds toothbrush market. In the United States, the worlds 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 impend release of Colgate-Palmolives new toothbrush, Precision, may affect sales of its existing toothbrush lines. This may lead to a cannibalization of the Colgate Plus and Colgate Classics market of up by 35% to 60%. of the expected Colgate Precision sales. Since the existing toothbrush lines are the cash cows of the companys 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-Palmolives me dia expenditure layout is very small compared to its rivals.It spent altogether $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 encounter its expenditures equivalent to that of its rivals. Colgate-Palmolives 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 didnt have any in the super premium niche position. Other decisions that ordain follow the positioning decision would be price, dispersion 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 clxx% 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 P recision, not only would it knock the childrens 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 reparation and Colgate Plus.In 1992 CP had a principal toothbrush brand Market share of 26% and was followed by Oral B and Johns on & 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 do drugs 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 vanquish 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