Case Study: 2

Colgate Palmolive Company:The Precision ToothbrushCase Study: 2

ContentsToothbrush Category: Changes & CPs Competitive Position.Market Segment & Consumer Behavior. Problem Statement- Positioning Precision as Niche Product or Mainstream Brand.Recommendations.P& L Statement.

Toothbrush Category: Changes & CPs Competitive PositionSince 1940s U.S Oral Care market witnessed many changes & in 1991 the U.S OC market was $ 2.9 billion in retail Sales (Toothbrush accounted $ 453 millions in retail sales 15.5 % of Oral Care market share).Market Growth average rate 9.3 % per annum since 1987, but Year 1992 market growth 21 % by value & 18 % in volume.Market emerging from Value & Premium to Super Premium Category.Shift in demanded benefits: Quality & Innovation:Cavity preventionOral hygieneHealthier Gum Therapeutic & Cosmetic benefits.

CPs Competitive PositionBy 1991 CP held the number one position in the world for the sale of Oral Care products.CP U.S Toothbrush sales in 1991 reached $ 77 million.Accounting No. 1 position in U.S with 23.3 % market share.With 19 % market share CP world leader in toothbrushes market.Toothbrush Product Segment: (1) Value: Colgate Classic(2)Premium : Colgate Plus(3) Super Premium: Colgate Precision

CPs Competitive Position- Condt.Competition: Identification of Competitors:-Oral B-IndicatorJohnson & Johnson ReachProcter & Gamble- Crest Complete. (New Entrant)Smithkline Beecham Aquafresh Flex. (New Entrant)Weakness of Competition: Colgate not only had worry about cannibalizing of their own product but also new line of product introduce by competitors like Oral B , Johnson & Johnson & Proctor & Gamble. Technology: - New products launches late 1980s & early 90s Innovative handles & bristles technique.Super Premium- category- with emphasis on Therapeutic & Cosmetic benefitsSocial :- Children MarketHealth Concern & Cavity prevention concern.Raise of advertisement & Social awareness.

Market Segment & Consumer BehaviorToothbrush Market Segmentation: Industry Executives divided the toothbrush category into 3 segments:-Value Toothbrushes: Priced on average at $1.29 , accounted for 24 % to 12 %.Premium Toothbrushes: Priced between $1.59 to $2.09, accounting for 41% to 42%.Super Premium Toothbrushes: Priced between $2.29 to $2.89, accounted for 35 % to 46 %.

Consumer BehaviorInvolved Oral Health Consumer- Therapeutic Brusher (46 %adults)Involved Oral Health Consumer- Cosmetic Brusher (21 % adults)uninvolved Oral Health Consumer- (33 % of adults)Differentiate among products, reach out functionally effective productsSearch for products that effectively deliver cosmetic benefitsView products are the same, lack of interest in product categoryBuy & use product themselvesBuy & use product for themselvesBuy & use product for all family members85 % brush at least twice a day, 62 % use a professional brush & 54 % floss regularly85 % brush twice,81 % use mouthwash54 % use breath fresheners69 % floss, & 54 % use a professional brush20 % brush once a day or less,28 % use only regular toothbrushes54 % floss,66 % use mouthwashMajor toothbrush brand used are Oral B Angle & Oral B Regular followed by Colgate PlusMajor toothbrushes brands used are Colgate classic & oral B Regular followed by Colgate plus & Oral B angleMajor toothbrushes brands used are Colgate Classic & Oral B regular Followed by Colgate Plus & Reach.Problem Statement- Positioning Precision as Niche Product or Mainstream Brand.

Defining of Market Strategy (Positioning, Branding & communication strategies) for new innovative Toothbrush:- Colgate PrecisionPrecision Toothbrush: A technical Innovation.Unique Brush with bristles of 3 different length & orientation.Three brush design evolved with 35 % more plague removing efficiency.More effective in removing gum problem & reducing it than Oral B & Reach.

Colgate Precision- Advertisement used in the Consumer Concept Tests & Display

Positioning Precision as Niche Product or Mainstream Brand- Strategies

Price

Budget Allocation:- Advertising & Promotion:-Budget should remain level as sales for 1993.Equally allocated to Colgate Classic, Colgate Plus & Precision.Contrast(Argument)- 75 % budget allocated to Precision & 25 % to CP-Plus & Colgate Classic.Positioned as 15 % price of Oral B & expecting to capture 3 % market share.

Precision Price asManufacturer PriceTrade PriceRetail PriceNiche Market $2.02$ 2.13$2.89Mainstream Market$ 1.76$ 1.85$ 2.49Positioning Precision as Niche Product or Mainstream Brand- StrategiesBranding:-Precision positioned in market as CP Super Premium toothbrush or Positioned as New Super Premium brand from Colgate. .Precision by ColgateInvestment ,Capacity & Distribution:-

Use of Existing distribution channel or developing the new strategies for distribution.

MachineryInvestment CostAnnual CapacityDepreciation TimeTufters$ 500,0003MM units15 yearsHandle Molds$ 300,0007 MM units5 yearsPackaging$ 150,00040 MM units5 yearsRecommendationsCP holds 43 % of the global toothpaste market & 16 % toothbrush market.CP sales increased 12 % to $ 1.3 Billion, accounting to 22 % CP total Sales, Toothbrush sales amount $ 77 millions with operating profit of 9.8 % .Considering above fact File of CP, without any doubt has the ability & means to take the endeavor- should take calculative risk too.CP-would have a strong against competitors on the basis on product attributes.-a better product with better performance.Position Product in Super Premium segment.Niche segment is more consistent than the main stream segment.Segment : specially tailored or target to therapeutic & cosmetic users

Pros & Cons of Positioning : Mainstream StrategyPROSCONSLess Erosion of Colgate Plus.Opportunity to create brand positioning into super premium market.CP could face less competition.Its broadened the CP- product portfolio in all three segments.Opportunity to tap, people looking for high end product than Super Premium.

Less turnover & sales.High budgets in terms of branding & positioning. PROs CONsUnsatisfied demand of product against price value, create perception of hot product.

New market within Value product segment.Greater erosion of Colgate Plus.May effect other segment- like Children brush line.Possible pressure on production & inefficiency to meet of demand supply.More Competition. Pros & Cons of Positioning : Niche Strategy