Case Analysis

Case AnalysisColgate Palmolive Company: The Precision Toothbrush

Marketing Management - I

Problem: -Colgate-Palmolive Company wants to launch a new toothbrush in United States market. It is trying to decide how to position its new product as a niche or a mainstream product in the super-premium segment.

Analysis:-The U.S toothbrush market has evolved since 100 years and has reached a maturity stage of the life-cycle. Customer involvement has increased and customers have become more sensitive to their oral hygiene and attributes of the tooth-brush they purchase. There were initially two segments carved by marketers namely Value segment and Professional segment. With increasing consumer involvement since 10 years a new segment Super-premium segment has been carved which comprises of consumers who highly value their toothbrush purchase. Also the value segment is eroding due to offers like free toothbrush with toothpaste, two for one scheme increasing sales of private labels. Super-premium segment on the other hand is seeing more competition resulting into greater increase in dollar-sales than volume-sales.

Major players and market share:-Market-SegmentTypes of consumersProducts

Value-Segment Customers are least involved in the segment. There is no brand loyalty. Makers and survivors of VALS network can form this segmentColgate Classic, Pepsodent Regular, Private labels

Professional-Segment Consumers are more involved and are ready to pay more if they get value for money. They may have shifting brand-loyalty based on the value of toothbrush. Strivers, Believers and Achievers of VALS network can form this segmentColgate Plus, Reach Regular, Pepsodent Prof.

Super-Premium SegmentHigh-premium category with extremely conscious consumers who are willing to pay high premium and are brand loyal. Thinkers, Innovators and Achievers can form this segmentOral-B Indicator, Reach Advanced, Aquafresh Flex

Attributes valued by consumers:-1. Value for money2. Ease of brushing3. The toughness of bristles4. Gum sensitivity5. Dentist suggestions

The Precision toothbrush:-

Point of Differentiation:- Three different length bristles providing optimal plaque cleaning compared to other tooth-brushes which makes it best product in the market

Strategy: - Currently Colgate Palmolive is already present in value and Professional segment with its products Colgate Classic and Colgate Plus. They want to capture Super-Premium segment with this product. They have two alternatives to decide how to position the product in this segment.

SWOT Analysis: Option 1: Main Stream ProductStrength Already present in this segment so it has established distribution channel Market share by volume is 41% and in terms of $ sale is 42% Manufacturing price is lessWeakness Increase in capacity required 10 months lead time High investment in machine Have to reduce one or more SKUs of present line.

Opportunity Volume share would be 10% in year 1 and 14.7% in year 2Threats Cannibalization of Colgate plus Could result in inadequate supply of product

Option 2: positioning as niche productStrength Higher profit margin about 30% Major distribution channels are food & drug store, which have highest share in retail toothbrush sales No need to reduce any SKU from present product lineWeakness Less revenue generation Manufacturing cost per unit is high Less market share

Opportunity Retail share would represent 3% volume share of toothbrush market in year 1 and 5% in year 2 Entry in new segment Threats Strong competition from rivals like Oral-B indicator, Aquafresh Flex, Crest Complete

Recommendation:Looking at the initial profit margin, Precision should be position as niche product. In a long term, main stream product strategy will be more beneficial. But due to constant technological advancement, product life of toothbrush not exceed more than 5 years. For product life less than 5 year, niche positioning is more profitable.