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Colgate-Palmolive Company:
The Precision Toothbrush
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Problem Statement
To define Positioning, Branding & Communication Strategy for its new toothbrush
Colgate Precision
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Major Players in Marketing Strategy of Colgate Precision
Susan Steinberg
Nigel Burton
• Precision Product Manager
• Division General Manager
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Consumer Behavior
Health of Gums - Primary issue Cavity Prevention - now a secondary issue
Consumers ready to pay premium for product addressing Gum Health issue.
Three categories: 1) Value
2) Professional 3) Super Premium (Emerging Category)
Purchase Criteria - Performance Benefits
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Data on Toothbrush Market in u.s.
•U.S. Oral Care Market - $2.9 billion
•U.S. Toothbrush Market - $453 million
•U.S. Market (CP - Toothbrush) - $77 million
•Dollar Sales Growth - 9.3% per annum (since 1987)
•1992 - Market Growth - 18% by volume & 21% by value
•Dollar growth exceeded volume growth due to emergence of super premium category.
•1993 - Lower projected sales growth - buildup of household inventory in 1992.
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Income Statement of cp Toothbrush (1989 - 1992)
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Colgate Precision
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•CP is global leader in personal and household products •Strong Brand Image Worldwide •Technical Innovation - Triple Action Brushing Effect • Concepts tests - 77% found Colgate Precision more effective.
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• 33% adults - Uninvolved Oral Health Consumers - Difficult to educate about the technical innovation.
• CP is not yet into the super-premium market while CP’s main competitor Oral-B has professional endorsement as dentist’s toothbrush.
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• CP’s customer research revealed that 46% of adult are concerned about health of their gums.
• Customers are willing to pay a premium for new products addressing this issue.
• Willingness of customers to try new products.
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• Competitors are offering incentive program to attract customers. • Innovation and additional features in competitors product • Threat of buyer/supplier growing bargaining power • Threat of New Entrants - In 1991, the toothbrush market exploded with
a dramatic increase in new entrants.
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Position of Precision in the Industry
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product
Niche, Super Premium Mainstream Professional
•Competitive •Effective •Unique •No CP Offering in super premium range
•Premium offering compared to others in this market segment.
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product
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PricePrice
Niche, Super Premium Mainstream Professional
•Equal to Oral-B Indicator •Premium when compared to Oral-B regular
•Best value for level of efficiency
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PricePromotion
Niche, Super Premium Mainstream Professional
•35% more effective on the teeth surface and 100% more effective at gum line/between teeth at removing plaque when compared to product offering from the competitors
•Best of mainstream offering
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PriceDistribution
Niche, Super Premium Mainstream Professional
•Majority through retail outlets specifically drug stores where people will be searching for best protection against gum disease.
•80% distributed through office of dental professionals •Rest through retail outlets
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Financial Forecast
•A financial analysis indicates a profit over a two year time frame for both market positions.
•The niche position generates a greater estimated net profit over the two years.
•Some sales of the new product are anticipated to come at the expense of sales of other existing Colgate products.
• In the niche position, an estimated 35% of sales would come form other products decreasing Colgate’s overall toothbrush net profit.
• In the mainstream position, an estimated 60% of sales would come from exiting products decreasing Colgate’s overall toothbrush net profit.
• Including cannibalization effect, only the niche market generates a profit over a two year period.
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Branding
• Emphasizing the Colgate name on the new Precision toothbrush would cause additional cannibalization of the
existing Colgate toothbrushes - estimated at 20%
• Using the Colgate name would be congruent with Colgate’s strategy to build the Colgate Brand Equity.
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Communication and PR0motion
•Four concept tests conducted among 400 adult professional brush users. •Results indicate consumers were highly motivated by precision toothbrush claims. •Additional in-home usage test were conducted - 77% claimed that Precision was much more effective than their
current toothbrush - Other consumer research revealed that the higher the exposure to
the product the greater consumer acceptance
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Manufacturing and Financial Resources
•Colgate Palmolive has spent $243 million to upgrade 25 of its 91 manufacturing plants
•Participated in several strategic acquisitions.
•Manufacturing capabilities began in China and Eastern Europe.
•If needed, some production can be re-directed to manufacturing sub-contractors which CP currently uses for other products.
•CP holds 43 % of the global toothpaste market and 16% of the global toothbrush market
•Sales have increased 12% to $1.3 billion, accounting for 22% of CP’s total sales
•Toothbrush sales amounted to $77 million with operating profit of $9.8 million
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Advantages and Disadvantages of Mainstream Marketing
Advantages Disadvantages
•Product is accessible to a larger market
• Marketing to more diverse audience - simple and direct
campaign - address all common concerns of all
toothbrush buyers.
• In the mainstream market a higher price makes a product less attractive to the average
consumer. • There is a variance amongst
consumers in relation to oral hygiene.
• Inadequate supply of the product due to huge demand
• Including Precision as a high-end, mainstream product could
potentially “cannibalize” Colgate Plus sales.
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Advantages and Disadvantages of Niche Marketing
Advantages Disadvantages• Concentrated, specific advertising campaign,
targeted to a specific demographic, psychographic, behavioral or geographic segment - efficient use of advertising
budgets • Developed to be the best toothbrush possible
and placed in the super-premium category, this toothbrush is inherently a niche product.
• Customers would appreciate the scientific data Colgate-Palmolive has complied on this
toothbrush. • Niche market participants are also more likely
to pay a premium for this product due to the fact that Precision caters to a distinct set of
needs they have. • To keep Precision as a specialized product
means that the new product is less likely to invade the market share of other Colgate-Palmolive products, like the Colgate Plus.
• Niche markets historically attract fewer competitors.
• Marketing the Precision product to a niche market would generate less revenue for Colgate-Palmolive than a
mainstream approach.
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Conclusion
• Colgate Palmolive should position the precision toothbrush as a niche market product during introductory and growth life cycle.
• Benefits and values are best suited for niche costumer and would therefore enjoy the greatest success in such a market.
• R&D investments suggest that Super Premium Niche segment is more consistent than mainstream market for advanced gum care.
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Thank You