Colgate-Palmolive Company: The Precision Toothbrush

This presentation is a case analysis on Colgate-Palmolive Company: The Precision Toothbrush. It was made for a marketing internship under Prof. Sameer Mathur, IIM Lucknow.

1. C O L G A T E PREC ISION

2. A CASE ANALYSIS by: Ishan Chourey

3. OBJECTIVE OF CASE STUDY To study consumer behaviour towards toothbrush market To study market competition faced by the Colgate Precision Toothbrush To study marketing strategies that can be used to position Precision Toothbrush. To study profits gained from adopting these strategies.

4. COLGATE-PALMOLIVE Fact File Started in 1804 by William, Colgate Palmolive is an international consumer product such as household, health care and personal products. Brands like Colgate, Palmolive Naturals, Brite etc. In 1896, it sold the first toothpaste in tube – Colgate Ribbon Dental Cream. In 1991, Colgate-Palmolive had over $6 Bn sales, net profit of $2.76 Bn, making it a global leader in household and personal care products . Today, it spread across 190+ countries across the globe with public listing in USA and India. Under the leadership of Ian M. Cook, it is one of the global leaders in oral health products, with over 46% global market share.

5. Source: http://marketrealist.com/2015/07/much-market-share-colgates-leading-brands/

6. The Tale of Colgate Precision Toothbrush In 1992, Colgate-Palmolive introduced the Colgate Precision toothbrush. They were poised to launch this new toothbrush Triple Action Brush Effect Provide Gum Protection More Effective Plaque Removal

7. 1992 ORAL CARE MARKET Toothbrush accounted for 15.5% of total Oral health Market Growth rate 9.3%/Annum

8. 1992 Value Segment Super-Premium Segment Professional Segment 24% of unit volume 12% of total sales Average price $1.29 35% of unit volume 46% of total sales Average price $2.29-$2.89 41% of unit volume 42% of total sales Average price $1.59-$2.09

9. STAR PLAYERS-PRECISION TOOTHBRUSH SUSAN STEINBURG – PRODUCT MANAGER NIGEL BURTON - DIVISIONAL GENERAL MANAGER RUBEN MARK – CEO, COLGATE-PALMOLIVE

10. WHY THE DEMAND? US population is increasing on awe 1.23 % annually Media Support and coupon promotions are increasing rapidly Baby boomers becoming more health conscious and willing to pay more for a toothbrush Increasing frequency of replacing a toothbrush over last few years

11. CONSUMER BEHAVIOUR To study the varying consumer behaviour, they were studied on three activities Types of Brushes consumed – Cosmetic, Therapeutic, Normal Factors Considered Before Purchasing New Toothbrush Factors For Choice Of Brand

12. CONSUMER SEGMENTATION

13. FACTORS CONSIDERED BEFORE PURCHASING NEW TOOTHBRUSH

14. FACTORS AFFECTING CHOICE OF BRAND FEATURES – BRISTLE TYPE, PLAQUE REMOVAL, SENSITIVE GUM CLEANING COMFORT – SOFT BRISTLES, EASY GRIP PROFESSIONAL RECOMMENDATION – DENTIST, ORAL CARE EXPERT

15. MAKING OF THE PRECISION In 1989, Colgate-Palmolive assembled a team to develop a new cutting edge toothbrush to compete with the likes of Oral-B Indicator and P&G Crescent Team comprised of: Dental Professionals Marketing Experts Consultants and Focus Groups To measure the success rate, 5 goals were established.

16. 5 Goals Understanding the varying techniques consumers used when brushing their teeth. CONCLUSION : Brushing was often ineffective at removing plaque from the gum line and between the teeth. Testing the between-teeth access of different toothbrush designs. CONCLUSION: CP’s new design was superior to both Oral-B and Reach in accessing front and back teeth, using either horizontal or vertical brushing. Establishing an index to score clinical plaque-removal efficacy at the gum line and between teeth. CONCLUSION: Measured presence of plaque on each of the nine tooth areas. Then Calculation of percentages of tooth areas affected by plaque pre- and post-usage of different brushes. Creating a bristle configuration and handle design offering maximum plaque- removing efficacy. CONCLUSION : Clinical trials established that the 3 similar newly designed products removed an average 35% more plaque than other leading brushes and therefore helped to reduce the probability of gum disease. Determining, through clinical and consumer research, the efficacy and acceptance of the new toothbrush design. CONCLUSION : Product design and characteristics, marketing concept, and competitive strengths were tested.

17. COLGATE PRECISION DESIGN BLUEPRINTS

18. LAUNCHING STRATEGY TARGETING CONSUMERS ENTERING MARKET DISTRIBUTION

19. CONSUMER TARGETING # Analysis Of Factors Affecting Brand Choice Recommendation By Dentists Comfort Features # Conclusion Of Analysis Recommendation By Dentists Comfort Features

20. BRAND POSITIONING Colgate Precision Was Developed To Provide A High Quality Toothbrush And To Capture Top Market Position. POSITIONING NICHE PRODUCT MAINSTREAM PRODUCT To introduce Colgate Precision as specialised product for gum diseases To introduce toothbrush as a regular product for a larger consumer appeal

21. NICHE POSITIONING Increase In Volume Share From 3% To 5% MAINSTREAM POSITIONING Increase In Volume Share From 10% To 14.7%

22. PRODUCTION COST & PRICING Production contract was given to Anchor Brush, including the manufacturing, warehousing and transportation. Precision’s manufacturing required three types of equipment’s: Steinberg decided that CP would establish a factory list price to the trade of $2.13, a premium over Oral-B regular and at parity with Oral-B Indicator. The mainstream strategy price would be $1.85, at parity with Oral-B regular.

23. STINEBERG ESTIMATION OF COST AND PRICE DATA

24. BRANDING Branding Colgate Precision was targeted in five steps: Primary Strategic Target Superiority Display Budget Advertisement Channel Print Ads.

25. PRIMARY STRATEGIC TARGET Segmentation Colgate Precision was targeted to Therapeutic users(46%) of adults who searched functionally effective products Demographical Approx. 76 million US citizen, baby bloomers and young adults. Geographical 23.3% Volume share across USA

26. BUDGET An overall increase in 3:1, overall investment was $14.6 Million was invested on Advertising, while $17.5 Million was consumer and trade product budget.

27. Advertising and Promotion Expenditures for Colgate-Palmolive Toothbrushes: 1989-1992E ($ in thousands)

28. SUPERIORITY DISPLAY “New Colgate Precision” provides 35% more plaque removal than Oral-B & Reach Emphasise on statistical superiority over other brands

29. Product display Point-of-sale Display Racks Increase product visual to customers

30. ADVERTISING CHANNEL

31. ADVERTISING TECHNIQUES INVOLVED Free 5 Oz. tube of Colgate toothpaste with every Colgate Precision Consumer Research Sampling Use dentists to sample consumer since professional endorsement In-house testing

32. COLGATE-PALMOLIVE TV ADS.

33. PRINT ADS.

34. PROMOTION COMMUNICATION &

35. After product development, four concept tests, conducted among 400 adult professional brush users (Colgate Plus, Reach, and Oral-B users) 18 to 54 years of age, were run during 1990-1991.

36. Consumers were exposed to various product claims in prototype print advertisements and then asked about the likelihood that they would purchase the product.

37. DISTRIBUTION SHORT TERM CHANNELS DRUGSTORES: Increase in sales of mass merchandises. More In-Store promotion Food Stores: 43% of whole sales is gained from here. A home for user it gradually accept the product. Dentists ad Professionals: Dentists promote and distribute more Colgate Precision toothbrushes LONG TERM CHANNELS DRUGSTORES: Attracts consumers with gum diseases, Precision is most effective for these Food Stores: 43% of whole sales is gained from here. A home for user it gradually accept the product. Dentists ad Professionals: Dentists promote and distribute more Colgate Precision toothbrushes

38. SALES PERFORMANCE 1989-1992E

39. Colgate-Palmolive Vs Other Major Brands 1991-1992E

40. ANALYSIS OF CASE Results indicate that a claim that the toothbrush would prevent gum disease motivated the greatest purchase intent among test consumers. Additional consumer research, including in-home usage tests, revealed that 55% of test consumers found Precision to be very different from their current toothbrushes, and 77% claimed that Precision was much more effective than their current toothbrush. Consumer research revealed that the more test consumers were told about Precision and how it worked, the greater their enthusiasm for the product.

41. PROBLEMS WITH COLGATE-PRECISION The brush looked unusual and test participants sometimes had mixed first impressions. A further problem was that the benefit of reduced gum disease from extra plaque removal was difficult to translate into a message with broad consumer appeal, since few consumers acknowledged that they might have gum disease.

42. CASE CONCLUSION Launching Precision tooth brush as a niche market product seems to yield more benefits, hence it should also be priced accordingly. Initially, it should be priced at par with Oral-B’s Indicator toothbrush. Considering the claims that the company makes for the Precision toothbrush and also that it falls in the super-premium segment, this pricing is optimal.  Afterwards, when the company opts to convert it into a mainstream product, then the price should be made at par with regular Oral-B product. Cannibalization of Colgate Plus should be taken care of.

43. Disclaimer This Marketing Study is created by of SRM University, Chennai, during a marketing internship under IIM Lucknow. Ishan Chourey Ishan Chourey Prof. Sameer Mathur Prof. Sameer Mathur