Colgate Palmolive Precision : Case Study

Here is the Harvard Case study of the Colgate Palmolive Precision toothbrush product

1. A CASE STUDY

2. A Presentation Sandra S Kurian (Mar Athanasius College of Engineering, Kothamangalam , Kerala) During the Internship under Prof. Sameer Mathur ( Marketing Management, IIM Lucknow )

3. Situation Colgate – Palmolive’s oral care division has come up with a technologically superior tooth brush, primarily named PRECISION But….. There is competition in the market due to high productivity

4. Susan Steinberg’s ( PRECISION Product Manager) Tasks : Recommend Positioning Supervise and improve on Product development process Decide on Advertising and Communication Strategies Decide on Branding of product

5. Features of PRECISION Bristles of three different lengths and orientation to facilitate triple action brushing effect : 1) Longer outside bristles ( to clean gum lines ) 2) Longer inner bristles( Clean between teeth and plaque removal ) 3) Shorter bristles ( clean teeth surface )

6. Features of PRECISION ( Continued) An average of 35% more plaque removal than competitors (Reach and Oral B) Same Effect in Horizontal and vertical brushing

7. Competitions : (1) ORAL B 23.1% volume market shares and 30.7% value shares in US retail sales Relied Heavily on Professional Endorsements In July 1991, Oral-B launched the Indicator brush, priced at a 15% premium to its other brushes It had a patch of blue bristles that faded to white when it was time for replacement Consumer promotions were expected to cost $4.5 million (5% of sales) and include $1.00-off coupons, “buy-one-get-one-free” offers and $2.00 mail-in refunds. Media expenditures for 1992 were estimated at $11.2 million (12.7% of sales).

8. Competitions : (2) Johnson and Johnson The Reach brand, which, in 1991, comprised 18 SKUs and Prevent, a brush with a beveled handle to help consumers brush at a 45% angle—the recommended brushing technique Reach line was positioned as the toothbrush that enabled consumers to brush in even the hardest-to-reach places, thereby increasing the efficiency of brushing. New products included Glow Reach (1990) and Advanced Design Reach (1991), which offered tapered heads, angled necks, and unique non-slip handles.

9. Competitions : (3) Procter and Gamble Crest had long, rippled bristles of different lengths, designed to reach between the teeth. Crest had “the ability to reach between the teeth up to 37% farther than leading flat brushes.” Consumer promotions already announced included 55 cent coupons and $1.99 refunds on toothbrushes purchased from floor stands. Media expenditures for the last quarter of 1992 were estimated at $6.4 million; Television commercials would carry the theme “Teeth aren’t flat, so why is your brush.”

10. Competitions : (4) Smithkline Beecham Aquafresh Flex toothbrushes had flexible handles that allowed for gentle brushing The 1992 promotion plan, estimated at $4.6 million (25% of sales), included $1.99 mail refunds, “buy-two-get-one-free” offers, toothbrush on-pack with toothpaste, and a self-liquidating premium offer of towels. Other competitors included Lever, Pfizer, and Sunstar

11. Colgate Palmolive Background 1) CP’s 5 year plan : New product launches Entry into new geographic markets A continuous focus on core consumer products 2) 243 million dollars to be spent to upgrade 25 of CP’s manufacturing plants; 275 new products introduced in market 3) In 1991, CP held 43% of the world toothpaste market and 16% of the world toothbrush market 4) CP’s U.S. toothbrush sales in 1991 reached $77 million, with operating profits of $9.8 million

12. Colgate Palmolive Background (continued) Several strategic acquisitions (e.g., of the Mennen men’s toiletries company) were completed Manufacturing began in China and Eastern Europe New products launched in the U.S. market included Colgate Baking Soda toothpaste and the Colgate Angle and Wild Ones toothbrushes. CP offered two lines of toothbrushes in 1991—the Colgate Classic and the Colgate Plus. Colgate Classic was positioned in the “value” segment and was CP’s original entry in the toothbrush market Colgate Plus was positioned as a higher-quality product in the “professional” segment.

13. CHALLENGES TO INTRODUCE PRECISION ORAL B had an upper hand to associate with the dental association on its products Possibility of cannibalization of Colgate Plus

14. Categories of Toothbrushes TWO CATEGORIES: 1) Professional brushes (priced between $ 1.59 and $ 2.09; 42- 44% of the brushes) 2) Value Brushes ( priced on average at $ 1.29 ( 24% of brushes) The late 1980s saw the emergence of SUPER- PREMIUM brushes (priced above $ 2.00 ; retail prices between $2.29 and $ 2.89) , which accounted for 35% of unit volume and 46% of dollar sales

15. CONSUMER BEHAVIOUR Baby Boom generation had concerns for gum health when compared to cavity protection and would pay a premium price to solve it Purchase frequency was low due to 2 for 1 offers Brand choice was based on features , comfort and professional recommendation Factors mainly affecting brand choice : Size and shape of mouth; Sensitivity of gums; Personal brushing styles and Handlers/Bristles and head shape of tooth brush

16. Types of Brushers Therapeutic Brushers ( Avoid oral Care Problems) Cosmetic Brushers ( Try to prevent bad breath and ensure white teeth) Uninvolved Brushers (Not really motivates by oral care benefits ; adjust their behaviour only when confronted on oral hygiene terms)

17. Advertising and Promotion ( progressing trends) Advertising media expenditures ,needed to launch new tooth brushes , rose Total media spending on television advertising grew from a total of 55 million dollars in 1992 to 70 million dollars in 1993 Growing competition also increased frequency and value of consumer promotion events Retail advertising features and in store displays increased toothbrush sales

18. Colgate Palmolive Statistics CP toothbrush line held 25% to 40% of category shelfspace in most stores 22% of all toothbrushes were expected to be distributed to consumers by dentists with dedicated sales force When Colgate brushes were sold with toothpastes, sales increased to 170%

19. SOPHIE’S CHOICE : POSITIONING STRATEGY Mainstream Positioning strategy Niche Positioning Strategy

20. MAINSTREAM POSITINING STRATEGY Resulted in larger market and volume shares within a year of launch Massive proportion of sales would occur through mass merchandising and club stores Highest possibility of Cannibalization of Colgate Plus Rescheduling of production, designated for Niche positioning Possibility of inadequate supply of product Mainsteaming with 7 SKUs will result in dropping of atleast 1 SKU

21. NICHE POSITIONING STRATEGY Targeting consumers concerned about gum diseases Captures 3% of US Toothbrush market by 1 st year of launch Gain command of 15% price premium over ORAL B No SKUs need be dropped If Mainstream positioned, precision would capture 10% of market share in 1 st year Volume shares would be equal to 10% by mainstreaming , whereas 5% by niche positioning

22. Another Sophie’s Choice : BRANDING Precision by Colgate Colgate Precision

23. Branding preference Stressing Precision as opposed to Colgate would limit the extent of cannibalization of Colgate Plus Whether mianstream or niche positioned, cannibalization of Colgate Plus would increase by 20%, if Colgate brand name was stressed but would remain unchanged if Precision brand name was stressed first Thus, Precision brand name was alone preferred more

24. Test Consumers’ responses Prevention of Gum diseases motivated greatest purchase intent 55% test consumers found precision to be very different; 77% claimed that it was more effective However, the brush looked unusual and test participants had initially mixed responses There was a difficulty to convey the benefit of reduced gum disease from extra plaque removal as few consumers only acknowledged that they had gum disease But the more they were enlightened on the features, the higher rose their enthusiasm.

25. What would you do , if the shoes of SUSAN STEINBERG ?

26. Brand it as “Precision by Colagte ” to reduce Cannibalisation As Colgate Plus is the bread and butter of CP’s Toothbrush Line

27. Positioning Niche position it initially, and later mainstream it, to avoid cannibalization possibilities at start itself In the short niche timeline, improve a feature or two of the Colgate Plus as a safety check against cannibalization See for more outlet options beyond club stores tec.

28. Advertising Strategy and Distribution Advertise it, stressing on the issues overcome, more informatively Increase consumer promotions among kids and maybe provide special discounts on festive seasons and also for disabled kids, as rain checks for mainstream positioning Ensure active feedback and most widened sampling through dentists, schools and fast food joints Mainly dentists, as Professional endorsements are more effective and credible

29. Reach out through social initiatives and make it affordable for the same Endorse more to appeal to the sentiments of therapeutic brushers Associate a super premium toothpaste, dental floss and mouth wash with precision