Colgate Palmolive : The Precision Toothbrush

Case study of Colgate Palmolive : The Precision Toothbrush of Harvard Case Analysis

1. Colgate Palmolive The precision toothbrush

2. Contents Problem Statement Demand and Market Segment Marketing Mix Marketing Strategy / Programs Recommendation

3. Problem statement Defining the Marketing Strategy for the New Toothbrush – COLGATE PRECISION Positioning Branding Communication Strategy

4. NATURE OF DEMAND Tooth brush market is close to a century old, but last few decades have witnessed many changes Now , there is a shift in demanded benefits  Cavity Prevention Healthier Gums  Y oung generation ready to pay for superior toothbrush Market is emerging from value and premium range to a third category of “Super Premium” range – Enhanced Oral Care

5. Extend of Demand Current US Toothbrush market – US $ 330 MN CP’s share – US $ 77 MN Market growth – 9.3% per annum since 1987 ($ sale)  Year 1992 – Market growth – 18% by volume, 21 % by $ sale $ growth exceeded volume growth due to emerge of Super Premium Toothbrush

6. Environmental Climate Political - Relatively insignificant Economic   New entrants appeared in early 90s Proctor & Gamble and Smithkline Beecham  Positioned in the super-premium segment  Technological The new products in late 1980’s & early 1990’s  D esign of the handle and head of the tooth brush T he action of the bristles  Super premium toothbrushes - with an emphasis on greater plaque removal and gum care 

7. Social Aesthetic appeal in the late 1980 The children’s market  Glow-in-the-dark handles Cartoon characters  New product - technological improvements An additional social development - concern for gum health - the baby boom population  Cavity prevention was the previous concern - willing to pay more for products designed for gum care Current status and future trend The most current technology is the action of the bristles Concern for gum health is demonstrated by the current population New product offerings to feature technological improvements of aesthetic improvements 

8. Colgate precision Presently in Introduction stage  Planned promotion for entry into Super Premium segment  Expected ROI in few years 

9. Product The Precision toothbrush is a technical innovation  Using infrared motion analysis, CP developed a unique brush with bristles of 3 different lengths and orientations Three brush designs evolved with 35% more plaque removing efficiency The brush is also shown to be more effective in reducing gum disease than the leading brushes, specifically Reach and Oral-B 

10. Price Greater discount may be given as reflected in the financial forecasts

11. Promotion Under the niche market Aggressive advertising campaign - demonstrate technical superiority of the toothbrush Under the mainstream position Through financial incentives Coupon , buy one get one free  Through professional channels – Dentists  Consumer promotions in strong CP market  F ree 5 oz. Tube of Colgate toothpaste with a Precision brush  50 %-off offer on Colgate toothpaste 50 cent. coupon

12. Financial forecast F inancial analysis indicates a profit over a two year time frame for both market positions  The Niche position generates a greater estimated net profit over two years of $12,527,333 The mainstream net profit over two years is estimated at $9,515,333  In addition, some sales of the new product are anticipated to come at the expense of sales of other existing Colgate products 

13. In the niche position, an estimated 35% of sales would come form other products decreasing Colgate’s overall toothbrush net profit by $2,507,400 in year one and $3,970,050 in year two In the mainstream position, an estimated 60% of sales would come from exiting products decreasing Colgate’s overall toothbrush net profit by $15,044,400 in year one and $21,133,800 in year two . Including cannibalization effect, only the niche market generates a profit over a two year period

14. 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

15. Communication & Promotion Information that may contribute to success Four concept tests conducted among 400 adult professional brush users (Colgate Plus, Reach, and Oral B ) The results indicates - consumers were highly motivated by the Precision toothbrush claims  Additional in-home usage tests 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

16. Skills and Financial Resources Colgate Palmolive has spent $243 million to upgrade 25 of its 91 manufacturing plants  Participated in several strategic acquisitions. E.g. Mennen, a men’s toiletry company 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

17. 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  What does this mean ? Colgate Palmolive, without any doubt, has the means and abilities to take on the endeavor 

18. Pros & cons of positioning Main stream strategy

19. NIChe Marketing strategy

20. Recommendation CP would have a strong position against competitors on the basis of product attributes B etter product with better performance  Focus on gum effectiveness brush Positioning in Super premium Segment specifically to therapeutic brushers  R&D investment concludes Super premium Niche segment is more consistent than mainstream market for the advanced gum care

21. Implementation Professional endorsement from dentists Pursue an aggressive advertising campaign  Match price-points with other super-premium brands  Associate a super-premium toothpaste with Precision