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A PROJECT OF

STRATEGIC
MANGEMENT

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A PROJECT REPORT ON

STRATEGIC MANAGEMENT
IN ORAL CARE INDUSTRY

ACKNOWLEDGEMENT

The completion of the project would have been a dream without the help and
support of people who gave their time to us for collection of information
needed and to help us for the any problems for the project. With immense
pleasure and gratefulness we are presenting this report. It is glad to
acknowledge the contribution of many individuals in making this report a
success.

We are gratly thankful to our director Prof. S. Chinnam Reddy for providing us
such a nice opportunity and guiding us for the project. We are also thankful to
our friends and all the persons who directly or indirectly helped us for this
project.

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PROJECT METHODOLOGY
Objectives:

- To analyze the situation exist in the market for the Oral Care Industry

- To know and analyze how the different companies uses different


strategies by which ways to retain and get the new customers from the
market

- How the strategies work in the Oral Care Industry

- How to apply the Strategies and to manage the strategies in the practical
world.

- To know the position of the different companies in the Industry and in the
market

- To know the acceptance criteria of the customers

- To know how to work and formulate the strategies in the market in Cut
Throat Competition Situation.

Data Collection:

This project is based on the secondary data only. Following are the sources
from which we collected the data:

Newspapers

The Economics Times


Business Standard

Magazines

Business India
Business Today
Business World
Brand Reporter

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Websites
www.hll.com
www.colgatepalmolive.com
www.thehindubusinessline.com

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INDEX

Sr Title Page no.


no.
1 Industry Profile 11
2 Company Profile 31
3 BCG Matrix of the Companies 33
4 Competitive Advantages of the Company 38
5 SWOT Analysis 43
6 Porter’s Five Forces Model 46
7 Conclusion 51
8 Bibliography 52

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Index of Figures & Table:

Sr.no. Title Page No.


1 Sales figures of Brands 21
2 Crest toothpaste 21
3 Go smile 25
4 Crest whitening 26
5 Oral B 28

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LITERATURE REVIEW
Happy.com
TheHinduBusinessLine.com
Brand Reporter

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Executive Summary:
This project is based on the strategic management of the company. Here, we
have studied the five force model for each company and have found that at
present Colgate is having higher market share compared to HLL, but HLL is
posing a serious threat to Colgate as it is capturing the market share of Colgate.
Colgate is having 51% of market share and HLL is having 38% of market
share. Also there major players in each oral care industry there are many small
players like Forhans, Dabur etc. but these companies operate at niche market
and do not affect much to the market share of leaders.

Also, Colgate is positioned as low value brand and is mainly used by rural
customer and middle class families whereas HLL is positioned as a premium
brand. HLL has specialization in Gel type of toothpaste and Colgate has
specialization in simple toothpaste sector. Then we have also undertaken the
SWOT analysis of the companies and found that both these companies have a
strong distribution system, which is their strength. Both these companies also
have their own weaknesses also.

The rural areas in India still using the traditional ways of cleaning the teeth, so
there is great chance of growth in the industry. As Colgate, now a days
introduce Colgate Active Salt toothpaste as to capture the Indian Rural Market
because in Rural Area people still use Salt for cleaning their Teeth and even in
Urban and Semi-Urban areas some traditional people believes that Salt is good
for the teeth so ever use Salt for cleaning so Colgate gives the new flavor for
the same and try to capture the market.

We have also done the BCG Matrix analysis of the companies and found that
Colgate is a Star Company in the industry and in case of HLL is concern it is
also in a Star category. Thus, both the companies are stars in the industry. But,
in case of few products of HLL’s Aim toothpaste is a Question Mark.
Colgate’s all products are in good condition so they lay down in Star category
of Matrix. For HLL other brands like Close-Up and its variants come in Star
category of the matrix. As we know that the industry is growing at high rate so
none of the products of any company could be in Dog category.

Both HLL and Colgate are competitor of each other. Due to the intense
competition between the two companies the prices of the products are coming
down. They are introducing different types of consumer schemes to attract
consumers.

According to BCG Matrix for whole industry both HLL and Colgate Palmolive
Ltd falls into the Star Category although some of their brands are not in the
Star Category.

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INDUSTRY PROFILE

India’s per capita consumption of Toothpaste is one of the lowest in the world;
it currently stands at 70 gms as compared to the global average of 362 gms.
This is because 74 % of our population live in rural areas and are not well
versed with personal health and hygiene. As the penetration level of this rural
segment is at a very low of 30 %.

Colgate and HLL products are way ahead as far as market share goes. These
brands have earned a place in the customer’s minds or speaking in a technical
term they have been positioned in the customer’s mind. Secondly, the brands
like Promise and Babool are catering to a very specific segment of customers,
which is the Herbal toothpaste user segment. Thus, they also have positioned
themselves as Herbal toothpaste user segment. This can be termed as ‘Niche
Market’, which they are catering to. Look at the Oral Care counter in a
supermarket, and what hit you is freebies on offer – practically every brand is
offering something free.

LOOK at the oral care counter in a supermarket, and what hits you is freebies
on offer — practically every brand is offering something free.

Oral care is among the first categories in the FMCG business where the now-
ubiquitous "buy-one-get-one-free" offers made its debut as early as 2000.
Surprisingly, while marketers have been winding down such promotions in
other FMCG categories such as soaps and detergents, there is no sign of this in
oral care products. So, freebie offers (called `below-the-line promotions' in
marketing parlance) continue to be the favourite selling pitch for toothpastes
and toothbrushes.

Freebies galore: Promises of "100 gm free for every 100 gm bought", "savings
of Rs 25 on every 200 gm pack", or "a saving of Rs 44 on every combi-pack of
toothpaste and toothbrush" scream from the packaging. These offers translate
into huge discounts on the maximum retail prices (MRPs) of the brands in
question.

Colgate Dental Cream's offer of two 200 gm packs at Rs 94, translates into a
discount of 15 per cent on the MRP. Close-Up's MRP of Rs 64 for 250 gm of
toothpaste (100 gm plus 150 gm free) into a discount of 25 per cent on MRP.
Anchor's bargain-basement price of Rs 25 for a 200-gm-toothpaste, with a
toothbrush free, translates into a whopping discount of 64 per cent on the
brand's MRP.

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Yes, the large discounts on MRP do mean that manufacturers get to save on
excise duty (excise duty for the category is levied on the MRP). However,
since the excise duty savings are likely to amount to just a fraction of the MRP,
such savings can hardly make up for the large discounts offered by the brands.
How have the major companies managed to fund these long-running
promotional offers without straining their profit margins? After all, despite
pressure on the topline, both Colgate Palmolive and Hindustan Lever have
managed to register robust profit growth over the past financial year.

Covered by higher realizations: Taking a cut in realizations has not been


difficult for the two major players. For one, margins in the category are high.
According to a Chennai-based retailer, "the major brands can easily afford to
sacrifice a part of their margins to promotional efforts for a sustained period".
These apart, steep hikes in the selling prices of toothpastes over the three years
from 1999 have probably left players in the segment with some cushion to fund
promotional activities. To take just a few of the major brands: The MRP of
Colgate Dental Cream (200 gm) was raised 37 per cent between May 1999 and
August 2002. Colgate Gel Red became costlier by around 30 per cent. HLL's
Close-Up Red saw an increase of around 30 per cent in its MRP, while
Pepsodent saw prices pegged up by around 30 per cent. Part of the price hike is
likely to have been absorbed by excise duty and sales tax changes. But, despite
the slew of freebies, quite a few of the brands are likely to have higher effective
realisations today than three years ago.

"Power" brand focus: The "power" brand strategy has also helped players
finance their high-decibel promotional campaigns. Over the past couple of
years, major players such as HLL have rationalised their brand portfolios to
weed out low contribution brands. This has freed up marketing spends, which
are now redirected into promoting a few, strong brands. HLL has, for instance,
withdrawn its low-priced toothpaste Aim and phased out variants of Close-Up
such as Oxyfresh and Close-Up Green. Its entire marketing might is now
focused on Close-Up and Pepsodent. Thus, the two now have the lion's share of
HLL's marketing spends in the category.

Squeezing supply chain costs: The slowdown has also forced the major
players to put their cost structure under a microscope. Both HLL and Colgate
have unleashed a slew of supply chain initiatives. HLL has been electronically
linking up its entire supply chain to change over to a continuous replenishment
system for its distributors. The exercise has helped reduce pipeline inventories
at various levels of the distribution system. On the other hand, HLL has also
pepped up buying efficiency through centralised purchases and strategic tie-ups
for inputs with vendors of raw materials. It has also restructured its outsourcing
arrangements with sub-contractors to reap the maximum benefits from bulk
buying.

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Fiscal benefits: Along with supply chain initiatives, players have also planned
their manufacturing capabilities to exploit fiscal benefits to the maximum.
Colgate Palmolive India, for instance, has invested in a Nepal subsidiary for
fiscal and locational benefits. Not only does the unit enjoy tax-free status, there
are savings on Customs and excise duties on products sourced from the unit.
With Colgate Palmolive-Nepal stabilizing operations, the contribution from
that unit almost doubled between 2000-01 and 2001-02. Dividends from the
Nepal unit, Rs 6.80 crore (up from Rs 3.87 crore last year), contributed around
10 per cent to Colgate Palmolive India's bottom-line in 2001-02.

These factors have ensured expanded profit margins for the two major players
despite the free-for-all in the oral care market place. Both HLL and Colgate
Palmolive have certainly seen an increase in their ad spend over the past year.
HLL's ad spend to sales ratio rose from 6.5 per cent in 1999 to 7.5 per cent in
2001, further moving up to 9.2 per cent in the first half of 2002. Yet, its
operating profit margins have expanded from 17.05 per cent in 2000, to 19.05
per cent in 2001, and further to 20.7 per cent in the first half of 2002.

Similarly, Colgate India increased its ad spend to sales ratio from 18.2 per cent
to 19.9 per cent between 2000-01 and 2001-02, and managed to expand its
operating profit margins from 8.2 to 9.2 per cent over the same period. If the
free-for-all in the marketplace has had consumers smiling broadly, it appears to
have benefited the players as well, forcing them to iron out operational
inefficiencies and look to new avenues for cost savings.

Global taste in Paste

WHILE growth has been hard to come by in the Indian oral care market, the
category has registered robust growth in the developed world. In the US and
Europe, growth in the category has been driven by a slew of innovative product
offerings over the past couple of years. Oral care accessories, rather than
toothpastes or toothbrushes, were the fastest-growing segment. This segment
comprises home oral care remedies such as tooth whitening kits and mouth
washes. The toothbrush category has registered sluggish growth. But electrical
toothbrushes have registered robust, double-digit, growth.

The blockbuster oral care product of the past year has undoubtedly been
Procter & Gamble's tooth whitening product-Crest Whitestrips. The
Whitestrips are plastic adhesive strips that are to be worn for brief periods for
the teeth to be noticeably whitened. P&G has promised a refund for consumers
not satisfied with the product after a two-week trial period. The brand, which
recently crossed the $100-million-mark in sales, has helped broaden the entire
accessory segment. Teeth whitening and mouth freshening have been the areas
where new product launches have worked. Colgate's Fresh Confidence, a gel
toothpaste with mouth freshening properties, is an example. So is Colgate's
Sensitive Whitening that offers care for sensitive teeth along with whitening

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properties. P&G's Crest Dual Action Whitening promises to combine tartar
control and whiten teeth.

Innovations in the toothpaste category have centred around convenience


products, which perform two or more functions. Colgate recently launched a 2-
in-1 mouthwash-cum-paste, which acts as a toothpaste and a mouthwash. It
claims to have better reach and long-lasting mouth freshening properties. In
toothbrushes, battery-powered brushes have held sway because of their
portability and convenience of use. P&G's SpinBrush and Colgate's ActiBrush
have both registered robust volume and sales growth over the past year, even as
the traditional toothbrush market was sluggish.

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INVESTMENT OUTLOOK OF ORAL CARE PRODUCTS

IRRESPECTIVE of which of the two players wins the next battle in the oral
care market, it will take a sustained revival of market growth for it to make a
difference to the financials of the two players. In the first half of 2002,
Hindustan Lever's oral care portfolio shrank by 8.2 per cent against the market
drop of 5.7 per cent. Signs of revival are evident in the second quarter, when
HLL managed to reverse the decline in its oral care portfolio. In 2002, Colgate
made market share gains across segments, in toothpastes, toothpowders and
toothbrushes. Yet, it has been unable to avoid a decline in sales, it has seen its
sales shrink by around 12 per cent in the first six months of 2002.

From an investment perspective, immediate prospects for both the FMCG


majors appear sluggish in light of the failure of the monsoons in the kharif
season. Colgate, with its significant exposure to the rural markets, may be
faced with sluggish earnings prospects for now. Given the stock' relative high
valuation, fresh exposures in the stock may thus be avoided. Earnings prospects
for HLL are also bound to be affected by a fall in farm incomes. However, a
broader product portfolio, a host of new marketing initiatives and a renewed
thrust on manufactured exports may have the potential to pay off over a period
of time. The stock has declined sharply in recent times to Rs 175 levels.
Investors with three-five-year investment horizons may use this opportunity to
build exp.

COMPETITION

TWO years ago all their pearlies were out, but today they are frothing at the
mouth. For oral care product makers, it has been a squeeze with the demand
downturn and intensifying competition. Little wonder that teeth are bared
between the market leader, Colgate Palmolive, and the challenger, Hindustan
Lever, as the marketing war between the two FMCG giants gets tough.

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In a slump

The Rs 2,200-crore toothpaste market (the largest oral care segment), grew a
robust 10 per cent in value in 2000. But this wound down to 2.4 per cent in
2001; much of the deceleration happening in the second half. In the first six
months of 2002, the market for toothpastes shrank by around 5.7 per cent in
value; in volumes terms it was much higher at 11 per cent. While sales growth
in value turned moribund only recently, volumes have been sluggish for a
while now. It is probably the increases in selling prices (see accompanying
piece) which kept the value growth going for so long. The toothpowder and
toothbrush markets shrank at a much higher rate.

De-growth by downtrading

Why is the market for oral care products shrinking? The favourite explanation,
of course, is that consumers have been cutting down on their consumption
levels because of the economic and agricultural slowdown; rural demand
accounts for a chunk of the market. Around 32 per cent of toothpaste demand
originates from rural areas, with 68 per cent coming from urban areas, while
the Rs 500-crore toothpowder market depends almost entirely on rural demand.
While HLL has a presence mainly in the toothpaste and toothbrush markets,
Colgate has a significant presence in toothpowders as well. Therefore, it has a
larger exposure to the rural market.

It may be difficult to believe that consumers would actually stop buying


toothpastes or toothpowders to save on their monthly bills. But it is certainly
plausible that low-income consumers will cut down on the quantity or
frequency of usage. The sharp drop in income levels appears to have forced
users to look for the cheapest possible substitute to their current brand, leading
to downtrading within the category. This explanation is indeed supported by
the fact that a debutant brand such as Anchor White has been able to build a
significant market share mainly by aggressive pricing and distribution in non-
urban areas. Even for the larger players, low-priced brands, such as Cibaca Top
and Colgate Herbal, have been the growth drivers.

Aggravated by promotions?

The shrinkage in the market has probably been aggravated by the pricing and
promotional strategies of the players. The sharp increase in the selling prices of
the key toothpaste brands over the past three years (which is prompted partly
by excise duty and sales tax increases) could have hastened the trend of
consumer downtrading. But Mr.Pradeep Banerjee, Category Head, Oral Care,
at Hindustan Lever has a different opinion. "The price hikes have been in line
with inflation; and we have largely held prices over the past year" he says. The
substantial free grammage distributed by way of promotions may have dented
the volume offtake, persuading consumers to stock up during the offer period,

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postponing their next buy. This would, in fact, explain why the shrinkage in
volumes of toothpastes accelerated towards the end of 2001, just after the
promotional offers were at their peak.

If the toothpaste segment was impacted adversely by the downturn, the lower-
end toothbrush market has been severely dented. Given that toothbrushes are
low-cost, high-margin products, they have been the favourite add-ons in
promotional campaigns. Several toothpaste brands have tagged "free
toothbrush" offers to sales. These offers have had a direct impact on toothbrush
sales. In 2001, Colgate's toothbrush portfolio shrank 14 per cent in value terms,
and HLL's 4 per cent.

Pepping up growth

The shrinking market size has spurred the two largest players in the market into
frenetic activity to pep up growth rates. The players first trained their guns on
enhancing the penetration level, that is, bringing new users into the toothpaste
segment. Toothpastes now reach only 67 per cent of the urban households and
33 per cent of the rural households, and there is considerable scope for market
expansion through the conversion of toothpowder users. There was also
potential for converting users of red toothpowders to white toothpowders. For
much of 1999 and 2000, both Colgate and HLL pepped up their rural
distribution network and refocussed on low-unit packs (smaller packs of
toothpastes at affordable prices). However, the crisis in the agricultural
economy appears to have impeded these efforts at penetration. The break-up of
the toothpaste market between urban and rural areas has not changed
significantly during the period. Nor has volume growth in toothpastes or white
toothpowders, picked up to any significant extent.

By the end of 2001, players redoubled efforts to persuade existing consumers


to use more of the product. Many recent toothpaste promotions focus on
offering the consumer additional quantities of toothpaste at the same price.
Much of the action here has been in the larger, 150 and 200 gm, pack sizes
which have traditionally accounted for 60-70 per cent of the market.

Makeover of existing brands

Below-the-line promotions have held the centrestage in the oral care market
and portfolio rationalisation has kept new launches to a minimum. But
marketers have milked their existing brands through periodic re-launches. For
instance, HLL has tried to rejuvenate the Close-Up franchise through the
launch of Close-Up Tingly Red and Eucalyptus Waves variants. The company
has also refurbished the message for Pepsodent by launching a child-centric
campaign highlighting the paste's germ-fighting abilities. Even some of the
more successful brands have seen periodic makeovers. Colgate has re-launched
its Blue Gel variant as Fresh Energy Gel in a transparent tube. Even the recent
entrant, Colgate Herbal, has been re-launched with a new formulation.

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It is early days yet to evaluate the efficacy of the Close-Up and the Colgate
Herbal re-launches. But Colgate claims that Fresh Energy Gel has seen its
market share climb from 4.1 per cent to 5.7 per cent after its re-launch. HLL
claims that Pepsodent has beaten the shrinking market to grow by 5.2 per cent
in the first half of 2002.

With focus on power brands emerging as the new mantra for growth, there
have hardly been new product launches from the two major players over the
last couple of years. Even Colgate Herbal and Cibaca Top, among the few new
launches over this period, appear to be part of a strategy to protect Colgate's
existing brands. This strategy has helped Colgate score a few points over HLL
in the ongoing battle for shares between the two largest players in the oral care
segment.

POWER OF HLL

IN THE late 1990s, Hindustan Lever used the novelty element in gel toothpaste
to make steady inroads into Colgate's dominance in the oral care market. By
1999-end, with its gel toothpaste Close-Up garnering an 18 per cent share of
the market, HLL had bitten off a 37 per cent market share (all market shares
mentioned are value shares, based on ORG MARG data) for toothpastes from
market leader Colgate.

But the past two years have seen a reversal of trend in consumer preference.

As the novelty of gel toothpastes wore off, white toothpastes turned in higher
growth rates than the gel segment. This had an impact on HLL for whom
Close-Up is the largest oral care brand. Close-Up turned in negative growth
rates much of 2001 and its share in the toothpaste market fell marginally.

HLL's renewed focus on Pepsodent helped it protect its turf. The brand
sustained robust double-digit growth rates for much of 2001, with its share
moving up from 11.1 per cent to 13.8 per cent by 2001-end.

Over 2001, HLL continued to score over Colgate, with its market (value) share
in toothpastes moved up from 35.5 per cent to 36.7 per cent over 2001. This
appears to have come at Colgate's expense. Colgate closed 2001 with a three-
percentage-point loss in market share at 46.1 per cent. But of late, Colgate
appears to have made a few winning moves to regain lost ground. Colgate
Herbal, launched in 2000 to pre-empt the host of herbal entrants from eating
into Colgate's market share, has helped pep up Colgate's oral care portfolio and
has a 2.5 per cent share of the market. The re-launch of its gel toothpaste also
helped increase Colgate's market share. Cibaca Top, Colgate's entry in the low-
priced segment, helped the company ward off low-price competitors and garner
another three per cent share of the market.

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As a result, between December 2001 and May 2002, Colgate increased its
value share in the toothpaste market from 46.1 per cent to 49.6 per cent, while
HLL's slipped from 36.3 per cent to 34.3 per cent. HLL faced a setback in its
low-price brand Aim, which HLL pulled back after launching it in 2000. But
while Colgate appears to have won this battle, this may be a temporary respite
in the marketing war between Colgate and HLL. "We plan to have a presence
in every segment of the oral care market and we will be addressing this
segment (the one vacated by the withdrawal of Aim) soon", says Mr.Pradeep
Banerjee of Hindustan Lever. He points out that HLL has reversed the decline
in oral care sales in the June 2002 quarter. The intense competition between the
two FMCG giants has made the going tough for the relatively small players in
the toothpaste segment. Smaller brands such as Forhans, Promise, Babool and
Meswak have found it difficult to match and sustain the promotional frenzy of
the larger brands. If there has been a winner among the smaller players in the
toothpaste segment, it has been the unlikely debutant Anchor White toothpaste
(from the makers of Anchor switchboards).

The company has used a combination of aggressively low pricing, sustained


media advertising and large distribution margins to push the brand in semi-
urban areas. The brand has quickly garnered a 3.7 per cent share of the
toothpaste market. However, whether the brand manages to sustain its initial
performance amid intensifying competition between the two dominant players
still remains to be seen.

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Mergers & Acquisitions

Mr. Cobbins noted that several major oral care players last year opted to
complete their oral care product portfolios and extend their strongest brands
into areas of new growth. They did this during a relatively quiet year.

“Firms were feverishly using the lull in the economy to position themselves for
optimal gains during the expected economic recovery in 2004,” Mr. Cobbins
noted. “The impact will likely be continued dominance in national and regional
markets by one or two very large players, with private label and smaller firms
selling at the value end and within niche categories like natural and health-
inspired products.”

For instance, Procter & Gamble purchased the Glide floss business from W.L.
Gore & Associates, Newark, DE, which will continue to manufacture the fiber
for the floss. Glide, the No. 2 retail brand in the U.S. according to IRI, is
P&G’s first floss. “The acquisition of Glide fits P&G’s strategy of smart, small
acquisitions on billion-dollar brands and increasingly sourcing innovation from
outside P&G,” said Beth Marshal, external relations specialist, oral care, P&G.
“While Glide was the only [P&G] oral care acquisition of 2003, it was a natural
fit...P&G will now feature a complete oral care regimen.”

Meanwhile, Colgate-Palmolive acquired GABA Holding AG, a $300 million


Swiss oral care company with notable strengths in the European pharmacy
channel and European dental community. GABA’s products are said to have a
therapeutic positioning. Colgate experts hope to build its global presence, just
as the company did in Asia in 1985 with the purchase of Hawley & Hazel, and
the 1995 acquisition of Kolynos, which expanded Colgate-Palmolive’s
presence in Latin America

“The GABA acquisition should have a similar effect on our overall European
toothpaste business, where we are already No. 1,” insisted Reuben Mark,
Colgate-Palmolive chairman and chief executive officer, in an official
statement.

But while some multinationals were buying, others were selling. “At the
opposite end, some firms like Unilever are shedding brands that are weak in
particular markets to concentrate on brands that have a competitive advantage
in different regions,” observed Mr. Cobbins

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Church & Dwight agreed to purchase Unilever’s North American toothpaste
and toothbrush brands Aim, Mentadent and Pepsodent in September for
approximately $115 million. This also included licensing rights to Close-Up
toothpaste.

“The primary decision was to give us critical mass in the category and to be a
more important partner with retail consumers, but we also gained a stronger
presence in the fast-growing dollar store class of trade,” insisted Dave Fox,
vice president of marketing, oral care, Church & Dwight.

Church & Dwight executives said the transaction will triple unit sales and more
than double dollar sales in the U.S. oral care sector. The company also plans to
reinvigorate the Unilever brands, which were not priorities for Unilever. “We
will give these brands marketing and product development support,” Mr. Fox
said.

What’s Hot and What’s Not Whether from multinational or local companies,
consumers continue to seek out multi-purpose and convenient items.

“All-in-one products continue to be a strong trend,” insisted Kathleen


Taggersell, spokesperson for Tom’s of Maine. “People are looking for more
than just cavity prevention; a healthy smile reflects a healthy body.”

Mr. Cobbins cited multi-purpose products such as toothpastes that clean teeth,
freshen breath and prevent tartar, as standard in the industry. “Adding
whitening is the newest benefit to the long laundry list that makes products
more appealing,” Mr. Cobbins added.

Despite lackluster sales in several oral care categories in 2003, the $334 million
tooth whitening sector registered gains of 36%, according to IRI, for the year
ended Nov. 30, 2003. This figure does not include Wal-Mart sales. The desire
for whiter teeth is evident across the board from grocery store products to
dental offices.

The American Academy of Cosmetic Dentistry (AACD) said today’s most


popular cosmetic dental treatments include whitening, bonding, implants and
veneers. Executives said thanks in part to the success of ABC’s hit television
program “Extreme Makeover,” cosmetic dentistry has gained popularity.

According to IRI data for the year ended Nov. 30, 2003, Crest Whitestrips was
the No. 1 tooth bleaching brand with sales of $166 million, up 5.2% from the
previous year. During the year, P&G launched Night Effects. It was the No. 3
tooth whitener with sales of $35.5 million, as reported by IRI for the same time
period. This overnight tooth-whitening system uses P&G’s patented

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LiquidStrip technology that slowly releases a whitening ingredient to remove
stains and buildup within two weeks, executives said. Crest Night Effects
retails for $14.99.

P&G also introduced a seven-day whitening regimen, Crest Whitestrips


Premium, nationwide in January. Executives said it is clinically proven to
remove 14 years of stain buildup in just seven days.

Meanwhile Colgate updated Simply White, the No. 2 brand in the segment,
with Simply White Night, an at-home, clear, paint-on gel that is applied once at
night. The product uses a polymer technology to adhere to and whiten teeth
without the need for rinsing. It costs $14.99.

Private label manufacturer Wisdom Oral Care Ltd., Evanston, IL, also entered
the tooth whitening market in March with Brush-On Whitening liquid gel for
Rite Aid drugstores. IRI reported private label tooth bleaching brands ranked
No. 10 for the year ended Nov. 30, 2003.

For any time of day, BriteSmile, Inc., Walnut Creek, CA, launched the
BriteSmile To Go, a portable, lightweight whitening pen. With a click of the
pen, a clear, time-released whitening formula is released and applied to teeth. It
is applied twice daily. Also, Den-Mat Corp., Santa Maria, CA, launched the
Rembrandt Lightning Plus Bleaching gel, Rembrandt Sapphire Light and
Rembrandt Allegro in 2003.

Paste Heightens the Whitening War Consumer demand for whiter teeth is
impacting other categories too. Toothpastes with whitening ability are also
bountiful on the oral care scene. IRI data shows toothpaste sales slid 3.7% for
the year ended Nov. 30, 2003. Colgate-Palmolive, the No. 1 vendor in the
toothpaste market, saw sales fall 3.5% in 2003 to $421 million. To help revive
sales, Colgate launched Colgate Simply White Whitening toothpaste in
December. It removes deep and surface stains and protects against cavities and
tartar with high-cleaning silica, hydrogen peroxide and a patented white
accelerator, executives said.

Plus+White The Smoker’s Whitening toothpaste,


new from CCA Industries, East Rutherford, NJ, is
formulated to remove tough tobacco stains and
whiten and polish teeth simultaneously,
according to executives.

One, Two, Three—Cheese! In front of cameras,


consumers’ smiles are getting wider thanks to a

22
GoSmile launched essential oil-
infused am and pm toothpastes
to lift the senses.
slew of tooth whitening products.

One company claims the throne to the “smile care” category—GoSmile in New
York City, created by dentist Jonathan B. Levine. “The concept behind our oral
care products is that they are professionally formulated and the actives in the
products really have a serious effect on your smile,” explained GoSmile
president Stacy Levine.

In addition to portable GoSmile tooth whitening ampoules, the company offers


two toothpastes formulated with essential oils to either stimulate or relax the
senses in the GoSmile AM and GoSmile PM toothpastes, respectively.

“The aromatherapeutic formulas encourage people to take care of their teeth,”


insisted Ms. Levine. “You know, it’s such a mundane experience, brushing
teeth. Normally people spend 20 to 30 seconds on it. But you should really
brush your teeth for one to two minutes.”

The toothpastes also have higher levels of fluoride and desensitizers, as well as
white cranberry extract to prevent the adhesion of bacteria that are known to
cause periodontal disease. Go-Smile products debut in Sephora stores this
month and also retail in specialty and department stores.

Church & Dwight’s Arm & Hammer Enamel Care toothpastes debut this
month, which also promote a big, bright smile. Executives said over time, acids
from food weaken tooth enamel and leave stain-collecting crevices. The
toothpastes contain liquid calcium and baking soda to clean teeth and fill in
surface enamel to provide a brighter, more lustrous smile, said Mr. Fox.
Clinical studies showed a 23% increase in gloss and 13.7% decrease in
roughness after three months of use, according company data.

Church & Dwight research also indicated the two most sought after oral care
benefits were cosmetic and therapeutic results, so two formulations were
developed, Enamel Care Extra Whitening and Advanced Cleaning.

Tasty Treatments Some multinationals are trying to spice up the whitening


toothpaste category with just that—spices. Procter & Gamble introduced
Whitening Expressions in September. These toothpastes are said to provide
whitening power in three surprising flavors: Cinnamon Rush, Fresh Citrus
Breeze and Extreme Herbal Mint.

“Our research showed that consumers wanted to enhance their everyday


experiences, including brushing,” said P&G’s Ms. Marshal. “Our target

23
consumer is someone who is looking to enhance their everyday brushing
routine through scents and flavors, someone who likes to express their
individuality in everything they do.”

P&G teamed up with renowned chef Emeril Lagasse in ads showing the
connection between spices and toothpaste.

If citrus is your fancy, Pfizer Consumer Healthcare introduced Natural Citrus


Listerine mouthwash with the germ-killing benefits of original Listerine
mouthwash, but with a less intense flavor.

In other mouthwash news, J&J introduced Act Plus Freshening, a breath


freshening fluoride rinse. A new flavoring technology delivers a cooling
sensation to the mouth. Executives said the rinse reduces cavities up to 71%.

The Breathalyzers If fresh breath tops your must-have list, several marketers
have not forgotten you. Colgate-Palmolive is launching Colgate Total
Advanced Fresh 2in1 toothpaste this month, a liquid gel version of Colgate
Total that contains the therapeutic
benefits of Colgate Total and freshens
breath for 12 hours, according to
executives. This follows the launch of
Colgate Total Advanced Fresh in June.

Thanks to Breath-Re-phresh from Tasker


Capital Corp., Wellesley, MA, garlic-
laden meals are no longer a worry. Said
to be the first oral hygiene breath drink,
Breath-Re-phresh combines shiitake Crest has expanded its Whitestrips line
mushroom and citrus extracts, vitamins, with a Premium variant.
xylitol, copper sulfate, ginger and spearmint to control the bacteria and sulfur
compounds that are known to cause bad breath.

Aquafresh launched Extreme Clean with a micro-active foam that creates


germ-killing bubbles to kill bacteria that cause bad breath. It also imparts an
icy-cool tingling sensation. Aquafresh Extreme Clean was shown in tests to kill
99.9% of odor-causing bacteria, executives said. This toothpaste targets young,
active adults.

Kids Just Wanna Have Fun Children are an important consumer group for oral
care marketers. In fact, February is National Children’s Dental Health month.
To help kids adapt to the teeth-cleaning routine, Tom’s of Maine, the No. 8
toothpaste vendor according to IRI, now offers Silly Strawberry under its line
of natural fluoride-free toothpastes. It contains mild fruit extracts for kids’

24
sensitive taste buds and a flip-top cap for little hands.

Tom’s of Maine also recently introduced “Dental Health for All,” a five-year
program to help underprivileged kids receive oral care. The company is
donating 75,000 toothbrushes and toothpastes to public dental clinics in the
U.S. and grants for dental equipment.

“There is so much work to be done, especially because with Medicare, oral


care is often not covered, so when there’s a dental emergency, parents have to
take their kids to the emergency room,” said Tom’s of Maine’s Ms. Taggersell.

Executives said the donations will help thousands of kids. In addition, the U.S.
Surgeon General said more than half of children ages five to nine have at least
one cavity or filing, according to Johnson & Johnson (J&J).

To get kids to brush, J&J added popular Japanese animation figures to its
Reach brand. The new Reach Yu-Gi-Oh! toothbrushes and toothpaste feature
Yugi, Kaiba and monster cartoon characters. A Yu-Gi-Oh power toothbrush
will roll out nationally next month. It has been available in Wal-Mart since
October.

Colgate-Palmolive entered into several licensing agreements to develop kid-


geared toothbrushes with Lego Jack Strong 1,2 flavoring for Colgate 2in1 Kids,
Baby Looney Tunes3 toothpaste with a musical cap and He-Man 4 oral care
products.

Dualstar Consumer Products, Beverly Hills, CA, launched mary-kateandashley


toothpaste in September. Named for teen superstars Mary-Kate and Ashley
Olsen and co-branded with GlaxoSmithKline’s Aquafresh, the toothpaste
features a bubble cool flavor and the girls at age 13 to appeal to young
consumers. Executives said this is an industry first—a children’s toothpaste co-
branded with live celebrities.

Cleaning the Teeth, Naturally Consumer demand for natural ingredients has
filtered down from other personal care categories. “Many Americans have
grown wary of man-made chemicals and perceive ingredients derived from
plants and herbs as healthier,” noted Euromonitor’s Mr. Cobbins. “Now, plants
and herbs which have been proven to benefit health in other applications are
being added to oral care products.”

The natural segment was largely targeted by smaller companies, but now,
multinationals are exploring this avenue as well.

25
“While these products currently represent niche markets, they are high growth
opportunities that the larger players are not ignoring,” Mr. Cobbins noted. “So
expect to see more products from mass market brands that include herbal
extracts or other ‘natural’ ingredients.”

Tom’s of Maine, Kennebunk, ME, developed a line of Natural Liquid


toothpaste designed to adhere to the toothbrushes better from tube to mouth to
lessen messes in the sink. This type of toothpaste has been popular for some
time in Europe, according to executives. It is also prevents bathroom messes,
especially when using electric toothbrushes. “It seeps down into the bristles, so
the toothpaste doesn’t fling all over the bathroom,” said Tom’s of Maine’s Ms.
Taggersell. The liquid toothpaste is available in Anti-Plaque plus Whitening,
Anti-Plaque Tartar Control plus Whitening and Goofy Grape for Children
varieties. The children’s version is fluoride-free and designed for children who
are learning to brush and may accidentally swallow toothpaste.

Also new are Natural Tartar Control mouthwash and Natural Oral Moistening
mouthwash. Both complement existing toothpastes for tartar control and dry
mouth. Ingredients such as non-alcoholic witch hazel and zinc target tartar,
while birch tree extract (xylitol) effectively soothes dry mouth. They do contain
alcohol and are packaged in clear bottles, rather than the former opaque
mouthwash bottles. The mouthwashes also feature the photography of Steven
Foster. “We responded to substantial consumer research we collected and
revised our packaging,” explained Ms. Taggersell. “Whatever ingredients are
inside are reflected on the packaging. It is very attractive on the shelf and very
informative for consumers.”

Jason Natural Cosmetics, Culver City, CA, won the 2004 Gold Medal for the
best tasting natural toothpaste from the Quality Institute International and
American Tasting Institute for the third consecutive year. Specifically, the
company’s CoQ10 Plus Gel toothpaste, which is available in Power Smile, Sea
Fresh, Healthy Mouth and NutriSmile flavors, and the Oral Comfort
mouthwash spray with CoQ10 were honored. All of the products contain
certified organic aloe vera gel to soothe and reduce irritated and inflamed gums
and coenzyme Q10 to reverse gum disease.

In other natural oral care news, Nature’s Gate, Chatsworth, CA, launched
Nature’s Gate Zap breath strips. These breath fresheners, available in Mint with
Green Tea and Anise with Green Tea, contain antioxidants which have been
shown to promote healthy gums by inhibiting the growth of bacteria, according
to executives. The breath strips are also biodegradable, and formulated without
preservatives or sweeteners. A 24-pack of breath strips costs $2.69.

26
Fiddling with Floss Another way to treat bad breath is removing particles of
food stuck between teeth. Floss is the solution; however, nearly 90% of
consumers floss infrequently or not at all, according to the American Dental
Association. The most popular reasons are forgetfulness, laziness or an
inability to put hands into the mouth. Reach Access Daily flosser is a new
disposable snap-on head with a strand of shred-resistant floss. This flosser is
also fitted with easy-to-hold grips and an angled neck to help floss back teeth.
Four colors are available (mango, aqua, raspberry and lime) and it can fit in
toothbrush holders to remind consumers to floss daily, according to executives.
The Reach Access Daily flosser retails in a pack of 8, 22 or 28 disposable snap-
on heads.

Aquafresh also introduced an innovate way to floss. New Floss ‘n’ Cap,
available in Aquafresh’s Cinnamon Splash and Whitening Cool Mint
toothpaste flavors, combines a toothpaste tube with a cap containing floss.
Executives said the triple-coated floss expands with use to dislodge food
particles and plaque between teeth.

Johnson & Johnson launched Reach Tartar Control floss with an ingredient
proven to reduce tartar buildup embedded in the floss fibers.

Brushing is No Longer Boring


Sales in the $1.34 billion manual and power-
operated toothbrush segment, have slowed. Last
year, sales of these products dipped 3.1%, but
companies continue launching new products to
stir up product sales.

J&J’s added Reach Max Brightener, a toothbrush


with polishing pads designed to remove dulling
film to reveal a bright, youthful smile. The
toothbrush’s pads are chemical-free and enamel-
safe. A J&J survey showed more than 83% of
consumers nationwide rated their teeth as their
Oral-B added the Professional top priority in looking their best. Also new from
Care 7000 series with extra J&J is the Reach Tooth & Gum Care toothbrush
features such as a brushing with soft, feathered bristles designed to reach
timer and oscillating bristles. below the gum line.

Colgate-Palmolive introduced the Colgate Whitening toothbrush, a manual


toothbrush with unique soft polishers to help remove stains and polish teeth. It
also has a comfortable elastomer rubber handle. Executives noted whitening

27
toothbrushes were an untapped segment. The brush is available in three vibrant
colors and full head soft and full head medium bristle forms.

Also to whiten teeth, Procter & Gamble launched the Crest SpinBrush Pro
Whitening battery-operated brush. It is said to guarantee an 88% whiter smile
in 14 days. The brush has a dense field of oscillating brushes, shaped like the
prophy cup used by dentists, to better contact and polish the teeth, and a rubber
polishing strip to hold more paste. Dual-rotating brush heads also clean
between teeth. Five colors are available: blue, green, lavender, gold and rose.

In August, The Gillette Company introduced Oral-B Professional Care 7000


series, an advanced line of power toothbrushes featuring 15% faster oscillation
than the Oral-B 3D Excel and a new quadrant timer to remind users to go to
another quadrant of the mouth every 30 seconds for optimal two-minute
brushing. Braun Oral-B power toothbrushes remain No. 1 in the power segment
with sales of $44.6 million, even though sales fell 37.3% from 2002, according
to IRI. Executives insisted rotating oscillation has been proven to be more
effective and gentler in removing plaque and reducing and even reversing gum
disease than other types of power toothbrushes, including toothbrushes with
sonic technology. Studies also suggested there is a link between healthy gums
and a healthy heart.

Power toothbrushes have more bells and whistles than ever. For example, the
Oral-B Professional Care series toothbrushes come with two brushing speeds,
Indicator Bristles that fade to signal when it is time to replace the toothbrush, a
new Full Charge Indicator and a variety of brush heads. The Professional Care
7000 series also features a pressure sensor that stops the brush’s pulsations
when the user is pressing too hard. They range in price from $69 to $99 each.

The Right Package All the acquisitions and product development that occurred
in 2003 have one goal—boosting sales. One way to gain the upper hand with
tried-and-true products is new packaging. Church & Dwight recently updated
the packaging on several of its Arm & Hammer toothpastes, including Dental
Care, Peroxi Care, Complete Care and Advanced White. Executives describe it
as a bright new look, with bolded print on a white backdrop. The signature Arm
& Hammer logo is still prevalent.

“The No. 1 reason was to gain a stronger shelf presence with the blocking of
one color rather than a multi-colored package,” explained Church & Dwight’s
Mr. Fox. “No. 2, we redesigned to provide a more therapeutic-looking
packaging consistent with our baking soda heritage.”

Only time will tell which strategy stands a better chance in the evolving market
—familiar brands or innovative products. Either way, established companies

28
and new players are both trying to take a bigger bite out of the ever-growing
oral care market.

29
COMPANY PROFILE

HLL

Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer


Goods company, touching the lives of two out of three Indians with over 20
distinct categories in Home & Personal Care Products and Foods & Beverages.
They endow the company with a scale of combined volumes of about 4 million
tonnes and sales of Rs.10,000 crores.

HLL is also one of the country's largest exporters; it has been recognised as a
Golden Super Star Trading House by the Government of India.

The mission that inspires HLL's 36,000 employees, including over 1,350
managers, is to "add vitality to life." HLL meets everyday needs for nutrition,
hygiene, and personal care with brands that help people feel good, look good
and get more out of life. It is a mission HLL shares with its parent company,
Unilever, which holds 51.55% of the equity. The rest of the shareholding is
distributed among 380,000 individual shareholders and financial institutions.

HLL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan,
Knorr-Annapurna, Kwality Wall's – are household names across the country
and span many categories - soaps, detergents, personal products, tea, coffee,
branded staples, ice cream and culinary products. They are manufactured in
close to 80 factories. The operations involve over 2,000 suppliers and
associates. HLL's distribution network, comprising about 7,000 redistribution
stockists, directly covers the entire urban population, and about 250 million
rural consumers.

HLL has traditionally been a company, which incorporates latest technology in


all its operations. The Hindustan Lever Research Centre (HLRC) was set up in
1958, and now has facilities in Mumbai and Bangalore. HLRC and the Global
Technology Centres in India have over 200 highly qualified scientists and
technologists, many with post-doctoral experience acquired in the US and
Europe.

HLL believes that an organisation's worth is also in the service it renders to the
community. HLL is focusing on health & hygiene education, women
empowerment, and water management. It is also involved in education and
rehabilitation of special or underprivileged children, care for the destitute and
HIV-positive, and rural development. HLL has also responded in case of
national calamities / adversities and contributes through various welfare
measures, most recent being the village built by HLL in earthquake affected

30
Gujarat, and relief & rehabilitation after the Tsunami caused devastation in
South India.

Over the last three years the company has embarked on an ambitious
programme, Shakti. Through Shakti, HLL is creating micro-enterprise
opportunities for rural women, thereby improving their livelihood and the
standard of living in rural communities. Shakti also includes health and hygiene
education through the Shakti Vani Programme, and creating access to relevant
information through the iShakti community portal. The programme now covers
about 50,000 villages in 12 states. HLL's vision is to take this programme to
100,000 villages impacting the lives of over a 100 million rural Indians.

HLL is also running a rural health programme – Lifebuoy Swasthya Chetana.


The programme endeavours to induce adoption of hygienic practices among
rural Indians and aims to bring down the incidence of diarrhoea. It has already
touched 70 million people in approximately 15000 villages of 8 states. The
vision is to make a billion Indians feel safe and secure.

If Hindustan Lever straddles the Indian corporate world, it is because of being


single-minded in identifying itself with Indian aspirations and needs in every
walk of life.

DABUR

Dabur India Limited is the fourth largest FMCG Company in India with
interests in Health care, Personal care and Food products. Building on a legacy
of quality and experience for over 100 years, today Dabur has a turnover of
Rs.1536.95 crore with powerful brands like Dabur Amla, Dabur
Chyawanprash, Vatika,
Hajmola & Real.

With effect from April 1, 2005, Balsara Home Products has become a
subsidiary of Dabur India Limited, an Indian FMCG company and the world's
largest manufacturer of Ayurvedic Medicines.

Dabur, today, is a name that is synonymous with healthy living and celebrating
life. It is recognized as one of India's leading and dynamic FMCG Company
with interest in Personal Care, Healthcare and Foods and brands like Hajmola,
Real, Dabur Chyawanprash, Vatika, Anmol. The company is driven with the
prime objective of providing safe and efficacious products to its customers
while creating wealth for all its stakeholders.

31
BCG Matrix

Companies that are large enough to be organized into strategic business units
face the challenge of allocating resources among those units. In the early
1970’s the Boston Consulting Group developed a model for managing a
portfolio of different business units (or major product lines). The BCG
Growth-Share Matrix displays the various business units on a graph of the
market growth rate vs. market share relative to competitors:

BCG Growth Share Matrix

QUESTION MARK
? Resources
are allocated
STAR to business
units
according to
where they
are situated
on the grid
as follows:
CASH COW DOG
Cash Cow
a business
unit that has a large market share in a mature, slow growing industry. Cash
cows require little investment and generate cash that can be used to invest in
other business unit.

Star a business unit that has a large market share in a fast growing industry.
Stars may generate cash; because the market is growing rapidly they require
investment to maintain their lead. If successful, a star will become a cash cow
when its industry matures. Colgate-Palmolive and HLL are the two companies
in the Oral Care Industry which falls under stars.

Question Mark (or problem child) a business unit has a small market
share in a high growth market. These business units require resources to grow
market share, but whether they will succeed and become stars is unknown. In
this case Dabur is the question mark in the industry.

32
Dog a business unit that has a small market share in a mature industry. A
dog may not require substantial cash, but it ties up capital that could better be
deployed elsewhere. Unless a dog has some other strategic purpose, it should
be liquidated if there is little prospect for it to gain market share.

For competitive strength there is Boston Consulting Group (BCG) Matrix


which uses memorable terms such as cash cows, star, problem child and dog.
The matrix is based on two principal dimensions: relative market share (i.e.
related to the nearest major competitors); and market growth.

33
BCG Matrix of Colgate Palmolive

Colgate is the market leader with a share of 51% and is constantly maintaining
its growth rate. More over all the products of Colgate are performing similarly
in their respective categories so as per BCG Matrix it comes under stars with
high market share and growth rate. It has been observed that some times the
growth rate occurs negatively at that time the company spends more on
advertising and on promotional and develop the growth rate, by this way they
are maintaining the growth rate and maintaining it’s position.

BCG Growth Share Matrix

QUESTION MARK
?
STAR Colgate Total, Herbal,
Gel, Active Salt, Cibaca
COLGATE DENTAL
CREAM

CASH COW DOG

Star: Among the huge product line of Colgate Palmolive, Colgate dental is the
oldest and the most acceptable brand in the oral care industry.

Question Mark: Colgate Total, Colgate Gel, Colgate Herbal, Colgate Active
Salt and Cibaca are the brands of Colgate that are in the stage in which the
overall industry rate is high and the brands itself have market share.

Cash Cows: out of the total market of the tooth powder most of the market is
being captured by Colgate-Palmolive and Dabur. The oldest and the highly

34
*accepted brand of the company with a high market share especially in the
rural market have become cash cows for the company.

HINDUSTAN LEVER LIMITED

HLL is the follower with a share of 36% and is constantly making efforts to
increase its growth rate. More over all the products of HLL are performing
similarly in their respective categories so as per BCG matrix it comes under
stars with high market share and growth rate. It has been observed that the
company spends more on advertising and on promotional activities and develop
the growth rate, by this way they are maintaining the growth rate and
maintaining it’s position.

BCG Matrix of HLL

QUESTION MARK
?
STAR
PEPSODENT
CLOSE-UP

CASH COW DOG

Stars: close up, the youth brand, was the first gel toothpaste to be
launched in India in 1975 and has remained the category leader ever since. The
brand arose out of a universal need for confidence in a social situation, starting

35
with fresh breath. Currently it has got quite good market share in gel paste
market.

Question Mark: HLL introduced Pepsodent to fight with Colgate dental care.
By heavy advertising and promotional activities currently it has acquired quite
a good market share with high growth rate.

36
COMPETITIVE ADVANTAGE
For Oral Care Product makers, it has been squeeze with the demand downturn
and intensifying competition. Little wonder that teeth are bared between the
market leader Colgate Palmolive and the challenger, Hindustan Lever, as the
marketing war between the two FMCG giants gets tough.

The intense competition between the two FMCG giants made the going tough
for the relatively small players in the toothpaste segment. Smaller brands such
as Forhans, Promise, Babool and Meswak have found it difficult to match and
sustain the promotional frenzy of the larger brand.

The new era of Indian industry is one of severe competition. In this race for
customer’s share of mind many Indian companies may lose out against national
and multinational giants (Goliaths). Here is a battle plan for this smaller share
company to fight the giants of the oral care industry. For a smaller share
company it is almost impossible today t substantially increase its market share,
especially in an established market. For, much of this increase should come
from the industry leader, which is easier said than done. If a smaller share firm
becomes affective and it really gets some inroads into the Goliath’s share, it
may face a big retaliation from the Goliah. This, on all probability, will result
in losing much of the gain in share, not to mention the additional loss of heavy
marketing expenses.

On the other hand, if a smaller share firm remains inactive for a long time, the
market leader will move from strength to strength. During this period, the
dominant leader will consolidate its market position getting a firm foot inside
the customer’s minds. Moreover, it may gain experience curve effects and
accumulate good financial returns.

37
COMPETITIVE ADVANTAGE OF COLGATE PALMOLIVE INDIA
LTD.

SUPERIOR QUALITY

Colgate Palmolive has an advantage of superior quality as the IDA is approving


it. As it is existing in the market since a long time which proves its quality.

SEGMENTATION ADVANTAGE

Colgate: rural to an extent urban lower incom3e middle income segments

The company has used a combination of aggressively low pricing, sustained


media advertising and large distribution margins to push the brand in semi
urban areas. Colgate advertising and large distribution margins to push the
brand in semi urban areas. Colgate has targeted the Lower Income and
medium income segments and earned a dominant position. Rural markets are
the target and loyal market for Colgate Dental cream whereas they have
positioned Colgate gel as the toothpaste for youth segment and Colgate Total
for the premium segment. The main earner as well as the housewives segment
clearly indicates their preference as Colgate.

DIFFERENTIATION ADVANTAGE

Colgate Palmolive has the advantage of differentiation in termas of the price.


The products of Colgate are priced low as compare to HLL. It also has an
advantage of product differentiation as it has a very high range of product line
in oral care segment. It differentiates in terms of different toothpaste for youth
like Colgate gel sensational whitening, Colgate Shakti for children, Colgate
Herbal for those who prefer to have ayurvedic products. It also has a
toothpowder, which attracts major part of rural segment.

POSITIONING IN THE RURAL MARKET

In the rural market segment Colgate has earned the number one spot and it
remains it. The brand Colgate has positioned its product Colgate Dental Cream
in the minds of the rural segment in such a way that the word Colgate has
become synonymous with toothpaste. The rural market segment is one of the
major loyal segments for Colgate

38
PROMOTIONAL ADVANTAGE

Different promotional schemes are to be introduced to attract the customers.


Now days the current promotional scheme is that if you buy one pack of
Colgate Dental Cream of 50 gms pack you get Rs. 3 off on each pack.

After all, despite pressure on the top line, both Colgate Palmolive have
managed to register robust profit growth over the past financial year.

ADVERTISEMENT ADVATAGE

Similarly, Colgate India increased its ad spend to sales ratio and managed to
expand its operating profit margins. If the free for al in the market place has
had consumers smiling broadly, it appears to have benefited the players as well,
forcing them to iron out operational inefficiencies and look t new avenues for
cost savings.

INNOVATION

Now, Colgate launched a new product Colgate Active Salt to capture the rural
market and to concentrate on the rural market as well as semi urban market.

39
COMPETITIVE ADVANTAGE ORF HINDUSTAN LEVER
LIMITED

DISTRIBUTION ADVANTAGE

HLL has an established distribution channel that is very efficient since longk
time. HLL has a very high reach as it has around more than 100 products in its
portfolio. Its distribution system is the best amongst the FMCG companies.

PROMOTIONS

Close up the youth brand, was the first gel toothpaste to be launched in India in
1975 and has remained the category leader ever since. The brand arose out of a
universal need for confidence in a social situation, starting with fresh breadth.

After all, despite pressure on the top line, both HLL have managed to register
robust profit growth over the past financial year.

“POWER” BRAND FOCUS

The “power” brand strategy has also helped players finance their high decibel
promotional campaigns. Over the past couple of years, major players such as
HLL have rationalized their brand portfolios to weed out low contributions
brands. This has freed up marketing spends, which are now redirected into
promoting a fer, strong brands . HLL has, for instance, withdrawn its low
priced toothpaste Aim and phased out variants of Close Up such as Oxyfresh
and Close Up green. Its entire marketing might is now focus don Close Up and
Pepsodent. Thus, the two now have the lion’s share of HLL’s marketing
spends in the category.

ADVERTISEMTNT

HLL’s ad spend arose from the past and also the operating profit is also rising
with this.

SQUEEZING SUPPLY CHAIN COSTS

HLL has been electronically linking up its entire supply chain to change over to
a continuous replenishment system for its distributors. The exercise has helped
reduce pipeline inventories at various levels of the distribution system. On the
other hand, HLL has also pepped up buying efficiency through centralized
purchases and strategic tie-ups for inputs with vndors of raw materials. It has
also restructured its outsourcing arrangements with sub-contractors to reap the
maximum benefits from bulk buying.

40
SEGMENTATION:

HLL: higher income, to an extent urban, youth, premium segments. Close-up


and Pepsodent targeting youth and premium segments and closing in on
Colgate in the some urban and metro segments.

INNOVATION:

The new flavors are in line with HLL’s endeavor to continuously innovate and
offer new advanced products to the customers. Close-Up whitening, the tooth
whitening variant was introduced with a unique self check device called “shade
card”. This helps consumers identify how “yellow” their teeth really are and
also to track the improvement in teeth color as they use the paste. The
toothpaste helps teeth get whiter in 4 weeks of regular use.

41
SWOT ANALYSIS

HINDUSTAN LEVER LIMITED

STRENGTH
- Strong brands in the FMCG sector
- It has very strong and established distribution channel which is the biggest
advantage for the introduction of new products to its product line.
- It can place its products at a low price as compared to the competitors as it
earns high margins on the other products.
- It has a very huge product line; therefore it can give freebies in order to
promote the toothpaste.
- Low cost operation.
- HLL’s Close up is being established as the youth’s brand.

WEAKNESSES
- Low exports level.
- Small-scale sector reservations limit ability to invest in technology and
achieve economies of scale.
- Several “me too” products.
- One of the major weaknesses of HLL is that it is not able to make its
positions in the rural market as compared to the Colgate-Palmolive who is
the market leader.
- HLL as compared to the Colgate-Palmolive who is the market leader.
- HLL as compared to the Colgate-Palmolive has a less product line in the
oral care.

OPPORTUNITY

- One of the biggest opportunities for HLL in the oral care is that it can
explore the rural market.
- In the long term however toothpaste players have a tremendous potential
to grow in this market. The reasons being that income levels are raising
and the population is becoming more aware of personal hygiene. To add
to this there is an increase in literacy levels across the country. As media
will play an important role hence advertising keeping rural Indian in mind
will provide the much needed impetus for growth to this market.
- Large domestic market.
- Export potential.
- Increasing income levels will result in faster revenue growth.

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THREATS

- The biggest threat to HLL comes from its rival company Colgate
Palmolive.
- As Colgate Palmolive is the market leader it has to face very tough
competition in order to capture the rural market.
- Slowdown in rural demand.
- Tax and regulatory structure.
- Imports.

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COLGATE – PALMOLIVE

STRENGTH

- The brand Colgate had positioned its product in the minds of the rural
segment in such a way that the word Colgate has become synonymous
with toothpaste. The rural market segment is one of the major ‘loyal’
segments for Colgate.
- Established since long time in the minds of the customers.
- It has a wide product line in the oral care.
- It is the market leader in both the segments i.e. urban and the rural
markets.
- Healthy Distribution channel.

WEAKNESSES

- Not able to influence the youths of the urban.


- Low expert level.
- As compared to HLL the promotion activities of Colgate Palmolive are
too less.

OPPORTUNITY

- In the long term however toothpaste players have a tremendous potential


to grow in this market. The reasons being that income levels are rising
and the population are becoming more aware of personal hygiene. To add
to this there is an increase in literacy levels across the country. As media
will play an important role hence advertising keeping the rural Indian
mind will provide the much needed impetus for growth to this market.
- Colgate should come up with strategies t caters to the premium segment
and position.
- Large domestic market.
- Export potential.
- Increasing income levels will result in faster revenue growth.

THREAT

- The biggest threat to Colgate Palmolive comes from its rival company
HLL.
- Tax and regulatory structure.
- Slowdown in rural demand.
- Coming up of the unorganized sector.

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FIVE FORCE MODEL
These forces determine the intensity of competition and hence the profitability
and attractiveness of an industry. The objective of corporate strategy should be
to modify these competitive forces in away that improve the position of the
organization. Based on the information derived from the Five Forces Analysis,
management can decide how to influence or to exploit particular characteristics
of their industry.

The Five Competitive Forces are typically described as follows:

Bargaining Power of Suppliers


Bargaining Power of Customers
Threat of New Entrance
Threat of Substitute
Competitive rivalry between Existing players.

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HINDUSTAN LEVER LIMITED

Bargaining Power of Suppliers

By this we mean how much power the suppliers enjoy over the company. For
toothpaste Industry the company’s enjoys more power over the suppliers. As
HLL is a very big company, buy raw materials in bulk quantity, thus the
company has more bargaining power over the suppliers. Also the supplier
power is less because there are many suppliers and also the switching cost for
the buyer company is less in this industry. Also as there is high competition in
the Toothpaste market, this is not present with the suppliers. Due to this
reasons also the Toothpaste industry enjoys more buying power over the
suppliers.

Bargaining Power of Customers:

The bargaining power of customers’ determines how much customers can


impose pressure on margins and volumes. In a market of intense competition,
the company has tried to give its customers the best products at the best price.
In this industry as there is intense competition the customer enjoys more
bargaining power than the company. With greater bargaining powers, these
retailers are forcing the companies to sell directly to them and claiming a larger
part of the resultant savings from the elimination of middlemen. As HLL does
not have much of the manufacturing facility it, generally outsource the
production of its production to other local companies. Thus it does not have
high fixed cost and so due to that the bargaining power of customer becomes
less. But to survive in the competitive market the company has to go along
with the customer so the company has to give freebies. Thus overall the
bargaining power of the customer is higher in this industry.

Threats to New Entrants:

As the company itself is a multinational company, it works on an international


level, but in India it has threats of the other multinational companies wanting to
establish their market in India. From the domestic side the company does not
have much to worry because the sources needed to enter into this industry viz.,
huge distribution network, high number of retailer reach, etc. Thus the threats
from new entrants coming in the unorganized market but they do not threaten
the company, as they do not last much in the market. The only new entrant that
the company has to worry about the Nirma.

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Threats of the substitute:

Before many years the toothpaste industry was in the struggling stage in the
Indian market as large amount of peoples used the traditional way of cleaning
the teeth viz., Datun, salt, ash etc. but now the people have become much more
aware of the toothpaste and its benefits and thus today large amount of
population uses the toothpaste for cleaning their teeth. The possible substitute
which is left for this industry is the toothpowder, which has also not remain
much famous now, with the decrease in the prices of toothpaste more and more
people are switching to toothpaste. Thus today there are not many substitutes
remaining for toothpaste.

Competitive Rivalry6 among the Existing Players:

The main players in the Indian toothpaste industry can be unarguably taken as
Colgate and Hindustan Lever Limited (HLL), Anchor, Balsara. The brands put
forward by these companies are Colgate Dental Cream, Colgate Gel, Colgate
Total, Pepsodene, Close Up, Babool, Promise, Meshwak, Dabur Red to name a
few. The company is on the second position in the 90000 TPA oral care
market.

The company’s main competitor is Colgate but with the marketing and
promotional efforts of HLL Colgate lose market share. The slowdown in the
growth rates was across categories with toothpowder recording growth in
volumes. In the past couple of years, stiff competition as well as stagnation in
market penetration has led to decline in market share and pressure on operating
margins.

Secondly, the brands like Promise and Babool are catering to a very specific
segment of customers, which is the Herbal toothpaste user segment. Thus, they
also have positioned themselves as Herbal toothpastes and hence they always
target the same segment. This can be termed as a ‘niche market’, which they
are catering to. HLL has very well fought with the competitors in the industry,
and is still beating them on many fronts with constantly bringing in new
products into the market and serving the need of the customer much better than
the competitors.

47
COLGATE PALMOLIVE (INDIA)

Bargaining Power of Suppliers:

By this we mean how much power the suppliers enjoy over the company. For
toothpaste Industry the company’s enjoys more power over the suppliers. As
HLL is a very big company, buy raw materials in bulk quantity, thus the
company has more bargaining popwer over the suppliers. Also the supplier
power is less because there are many suppliers and also the switching cost for
the buyer company is less in this industry. Also as there is high competition in
the Toothpaste market, which is not present with the suppliers. Due to this
reasons also the Toothpaste industry enjoys more buying power over the
suppliers.

Bargaining Power of Customers:

The bargaining power of customers deremines how much customers can


impose pressure on margins and volumes. In a market of intense competition,
the company has trried to give its customers the best products at the best price.
In this industry as there is intense competition the customer enjous more
bargaining power than the company. With greater bargaining powers, these
retailers are forcing the companies to sell directly to them and claiming a larger
part of the resultant savings from the elimination of middlemen. As HLL does
not have much of the manufacturing facility it, generally outsource the
production of its production to other local companies. Thus it does not have
high fixed cost and so due to that the bargaining power of customer becomes
less. But to survive in the competitive market the company has to go along
with the customer so the company has to give freebies. Theus overall the
bargaining power of the customer is higher in this industry.

Threats to New Entrants:

As the company itself is a multinational company, it works on an international


level, but in India it has threats of the other multinational companies wanting to
establish their market in India. From the domestic side the company does not
have much to worry because the sources needed to enter into this industry viz.,
huge distribution netwoek, high mumber of retailer reach, etrc. Thus the threats
from new entrants coming in the unorganized market but they do not threaten
the company, as they do not last much in the market. The only new entrant that
the company has to worry about the Nirma.

48
Threats of the substitute:

Before many years the toothpaste industry was in the struggling stage in the
Indian market as large amount of peoples used the traditional way of cleaning
the teeth viz., Datun, salt, ash etc. but now the people have become much more
aware of the toothpaste and its benefits and thus today large amount of
population uses the toothpaste for cleaning their teeth. The possible substitute
which is left for this industry is the toothpowder, which has also not remain
much famous now, with the decrease in the prices of toothpaste more and more
people are switching to toothpaste. Thus today there are not many substitutes
remaining for toothpaste.

Competitive Rivalry among the Existing Players:

The main players in the Indian toothpaste industry can be unarguably taken as
Colgate and Hindustan Lever Limited (HLL), Anchor, Balsara. The Brands put
forward by these companies are Colgate Dental Cream, Colgate Gel, Colgate
Total, Close Up, Pepsodent, anchor, Promise, Meshwak, Debur Red, to name a
few. The company is leader in the 90000 TPA oral care market.

But despite the positives, Colgate is not having a dream run. For one,
competition in oral care increased with the entry of HLL. Severe competition
from HLL and other players led to the company consistency losing market
share. The slowdown in the growth rates was across categories with
toothpowder recording growth in volumes. In the past couple of years, stiff
competition as well as stagnation in market penetration had led to decline in
market share and pressure on operating margins.

But all said and done, Colgate seems no longer on the back foot. Though
Colgate has lost market share, it has managed to stem the slide in the last
couple of years to maintain a steady market share. It has achieved this not only
by heightened advertising focus but also by introducing new sub brands like
‘Total’, ‘Herbal’, ‘Gum care’ and new gel variants. It has also launched an
exorbitantly priced (Rs.999) ‘Active’ toothbrush. These new products have re
affirmed Colgate’s image as the pro active market leadet capable of introducing
quality products. ‘Total’, ‘Herbal’ and ‘Gum care’ are positioned as premium
products compared to the flagship, Colgate Dental Cream (CDC). Though,
Colgate was forced to reduce their price premiums later, the choice and the
quality of products in its folio have given a boost to the ‘Colgate’ brand.

Colgate has also initiated cost control measures to compete more effectively in
the market. Colgate has set itself an ambitious target of taking its market share
back in the next few years.

Thus, we can say that the company has been hit hard by the competition.
But, now the company is fighting back to regain its market share.

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CONCLUSION
After considering all these facts of the market and the working of the market, it
has been concluded that in Oral Care Industry there is a cut throat competition
is going on between major players.

To the small players it will not affect, even people also considers brands in
their purchasing. So for the new entry it is difficult to capture the market share
but for the existing company the differentiation will not becomes that much
difficult to capture the market.

Here, major competitors are Colgate Palmolive and Hindustan Lever Limited.
They are always competing to capture high market share and trying to be NO.1,
but customers are putting both at same level. As per the BCG Matrix concept
also both are at same level in STAR category.

So, Oral Care Industry is an industry in which all players needs to concentrate
on customer’s changing demand and preferences to survive in the market and
to capture the market share.

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BIBLIOGRAPHY
Books, Magazines & Newspapers

The Economics Times


Business Standard

Business India
Business Today
Business World
Brand Reporter

Websites

www.hll.com
www.colgatepalmolive.com
www.thehindubusinessline.com
www.happy.com
www.HinduBusinessLine.com

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