Synopsis: With 1991 sales, Colgate-Palmolive (CP) was the global leader in household and personal care products

like toothbrushes and toothpastes. In 1991, sales escalated to $6.06 billion and profits to $2.76 billion and it gained 43% of the world's toothpaste market and 16% of the world's toothbrush market. It was also the leader in retail toothbrush sales in the United States. Before 1990s, toothbrushes were introduced on the basis of aesthetic rather than functional features. But during 1990s CP's consumer research indicated that baby boomers were becoming increasingly concerned with their oral health, specifically their gums. This gave rise to the sales of therapeutic toothbrushes. Now the toothbrush industry experienced a huge inflow of competitors and this led to the formation of a niche, super-premium market. In order to gain an edge each competitor worked on developing new tooth brush technology, forming alliances with dental professionals, expanding advertising budgets and promotional offers to grab the consumer attention. In August 1992, Colgate-Palmolive was poised to launch a new tooth brush in the United States, tentatively named Colgate Precision in the super premium market. In initial clinical tests Precision was proven to very effective in removing plaque on an average 35% more effective than other leading toothbrush brands in preventing gum disease. The advantage was because of the innovative design, high tech research and infrared motion analysis, consumer research and extensive product testing. CP's Oral care team had been developing this technologically superior toothbrush since 1989. Due to high competitive market CP had to decide whether to market Colgate Precision as per existing market strategies or to develop new strategy for the new product.

Industry Analysis: The purpose and main focus of the oral health care industry is to prevent teeth and gum diseases and to deliver cosmetic benefits. Examples of products in this industry include toothbrushes, toothpaste, dental floss, and mouth rinses.

Toothbrush was first evolved as early as in 3000 B.C., and advancements and fashion have been continued ever since. Such advancements include the head shape, size, bristle type, color, and sparkling & angled handles. In 1991, the U.S. Oral Care market was $2.9 billion in retail sales and had grown at an annual rate of 6.1% since 1986 in which toothbrush accounted for 15.5% i.e. $453 million. Dollar sales of toothbrushes had grown at an average rate of 9.3% per annum since 1987 however; in 1992 they increased by 21% in value and 18% in volume. Hence, it can be said that the toothbrush industry was still growing.

In 1992, the three players that dominated the market were CP, Johnson & Johnson (J&J) and Oral-B, while Oral-B dominated the super-premium segment. As there was high level of competition to gain market shares, there was huge investment in R&D and advertisement and promotion, each competitor trying to distinguish themselves from each other and trying to introduce a better product compared to its rivals. In case of international market there was competition from Unilever, Nestles LOreal Division, Henkel of Germany, and Koa of Japan.

As the industry was still growing it attracted new entrants during the in the early 1990s such as Procter & Gamble and Smithkline Beecham. Even though the toothbrush market being in a

growing stage, the number of new entrants were low in the U.S. market as the investment required to compete with the already established brands and market leaders were high.

There were four distribution channels that were available in the market; traditional food stores, mass merchandise, drug stores and dentists. Dentists had a higher bargaining power compared to other distribution channels providing the manufacturer with lower margins as compared to other distribution channels. The retailers were more receptive of adding new toothbrush products as they provided high margins between 25% to 35%.

Company Analysis: The Colgate-Palmolive was founded in 1806 by William Colgate. The company first began by concentrating their production on soaps, perfumes, and candles. They began introducing oral health care products to the In 1873, the firm introduced its first toothpaste, an aromatic toothpaste sold in jars. His company sold the first toothpaste in a tube, Colgate Ribbon Dental Cream (nw, nd, Colgate-Palmolive, History, 16ht July 2013, http://en.wikipedia.org/wiki/ColgatePalmolive). By 1991, Colgate-Palmolive had become the global leader in household and personal

care products.

By the early 1990s there were many different companies that focused on oral care products, with the leader being Colgate-Palmolive. By 1991, Colgate-Palmolive held the number one position in the world for the sale of oral care products, accounting for 19% of the world's toothbrush market. The companys sales and profits topped in 1991 of $6.06 billion and $2.76 billion respectively. Till this time Colgate had introduced two different types of toothbrushes to

the market, the Colgate Classic and the Colgate Plus and was positioned in value segment and professional segment respectively. SWOT Analysis: Strengths: CP is a global leader in household and personal care products. CP held the number one position in the U.S. retail toothbrush market with a 23.3% volume share. It focused on technical performance improvements, such as greater plaque removal and easy to use. Focus on innovation and new product launches. It diversified business operations. CP has formed a strong relationship with subcontracting manufacturer, Anchor Brush. It has strong brand name. Colgate focuses on four core businesses: Oral Care, Personal Care, Home Care and Pet Nutrition. Excellent advertising and brand visibility of products with a strong customer loyalty for brand. Weaknesses: Threat of fake products, Fake brands are supplied under their brand names. Highly leveraged. Continuous Product Recalls Hurts Brands and Profits and will have a long-term negative impact on this entity. Market share is limited due to presence of other strong brands.

Opportunities: Emerging market growth. Increasing purchasing power of people increases demand. Extend or spread out advance technologies. Mergers and acquisitions to strengthen the brand. Strong international presence and expansion should increase growth and profits. New Market Threats: Company faced though competition in international markets. Increasing commodity prices. Competition from local products. New line of products that were being introduced by Oral-B, Johnson & Johnson, and Procter and Gamble. Consumers are unaware of gum diseases, need to educate consumers. New product innovation can easily be imitated.

Product Analysis: The product in which this case focuses around is the Precision toothbrush. Product innovation began in 1989 when the company put together a research team; purpose aimed at testing the design of the toothbrush, how the company would market the product, and how the company would gain a competitive advantage over others. By studying consumers brushing techniques, and focusing on areas of the mouth that had developed excessive amounts of plaque build-up, such as in between the teeth and on the gum line, researchers were able construct a newly

designed toothbrush. The research team tested and experimented with the toothbrush extensively for eighteen months with the help of dental professional focus groups and product usage test to determine the overall acceptance of Precision. This led in 1992, CP's senior management to decide to launch Precision early in 1993.

As the demand for firm bristles, medium bristles were declining, demand for soft bristles were rising and in case of extra soft were rising in a rapid rate, the main design of the product concentrated on the bristles of the toothbrush. The head of the Precision toothbrush included three different lengths and orientation, each length having its own responsibility. The longer outer bristles cleaned around the gum line, the long inner bristles cleaned between teeth, and the shorter bristles cleaned the teeth surface. Because of the newly innovated bristles, the removal of plaque increased by 35% when compared to other leading toothbrush manufacturers. This product at the time was clearly ahead of its competition in all segments. In addition to Colgate Precision, the company had two other product lines and they were Colgate Classic and Colgate Plus targeting value segment and professional segment respectively. As a result of many consumers trading up from the value segment to professional segment the value segment was eroding and not very profitable.

Segments The toothbrush market was primarily divided into two segments, the value segment and the professional segment. In the late 1980s the segment was further divided into 3 with an addition of super-premium segment. Value segment was slowing eroding as many customers were trading up to the professional segment. CPs Colgate classic line was focused on this segment. This

represented only 12% of dollar sales for the total market. Professional segment accounted for the highest market share based on volume at 41% and second in the dollar sales at 42%. This segment was dominated by CPs Colgate plus. The third segment; super-premium accounted for 34% of the total market share based on volume and highest market share based on dollar sales. This is the segment for which CP did not have a product line.

Conclusion & Recommendation: Positioning: Using the BCG Matrix for the current product line, it can be noted that currently Colgate Plus is in the region of Cash Cow, Colgate Classic in the region of Problem Child and with the new product we need to decide where to position it such that it does not have an impact on the cash of the CP toothbrush. In the current scenario, the Colgate Plus line is supporting the R&D and the new advertisement that are to support the new product line i.e. Precision. Therefore, positioning the new product in mainstream or the professional segment could cannibalize the current cash cow and turn it into a dog. Further, it also needs to be mentioned that the consumers in this segment are normally cosmetic consumers who are not that worried about oral health rather only care about preventing bad breath and ensuring white teeth. Therefore, this target customers and segment could be totally wrong. Further, as this is an innovative product the positioning should be done in the niche market as this generates higher profit per unit as the consumers in this market are willing to pay a premium for oral hygiene, and hence are the target consumers. This is also supported by the fact that currently CP is not in a position to go mainstream as the demand forecasted cannot be met with the current production levels.

Branding: Since the Precision toothbrush is ahead of the current products available in the market and is very distinct from the products currently offered by CP and further, this is to be currently targeted at the super premium or niche market, the Precision line should be branded different from the current Colgate plus product line. The reasons for different branding than Colgate Plus are as follows: This product line is to compete with Oral-B in the niche market and therefore should have a different image than the current products offered by CP. As emphasis needs to be given that this is a superior product to the current product offered by CP and any other rival, therefore consumers need to view Precision as a totally different product as to what CP is currently offering. The current branding does not support the Precision line, as none of the advertisement campaigns from 1985 to 1992 distinguishes itself as superior.

Communication Strategy: CP should use the media and campaigns to spread awareness regarding oral health in relation with Precision. The company should stress on how harmful plaque is to oral health and emphasize on Precision is the best toothbrush available in the market. Instead of advertising the new product advertisement should be focused on oral health, then adding to the advertisement Precision should be brought into the picture stating its advancement compared to other products available in the market. This will help the brand be more lined towards CSR and consumer health.

In conclusion we would like to stress that as super-premium is a growing market and has a market share of 34% of the total market share based on volume and highest market share based on dollar sales CP should focus on this segment as consumers in this market will trade up instead of trade down based on historical evidence as has happened to the focus segment. Having said this, the company should slowly increase its capacity and in the third year should open the product to the professional segment as by this time prices of the products could decrease due to high completion and the innovation of Precision could be imitated and copied. Further, new innovations could replace Precision in the super-premium market in the coming years. Hence, first CP should target the super-premium segment then after a few years should open Precision to professional segment.