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CASE REVIEW

COLGATE-PALMOLIVE COMPANY : THE PRECISION


TOOTH BRUSH
Pendahuluan
Company Background:
1991 sales : $6.06 billion and gross proft : $2.76 billion made C! as
a global leader in personal care products.
" # $ e%penditures &or 1991 : $11' million and media ad(ertising
e%penditures : $'2) million.
!lan 1991*199+ : ne, product launc- in ne, geograp-ic markets.
.n 1991 $2'/ million &or :
1. 0pgrade 2+ C!1s manu&acturing plants &rom total 91 plants
2. 27+ ne, products ,ere introduced
/. 2c3uisitions o& 4ennen men1s toiletries company
'. 4anu&acturing began in C-ina and 5astern 5urope
062 7oot-brus- 4arket:
!roduct 6egment:
7a-un 1992 ada / pemain utama perusa-aan produsen sikat gigi di
062 yaitu colgate*palmoli(e 8#8 dan 9ral*B dima colgate dan :#: bermain
pada segmen pro&esianal sedangkan oral*b pada segmen premium.
Consumer Be-a(ior
tabel diatas merupakan indikator/ acuan konsumen dalam memilih sebuah brand.
Competition:
2d(ertising and !romotion
Untuk memaksimalkan retailsales, salespeople untuk CP menempatkan produk tersebut
diantara reach dan oral-B pada rak penjualan.
$istribusi :
!ada le(el retailer margin yang dibebankan untuk sikat gigi adala-
sebesar 2+;*/+; dan berlaku dua kali lipatnya se-ingga retailer lebi-
memili- men:ual sikat gigi dibandingkan pasta gigi. 2k-ir 1991* a,al
1992 pen:ualan sikat gigi 6<0s meningkat 1992 semua pen:ualan sikat
gigi dilakukan ole- doktergigi dengan dominasi ole- oral*B dimana
pen:ualan melalui dokter gigi adala- setenga- dari pencapaian dengan
distribusi biasa =retailer>.
4arketing :
1. !roduct $esign and testing
!astagigi yang di-asilkan merupakan produk ino(asi dengan
teknologi tinggi melalui riset laboratorium dan pengalaman tenaga
a-li. misinya adala- ? de(elop a superior tec-nical pla3ue
remo(ing de(ice@.
2. !ositioning
merupakan ?nic-e product@ dengan target konsumen yang peduliA
a,are ter-adap gum disease. Barapannya adala- mampu merai-
/; pasar 06 dari ta-un pertama peluncuran. 2lternati& lainnya
adala- ? as a mainstream brus- ,it- t-e boarder appeal o& being
t-e most eCecti(e brus- a(ailable on market@
/. Dolumes:
6teinberg berekspektasi ba-,a dengan noc-e positioning sales
sebesar /; pada ta-un pertama dan +; pada ta-un berikutnya.
$engan mainstream positioning maka sales (olume adala- sebesar
10; pada ta-un pertama dan 1'7; pada ta-un berikutnya.
!roduction Cost # !ricing :
0ntuk produksi perusa-aan beker:asama dengan 2nc-or brus-.
Eingkup produksi yang disubkontrakkan adala- gudang dan transport.
princing : nic-e product $2.1/ premium diatas 9ral*B and at parity ,it-
9ralB indicator.
mainstream strategy : $1.)+ parity dengan 9ral*B regular.
Branding
metode yang digunakan adala- consumers concepts test. dengan
test tersebut ?Colgate !recision@ lebi- disukai dibandingkan dengan
alternati& nama yang lain. $engan terpili-nya brand tersebut !erusa-aan
mencoba membangun brand e3uity untuk colgate.
Communication #!romotion:
6eperti misi yang di:an:ikan adala- ?mende(elop produk untuk
menanggulangi gum disease@ maka itula- strategi yang digunaka. $ari
riset yang dilakukan ++; konsumen merasakan perbedaan dari sikat gigi
yang mereka miliki dan 77; merasa sikat gigi ini lebi- e&ekti&.
0ntuk promosi perusa-aan menggunakan &ree +oF tube untuk
setiap pembelian 1 sikatgigi.
Guestion*2ns,er
1. H-at c-anges are occuring in t-e toot-brus- categoryI 2sses colgate
palmoli(e1s competiti(e positionI
7oot-brus- manu&acturers -a(e poured millions o& dollars and
-ours to marry &orm and &unction in oral -ealt- care products t-at
enable t-eir users to brus- &re3uently com&ortably and abo(e all
properly. 2long t-e ,ay t-ey -a(e built t-e 0.6. oral care market into
a $2.9 billion industry c-anged t-e brus-ing -abits o& millions and
turned t-e lo,ly toot-brus- into a trendy li&e style accessory.
2s t-e consumers are becoming more concerned about t-e -ealt-
o& t-eir teet- t-e toot-brus- companies are &ocusing on -elping t-em
-a(e an optimal dental -ealt- and oCering (arious types o&
toot-brus-J to do t-is t-ey must be all t-e time &ocused on ,-at t-e
customerKs needs and &or t-is reason t-e toot-brus- companies -a(e
made numerous &unctional and aest-etic c-anges to t-e -eads and
bodies t-eir products. 6ome toot-brus-es -a(e an indicator ,-o tells
you ,-en to c-ange t-e toot-brus-J -andles ,ere t-ickened &or a
more com&ortable grip and lengt-ened to e%tend t-e reac- o& t-e
bristles. 6-a&t materials c-anged incorporating translucent and more
Le%ible plastics in t-e -andle and rubber components &as-ioned into
t-umb ridges to -elp pre(ent slippage. 7-e toot-brus- market -as
become (ery competiti(e and Colgate*!almoli(e is &acing strong
competition &or its products &rom e%isting companies like 8o-nson #
8o-nson and 9ral*B and ne, companies suc- as !rocter # Mamble and
6mit- <line Beec-am ,-o positioned t-eir ne, product lunc-es in t-e
super*premium toot-brus- segment.
.n 1991 C! launc-ed ne, products in t-e 0.6 market C! and -eld '/;
o& t-e ,orld toot-paste market and 16; o& t-e ,orld toot-brus-
market. 9t-er oral care products included dental Loss and mout-
rinses. .n 1991 ,orld,ide sales o& C!Ks oral care products increased
12; to $1./ billion accounting &or 22; o& C!Ks total sales.
2. Bo, is t-e toot-brus- market segmented I Compare consumer
be-a(ior &or toot-brus-es and toot-paste I
7-e toot-brus- category is di(ided into t,o segments: (alue
and pro&essional. 2lso t-e toot-brus-es are diCered by bristle type =
frm medium so&t and e%tra so&t> and by -ead siFe =&ullAadult
compact and c-ildAyout->. .n t-e beginning t-e toot-brus-es ,ere
introduced on t-e basis o& &unctional &eatures but in t-e late 19)0Ks
t-is c-anged and many ne, toot-brus-es ,ere introduced on t-e
basis o& aest-etic and o& course t-is c-anged because in 1991 ne,
product introduction ,ere again &ocused on tec-nical per&ormance
impro(ements. Menerally diCerent people -a(e (arious needs &or
buying toot-brus-.
Nurt-ermore ,e -a(e t-ree groups o& consumers: .n(ol(ed oral
-ealt- consumers*t-erapeutic brus-ers '6; .n(ol(ed oral -ealt-
consumers* cosmetic brus-ers 21; 0nin(ol(ed oral -ealt-
consumers*//; .6o ,e -a(e consumers ,-o searc- out &unctionally
eCecti(e products in order to a(oid oral care products consumers
,-o searc- &or products t-at deli(er cosmetics beneft =suc- as
pre(enting bad breat- andAor ensuring ,-ite teet-> and t-e last
group ,-o (ie,s t-e products as t-e same. 7-ese kind o&
consumers are not moti(ated by oral care benefts and ad:ust t-eir
be-a(ior only ,-en t-ey con&ront oral -ygiene problems. Nor most
consumers toot-brus-es ,ere as important as toot-paste to
eCecti(e oral -ygiene and t-at t-e primary role o& a toot-brus- ,as
to remo(e &ood particlesJ pla3ue remo(al and gum stimulation ,ere
considered secondary. C! estimated t-at )2; o& toot-brus-es
purc-ases ,ere unplanned. 7-e a(erage or replacements o& t-e
toot-brus-es ,ere only once e(ery ).6 mont-s in 1990 7.+ in 1991
and due to t-e pre(alence o& Ot,o*&or*oneO t-e a(erage ,as 12.'
mont-s in 1990 and 9.7 mont-s in 1991.
Consumer be-a(ior &or toot-brus-es and toot-pastes is diCerent.
7-e toot-paste is s-ared by members o& t-e same -oyse-old.
Consumers are more care&ul in c-oosing t-e rig-t toot-brus- rat-er
t-an toot-paste. !eople are c-oosing t-e toot-brus- based on t-eir
indi(idual needs about siFe t-e -andle t-e bristles and -ead s-ape
o& t-e toot-brus- and all t-at based on t-e s-ape o& t-e mout-.
/. H-at are t-e arguments &or launc-ing !recision as a> a nic-e
product and b> a mainstream brandI
Eaunc-ing !recision as a nic-e product:
Pic-e positioning &ocuses on customers ,-o care about t-e
pre(ention o& gum diseases. 2s suc- it could command a 1+; price
premium o(er 9ral*B and ,ould be e%pected to capture /; o& t-e
0.6. toot-brus- market by t-e end o& t-e frst year &ollo,ing its
launc-. 6teinberg belie(ed t-at ,it- a nic-e positioning !recision
retail sales ,ould represent /; (olume s-are o& t-e toot-brus-
market in year 1 and +; in year.
0nder a nic-e positioning strategy 6teinberg decided t-at C!
,ould establis- a &actory list price to t-e trade o& $2.1/ a premium
o(er 9ral*B regular and at parity ,it- 9ral*B .ndicator. .& t-e
company decided to position t-e !recision toot-brus- as a nic-e
product many positi(e benefts ,ould appear:
1. . !recision toot-brus- is more ad(anced and is c-aracteriFed &or
its tec-nological superiority o(er its competitors. Because o& t-at
Colgate*!almoli(e can be able to diCerentiate and promote
somet-ing ne, to t-e market.
2. Colgate*!almoli(e ,ould be able to c-arge premium prices i&
targeting to customers ,-o are ,orried about gum diseases.
/. .& t-e company decided to position t-e !recision toot-brus- as a
nic-e product 6<0Ks ,ould not decrease.
'. .n case o& &ailure o& !recision Colgate could reduce t-e losses i&
costs ,ere to decrease.
Nocusing on t-e same customers nic-e positioning oCers some
negati(e benefts. 2s it is e%pected sales in mass merc-andisers
,ould decrease and also retail sales ,ould be less i& nic-e
positioning ,as used. Eaunc-ing !recision as a mainstream
brand: 4ainstream positioning regards !recision toot-brus- as
t-e most appealing and eCecti(e on t-e market. .t ,as estimated
t-at as a mainstream product !recision could capture 1+; o&
t-e 0.6. toot-brus- market by t-e end o& t-e frst year &ollo,ing
its launc-. 6teinberg belie(ed t-at ,it- a mainstream positioning
!recision retail sales ,ould represent 10; (olume s-are o& t-e
toot-brus- market in year 1 and 1'.7; in year 2. 0nder a
mainstream positioning strategy 6teinberg decided t-at C!
,ould establis- a &actory list price to t-e trade o& $1.)+ at parity
,it- 9ral*B regular. .& t-e company decided to use mainstream
positioning t-ere ,ould be some ad(antages:
Pame recognition and brand a,areness &or Colgate ,ould be
increased.
7-e !recision toot-brus- ,ould be c-aracteriFed as t-e most
superior product.
7-e company s-ould take ad(antage o& t-e &act t-at most retail
stores are under t-is position rat-er t-an nic-e position. 0sing
mainstream positioning some disad(antages may appear:
2lt-oug- !recision toot-brus- is superior compared to
ot-er brus-es t-e prices o& all ,ould be e3ual. 7-is &act
leads to more competition ,-ic- ,ill cause an increase in
prices.
6ome 6<0Ks ,ould be reduced
2 mainstream toot-brus- raised concerns about t-e
possible cannibaliFation o& Colgate !lus and about pressure
on production sc-edules t-at -ad been de(eloped &or a
nic-e positioning. !roduction capacity increases re3uired
10 mont-s lead time and s,itc-ing to a mainstream
positioning could result in inade3uate supply o& products.
'. H-at marketing recommendations ,ould you make to 6teinbergI
2s ,e can see in e%-ibit + Colgate*!almoli(e -as 2) 6<0s 9ral*B 16
Crest Complete 10 and 23ua&res- Nle% 10. !ositioning Colgate*!almoli(e
!recision 7oot-brus- in t-e super*premium Pic-e s-ould be t-e defning
line bet,een 9ral*B and Colgate*!almoli(eKs oral care products. 2s it is
mentioned in t-e case in clinical test t-e brus- ac-ie(ed an a(erage /+;
increase in pla3ue remo(al compared ,it- ot-er leading toot-brus-es
specifcally 9ral*B and t-is clinical test means t-at !recision could be
positioned as a Pic-e product and as ,e kno, nic-e ,as recommended
to a(oid t-e cannibaliFation o& Colgate !lus ,-o ,as in t-e mainstream
market.
He recommend t-at is better i& !recision is displayed separately
&rom t-e ot-er Colgate*!almoli(e products and close to competiti(e super*
premium toot-brus-es because frst o& all t-e consumers can compare
price =,-ic- is $2.1/ a premium o(er 9ral*B regular and at parity ,it-
9ral*B .ndicator> design =,-ic- is superior to bot- 9ral*B and "eac-> and
ingredients =,-ic- are more eQcient t-an 9ral*B>.
7-e most important ad(antage o& Colgate*!almoli(e is t-at no one
o& its competitors -a(e not launc-ed ne, impro(ed products so C! ,ill
t-e frst and so ,ill -a(e t-e beneft o& positioning a ne, product in t-e
super*premium nic-e market. 2nd being ne, product !recision ,ill reac-
maturity le(el maybe in less t-an 2 years and in t-is time C! can continue
impro(ing its products. 2&ter t-is C! can mo(e !recision into t-e
mainstream market and mo(e Colgate*!almoli(e !lus into t-e (alue
market.
!recision toot-brus- s-ould be carried primarily by drug and &ood stores
and C! s-ould &ocus on t-e baby boom generation because as ,e sa, in
t-e case t-ey ,ere becoming more concerned about t-e -ealt- o& t-eir
gums and ,ere ,illing to pay a premium &or ne, products addressing t-is
issue. C! s-ould compete directly ,it- 9ral*B in t-e pro&essional dental
oQces segment and use t-e oQces &or distribution points and
rein&orcement and recognition o& t-e ne, product because t-e
pro&essional ad(ise is important to establis- t-e credibility o& a ne,
toot-brus-.
9ne o& t-e important points is ,-at kind o& toot-brus- t-ey ,ill
produce and &rom t-e data ,e see t-at t-e medium*bristle accounted &or
/9; and ,ere declining at '; a year so&t*bristle brus-es -eld at ');
market s-are and ,ere gro,ing at 7; per year e%tra so&t*bristle -eld only
a +; s-are but ,ere gro,ing e(en more rapidlyJ C! s-ould &ocus on t-e
so&t and e%tra so&t* bristle brus- because are t-e 2 sub*segments ,it- t-e
-ig-er percentage o& increase. Because competition ,as increasing and
t-e competitors spend a lot o& money on t-e promotion o& t-eir ne,
products =8o-nson# 8o-nson spend $17.1 million 9ral B $ 11.2 million
6mit-kline Beec-am $10 million> C! s-ould spend at least at pair ,it-
9ral B ,-ic- is t-e bigger Competitor. 2d(ertising and promotion s-ould
be done t-roug- commercials in 7D magaFines radio and t-ey s-ould
&ocus on t-e benefts o& t-e !recision toot-brus-.