Colgate Palmolive

Company:
The Precision Toothbrush
Case Study: 2
Contents

Toothbrush Category: Changes & CPs
Competitive Position.
Market Segment & Consumer Behavior.
Problem Statement- Positioning Precision as
Niche Product or Mainstream Brand.
Recommendations.
P& L Statement.


Toothbrush Category: Changes &
CPs Competitive Position
Since 1940s U.S Oral Care market witnessed many
changes & in 1991 the U.S OC market was $ 2.9 billion in
retail Sales (Toothbrush accounted $ 453 millions in
retail sales 15.5 % of Oral Care market share).
Market Growth average rate 9.3 % per annum since
1987, but Year 1992 market growth 21 % by value & 18
% in volume.
Market emerging from Value & Premium to Super
Premium Category.
Shift in demanded benefits: Quality & Innovation:
I. Cavity prevention
II. Oral hygiene
III. Healthier Gum Therapeutic & Cosmetic benefits.



CPs Competitive Position

By 1991 CP held the number one position in the world
for the sale of Oral Care products.
CP U.S Toothbrush sales in 1991 reached $ 77
million.
Accounting No. 1 position in U.S with 23.3 % market
share.
With 19 % market share CP world leader in
toothbrushes market.
Toothbrush Product Segment:
(1) Value: Colgate Classic
(2)Premium : Colgate Plus
(3) Super Premium: Colgate Precision


CPs Competitive Position- Condt.
Competition: Identification of Competitors:-
1. Oral B-Indicator
2. Johnson & Johnson Reach
3. Procter & Gamble- Crest Complete. (New Entrant)
4. Smithkline Beecham Aquafresh Flex. (New Entrant)
Weakness of Competition: Colgate not only had worry about
cannibalizing of their own product but also new line of product
introduce by competitors like Oral B , Johnson & Johnson &
Proctor & Gamble.
Technology: -
I. New products launches late 1980s & early 90s
II. Innovative handles & bristles technique.
III. Super Premium- category- with emphasis on Therapeutic &
Cosmetic benefits
Social :-
I. Children Market
II. Health Concern & Cavity prevention concern.
III. Raise of advertisement & Social awareness.

Market Segment & Consumer
Behavior

Toothbrush Market Segmentation: Industry
Executives divided the toothbrush category into 3
segments:-
I. Value Toothbrushes: Priced on average at
$1.29 , accounted for 24 % to 12 %.
II. Premium Toothbrushes: Priced between $1.59
to $2.09, accounting for 41% to 42%.
III. Super Premium Toothbrushes: Priced between
$2.29 to $2.89, accounted for 35 % to 46 %.




Consumer Behavior
















Involved Oral Health
Consumer- Therapeutic
Brusher (46 %adults)
Involved Oral Health
Consumer- Cosmetic
Brusher (21 % adults)
uninvolved Oral Health
Consumer- (33 % of
adults)
Differentiate among
products, reach out
functionally effective
products
Search for products that
effectively deliver
cosmetic benefits
View products are the
same, lack of interest in
product category
Buy & use product
themselves
Buy & use product for
themselves
Buy & use product for all
family members
85 % brush at least twice
a day, 62 % use a
professional brush & 54 %
floss regularly
85 % brush twice,
81 % use mouthwash
54 % use breath
fresheners
69 % floss, & 54 % use a
professional brush
20 % brush once a day or
less,
28 % use only regular
toothbrushes
54 % floss,
66 % use mouthwash
Major toothbrush brand
used are Oral B Angle &
Oral B Regular followed
by Colgate Plus
Major toothbrushes
brands used are Colgate
classic & oral B Regular
followed by Colgate plus
& Oral B angle
Major toothbrushes
brands used are Colgate
Classic & Oral B regular
Followed by Colgate Plus
& Reach.
Problem Statement-
Positioning Precision as Niche Product or Mainstream Brand.

Defining of Market Strategy (Positioning,
Branding & communication strategies) for new
innovative Toothbrush:-
Colgate Precision
I. Precision Toothbrush: A technical
Innovation.
II. Unique Brush with bristles of 3 different
length & orientation.
III. Three brush design evolved with 35 % more
plague removing efficiency.
IV. More effective in removing gum problem &
reducing it than Oral B & Reach.

Colgate Precision- Advertisement used in
the Consumer Concept Tests & Display
Positioning Precision as Niche Product or
Mainstream Brand- Strategies

Price





Budget Allocation:- Advertising & Promotion:-
1. Budget should remain level as sales for 1993.
2. Equally allocated to Colgate Classic, Colgate Plus &
Precision.
3. Contrast(Argument)- 75 % budget allocated to
Precision & 25 % to CP-Plus & Colgate Classic.
4. Positioned as 15 % price of Oral B & expecting to
capture 3 % market share.

Precision
Price as
Manufacturer
Price
Trade
Price
Retail Price
Niche
Market
$2.02 $ 2.13 $2.89
Mainstream
Market
$ 1.76 $ 1.85 $ 2.49
Positioning Precision as Niche Product or
Mainstream Brand- Strategies
Branding:-
Precision positioned in market as CP Super Premium
toothbrush or Positioned as New Super Premium
brand from Colgate. .Precision by Colgate
Investment ,Capacity & Distribution:-





Use of Existing distribution channel or developing the
new strategies for distribution.

Machinery Investment
Cost
Annual
Capacity
Depreciation
Time
Tufters $ 500,000 3MM units 15 years
Handle Molds $ 300,000 7 MM units 5 years
Packaging $ 150,000 40 MM units 5 years
Recommendations
CP holds 43 % of the global toothpaste market & 16 %
toothbrush market.
CP sales increased 12 % to $ 1.3 Billion, accounting to
22 % CP total Sales, Toothbrush sales amount $ 77
millions with operating profit of 9.8 % .
Considering above fact File of CP, without any doubt has
the ability & means to take the endeavor- should take
calculative risk too.
CP-would have a strong against competitors on the
basis on product attributes.-a better product with better
performance.
Position Product in Super Premium segment.
Niche segment is more consistent than the main stream
segment.
Segment : specially tailored or target to therapeutic &
cosmetic users

Pros & Cons of Positioning : Mainstream
Strategy
PROS CONS
Less Erosion of Colgate Plus.
Opportunity to create brand
positioning into super premium market.
CP could face less competition.
Its broadened the CP- product
portfolio in all three segments.
Opportunity to tap, people looking for
high end product than Super
Premium.


Less turnover & sales.
High budgets in terms of branding &
positioning.
PROs CONs
Unsatisfied demand of product against
price value, create perception of hot
product.

New market within Value product
segment.
Greater erosion of Colgate Plus.
May effect other segment- like Children
brush line.
Possible pressure on production &
inefficiency to meet of demand supply.
More Competition.
Pros & Cons of Positioning : Niche Strategy