eminar Applications of Management Accounting and Control

ottle-Taylor:
xpanding the Oral Care Group in India

Leon Brakemeier, Marie Hemelt, Mantin Lau, Simon Lorenz

1
Content

1. What factors determine demand for toothbrushes?

2. How is Cottle doing in India?

3. How should Cottle accelerate the development of the

toothbrush market in India?

2
 Factors affecting the demand for toothbrushes:
Oral care habits & Consumer Consumer Consumer attitude
accessibility: disposable income: awareness & dental about oral care:
care infrastructure:
Many Indians still A large proportion of Majority of Indians
clean their teeth with Indias population In 2007 about 50% of does not associate
traditional products lives below 2$ per day Indians were not dental problems with
like Neem twigs, black concerned with improper oral care but
salt, tobacco, charcoal Only a small subset of preventing or curing rather with bad eating
and ash wealthy consumers dental problems habits or genetics
could afford a battery- Migration of Indian Indians wanted to
Almost 95% of the operated toothbrush dentists to foreign upgrade from home-
retail sector in India is countries for higher grown dental
Disposable income will
unorganized, where compensation remedies to
rise in the upcoming
products are sold in a inexpensive modern
years, increasing the
very cramped and oral care products
purchasing power
cluttered way

3
 Brushing incidence in India 2007: Replacement Incidence:

7%
9%
23% 9%
22%
39%
91%

1 time / week 2 times / week 3 times / week 1 time / day 2 times / day Replaced in 3 Months

4
Increasing the demand for toothbrushes:
Reaching out to rural India

Advertising

Increase dental health awareness (partnership with IDA)

Distributor Education

Free sampling
5
How is Cottle Taylor doing in
India?

6
Cottle Taylor
Since 1815, oral care, personal care, home care
Operating in over 200 countries
Revenue $11.5 billion
50% generated from emerging markets

Cottle India
Oral care product production and distribution
Generates 6% of Cottle Taylor revenue

Strategy
Basic product, brand awareness, distribution network
introduce more profitable lines
7
Organisation
Decisionmaking not centralised, local expertice and management

Product acceptance
Partnership with IDA, studies show success

Distribution network
SarIndia; 22%
Products sold in over 450,000 stores wide and reliable
Cottle; 46%
Competitive advantage
Daltan; 21%

others; 11%
Sales:
Strong market position
Declining margins for Toothpaste and powder
8
 Growth
Cottle India toothbrush sales in units 2009 grew 18%
Estimates for 2010 are between 20-30%
100.0%

75.0%
Battery-operated make up

50.0% 14% of toothbrush Revenue

high growth potential
25.0%

0.0%
India Thailand Japan

Low-End Mid-Range Battery-Operated

9
 Industry Growth
1000

900

800

700

600
Mouthwash
500 Toothbrushes
$ in millions
Toothpowder
400 Toothpaste

300

200
+47% over 5 years
100
Strong Industry growth
0
2004 2005 2006 2007 2008 2009

10
Has Cottle enjoyed a first mover
advantage?

11
Definition: First mover advantage

is a marketing strategy where a business obtains

certain competitive advantage by virtue of being the
first to bring a specific product or service to market
Reward of huge profit margins
But not every first mover will get an advantage

12
Brand value and Production capacity Quality & reliable Variety of Oral care
recognition, & efficiency distribution Products
collaboration with IDA network
Most of the Indians used Requirement of Production variety of
traditional ways to clean financial & Competitive oral care production
their teeth in the past manufacturing advantage through (Toothpaste and
resources for the build of a vast, toothbrushes)
In 2004 campaigns were
toothbrush production quality and reliable
introduced by IDA &
Cottle distribution network By 2009 different
Investment in growth toothbrush designs:
Free dental check ups, of its manufacturing Investment in Low-end manual
product samples, basic
capacity and cultivating large Mid-range
instructions
improvements inf distributor and Battery-operated
Oral care growth in India productivity over time supermarket
Cottle developes into an relationships
The manufacturing
authorithy on oral care
process was scaled
enough to meet
demand without
Cottle reached 46%
relying on of market
expensive share and $70.1
million sales by import
and risky 2009!
process
13
Should Cottle spend advertising
dollars promoting battery-
operated toothbrushes? Why or
why not?

14
 Urban market
Only 22% (255 million) of
Indians are living in the urban
segment
higher income
less price sensitive
Shops at convenience stores,
supermarkets, specialty
retailers and department
stores
Preferred larger products as it
provided more value
Cottles Indian market share is
currently driven by the urban
market
Rural market
78% (905 million) of
Indians are living in rural
towns
Low income group, no
access to credits
Limited or no savings
Price sensitive
Purchasing products at
small cramped
independend grocery stores
Study shows Indians were
not concerned with
preventing or curing dental
problems & rejection of
using modern oral care 15
products
 No big effect of promoting battery-operated toothbrushes due to
non equal market share of the two groups
Focus more on rural market since most of the population are
belonging to this group to get new customers
More campaigns about the importance of oral care in collaboration
with IDA is needed
Change from traditional methods to the use of oral care products
Provide more consumer awareness
Education of non users to begin usage
Spend more money on people in poverty region to get the basic
dental hygiene in the whole country!

16
 online advertising for urban market
Usage of social media for instance
low price advertising with almost same effect
not so time consuming

Cottle can put their main focus on higher quality products when
the acceptance of their products increase

17
What are Cottles target market
segments?

18
Strategy
(1)Persuading consumers to brush for the first time
(2)Increasing the incidence of brushing
(3)Persuading consumers to upgrade to mid-range or premium
products
19
Low end manual product Mid-range manual Battery-operated
(1)(2) (2)(3) (3)
<1000$ <4500$ >4500$
Rural towns/ villages and Rural towns/ villages and Urban
semi-urban urban settings Brush regulary
No and rarely brushing Brush irregulary and
rarely

20
 What makes the most sense for cottle to reach?

Orange, yellow (poor, rural settings, no/ irregluary brushing)

Establishing a customer relationship
Forecasted profit (million) :
Low end: $18,396
Mid-range: $ 8,718
Battery-operated: $ 4,396

Focus on strategy (1), (2)

21
Thank you for your attention.

22