Executive Summary Toothbrush is currently one of the most promising categories and Colgate has proven to be a market leader with its products, Classic in value segment and Plus in professional. Increasing concern over oral hygiene amongst consumers resulted in a superior and premium grade of toothbrush that entirely focuses on improving brushing experience and oral health Users are making transition towards higher value toothbrushes (super premium), due to the increased awareness of oral hygiene. Research suggests that majority of the consumers are more concerned about their oral health than ever and all the major brands like Oral B, Johnson & Johnson and Proctor and Gamble have either launched or in the process to launch a product in this segment Colgate Palmolive is expected to lose it’s market share by almost 4% in 1993 and 3% in 1994, as it faces tough competition from major oral care competitors. If we don’t extend our toothbrush portfolio to include a super premium toothbrush, we are expected to lose our foothold in the toothbrush category Our oral care division decided to launch a technological innovative product, that would meet the current market demand to cater premium brush users called “Precision”. If executed right, Precision will ensure a 5% growth in overall market share and maintain Colgate’s position as a market leader in the industry With an investment of $14 million towards media advertisement and almost $7.6 million towards production, launching Precision as a mainstream product would result in NPV of $11 million and an IRR of 129%

1. Presented by: Aditya Kamboj
Student ID: 128390184
Email: akamboj4@myseneca.ca
Presented to: Prof. Duncan Reith
Course: MGM725 (Business Metrics)

2. Executive Summary
 Toothbrush is currently one of the most promising category and Colgate has proven to be a market leader with it’s products, Classic in value
segment and Plus in professional. Increasing concern over oral hygiene amongst consumers resulted in a superior and premium grade of
toothbrush that entirely focuses on improving brushing experience and oral health
 Users are making transition towards higher value toothbrushes (super premium), due to the increased awareness of oral hygiene. Research
suggests that majority of the consumers are more concerned about their oral health than ever and all the major brands like Oral B, Johnson
& Johnson and Proctor and Gamble have either launched or in process to launch a product in this segment
 Colgate Palmolive is expected to loose it’s market share by almost 4% in 1993 and 3% in 1994, as it faces tough competition from major oral
care competitors. If we don’t extend our toothbrush portfolio to include a super premium toothbrush, we are expected to lose our foothold
in the toothbrush category
 Our oral care division decided to launch a technological innovative product, that would meet the current market demand to cater premium
brush users called “Precision”. If executed right, Precision will ensure a 5% growth in overall market share and maintain Colgate’s position
as a market leader in the industry
 With an investment of $14 million towards media advertisement and almost $7.6 million towards production, launching Precision as a
mainstream product would result in NPV of $11 million and an IRR of 129%
2

3. There is a growing demand in the US tooth brush market and competition is on the rise
Why Toothbrush market?
 Sales of toothbrushes is growing at an average rate of 9.3% PA since 1987
 In 1991, US oral care market was $2.9 billion in retail sales, and was
growing at an average rate of 6.1%
 $453 million in retail sales in 1991
 Value share is exceeding volume share, between 1991-92, 21% increase in
value vs 19% volume
3
Factors responsible for this dramatic increase:
 Increase in advertisement and promotional expenditure by the major
FMCG companies has induced demand
 Aggressive consumer and trade promotions
 Increasing competition in this space as everyone speculates this category
to evolve with time
 Also, oral hygiene awareness amongst people is increasing the purchase
frequency

4. The market share for super-premium brushes is growing exponentially as more
consumers are concerned about their oral health
Market
Segment for
Toothbrushes
Value Segment
Average Price -
Around $1.29
Super Premium
Average Price -
$2.29 - $2.89
Professional
Segment
Average Price -
$1.59 - $2.09
Why Super Premium?
 Consumers are trading up to professional toothbrushes, which is leading to erosion
of value brushes
 Consumers are driven towards premium brushes as they now understand the
importance of oral hygiene and application of premium brushes
 Super premium brushes have been generating the maximum revenue share in the
market – 40% higher price point than Professional brushes
 Super Premium segment is increasing on an average of 9.5% value share and 15%
volume share
Toothbrush Market Segments
4
Segments
volume volume
1989 32% 45% 23%
1990 28% 43% 29%
1991 26% 44% 30%
1992E 24% 41% 35%
volume
Value Professional Super premium
Value/Volume Segment Market Share

5. Therapeutic buyers who are more involved in their oral health are driving sale for
super premium brushes
 According to the Colgate Palmolive research, baby boomers
generation (adults born in the 1940’s, 1950’s and early 1960’s) are
more concerned about their oral health and are willing to pay
premium prices
 Almost 34% of the US population in 1990 was composed of baby
boomers, with an income more than country’s median income
(The Baby Boom Cohort in the United States, census.gov)
Therapeutic Brushers Cometic Brushers
Uninvolved Oral
Health Consumers
Differentiate among
products
Differentiate among
products
View the product as same
They look for functionally
effective products
They look for products that
offer cosmetic benefit
Lack of interest in the
category
Buy and use products for
themselves
Buy and use products for
themselves
Buy and use products for
all family members
62% use professional brush 54% use professional brush
28% uses value
toothbrushes
Oral B Angle, Oral B Regular,
Colgate Plus, and Reach
Colgate Classic, Oral B
Regular and Colgate Plus
Colgate Classic, Oral B
Regular, Colgate Plus and
Reach
5

6. US toothbrush market size is expected to grow, although the market would see a
decline in consumption in 1993 due to build-up inventory in customer’s houses
The above calculations are done assuming:
 % market size for retail, dentist and sampling remains the same
 % of brush buyers = 100% - (6% + 2%), where 6% = electric brush users and 2% is average infant population (statista.com)
6
243 242
261
307
285
304
0
50
100
150
200
250
300
350
1989 1990 1991 1992 1993 1994
Total Brush Consumption (mm)
 Due to the trade promotions like “two for one”,
people now have more toothbrush inventory at
home, hence purchase frequency is expected to
go down
1989 1990 1991 1992 1993 1994
US Population (mm) 246 250 253 257 260 263
1.46% 1.36% 1.58% 1.17% 1.50%
% of tooth brush buyers 92% 92% 92% 92% 92% 92%
Number of buyers (mm) 226 230 233 236 239 242
Average Unit Purchased/PA 1.4 1.4 1.6 1.6 1.62 1.67
Total Market Size (mm) 317 321 372 378 388 404
Sampling% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sampling Market Size (mm) 25 26 30 30 31 32
Dentist % 22% 22% 22% 22% 22% 22%
Dentist Market Size (mm) 70 71 82 83 85 89
Retail % 70% 70% 70% 70% 70% 70%
Retail Market Size (mm) 222 225 261 265 271 283
Retail Market Trend 1.58% 2.43% 4.28%
Consumption (Units) 1989 1990 1991 1992E 1993 1994
Total Brushes Bought (mm) 243 242 261 307 285 304
% Change 8% 18% -7% 7%
Market Size

7. There is an urgent need to react to the changing toothbrush market
landscape as both Classic and Plus are consistently declining
7
12.0
13.7
16.9 17.3
14.4
13.1
8.5 8.1
6.4
4.9
3.8
2.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
1 2 3 4 5 6
Declining Plus and Classic Market Share
Plus Classic
BRAND 1989 1990 1991 1992E 1993E 1994E
COLGATE 20.5 21.8 23.3 22.2 18.2 15.5
ORAL-B 24.0 24.5 23.1 19.8 21.7 22.7
J & J 20.6 19.8 19.2 19.4 19.0 19.3
SMITHKLINE BEECHAM 0.0 0.0 0.9 4.6 6.7 9.3
P&G 0.0 0.0 0.0 2.0 4.2 8.6
Lever 10.5 9.8 7.2 5.0 3.5 2.0
Butler 0.0 0.0 2.0 2.0 2.0 2.0
PRIVATE LABEL 0.0 0.0 11.2 11.5 11.9 12.2
Market Share - All Major Brands
Expected decline of Colgate's toothbrush market share:
Declining share of Colgate classic, as consumers are trading up to
higher priced toothbrushes
Private label conquered the value segment after 1990 and is
further expected to grow and dominate value toothbrushes
Major competitors like Oral B, P&G and J&J launched their super
premium brushes in the market and are consistently gaining market
share
Professional segment share is also expected to loose it’s share due
to emergence of super premium brushes and aggressive promotion
done by competitors to promote their super-premium brands
 Colgate is expected to lose 4% in 1992 and another 3% if no action
or innovation is done

8. Why Precision Toothbrush?
 Considering increase in awareness for oral hygiene, precision would be a good fit to Colgate's
toothbrush portfolio
 The brush is a technological innovation in the toothbrush industry. Researchers used infrared
motion analysis to design this brush that is 35% more effective than any other brush in the market.
 The brush passed 18 months long clinical and consumer research – that proved the overall
acceptance of the brush
 Also, according to a concept test performed by Colgate 29% of the people claimed that they would
definitely buy Precision, which is significant for a test
Precision toothbrush is the answer to the changing landscape of toothbrush
market due to the changing consumer buying behavior
8

9. Precision will ensure Colgate stays a market leader in toothbrush category by
improving market share, 5% in 1993 and 8% in 1994
 Increased promotional expenditure on
Crest, Oral-B indicator and Reach will gain
an immediate market share without
precision
 Colgate is expected to gain an immediate
market share after introducing the
precision toothbrush in the market,
projected share 7.1% and 11.2%
 Other major brands would loose some
market share for super premium brushes
after Colgate’s launch 9
1989 1990 1991 1992E 1993E 1994E 1993E 1994E
BRAND Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%)
COLGATE
Precision 0.0 0.0 0.0 0.0 0.0 0.0 7.1 11.2
Plus 12.0 13.7 16.9 17.3 14.4 13.1 13.2 11.0
Classic 8.5 8.1 6.4 4.9 3.8 2.4 2.4 1.1
TOTAL 20.5 21.8 23.3 22.2 18.2 15.5 22.7 23.3
ORAL-B
Oral-B Regular 24.0 24.5 22.1 16.1 15.5 11.0 15.0 10.5
Oral-B Indicator 0.0 0.0 1.0 3.7 6.2 11.7 6.4 8.2
TOTAL 24.0 24.5 23.1 19.8 21.7 22.7 21.4 18.7
J & J
Reach 18.1 18.2 17.8 15.2 11.2 10.0 10.5 8.9
Reach Advanced Design 0.0 0.0 0.7 4.0 6.2 9.2 5.9 8.2
Prevent 2.5 1.6 0.7 0.2 0.1 0.1 0.1 0.1
TOTAL 20.6 19.8 19.2 19.4 19.0 19.3 16.5 17.2
SMITHKLINE BEECHAM
Aqua-Fresh 0.0 0.0 0.9 4.6 6.7 9.3 5.2 8.2
TOTAL 0.0 0.0 0.9 4.6 6.7 9.3 5.2 8.2
P&G
Crest 0.0 0.0 0.0 2.0 4.2 8.6 4.0 7.9
TOTAL 0.0 0.0 0.0 2.0 4.2 8.6 4.0 7.9
Lever 10.5 9.8 7.2 5.0 3.5 2.0 3.0 1.9
Butler 0.0 0.0 2.0 2.0 2.0 2.0 2.2 2.2
PRIVATE LABEL 0.0 0.0 11.2 11.5 11.9 12.2 12.2 12.2
OTHER LABEL 24.4 24.1 13.1 13.5 12.8 8.4 12.8 8.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Without Precision With Precision
Brand/Product Market share

10. With mainstream strategy Colgate is expected to generate $16 million more
operating cash flow for second year then niche strategy
10
 Due to a significant increase in demand
for the super premium brushes – Colgate
should launch Precision as a mainstream
product
 Colgate would sell twice as many
brushes with main stream compared to
niche strategy
 Scaling volume would help Colgate to
drive down manufacturing cost per unit
compared to the niche strategy
 With mainstream strategy would put an
increase of $19M in 1994, as opposed to
only $4 million with niche strategy
1993E 1994E 1993E 1994E
(000's) (000's) (000's) (000's)
Projected Units 13,756 15,085 27,513 45,256
Average Selling Price $2.02 $2.02 $1.76 $1.76
Total Revenue $27,787.91 $30,472.51 $48,422.50 $79,650.91
Cost Of Goods per unit $0.66 $0.66 $0.64 $0.64
Total Variable Cost 9079 9956 $17,608 $28,964
Gross Margin $18,708.69 $20,516.14 $30,814 $50,687
Fixed Cost
Advertisement 11200 11200 $19,984 $22,263
Investment 3250 800 $4,550 $3,100
Total Fixed Cost 14450 12000 $24,534 $25,363
Operating Cash Flow $4,258.69 $8,516.14 $6,280 $25,324
Niche Strategy Mainstream Strategy
Why Mainstream strategy?

11. 11
Colgate must increase it’s media and promotional expenditure, and allocate
majority of the budget to Precision, to ensure a successful launch and improve it’s
share of voice
Colgate Precision
25
Reach
27
Oral-B
17
Crest Complete
10
Aquafresh Flex
19
Pfizer Plax
2
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
0 1 2 3 4 5 6 7
 To increase share of voice % in the market, Colgate
needs to dominate and invest more on media
advertisements
 First year investment would ensure a successful
launch, and second year would help in acquiring
more customers and pressurize competitors
 Also, significant amount should be also invested in
trade promotions, as it would induce people to try
Precision as opposed to other brands
0%
10%
20%
30%
40%
50%
60%
70%
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Colgate Precision Colgate Plus Colgate classic
(000's) (000's) (000's) (000's) (000's)
Media
a $9,623 (40%) $7,699 40% $6,929 40% $14,000 46% $15,000 44%
Consumer Promotions 6,978 (29%) $5,581 29% $5,023 29% $8,094 26% $9,390 27%
Trade Promotions 7,457 (31%) $5,966 31% $5,370 31% $8,650 28% $9,861 29%
Total Advertising $24,058 (100%) $19,246 100% $17,322 100% $30,745 100% $34,251 100%
Colgate with precision
1993E 1994E1992E 1993E 1994E
Colgate without precision
Break-up for Advertisement expenditure
Resultant Share of Voice%
Increasing media expenditure
to $14 million would result in
8% increase in share of voice
%

12. 12
Colgate is projected to make an investment of $7.6 Million to support the production of
retail and sampling Precision units in 1993 – 94
Total Investment: 7,650,000
 Colgate requires a total of 12 Tufters, 5 Handle Molds and 1 Packaging assembly to handle the production of Precision
toothbrushes
 Note: The Dentist channel is not accounted for in our financial projections as it generates a very nominal contribution
margin of $0.15, although investment required to produce those units are included to keep our analysis conservative
Tufters Handle Molds Packaging
1993
Projected Retail Units 19,258,949 19,258,949 19,258,949
Sampling units 2,201 2,201 2,201
Dentist Units 6,053 6,053 6,053
Total projected units 19,261,150 19,261,150 19,261,150
Annual Capacity 3,00,0000 7,00,0000 40,000,000
Investment Cost $500,000 $300,000 $150,000
Units Required 7 3 1
Total Investment $3,500,000 $900,000 $150,000
Grand Total
Investment Requirement
$4,550,000
Tufters Handle Molds Packaging
1994
Precision projections Units 12,420,390 12,420,390 12,420,390
Sampling units 3,620 3,620 3,620
Dentist Units 9,956 9,956 9,956
Total projected units 12,424,011 12,424,011 12,424,011
Annual Capacity 3,00,0000 7,00,0000 40,000,000
Investment Cost $500,000 $300,000 $150,000
Units Required 5 2 0
Total Investment $2,500,000 $600,000 $0
Grand Total $3,100,000
Second Investmment required

13. Precision is expected to add almost $13 Millions to cash flow and 4% increase in the
market share
13
1989 1989 1990 1990 1991 1991 1992E 1992E 1993E 1993E 1994E 1994E
(000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o
Market Size (Units) 221,794 225,039 260,691 264,813 271,253 282,851
Market Share % 20.50% 21.80% 23.30% 22.20% 18.20% 15.40%
Change in Market Share 1.30% 1.50% -1.10% -4.00% -2.80%
Units Sold 45,468 49,059 60,741 58,788 49,368 43,559
Average Selling Price $1.08 $1.10 $1.17 1.20 1.21 1.22
Total Sales/Revenue $48,939 $54,198 $70,989 $70,800 $59,844 53,303
Variable Cost Per Unit $0.43 $0.44 $0.52 $0.57 $0.57 $0.57
Total Variable Cost 19,724 40.30% 21,753 40.14% 31,702 44.66% 33,655 47.54% 28,140 47.02% 24,829 46.58%
Contribution Margin 29,214 59.70% 32,446 59.86% 39,287 55.34% 37,145 52.46% 31,704 52.98% 28,475 53.42%
Contribution Margin Per Unit $0.64 $0.66 $0.65 $0.63 $0.64 $0.65
Fixed Cost
Advertising Cost $11,693 $17,015 $20,334 $24,058 19,246 17,322
Overhead Cost $4,429 $6,304 $10,007 $11,423 11,423 11,423
Total Fixed Cost $16,122 32.94% $23,319 43.03% $30,341 42.74% $35,481 50.11% 30,669 51.25% 28,745 53.93%
Fixed Cost Per Unit $0.35 $0.48 $0.50 $0.60 $0.62 0.66
Net Income/Cash Flow $13,092 $9,127 $8,946 $1,664 $1,035 -$270
Initial Investment
Net Cash Flow $13,092 $9,127 $8,946 $1,664 $1,035 -$270
Colgate Total without precision (Base)
 Net income is dramatically expected to grow after launching precision due to increase in the market share, premium selling price and lower fixed cost with
respect to the Total Revenue generated
 Launching precision would have a significant positive impact on the contribution margin i.e. our overall toothbrush category would have more capacity to
absorb and cover fixed cost
1992E 1992E 1993E 1993E 1994E 1994E
(000's) o/o (000's) o/o (000's) o/o
264,813 271,253 282,851
22.20% 7.10% 11.20%
4.10%
58,788 19,259 31,679
$1.20 $1.76 $1.76
$70,800 $33,896 55,756
$0.57 $0.64 $0.64
$33,655 47.54% $12,326 36.36% $20,275 36.36%
$37,145 52.46% $21,570 63.64% $35,481 63.64%
$0.63 $1.12 $1.12
$24,058 33.98% 19,984 58.96% 22,263 39.93%
$11,423 0 0
$35,481 50.11% 19,984 58.96% 22,263 39.93%
$0.60 $1.04 $0.70
$1,664 $1,586 $13,218
-4550 -3,100
-$2,886 -$1,514 $13,218
Colgate Total Precision with Innovation

14. 14
 Due to shift in company’s focus towards
precision, and influx in people buying
private label as a substitute for brand
name brushes, unit sold for both plus and
classic is expected to fall
 The average selling price goes up because
Colgate would be selling more plus than
classic
 Although, the cash flow produced by these
two brands would be better than current
situation as the advertisement expense
allocated to the brands would be
significantly less than our current spending
 Although, the cashflow is expected to
consistently go down due to decreasing
market share
Reducing the advertisement budget for both Plus and Classic would have some positive
impact on the cash flow produced by them
Launch of Precision would further have a
notable positive impact on cashflow
produced by Toothbrush category
1993E 1993E 1994E 1994E
(000's) o/o (000's) o/o
271,253 282,851
18.20% 15.40%
-4.00% -2.80%
49,368 43,559
1.21 1.22
$59,844 53,303
$0.57 $0.57
28,140 47.02% 24,829 46.58%
31,704 52.98% 28,475 53.42%
$0.64 $0.65
19,246 17,322
11,423 11,423
30,669 51.25% 28,745 53.93%
$0.62 0.66
$1,035 -$270
$1,035 -$270
Colgate Total without precision (Base)
Market Size (Units)
Market Share %
Change in Market Share
Units Sold
Average Selling Price
Total Sales/Revenue
Variable Cost Per Unit
Total Variable Cost
Contribution Margin
Contribution Margin Per Unit
Fixed Cost
Advertising Cost
Overhead Cost
Total Fixed Cost
Fixed Cost Per Unit
Net Income/Cash Flow
Initial Investment
Net Cash Flow
1993 1993 1994 1994
(000's) o/o (000's) o/o
271,253 282,851
15.60% 12.10%
-3.50%
42,315 34,225
$1.25 $1.29
$52,829 44,150
$0.57 $0.57
$24,225 45.86% $19,593 44.38%
$28,604 54.14% $24,557 55.62%
$0.68 $0.72
10,761 20.37% 11,988 27.15%
11,423 11,423
22,184 41.99% 23,411 53.03%
$0.52 $0.68
$6,421 $1,146
$6,421 $1,146
Colgate Plus and Classic with innovation

15. 15
Overall Colgate would see an phenomenal improvement in financial position of it’s
toothbrush category and generate almost $14 million Cash Flow in 1994 for the Co.
Market Size (Units)
Market Share %
Change in Market Share
Units Sold
Average Selling Price
Total Sales/Revenue
Variable Cost Per Unit
Total Variable Cost
Contribution Margin
Contribution Margin Per Unit
Fixed Cost
Advertising Cost
Overhead Cost
Total Fixed Cost
Fixed Cost Per Unit
Net Income/Cash Flow
Initial Investment
Net Cash Flow
 In 1994 Colgate would experience a significant increase it’s overall market share. Also, with innovation there would be an increase in the average
selling price and together this would have a notable positive impact on company’s contribution margin and net income for the toothbrush
category
1992E 1992E 1993E 1993E 1994E 1994E
(000's) o/o (000's) o/o (000's) o/o
264,813 271,253 282,851
22.20% 18.20% 15.40%
-1.10% -4.00% -2.80%
58,788 49,368 43,559
1.20 1.21 1.22
$70,800 $59,844 53,303
$0.57 $0.57 $0.57
33,655 47.54% 28,140 47.02% 24,829 46.58%
37,145 52.46% 31,704 52.98% 28,475 53.42%
$0.63 $0.64 $0.65
$24,058 19,246 17,322
$11,423 11,423 11,423
$35,481 50.11% 30,669 51.25% 28,745 53.93%
$0.60 $0.62 0.66
$1,664 $1,035 -$270
$1,664 $1,035 -$270
Colgate Total without precision (Base)
1993E 1993E 1994E 1994E
(000's) o/o (000's) o/o
271,253 282,851
22.70% 23.30%
0.60%
61,574 65,904
$1.41 $1.52
$86,725 99,906
$0.59 $0.60
$36,446 42.02% $39,783 39.82%
$50,279 57.98% $60,123 60.18%
$0.82 $0.91
30,745 35.45% 34,251 34.28%
11,423 11,423
42,168 48.62% 45,674 45.72%
$0.68 $0.69
$8,112 $14,449
-3100
$5,012 $14,449
Total Innovation

16. 16
Hurdle Rate 12%
Net Present Value $10,735
IRR 129%
Colgate is expected to recover the investment made towards Precision in 1993 with an
NPV of $10,735 and IRR of 129%
Precision would recover the
investment made and achieve
break-even in 1993 with Net
Present value of $10,735 and IRR
of 129%
1992 1993 1993 1993 1994
(000's) (000's) o/o (000's) o/o
Market Size (Units) 0 0
Market Share % 4.50% 7.90%
Change In Market Share
Units Sold 12,206 22,345
Average Selling Price $0.20 $0.29
Total Sales/Revenue $26,881 $46,602
Variable Cost Per Unit $0.02 $0.03
Total Variable Cost $8,183 30.44% $14,846 31.86%
Contribution Margin $18,698 69.56% $31,756 68.14%
Contribution Margin Per Unit $0.18 $0.26
Fixed Cost
Advertising Cost $11,498 42.77% $16,929 36.33%
Overhead Cost $0.00 $0.00
Total Fixed Cost $11,498 42.77% $16,929 36.33%
Fixed Cost Per Unit $0.06 $0.03
Net Income/Cash Flow $7,200 $14,827
Initial Investment -$4,550 -$3,100
Net Cash Flow -$4,550 $4,100 $14,827
Total Change

17. 17
Market Size
1989 1990 1991 1992 1993 1994
US Population (mm) 246 250 253 257 260 263
1.46% 1.36% 1.58% 1.17% 1.50%
% of tooth brush buyers 92% 92% 92% 92% 92% 92%
Number of buyers (mm) 226 230 233 236 239 242
Average Unit Purchased/PA 1.4 1.4 1.6 1.6 1.62 1.67
Total Market Size (mm) 317 321 372 378 388 404
Sampling% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Sampling Market Size (mm) 25 26 30 30 31 32
Dentist % 22% 22% 22% 22% 22% 22%
Dentist Market Size (mm) 70 71 82 83 85 89
Retail % 70% 70% 70% 70% 70% 70%
Retail Market Size (mm) 222 225 261 265 271 283
Retail Market Trend 1.58% 2.43% 4.28%
Consumption (Units) 1989 1990 1991 1992E 1993 1994
Total Brushes Bought (mm) 243 242 261 307 285 304
% Change 8% 18% -7% 7%
Appendix 1: US Toothbrush Market Share

18. Appendix 2: Major brands market share, with and without Precision
18
Brand/Product Market share
Without Precision With Precision
1989 1990 1991 1992E 1993E 1994E 1993E 1994E
BRAND Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%) Vol (%)
COLGATE
Precision 0.0 0.0 0.0 0.0 0.0 0.0 7.1 11.2
Plus 12.0 13.7 16.9 17.3 14.4 13.1 13.2 11.0
Classic 8.5 8.1 6.4 4.9 3.8 2.4 2.4 1.1
TOTAL 20.5 21.8 23.3 22.2 18.2 15.5 22.7 23.3
ORAL-B
Oral-B Regular 24.0 24.5 22.1 16.1 15.5 11.0 15.0 10.5
Oral-B Indicator 0.0 0.0 1.0 3.7 6.2 11.7 6.4 8.2
TOTAL 24.0 24.5 23.1 19.8 21.7 22.7 21.4 18.7
J & J
Reach 18.1 18.2 17.8 15.2 11.2 10.0 10.5 8.9
Reach Advanced Design 0.0 0.0 0.7 4.0 6.2 9.2 5.9 8.2
Prevent 2.5 1.6 0.7 0.2 0.1 0.1 0.1 0.1
TOTAL 20.6 19.8 19.2 19.4 19.0 19.3 16.5 17.2
SMITHKLINE BEECHAM
Aqua-Fresh 0.0 0.0 0.9 4.6 6.7 9.3 5.2 8.2
TOTAL 0.0 0.0 0.9 4.6 6.7 9.3 5.2 8.2
P&G
Crest 0.0 0.0 0.0 2.0 4.2 8.6 4.0 7.9
TOTAL 0.0 0.0 0.0 2.0 4.2 8.6 4.0 7.9
Lever 10.5 9.8 7.2 5.0 3.5 2.0 3.0 1.9
Butler 0.0 0.0 2.0 2.0 2.0 2.0 2.2 2.2
PRIVATE LABEL 0.0 0.0 11.2 11.5 11.9 12.2 12.2 12.2
OTHER LABEL 24.4 24.1 13.1 13.5 12.8 8.4 12.8 8.4
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

19. Wighted Average selling price without precision
1989 1990 1991 1992 1993 1994
Plus Classic Plus Classic Plus Classic Plus Classic Plus Classic Plus Classic
(000's) (000's) (000's) (000's) (000's) (000's) (000's) (000's) (000's) (000's) (000's) (000's)
Market Size 221,794 221,794 225,039 225,039 260,691 260,691 264,813 264,813 271,253 271,253 282,851 282,851
Market Share 12.00% 8.50% 13.70% 8.10% 16.90% 6.40% 17.30% 4.90% 14.40% 3.80% 13.10% 3.10%
Units Sold 26,615 18,852 30,830 18,228 44,057 16,684 45,813 12,976 39,060 10,308 37,054 8,768
Selling Price $1.35 $0.69 $1.35 $0.69 $1.35 $0.69 $1.35 $0.69 $1.35 $0.69 $1.35 $0.69
Sales $35,931 $13,008 $41,621 $12,577 $59,477 $11,512 $61,847 $8,953 $52,732 $7,112 $50,022 $6,050
Weighted Average Price $1.08 $1.10 $1.17 $1.20 $1.21 $1.22
19
Weighted Average selling price with precision
1993 1994
Plus Classic Precision Plus Classic Precision
(000's) (000's) (000's) (000's) (000's) (000's)
Market Size 271,253 271,253 271,253 282,851 282,851 282,851
Market Share 13.20% 2.40% 7.10% 11.00% 1.10% 11.20%
Units Sold 35,805 6,510 19,259 31,114 3,111 31,679
Selling Price $1.35 $0.69 $1.76 $1.35 $0.69 $1.76
Sales $48,337 $4,492 $33,896 $42,003 $2,147 $55,756
Weighted Average
Price $1.41 $1.52
Weighted Average Variable cost after innovation for all the products
1993 1994
Plus Classic Professional Plus Classic
Professiona
l
(000's) (000's) (000's) (000's) (000's) (000's)
Market Size 271,253 271,253 271,253 282,851 282,851 282,851
Market Share 13.20% 2.40% 7.10% 11.00% 1.10% 11.20%
Units Sold 35805.3696 6510.0672 19258.9488 31113.6364 3111.36364 31679.3389
Cost Per Unit $0.57 $0.57 $0.64 $0.57 $0.57 $0.64
Total Cost $20,409.06 $3,710.74 $12,325.73 $17,734.77 $1,773.48 $20,274.78
Weighted Avg. $0.59 $0.60
Appendix 3: Weighted average selling price and variable cost

20. Colgate without precision Colgate without precision
1989 1990 1991 1992E 1993E 1994E
(000's) (000's)
Media
a
$3,667 (31%) $6,988 (41%) $8,761 (43%) $9,623 (40%) $7,699 40% $6,929 40%
Consumer Promotions 4,541 (39%) 5,893 (35%) 5,286 (26%) 6,978 (29%) $5,581 29% $5,023 29%
Trade Promotions 3,485 (30%) 4,134 (24%) 6,287 (31%) 7,457 (31%) $5,966 31% $5,370 31%
Total Advertising $11,693 (100%) $17,015 (100%) $20,334 (100%) $24,058 (100%) $19,246 100% $17,322 100%
20
Colgate with precision
1993E 1994E
(000's) (000's)
Media
a
$14,000 46% $15,000 44%
Consumer Promotions $8,094 26% $9,390 27%
Trade Promotions $8,650 28% $9,861 29%
Total Advertising $30,745 100% $34,251 100%
Break-up for media and promotional budget
1993E 1994E
(000's) (000's)
Colgate Precision $19,984 65% $22,263 65%
Colgate Plus $9,223 30% $10,275 30%
Colgate classic $1,537 5% $1,713 5%
Total Expenditure $30,745 100% $34,251 100%
Share of voice
1991 1992E
Media $MM Share Voice(%) Media $MM Share Voice(%)
Colgate Plus 7.0 19 8 15
Reach 15.5 42 17.1 31
Oral-B 10.2 27 11.2 20
Crest Complete 0.4 1 6.4 12
Aquafresh Flex 0.4 1 10 18
Pfizer Plax 2.3 6 2.2 4
100
1993E 1994E
Share Voice(%) Media $MM Media $MM Share Voice(%)
Colgate Precision 23 14.0 15.0 25
Reach 28 17.5 17.5 27
Oral-B 17 12.2 12.7 17
Crest Complete 10 7.4 8.2 10
Aquafresh Flex 19 11 12.0 19
Pfizer Plax 3 2.5 2.5 2
Appendix 4: Advertisement and promotion budget

21. 21
Appendix 5: Investment required for precision
Contribution margin from Dentist channel
1993 1993 1994 1994
(000's) o/o (000's) o/o
85.3 88.9
7.10% 11.20%
4.10%
6.05 9.96
$0.79 $0.79
$4.78 $7.87
$0.64 $0.64
$3.87 81.01% $6.37 81.01%
$0.91 18.99% $1.49 18.99%
$0.15 $0.15
Investment Requirement
Tufters Handle Molds Packaging
1993
Projected Retail Units 19,258,949 19,258,949 19,258,949
Sampling units 2,201 2,201 2,201
Dentist Units 6,053 6,053 6,053
Total projected units 19,261,150 19,261,150 19,261,150
Annual Capacity 3,00,0000 7,00,0000 40,000,000
Investment Cost $500,000 $300,000 $150,000
Units Required 7 3 1
Total Investment $3,500,000 $900,000 $150,000
Grand Total $4,550,000
Second Investmment required
Tufters Handle Molds Packaging
1994
Precision projections Units 12,420,390 12,420,390 12,420,390
Sampling units 3,620 3,620 3,620
Dentist Units 9,956 9,956 9,956
Total projected units 12,424,011 12,424,011 12,424,011
Annual Capacity 3,00,0000 7,00,0000 40,000,000
Investment Cost $500,000 $300,000 $150,000
Units Required 5 2 0
Total Investment $2,500,000 $600,000 $0
Grand Total $3,100,000

22. Colgate Total without precision (Base)
1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994
(000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o
Market Size (Units) 221,794 225,039 260,691 264,813 271,253 282,851
Market Share % 20.50% 21.80% 23.30% 22.20% 18.20% 15.40%
Change in Market Share 1.30% 1.50% -1.10% -4.00% -2.80%
Units Sold 45,468 49,059 60,741 58,788 49,368 43,559
Average Selling Price $1.08 $1.10 $1.17 1.20 1.21 1.22
Total Sales/Revenue $48,939 $54,198 $70,989 $70,800 $59,844 53,303
Variable Cost Per Unit $0.43 $0.44 $0.52 $0.57 $0.57 $0.57
Total Variable Cost 19,724 40.30% 21,753 40.14% 31,702 44.66% 33,655 47.54% 28,140 47.02% 24,829 46.58%
Contribution Margin 29,214 59.70% 32,446 59.86% 39,287 55.34% 37,145 52.46% 31,704 52.98% 28,475 53.42%
Contribution Margin Per Unit $0.64 $0.66 $0.65 $0.63 $0.64 $0.65
Fixed Cost
Advertising Cost $11,693 $17,015 $20,334 $24,058 19,246 17,322
Overhead Cost $4,429 $6,304 $10,007 $11,423 11,423 11,423
Total Fixed Cost $16,122 32.94% $23,319 43.03% $30,341 42.74% $35,481 50.11% 30,669 51.25% 28,745 53.93%
Fixed Cost Per Unit $0.35 $0.48 $0.50 $0.60 $0.62 0.66
Net Income/Cash Flow $13,092 $9,127 $8,946 $1,664 $1,035 -$270
Initial Investment
Net Cash Flow $13,092 $9,127 $8,946 $1,664 $1,035 -$270
22
Appendix 6: Base case

23. 23
Appendix 7: Colgate plus and classic with innovation
Colgate Plus and Classic with innovation
1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994
(000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o
Market Size (Units) 221,794 225,039 260,691 264,813 271,253 282,851
Market Share % 20.50% 21.80% 23.30% 22.20% 15.60% 12.10%
Change In Market Share -3.50%
Units Sold 45,468 49,059 60,741 58,788 42,315 34,225
Average Selling Price $1.08 $1.10 $1.17 $1.20 $1.25 $1.29
Total Sales/Revenue $48,939 $54,198 $70,989 $70,800 $52,829 44,150
Variable Cost Per Unit $0.43 $0.44 $0.52 $0.57 $0.57 $0.57
Total Variable Cost $19,724 40.30% $21,753 40.14% $31,702 44.66% $33,655 47.54% $24,225 45.86% $19,593 44.38%
Contribution Margin $29,214 59.70% $32,446 59.86% $39,287 55.34% $37,145 52.46% $28,604 54.14% $24,557 55.62%
Contribution Margin Per Unit $0.64 $0.66 $0.65 $0.63 $0.68 $0.72
Fixed Cost
Advertising Cost $11,693 $17,015 $20,334 $24,058 33.98% 10,761 20.37% 11,988 27.15%
Overhead Cost $4,429 $6,304 $10,007 $11,423 11,423 11,423
Total Fixed Cost $16,122 32.94% $23,319 43.03% $30,341 42.74% $35,481 50.11% 22,184 41.99% 23,411 53.03%
Fixed Cost Per Unit $0.35 $0.48 $0.50 $0.60 $0.52 $0.68
Net Income/Cash Flow $13,092 $9,127 $8,946 $1,664 $6,421 $1,146
Initial Investment
Net Cash Flow $13,092 $9,127 $8,946 $1,664 $6,421 $1,146

24. Colgate Total Precision with Innovation
1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994
(000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o
Market Size (Units) 221,794 225,039 260,691 264,813 271,253 282,851
Market Share % 20.50% 21.80% 23.30% 22.20% 7.10% 11.20%
Change In Market Share 4.10%
Units Sold 45,468 49,059 60,741 58,788 19,259 31,679
Average Selling Price $1.08 $1.10 $1.17 $1.20 $1.76 $1.76
Total Sales/Revenue $48,939 $54,198 $70,989 $70,800 $33,896 55,756
Variable Cost Per Unit $0.43 $0.44 $0.52 $0.57 $0.64 $0.64
Total Variable Cost $19,724 40.30% $21,753 40.14% $31,702 44.66% $33,655 47.54% $12,326 36.36% $20,275 36.36%
Contribution Margin $29,214 59.70% $32,446 59.86% $39,287 55.34% $37,145 52.46% $21,570 63.64% $35,481 63.64%
Contribution Margin Per Unit $0.64 $0.66 $0.65 $0.63 $1.12 $1.12
Fixed Cost
Advertising Cost $11,693 $17,015 $20,334 $24,058 33.98% 19,984 58.96% 22,263 39.93%
Overhead Cost $4,429 $6,304 $10,007 $11,423 0 0
Total Fixed Cost $16,122 32.94% $23,319 43.03% $30,341 42.74% $35,481 50.11% 19,984 58.96% 22,263 39.93%
Fixed Cost Per Unit $0.35 $0.48 $0.50 $0.60 $1.04 $0.70
Net Income/Cash Flow $13,092 $9,127 $8,946 $1,664 $1,586 $13,218
Initial Investment -4550 -3,100
Net Cash Flow $13,092 $9,127 $8,946 -$2,886 -$1,514 $13,218
24
Appendix 8: Colgate with precision (Innovation case)

25. Total Innovation
1989 1989 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994
(000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o (000's) o/o
Market Size (Units) 221,794 225,039 260,691 264,813 271,253 282,851
Market Share % 20.50% 21.80% 23.30% 22.20% 22.70% 23.30%
Change In Market Share 0.60%
Units Sold 45,468 49,059 60,741 58,788 61,574 65,904
Average Selling Price $1.08 $1.10 $1.17 $1.20 $1.41 $1.52
Total Sales/Revenue $48,939 $54,198 $70,989 $70,800 $86,725 99,906
Variable Cost Per Unit $0.43 $0.44 $0.52 $0.57 $0.59 $0.60
Total Variable Cost $19,724 40.30% $21,753 40.14% $31,702 44.66% $33,655 47.54% $36,446 42.02% $39,783 39.82%
Contribution Margin $29,214 59.70% $32,446 59.86% $39,287 55.34% $37,145 52.46% $50,279 57.98% $60,123 60.18%
Contribution Margin Per Unit $0.64 $0.66 $0.65 $0.63 $0.82 $0.91
Fixed Cost
Advertising Cost $11,693 $17,015 $20,334 $24,058 33.98% 30,745 35.45% 34,251 34.28%
Overhead Cost $4,429 $6,304 $10,007 $11,423 11,423 11,423
Total Fixed Cost $16,122 32.94% $23,319 43.03% $30,341 42.74% $35,481 50.11% 42,168 48.62% 45,674 45.72%
Fixed Cost Per Unit $0.35 $0.48 $0.50 $0.60 $0.68 $0.69
Net Income/Cash Flow $13,092 $9,127 $8,946 $1,664 $8,112 $14,449
Initial Investment -4550 -3100
Net Cash Flow $13,092 $9,127 $8,946 -$2,886 $5,012 $14,449
25
Appendix 9: Total Innovation

26. 26
Market Size (Units)
Market Share %
Change In Market Share
Units Sold
Average Selling Price
Total Sales/Revenue
Variable Cost Per Unit
Total Variable Cost
Contribution Margin
Contribution Margin Per Unit
Fixed Cost
Advertising Cost
Overhead Cost
Total Fixed Cost
Fixed Cost Per Unit
Net Income/Cash Flow
Initial Investment
Net Cash Flow
Appendix 10: Total change with NPV and IRR, and Change with innovation
Total Change
1992 1993 1993 1993 1994
(000's) (000's) o/o (000's) o/o
Market Size (Units) 0 0
Market Share % 4.50% 7.90%
Change In Market Share
Units Sold 12,206 22,345
Average Selling Price $0.20 $0.29
Total Sales/Revenue $26,881 $46,602
Variable Cost Per Unit $0.02 $0.03
Total Variable Cost $8,183 30.44% $14,846 31.86%
Contribution Margin $18,698 69.56% $31,756 68.14%
Contribution Margin Per Unit $0.18 $0.26
Fixed Cost
Advertising Cost $11,498 42.77% $16,929 36.33%
Overhead Cost $0.00 $0.00
Total Fixed Cost $11,498 42.77% $16,929 36.33%
Fixed Cost Per Unit $0.06 $0.03
Net Income/Cash Flow $7,200 $14,827
Initial Investment -$4,550 -$3,100
Net Cash Flow -$4,550 $4,100 $14,827
Hurdle Rate 12%
Net Present Value $10,931
IRR 131%
Change
1993 1993 1993 1994
(000's) o/o (000's) o/o
0.0 0.0
-2.60% -3.30%
-7,053 -9,334
0.04 0.07
-7,015 -9,153
$0.00 $0.00
-$4,037 57.56% -$5,344 58.38%
-$2,977 42.44% -$3,810 41.62%
$0.04 $0.07
-$8,486 120.97% -$5,334 58.27%
$0.00 $0.00
-$8,486 120.97% -$5,334 58.27%
-$0.10 $0.02
$5,509 $1,524
$0.00 $0.00
$5,509 $1,524