A Harvard Business School Case Analysis.

1. Colgate-Palmolive
Company: The
Precision Toothbrush
A Harvard Business School Case
Analysis
Arnab Das

2. Colgate-Palmolive’s Oral Care Industry
Position

3. CP held 43% of the world toothpaste market and 16% of the world
toothbrush market.
CP’s U.S. toothbrush sales reached $77 million, with operating
profits of $9.8 million. Toothbrushes represented 19% of CP’s
U.S. Oral Care Division sales and profits.
CP held the number one position in the U.S. retail toothbrush
market with a 23.3% volume share.

4. Situation
Analysis

5. Advertising and Promotion budget also need to be decided.
Positioning, branding, and communication strategies need to be devised for
Colgate Precision.
The market is highly competitive with substantial new product activity.
Colgate-Palmolive (CP) has decided to launch a new toothbrush in the United
States, tentatively named Colgate Precision.

6. The PrecisionToothbrush
A technical innovation.
Mission is to “develop a superior,
technical, plaque removing
device.”
Triple-action brushing effect.
35% more effective in plaque
removal than its competitors.

7. Major Players in Marketing Strategy of
Colgate Precision Toothbrush
Susan Steinberg
Product Manager
Nigel Burton
Division General Manager

8. Understanding US Toothbrush
Industry

9. 24%
12%
41%
42%
35%
46%
Unit Volume Share
Dollar Sales
Product Segmentation in 1992
Super-Premium Professional Value

10. Consumer Behaviour (1/2)
46% therapeutic brushers.
21% cosmetic brushers.
33% uninvolved brushers.

11. Consumer Behaviour (2/2)
Fits most comfortably in mouth- 63%
Best for getting at hard-to-reach places- 52%
Bristles are of right softness- 46%
Bristles are of right firmness- 36%
Dentist recommendation- 35%
Important part of oral care regimen- 30%
Brand Decision Factors

12. Competitors of Colgate-Palmolive (1/5)
Oral-B has been the market leader since
the 1960s.
Held a 23.1% volume market share and
30.7% value share in US.
Known as “The dentist’s toothbrush”.
Launched Indicator Brush in 1991, priced
at 15% premium to its other brushes.

13. Competitors of Colgate-Palmolive (2/5)
Johnson & Johnson ranked third in the U.S.
retail toothbrush market with a 19.4%
volume share and a 21.8% value share.
The Reach line was positioned as the
toothbrush that enabled consumers to brush
in even the hardest-to-reach places, thereby
increasing the efficiency of brushing.
J&J’s expected 1992 operating margin on
toothbrushes, after advertising and
promotion costs, was 8.4% of factory sales.

14. Competitors of Colgate-Palmolive (3/5)
P&G was expected to launch Crest Complete
nationally in September 1992.
Claimed to have “the ability to reach between
the teeth up to 37% farther than leading flat
brushes.”
Expected to capture a 2.0% volume share and
a 2.6% value share by the end of 1992.

15. Competitors of Colgate-Palmolive (4/5)
Smithkline Beecham entered the market
with Aquafresh Flex in August,1991.
Held a 0.9% share by volume and 1.1% by
value of the U.S. retail market.
Point of differentiation was “flexibility and
gentleness”.
Expected to make an operating loss on
toothbrushes in 1992.

16. Competitors of Colgate-Palmolive (5/5)
Pepsodent of Lever Butler of Sunstar

17. Advertisement &
Promotions

18. It is estimated that almost all toothbrush companies will increase
media advertising expenditure with newer entrants in super-
premium segment (Crest Complete, Aquafresh Plax) leading the
pack by some distance.

19. Colgate has always evenly distributed its expenditures across different forms
of advertising and promotion.

20. SWOT Analysis
of Colgate-
Palmolive

21. Strengths
Number one company in US
retail toothbrush market.
Extensive international reach.
Exclusive R&D team working on
new technologies.
Innovative product design.

22. Weaknesses
Lack of professional dental
endorsements.
Small media expenditure layout
compared to its rivals.
Introduction of Precision
toothbrush may cannibalize Colgate
Plus and Colgate Classic.

23. Opportunities
Increasing market share in the highly profitable but emerging “super
premium” segment.
Capturing baby boomers and younger generation as they are more
concerned about gum care..
Converting unplanned toothbrush purchases into sales through well
directed advertisements.

24. Threats
Intense segment rivalry.
Threat of new entrants.
Threat of substitute products (electronic
brush).

26. Positioning
Branding
Communication and
Promotion

27. Niche Positioning – Advantages for Precision
Allows for a concentrated marketing campaign targeted to therapeutic brushers.
Niche market consumers are more likely to pay a premium price for Precision.
The super-premium segment accounts for 46% of dollar sales, CP will do well if they
place Precision as a niche product to capture market share.
Positioning (1/4)
Niche Positioning | Benefits of Precision Toothbrush
Allows for a concentrated marketing campaign targeted towards
therapeutic brushers who care about gum care.
Niche marketing accounts for 46% of dollar sales and premium
consumers are willing to pay high price.
Precision won’t have a chance to cannibalize Colgate Plus or
Colgate Classic.
Precision has a ready to go production schedule.

28. Positioning (2/4)
Niche Positioning | Harms of Precision Toothbrush
Lesser revenue than mainstream positioning.
Product reach is limited to a specific section.

29. Positioning (3/4)
Mainstream Positioning | Benefits of
Precision Toothbrush
Simple and direct campaigning.
Greater return on investment.
Large market share.

30. Positioning (4/4)
Mainstream Positioning | Harms
of Precision Toothbrush
Almost one-third population have
little interest in oral hygiene.
Precision won’t appeal to them.
Cannibalization of Colgate Plus
and Colgate Classic.
Mainstream market is steadily
declining.

31. Precision should be placed in the niche market as
a superior and distinctive product in the fast
growing super-premium segment.
Later Precision can be moved into the
mainstream market and thus gain higher market
share.

32. Branding
“Colgate Precision”
or
“Precision by Colgate” ?
“Colgate Precision” appeared to be
more popular from a survey but also
increased cannibalization risk of
Colgate Plus by 20%.
“Precision by Colgate” had no
cannibalization risk but it was unable
to harness Colgate brand equity.

33. “Precision by Colgate” would be more suitable
as it won’t cannibalize Colgate Plus, which is
the bread and butter of CP.
“Precision by Colgate” stresses on Precision,
which indicates the specific value it is going it
deliver to its customers.
In later stages, when Precision will enter
mainstream market, focus can be shifted to
Colgate as the company would look to build on
the brand equity.
Recommendation

34. Communication and Promotion (1/2)
Key findings of a survey
carried out by CP:
55% found Precision different than their
current toothbrush.
77% found Precision more effective.
Once tried, consumer intent to purchase
Precision rose dramatically.

35. Communication and Promotion (2/2)
Advertising and promotion budget was
$24.1 million in 1992. A decision needs
to be taken for allocation of 1993 budget
to different CP products.
Susan Steinberg, Precision Product
Manager considered several promotions
to back the launch. Sampling formed an
important part as surveyed customers
gave positive feedback after using
Precision.
Another important tactic was
professional endorsement through
dentists.

36. Recommendation
Budget of 1993 should be increased
by 80% and that amount should be
solely invested in Precision
toothbrush. In that way, a sufficient
amount will be invested towards
promotion to build Precision as a
brand in the increasingly competitive
super-premium segment without
hurting advertising budgets of its
existing products.