The document summarizes a case analysis for Harvard Business School regarding Colgate's launch of a new toothbrush tentatively called Colgate Precision. It discusses positioning the product in the niche or mainstream market, branding options, and promotion strategies. Key decisions were to position it niche to achieve earlier profitability, name it "Precision by Colgate" to limit cannibalization of existing products, and use sampling and consumer promotions and target dental professionals to compete with rivals. The analysis considered financial projections and consumer research to recommend an optimal marketing mix for the new product.
3. American world wide consumer products
company focused on the production, distribution
and provision of households, health care and
personal products.
(Est. 1806, Revenue $16.03 Billion)
5. • Company
releasing new
toothbrush,
tentatively named
Colgate Precision
New
toothbrush
• The Product has
been under
development for 3
years
3yrs in
development • Positioning,
branding and
communication
strategies have to
be decided
The marketing
mix
17. Strengths
• CP is among the global leader in oral care space;
43% toothpaste market share, 16% world’s
toothbrush market share
• Technically superior product with 35% more plague
removal as compared to other products.
• Concept test showed 77% people found precision
to be more effective than their current toothbrush.
• Because of its good standing relationship with retail
stores , it is able to position its products on the
middle shelf, right between its competitors, Reach
and Oral-B
18. Weakness
• 33% consumers not educated enough about oral
health
• CP is not positioned in the super premium segment
• Its competitor, Oral-B, has endorsement from
doctors and American Dental Association while it
does not.
19. Opportunity
• Consumer research revelled that 46% of adults are concerned about
health of their gums.
• These customers are willing to pay a premium
• Consumers are open to trying new, technologically evolved products
20. Threats
• Competitors offering several incentives like buy-one-get-one
free, coupon deals etc.
• Competitors are also coming up with technologically
advanced iteration of their products which can threaten its
precision brand.
22. Oral-B
23% by volume and 30.7%
by value share
Johnson & Johnson
19.4% by volume and
21.8% by value share
Procter & Gamble
2% by volume and 2.6%
by value share
Others
SmithKline Beecham,
Lever, Pfizer and Sunstar
Competition
25. Psychographic
Involved ORAL Health consumers-
Therapeutic Brushers(46%of adults)
Involved ORAL Health consumers-
Cosmetic Brushers(21% of adults)
Involved ORAL Health consumers(33% of
adults
Differentiate among products. Search our
functionally effective products
Search for products that effectively
deliver cosmetic benefits
View products as the same. Lack of
interest in product category
Buy and use product for themselves Buy and use product for themselves Buy and use product for all family
members
85% brush at least twice a day, 62% use a
professional brush and 54% floss
regularly
85% brush twice a day,
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 toothbrush,
54% floss,
66% use mouthwash
Major toothbrush brands used are Oral-B
Angle and Oral-B Regular followed by
Colgate Plus and Reach
Major toothbrush brands used are
Colgate Classic and Oral-B Regular
followed by Colgate Plus and Oral-B Angle
Major toothbrush brands used are
Colgate Classic and Oral-B Regular
followed by Colgate Plus and Reach
26. Now let us look at all the decision one by one
28. Advantages
• Entry into a otherwise unexplored territory for CP; super-premium
products.
• Targeted at concentrated customers concerned with oral hygine at
super-premium price.
• Expected to earn toughly 35% volume share and 46% value share
• No cannibalization of Colgate Plus ;no SKUs need to be dropped;
satisfied sales manager
Disadvantages
• Lower and value share captured.
30. Advantages
• Higher share in the U.S. market
• Due to short term unavailability, the product can be perceived as ‘hot’.
Disadvantage
• Cannibalization of Colgate Plus expected; angry sales manager. • Deletion
of SKUs
• Retailers reluctant to market two products in the same category
• Product is expensive when compared to other mainstream products;
demand in consumer concept results fell significantly when people were told
about the prices
• Colgate still won’t enter in the super-premium segment
33. Niche
• Loss in 1st year: $6.74 million
• Profit in 2nd Year: $3.24 million
• Considering no capital expenditure from 3rd year and stagnant
demand and same promotional expenditure as in second year:
Profit from 3rd year onwards: $4.65 million
• Company will break even in 3rd year, followed by $4.65 million
yearly profit(uniform sales through the year assumed).
• At the end of five years the profit will stand approximately at
$10.46 million.
34. Mainstream
• Loss in 1st year: $21.6 million
• Profit in 2nd Year: $5.06 million
• Considering no capital expenditure from 3rd year and stagnant
demand and same promotional expenditure as in second year:
Profit from 3rd year onwards: $8.96 million/year
• Company will break even in 4th year (46th month), followed by
$8.96 million yearly profit (uniform sales throughout the year
assumed)
• At the end of five years the profit will stand approximately at
$10.45 million
35. Conclusion on Positioning
• It can be seen that both positioning strategies give almost same
profit at the end of 5 years, assuming constant demand.
• Positioning the toothbrush in mainstream category would yield
higher returns from 6th year onwards.
• But, it must be kept in mind that the life of toothbrush is prone to
technological innovation and expecting a product life of more than 5
years in this category would not be logical.
• Since, positioning the product in niche category helps in achieving
breakeven earlier ( 33 months as compared to 46 months), the product
must be positioned in niche category.
40. Points to consider
• Executives believe that product represented “big news” in the
category and can stand alone. Favourable towards name it
“Precision by Colgate”.
• Naming it “Precision by Colgate” would also limit the
cannibalization form Colgate plus by 16.66%.
• CP’s corporate strategy would be built more by naming it “Colgate
Precision”.
41. Conclusion on Branding
• It would be beneficial to name the product as “Precision by
Colgate”. It would limit the cannibalization of Colgate Plus
significantly.
• Also, we have already decided to place the product in niche
category. The product is advanced enough to stand alone with
this name with this product positioning.
• It also gives the feeling of superiority and effectively
conveys the functional advantage effectively.
43. How?
• Consumers want superior product and 77% of the test group found
Precision to be more effective than their current toothbrush.
• Consumer who use the product once are much more likely to buy the
product. Sampling could be used effectively.
• Consumer promotions like free toothbrush with Colgate toothpaste and
coupons for Precision can be used.
• Promotional and advertising budget should be shared equally by Colgate
Plus and Precision teams as Colgate Plus has been one of the best sellers in
this category. It is the bread and butter of CP right now.
• Dental professionals should also be targeted to compete effectively with
Oral-B
