marketing management internship under sameer mathur IIM lucknow

1. Colgate-Palmolive Company:
The Precision
Toothbrush

2. Colgate-Palmolive is a global leader in household and personal products.

3. Why study this case?
•To understand the market competition faced by
the Colgate Precision Toothbrush.
• To analyze the Consumer Behavior of that time
period.
• To summarize the profits gained by the
company.

4.  Susan Steinberg
(Precision Product Manager)
 Reuhen Mark
(Colgate Palmolive CEO)
 Nigel Burton
(Division General Manager)
 John Phillips
(Colgate Plus Manager)

5. Background - COLGATE PRECISION:
A new product, toothbrush launched by CP in
August 1992
Developed over a period of 3 years
SUSAN STEINBERG
 Precision Product Manager
 The person who managed the entire product
development process
 Responsible for recommending the
POSITIONING , BRANDING and
COMMUNICATION strategies

7. The Situation:
•Colgate-Palmolive (CP) was
poised to launch a new toothbrush
in the United States , tentatively
named Colgate Precision.
•Susan Steinberg had to
recommend positioning, branding,
and communication strategies to
division general manager Nigel
Burton.

9. The US Toothbrush Market &
History:

10. •The U.S. Toothbrush Market has seen many
changes since ancient times ranging from Dr.
West’s Miracle Tuft Toothbrush to the newly
launched The Colgate Precision Toothbrush.

13. Objectives of this Case:
Understand the entry of Precision
toothbrush into new geographic
markets and
How it transformed from a “Sleepy &
inefficient” company into a lean and
profitable one.

14. 1.To launch new products
2.To enter into new geographic
markets
3.To improve efficiency in
manufacturing & distribution
4.To continue focus on CORE
CONSUMER PRODUCTS

15. Objectives of this Case (Contd.)
Analysis of
Product Segmentation
•Value and Profession
Consumer Segmentation
•Age
•Replacement frequency
•Personal brushing style

16. The industry executives had divided the toothbrush
category into following segments :
1.Value
2.Professional
3.Super - Premium

19. Three Issues(1/3):
How Precision should be positioned & branded and
communicated to consumers?

20. Three Issues(2/3):
What the advertising and
promotion budget should be and
how it should be broken down?

21. Three Issues(3/3)
How to develop a profit and loss
pro forma that would enable
Precision toothbrush to reach its
full potential?

22. •CP’s Consumer Research indicated that the
Baby Boom Generation Consumers were NOW
becoming more CONCERNED about the HEALTH
OF THEIR GUMS AS OPPOSED TO CAVITY
PREVENTION and were WILLING TO PAY A
PREMIUM FOR NEW PRODUCTS ADRESSING
THIS ISSUE.

25. competition

26. Oral-B Aqua fresh ReachCrest

27. .
Objectives of this Case
(Contd.)
Competition
•Number & type of Stock keeping
Units(SKUs)
•Market shares in terms of volume and
value in US retail markets

28. Objectives of this Case
(Contd.)
Evaluate the impact of
Precision marketing mix on
sales.

40. Product distribution

41. In 1992, 22% of all toothbrushes were expected to be
distributed to consumers by dentists.
• Manufacturer margins on toothbrush sales through
dentists were less than half those achieved through
normal retail distribution
• Exhibit 13 summarizes toothbrush retail
distribution trends by volume and value.

44. The Precision Marketing Mix
Product Design and Testing

45. In 1989, CP had established
a task force comprising
executives from:
•R&D and Marketing
•Dental professionals
•Outside consultants
MISSION
’’To develop a superior, technical, plaque removing
device’’.

46. Product
Positioning:
•The Precision toothbrush is a technical
innovation.
•Using infrared motion analysis developed a
unique brush with bristles of 3 different lengths
and orientations.
•Three brush design evolved with 35% more
plaque removing efficiency
•The brush is also shown to be more effective in
reducing gum disease than the Leading brushes ,
specifically Reach and Oral-B

47. Volumes:
Steinberg believed that :
1.With a niche positioning Precision retail sales would
represent 3% volume share of the toothbrush market in year
1 and 5% in year 2.
2.With a mainstream positioning, these volume shares
would be 10% in year 1 and 14.7% in year 2.
3.Total category unit volumes were estimated at 268 million
in 1993 and 300 million in 1994.

48. Volumes(contd.):

49. Capacity and Investment Costs:
Three types of equipment were required to
manufacture the Precision brush:
1.Tufters
2. handle molds
3. packaging machinery.
• Table D gives the cost, depreciation period, and annual
capacity for each class of equipment.

50. Capacity and Investment
Costs(contd.):

51. Production price and costing

52. •Steinberg consolidated - best estimate of
the cost and price data as in Table E
Product price and
costing(contd.)

53. Product price and costing

55. Result analysis :
A claim that the toothbrush would prevent
gum disease motivated the greatest
purchase intent among test consumers.

56. Result analysis(contd.):

57. Team Steinberg had 5 major goals
set

58. 1. Understanding Consumer
Techniques
Concluded that brushing removed plaque from
teeth surface but ineffective in removing from
gum line and between teeth

59. 2. Testing between teeth access of
different toothbrush design
Concluded that the new design was more efficient
than Oral-B and Reach in accessing front and
back teeth

60. 3. Index to score clinical
plaque-removal efficacy
Here Presence of Plaque on each tooth
area was calculated -pre and post
usage of toothbrush

61. 4. Creating an efficient
bristle configuration and
handle design
An average 35% more plaque was found
to be removed than other leading brands

62. 5. Efficacy and
Acceptance of new
toothbrush design
Extensive consumer research was
carried to test product design and
characteristics, marketing concept and
strengths

63. Breakeven analysis

64. •Total Manufacturing Costs + Total Advertising Costs = Input
Cost( Variable + Fixed costs)
•Total Profit = Retail Price * number of brushes – Input Cost
•For Breakeven , Input Cost = Total revenue generated by
selling the Precision brushes

65. TABLE C + TABLE E =
A Pro-forma income statement
Profit Implications - Niche Vs Mainstream
Positioning Strategies
Uncertain Cannibalization

66.  Company background
 U.S. toothbrush market
 Product segments
 Consumer behavior
 Competition
 The Precision Marketing mix
 Conclusion

67. Created by
A . Venkata Ramana ,
SASTRA University
during an Internship under
Prof . Sameer Mathur , IIM lucknow.