Colgate-Palmolive Company: The Precision Toothbrush, HBR case Study during a marketing internship under Prof. Sameer Mathur.

1. Presented By Subho Mistri
J.U.(B.E.)
(A HBR case study)

2. • Company Background
• US toothbrush market
• Product segments
• Consumer behavior
• Competition
• The precision marketing mix
• Conclusion
Contents

3. WHY STUDY THIS CASE
• To understand the market competition faced by
Colgate precision Toothbrush
• To analyze the consumer behavior of that time
period
• To summarise the profits gain by the company

4. COLGATE PRECISION
 A new product toothbrush launched by CP
in August 1992
 Developed over a period of 3 years
Who is Susan Steinberg?
 Precision product manager, managed the entire new development
process.
 Responsible for recommending positioning, branding and
communication strategies.

5. Company’s Background
CP– A Global Leader in Household & Personal Care Product:

6. THE U.S. MARKET

7. The U.S. Toothbrush
market has seen many
changes from Dr.
West’s miracle Tuft
toothbrush to the
newly launched the
Colgate Precision

9. The Five year
Plan(1991-1995)

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

11. Product

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

14. CONSUMER
BEHAVIOUR

15. CP’s Consumer Research indicated that Baby
Boom generation Consumers were now
becoming more concern about the health of
their Gums as opposed to cavity prevention
and were willing to pay a Premium for new
Products addressing this issue

18. COMPETITION

24. PROMOTION

26. MEDIA EXPENDITURES

27. TELEVISION & ADVERTISING COPY STATEGIES & EXECUTIONS

28. CP TELEVISION ADVERTISING

29. ADVERTISING EXPENDITURE FOR CP TOOTHBRUSHES

31. • In 1992, 22% of all toothbrushes were
expected to be distributed to the
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 by volume & value

34. PRODUCT DESIGN
AND TESTING

35. 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”

39. Capacity and Investment Cost: Three types of equipment
were required to manufacture the precision toothbrush :
1. Tufters
2. Handle molds
3. Packaging machinery
Table D gives the cost, depreciation period, and annual
capacity for each class of equipment

42. Production Cost
Warehousing cost
Transport cost

43. Steinberg estimated the cost & Price data as below

45.  Total manufacturing cost+
total Advertising
cost=Input cost (Variable
+ Fixed cost)
 Total Profit= (Retail
Price*No. of brushes) -
input cost
 For Breakeven, Input
Cost= Total revenue
generated by selling the
precision brush.

46. Table C+
Table E
A Pro-forma
income
statement
Profit
implications
• Niche Vs Mainstream
• Position Strategies
• Uncertain Cannibalization

49. Two tests were carried out:
Consumer concept test
Name Test
OUTCOME:
Under the niche and mainstream positioning scenarios-
1. Cannibalization figures for Colgate Plus would be increased by
20% if the Colgate brand name was stressed.
2. Remain unchanged if the precision brand name was stressed.

50. CP’s stated
corporate
strategy was to
build on the
Colgate brand
equity

52. 4 concept tests conducted among
400 adult professional brush users
(Colgate Plus , Reach & Oral-B
users)-18 to 54 years of age.

53. Result of Four concept tests :
TEST 1:
(69+68+66)/3=67.67% Probably would buy
(15+15+10)/3=11.67% Definitely would buy
TEST 2:
(80+71+74+68)/4=73.5% Probably would buy
(19+19+18+14)/4=17.5% Definitely would buy
TEST 3:
(63+72+62+66)/4=65.75% Probably would buy
(13+16+11+14)/4=13.5% Definitely would buy
TEST 4:
(87+61)/2=74% Probably would buy
(19+48)/2= 24% Definitely would buy

57.  Precision-A technological breakthrough-
more than a niche product/simple line
extension
 How precision should be position, branded
and communicated to customers.
 What the advertising & promotion should be
and how it should be broken down.
 To develop a marketing mix and profit-and-
loss pro forma to enable precision to reach
its full potential.

58. This presentation made By Subho Mistri (J.U.), during a
marketing internship under Prof. Sameer Mathur (IIM-L)