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Colgate palmolive company
- 1. COLGATE-PALMOLIVE COMPANY: THE PRECISION TOOTHBRUSH
- 3. • Global leader in household and personal care products SLEEPY AND INEFFICIENT LEAN AND PROFITABLE
- 5. THE U.S TOOTH BRUSH MARKET
- 6. ≤ 1970: Purchase was based purely on the PRICE FACTOR >1970: Purchase was based on the PERFORMANCE BENEFIT
- 7. CHRONOLOGY OF TOOTHBRUSH INNOVATIONS IN THE U.S
- 9. TOOTH BRUSH VALUE SUPER PREMIUM PROFESSIONAL
- 10. COMPETITION • Colgate • Oral-B (owned by Gillette) • Johnson & Johnson • Procter & Gamble • Smithkline Beecham • Lever • Pfizer • Sunstar
- 13. CP was planning to launch a new toothbrush in the U.S- COLGATE PRECISION Susan Stainberg, Precision product manager, had developed the product. She wants to decide on positioning, branding, and communication strategies.
- 15. TECHNICAL OBJECTIVES • Long outer bristles: clean the gum line. • Long inner bristles: Clean b/w the teeth. • Short bristles: clean the teeth surface BRISTLES FEATURES • 35% increase plaque removal PLAQUE REMOVAL • Double the plaque removal score of competitors POINT OF DIFFERENCE
- 16. MISSION DEVELOP A SUPERIOR, TECHNICAL, PLAQUE REMOVING DEVICE
- 18. 1. • How to position the product • How to brand and communicate it to the customers 2. • Advertising and promotion budget 3. • Developing a market-mix • Profit and loss pro forma
- 20. POSITIONING
- 21. NICHE PRODUCT Capture 3% of the U.S toothbrush market at the end of 1st year MAINSTREAM PRODUCT Capture 10% of the U.S toothbrush market at the end of the 1st year SUPER-PREMIUM PRODUCT
- 22. STENBERG’s ASSUMPTIONS • Precision sales: 3% volume share of the toothbrush market in 1st year and 5% in the second year • Mainstream sales: 10% volume share in the 1st year and 14.7% in the second year. • Total category unit volume: 1993- 268 million 1994- 300 million
- 23. UNIT VOLUMES REACH TO CONSUMER
- 25. CAPITAL INVESTMENT FOR EACH CLASS OF EQUIPMENT
- 26. PRODUCTION COST AND PRICING • Subcontracted to Anchor Brush. • NICHE: $2.13/brush • MAINSTREAM: $1.85/brush WAREHOUSI NG COST TRANSPORT COST PRODUCTIO N COST
- 27. CONCERNS IN MAINSTREAM POSITIONING • Might cannibalize Colgate plus. • Production schedules developed for niche will not suit it. • Precision shelf: COLGATE PLUS > COLGATE PRECISION >ORAL-B
- 28. CONCERNS IN MAINSTREAM POSITIONING CONTD. • Precision in mainstream dropping of one or more SKUs from plus line. precision Niche: food and drug store Mainstream: greater proportion- mass merchandise
- 30. UNCERTAINITIES OF THE ESTIMATE • 35-60% of volumes indicated in the table unit volume reach to consumers could have come from Colgate classic and plus. • ASSUMPTION: Let’s take it to be an average of 47.5% cannibalization. • So, 52.5% of the total indicated would be possible. • Revised estimate follows:
- 31. Precision as a Niche product Precision as a Mainstream product Planned capacity unit volume Year 1= 6.825 MM units Year 2= 10.5 MM units Year 1=22.05 MM units Year 2=30.975 MM units Investment in capacity, where Year 2 figures are additional capacity Year 1= $1.7 M Year 2= $0.7 M Year 1= $4.78 M Year 2= $2.05 M Depreciation costs Year 1= $166,250 Year 2= $236,250 Year 1=$465,500 Year 2=$666,750 Manufacturer per cost unit: Year 1 and 2 $0.66 $0.64 -Manufacturer price -Suggested retail price $2.02 $2.89 $1.76 $2.49 Advertising- Year 1 -Year 2 Consumer Promotions- Year 1 -Year 2 Trade Promotions- Year 1 -Year 2 $2.625 million $2.625 million $2.415 million $2.1 million $0.84 million $1.42 million $7.875 million $6.3 million $6.825 million $5.25 million $2.52 million $3.675 million #SKUs -Brushes -Colors 4 adult 6 colors 6 adults / 1 child 6 colors
- 32. BRANDING
- 33. BRANDING 49% Acceptance & 31% appealing Colgate Precision Precision by ColgateVS
- 35. CONSUMER CONCEPT TEST 4 concept tests 400 adult professional brushers
- 36. ADVERTISEMENTS USED IN CONSUMER CONCEPT TESTS
- 37. CONSUMER CONCEPT TEST RESULTS
- 38. ADVERTISING AND PROMOTION BUDGET 4 WAYS: 1. $9.6 MILLION IN ADVERTI SEMENT $14.4 MILLION IN PROMOTI ON $24.1 MILLION
- 39. 2. Budget same as percentage of sales in 1993 Classi c Precisionplus
- 43. Placing precision in mainstream: • affects Colgate Plus • doesn’t suit production schedule • concept test – consumers preferred brushes ton fight against gum diseases • Thus, Precision is placed as a NICHE product. Branding: • Based on the name test results we can conclude it to be branded as COLGATE PRECISION
- 44. ADVERTISING : • $35.3 million in advertising and promotion expenses will be optimal because among the 4 ways this method of allocation was especially for Niche product .