Harvard business case study

1. The Precision Toothbrush
Case study

2. What is Colgate -Palmolive ?
• Colgate –Palmolive company is an American worldwide consumer
products company focused on production, distribution and provision
of household, health care and personal care products such as oral
hygiene products, soaps and detergents
• With 1991 sales of $6.06 billion and gross profit of $2.76 billion
Colgate-palmolivebecame a global leader in household and personal
care products

3. What is the case about?
• In 1992 august Colgate was poised to release a new toothbrush in the
United States initially named Colgate precision
• And now the company is facing high competition in the market it has
been developing this superior product for three years

4. Objectives of the case
• To study the market competition faced by Colgate precision
toothbrush
• To study the consumer behavior towards toothbrush market
• To study the strategies that can be used to position the
Colgate precision in the market
• To analyze the profits gained by adopting different strategies

5. Key Players
•Susan Steinberg (Precision Product Manager)
•Reuben Mark (CEO Colgate Palmolive)
•Nigel Burton ( Division General Manager)
•John Phillips (Colgate Plus manager)

6. Operating statements for cp's u.s
toothbrush business

7. Situational analysis (1/3)
• Cp launched precision as line extension
• Facing tough competition from other firms
• Developing strategies for positioning, branding,communication

8. Us toothbrush market (2/3)

9. Consumer behavior (3/3)

10. Three Issues
• 1 How Precision should be positioned, branded and
communicated to consumers?
• 2 What the advertising and promotion budget should be and
how it should be broken down?
• 3 How to develop a profit and loss pro forma that would
enable Precision toothbrush to reach its full potential?

11. Product design and testing
• In laboratory, experiments researches used infrared motion analysis
to track consumers brushing movements and consequent levels of
plaque removal with this knowledge and through computer aided
design. Cp designed unique brush with bristles of three different
lengths

12. How precision should be positioned and
communicated with customers?
• Two ways of positioning
• Mainstream positioning
• Niche positioning

13. Pros and cons for Niche marketing
• Pros
• 1 Less damage to Colgate plus
• 2 Colgate enter into premium category
• 3 It can be later broadened into mainstream
• Cons
• Less contribution to profit in future years

14. Pros and cons for Mainstream marketing
• Pros
• 1 Unsatisfied demand may create perception of "hot product"
• 2 Net profit increases
• Cons
• 1 Greater erosion of Colgate
• 2 It has to terminate slow moving children brush from plus
line

15. Capacity and investment costs
• Raw materials required for production are
• Tufters
• Handle molds and packaging machinery

16. Production cost and pricing
• Production was given to anchor brush who also manufactures
Colgate plus line of toothbrushes

17. Branding
• Out of many names proposed "Colgate precision" got 49% of
votes
• Debate on whether to market it as Colgate precision or
precision
• If Colgate precision was used cannibalization of plus would
increase by 20%
• If precision is used remains unchanged

18. Communication and Promotion
• Special coupons: A 50%-off offer on any size of Colgate toothpaste
in conjunction with a 50¢ coupon on the Precision brush in strong
Colgate markets.
• Buy 1 get 1 bundling:A free 5 oz. tube of Colgate toothpaste with
the purchase of a Precision brush in strong competitive markets
• Concept tests: Once the basic product design was established,
four concept tests, conducted among 400 adult professional brush
users 18 to 54 years of age, were run during 1990-1991.
Consumers were exposed to various product claims in prototype
print advertisements and then asked about the likelihood that they
would purchase the product

20. What the advertisement and promotion
budget should be and how it is broken
down?
• Insights From Advertising and Promotion

21. Media expenditures

22. Television and advertising copy
strategies

23. Colgate plus advertising

24. Advertising and promotion
expenditures

25. But how the budget is broken?

26. The budget should be broken down by
following ways :- •Department or
Category Budget
• Media selection
• Proper planning
• Monitoring

27. Competition

28. Toothbrush innovations

29. Toothbrush prices

30. Dollar market share

31. Dollar market share by class of trade

32. Conclusion
• At first the precision should be niche marketed and after achieving
maximum productivity requirements it can be mainstream positioned
• In niche positioning it enjoys high price and after achieving sufficient
amount of production capacity it can be changed
• Precision by Colgate is better name because it doesn't effect sales of
Colgate plus
• Price Precision at competitive levels within the super-premium segment so
as to offer more value than competitors, for an equivalent cost
• Leverage their existing intensive distribution channel relationships to
ensure that Precision receives the most effective placement

34. Disclaimer
• Created by Lakshmi Narayana, CBIT Hyderabad during a marketing
internship under professor Sameer Mathur, IIM Lucknow