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Colgate
Colgate-Palmolive Company aimed to enhance its market position in the toothbrush segment in 1991, focusing on product innovation, advertising expenditure, and updating manufacturing processes. The Precision Toothbrush, scheduled for launch in 1993, was designed for effective plaque removal with distinct bristle configurations, but faced challenges in brand positioning and consumer perception. In-depth consumer research revealed that professional endorsements and 'sampling' strategies would be vital for establishing credibility and motivating further purchases.
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Colgate
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- 3. 1/4About Colgate-Palmolive…(In 1991) Totalsales: $6.06 billion Gross profit: $2.76 billion Operating profit: 13% of net sales (Exhibit 1) Total worldwide R&D expenditures: $114 million Media advertising expenditures: $428 million
- 4. 2/4About Colgate-Palmolive…(In 1991) Emphasizednew product launches and entry into new geographic markets, along with improved efficiencies in manufacturing and distribution and a continuing focus on core consumer products. • $243 million was spent to upgrade 25 of CP’s 91 manufacturing plants • 275 new products were introduced worldwide
- 5. 3/4About Colgate-Palmolive…(In 1991) CPheld : 1. 43% of the world toothpaste market 2. 16% of the world toothbrush market. 3. The number one position in the U.S. retail toothbrush market with a 23.3% volume share.
- 6. 4/4About Colgate-Palmolive…(In 1991) CPoffered two lines of toothbrushes – Colgate Classic, positioned in the “value” segment Colgate Plus, positioned in the “professional” segment
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- 8. SALES SHARE PRODUCT SEGMENTPRICE DOLLAR SALES UNIT VOLUME SALES Super premium brushes $2.29-$2.89 35% 46% Professional brushes $1.59-$2.09 41% 42% Value brushes around $1.29 24% 12% 1/3
- 9. SALES SHARE PRODUCT NATUREGROWTH RATE UNIT VOLUME SALES Firm bristle brushes 8% -13% Medium bristle brushes 39% -4% Soft bristle brushes 48% 7% Extra-soft bristle brushes 5% fairly rapidly 2/3
- 10. SALES SHARE UNIT VOLUMESALES Full-sized heads 69% PRODUCT SIZE Compact heads 17% Child/youth sized heads 13% 3/3
- 11. PRECISION was scheduledto be launched early in 1993… It faced a major challenge of positioning itself as better than those whose had been launched recently….
- 12. The goal ofa great brand image could be achieved by understanding the needs and wants of consumers properly
- 13. Before breakfast 45% After breakfast 57% After lunch28% 24% 71% After dinner Before bed BRUSHING HABITS
- 14. VISIBLY WORN OUT BRUSH70% AFTER SEEING THEIR DENTISTS 11% ON IMPULSE 3% REASON FOR PURCHASE 48% consumers changed brush once on every 3 months. Out of those… 65% had more than one tooth brush 24% kept a tooth brush at work 54% had a special toothbrush for travelling
- 15. COMFORTABLE FIT IN MOUTH63% BEST FOR GETTING AT HARD TO REACH PLACES 52% RIGHT SOFTNESS OF THE BRISTLES 46% 36% 35% 30% RIGHT FIRMNESS OF THE BRISTLES DENTIST’S RECOMENDATION PART OF ORAL CARE REGIMEN MAIN REASONS FOR USING A BRAND (EXHIBIT 3) *Respondents could check multiple items
- 16. THERAPEUTIC BRUSHERS 46% of adults Searchout functionally effective products 85% brush twice a day 62% use a professional brush 54% floss regularly COSMETIC BRUSHERS 21% of adults Search for products that deliver cosmetic benefits 85% brush twice a day 81%use mouth wash 54% use breath fresheners 69% use floss 54% use a professional brush UNINVOLVED CONSUMERS 33% of adults View products as the same 20% brush once a day or less 28% use regular toothbrushes only 54% floss 66% use mouth wash
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- 18. Value Colgate Classic Pepsodent Regular Super-premium Oral-BIndicator Oral-B Regular Crest Complete Reach Advanced Aquafresh Flex Professional Colgate Plus Reach Regular Pepsodent Prof.
- 19. The year 1991saw the introduction of several new products…. Colgate Plus Angle Handle Diamond-shaped & angled handle Colgate Plus Wild Ones Cosmetic feature J&J Advanced Reach Design Rubber-ridged, non-slip handle Oral-B Indicator Bristles change colour Aquafresh Flex Flexible handle neck Pfizer Plax Groove for thumb PRODUCT NAME MAIN FEATURE
- 20. In the year1991, Colgate had spent a total of $20,334,000 for advertising and promotion
- 21. ADVERTISING When Colgate toothbrushes were combinedwith Colgate toothpaste in a single display, toothbrush sales increased by 170%. 1/4
- 22. CP had fourdisplay systems ADVERTISING 2/4 Counter Tops 24-36 brushes Floor Stands 72 brushes Sidekicks 144-288 brushes Waterfall Display 288-576 brushes
- 23. ADVERTISING 3/4 The CPtoothbrush line held 25% to 40% of the category shelf space in most stores. To maximize retail sales, CP sales people tried to locate the Colgate line in the middle of the category shelf space, between the Reach and the Oral-B product lines.
- 24. ADVERTISING 4/4 The numberof coupon events for toothbrushes increased from 10 in 1990 to 33 in 1992. In the same period, the average toothbrush coupon value increased from $0.25 to $0.75.
- 25. Partly in responseand partly because of the increasing number of SKUs, food stores began to expand shelf space devoted to oral care products. DISTRIBUTION
- 26. RETAIL TOOTHBRUSH SALES…(IN1991) $MMUNITS MM Food Stores 110 (42%) 192 (42%) Drug Stores 77 (29%) 148 (33%) Mass Merchandisers 54 (21%) 89 (20%) Military 5 (2%) 5 (1%) Club Stores 12 (5%) 15 (3%) Other 3 (1%) 4 (1%)
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- 28. Product Design andTesting Researchers used infrared motion analysis to track consumers’ brushing movements and consequent levels of plaque removal.
- 29. Product Design andTesting CP developed a unique brush with bristles of three different lengths and orientations . The longer outer bristles cleaned around the gum line, the long inner bristles cleaned between teeth, and the shorter bristles cleaned the teeth surface.
- 30. Product Design andTesting The brush achieved an average 35% increase in plaque removal, compared with other leading toothbrushes, specifically Reach and Oral-B. At the gum line and between the teeth, the brush was even more effective, achieving double the plaque removal scores of competitor brushes.
- 31. The problem highlighted inthis case is defining the market strategy for the toothbrush (positioning, branding and communication strategy)
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- 34. Investment Cost AnnualCapacity Depreciation time Tufters $500,000 3 MM units 15 years Handle Molds $300,000 7 MM units 5 years Packaging $150,000 40 MM units 5 years Capacity and Investment Costs
- 35. NICHE POSITIONING STRATEGY MAINSTREAM POSITIONING STRATEGY # units retailYear 1 = 8 MM Year 2 = 15 MM Year 1 = 26.8 MM Year 2 = 44.1 MM # units consumer promotional Year 1 = 2 MM Year 2 = 2 MM Year 1 = 7 MM Year 2 = 7 MM sampling # units through professionals Year 1 = 3 MM Year 2 = 3 MM Year 1 = 8 MM Year 2 = 8 MM How unit volumes reach consumer
- 36. RETAIL PRICE TRADE PRICE MANUFACTURE PRICE NICHE POSITIONING MAINSTREAM POSITIONING $2.89 $ 2.49 $ 2.13 $ 1.85 $ 2.02 $ 1.76
- 37. Niche : estimatednet profit over two years is $12,527,333 Mainstream : estimated net profit is $9,515,333 A financial analysis indicates a profit for both market positions
- 39. Alternative names which wereconsidered for the toothbrush included Colgate Precision, Colgate System III, Colgate Advantage, Colgate 1.2.3, Colgate Contour, Colgate Sensation, and Colgate Probe. The Colgate Precision name was consistently viewed more favourably—it was deemed appropriate by 49% of concept acceptors and appealing by 31%
- 40. The relative prominenceof the Precision and Colgate names on the package and in advertising also had to be decided Colgate Precision Precision by Colgate or
- 41. CP’s stated corporate strategywas to build on the Colgate brand equity Colgate Precision
- 42. Stressing Precision asopposed to Colgate would limit the extent of cannibalization of Colgate Plus. It was estimated that cannibalization figures for Colgate Plus would increase by 20% if the Colgate brand name was stressed but remain unchanged if the Precision brand name was stressed Precision by Colgate
- 43. Since, cannibalization is large,higher emphasis on Precision than Colgate is recommended Colgate Precision Precision by Colgate
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- 45. Additional consumer research, includingin-home usage tests, revealed that 55% of test consumers found Precision to be very different from their current brushes, and 77% claimed that Precision was much more effective than their current brush. The results of some tests on consumers indicated that a claim that the toothbrush would prevent gum disease motivated the greatest purchase intent among test consumers.
- 46. Once tried, consumer intentto purchase rose dramatically… Therefore sampling would be critical to Precision’s success.
- 47. Another important tactic wasto use dentists to sample consumers since professional endorsements are important in establishing the credibility of a new toothbrush.
- 48. 1.The brush lookedunusual and test participants sometimes had mixed first impressions. 2.The benefit of reduced gum disease from extra plaque removal was difficult to translate into a message with broad consumer appeal, since few consumers acknowledged that they might have gum disease.
- 49. This presentation hasbeen created by Akriti Sarswat, IIT Kanpur, during a marketing internship under the guidance of Prof. Sameer Mathur, IIM Lucknow.