Colgate

1. ColgateColgate PalmolivePalmolive ––
The PrecisionThe Precision
ToothbrushToothbrush
A Harvard BusinessA Harvard Business
School case studySchool case study

2. What it
does?
Colgate-Palmolive is an
American worldwide consumer
products company focused on
the provision of household,
health care and personal
products, such
as soaps, detergents, and oral
hygiene products.

3. • Founded by William
Colgate in 1806.
• A global leader in the
household and
personal care
products.
• The company's
corporate offices are
on Park
Avenue in Midtown
Manhattan, New York
City.
Company
Background

4. About the Company
Global leader in household and personal
care products
1991

5. What is The Precision
Toothbrush??

6. Colgate Precision
Toothbrush
• Household, healthcare and personal product
specialist company
• Launched in August 1992 in United States
• Developed by Susan Steinberg, the precision product
manager
• Product was developed with intense research in 3
years
• Technologically Superior toothbrush over 3 years

8. The U.S. Toothbrush
Market

9. •Product Segments
Toothbrushes varied by bristle type
and by head size.

10. PRODUCT
SEGMENT PRICE 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%
Sales shares

11. PRODUCT NATURE
GROWTH
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
2/3Sales shares

12. UNIT VOLUME SALES
Full-sized heads 69%
PRODUCT SIZE
Compact heads 17%
Child/youth sized heads 13%
3/3Sales shares

13. Dominators of U.S.
Toothbrush Market
• Colgate – Palmolive
• Johnson & Johnson ]-]-Professional
Segment
• Oral - B ] -] -Super-Premium
Segment

14. Analyzing
consumer behavior
• CP’s consumer research indicated that
consumers were becoming more concerned
about the health of their gums and were willing to
pay a premium for new products addressing this
issue.
• Most consumers agreed that toothbrushes were
as important as toothpaste to effective oral
hygiene.
• They believed that the primary role of a
toothbrush was to remove food particles and gum
stimulation were considered secondary.

15. Consumer
Segmentation of
Toothbrush Users

16. Brand Decision
Factors for Consumers

17. SWOT Analysis for
Colgate

18. Strengths
• Strong financial
performance
• Focus on innovation
and new product
launches
• Colgate business
planning initiative

19. • Product research
• Highly leveraged
Weaknesses

20. Opportunities
• Emerging markets growth
• Deploying advance technologies
• Growing Hispanic population in the US

21. Threats
• Competitive landscape from other
Private label growth
• Increasing commodity prices
• Falling consumer confidence

22. The Precision
Marketing Mix

23. Product Design and
Testing
•An amazing technical innovation.
•In laboratory experiments, researchers used infrared motion
analysis to track consumers’ brushing movements
•Analyzed consequent levels of plaque removal.
These parameters developed a unique brush with bristles cleaned
the teeth surface. This resulted in a triple action brushing effect

24. Team Steinberg had 5
major goals set !

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

26. 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

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

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

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

30. NICHE
POSITIONING
or
MAINSTREAM
POSITIONING

31. Investment Cost Annual Capacity 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

32. NICHE
POSITIONING
STRATEGY
MAINSTREAM
POSITIONING
STRATEGY
# units retail Year 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

33. RETAIL PRICE
TRADE PRICE
MANUFACTURE
PRICE
NICHE
POSITIONING
MAINSTREAM
POSITIONING
$ 2.89 $ 2.49
$ 2.13 $ 1.85
$ 2.02 $ 1.76

34. Niche : estimated net
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

35. Communication and Promotion
The
toothbrush
would
prevent gum
disease
motivated
the greatest
purchase
intent
among test
consumers.

36. Including in-home usage tests
revealed
• 55% of test consumers found
Precision to be very different from
their current toothbrushes.
• 77% claimed that Precision was
much more effective than their
current toothbrush.

37. Conclusion
Steinberg believed that Precision
was more than a niche product line
extension and that the proven
benefits to consumers represented a
technological breakthrough.
Precision was positioned , branded,
and communicated to consumers
after proper analysis. Market mix was
developed that enabled Precision to
reach its full potential.

38. Disclaimer
Tarun Bajaj
IIT Bombay
Professor Sameer Mathur
IIM Lucknow
Presentation by TARUN BAJAJ, IIT BOMBAY
during a Marketing Internship under Prof.
Sameer Mathur, Professor, IIM Lucknow