Harvard Business School Case Analysis. All the information from product launch to promotions and breakeven analysis is provided.

2. COLGATE- PALMOLIVE COMPANY:
THE PRECISION TOOTHBRUSH
In August, 1992-1993 Colgate
Palmolive’s Oral Care division launched
it’s product The Precision Toothbrush

3. What is the present
situation

4. COMPANY BACKGROUND
With in 1991 company-
sales reached $6.06 Billion
Gross Profit- $2.76 Billion
Research and Development- $114
Million
Advertising Expenditure- $428 Million

5. What are the
characters defined in
the case study

6. Susan stein berg- Precision Product
Manager
Nigel Burton- Division General Manager
Reuben Mark- CP’S (Colgate Palmolive),
C.E.O
John Philips- Colgate Plus Product
Manager

7. Five year plan for period (1991-1995)
Aim to launch New Product with
improved Efficacy.

8. 1.Colgate Baking Soda
2.Colgate Angle Toothbrush
3.Wild ones Toothbrushes

9. Hypothesis required for
case study

10. USA Toothbrush Market
• Toothbrush became consumers commodity as
years passed.
• In 3000BC people used twigs as their
toothbrush.
• 1938 - Dr. west’s Miracle Trust toothbrush
entered market.
• 1940 - Oral-B-Soft bristle brush entered market.
• 1961-Broxodent - Electric brush entered market.

12. • In 1989 Colgate entered toothbrush market.
• Consumer increased frequency of buying due to increase media support
by 49%.

13. Product Market Segment Strategies:
1.Professional segment within $1.59-2.09

14. 2. Super Premium segment
between $2.29-$2.89

15. 3. Value market segment
with in $1.29

17. Product Segments
1.Bristle type:
-Firm
-Medium
-Soft
-Flat
Soft Bristles brushes
grows at 7%/year

18. 2. Head Size-
-Full/adult
-Compact
-Child/youth

19. Consumer Behavior
 1940-1960 People changes their
concern to take care about their gum
opposed to cavity prevention.
 Due to prevalence of “two for one ”
offers purchase frequency lagged
replacement frequency.

20. YEAR
1990
1991
1992
REPLACEMENT FREQUENCY
12 months
11 months
9.7 months(expected replacement)
0
2
4
6
8
10
12
14
1990 1991 1992
Chart Title
Series 1 Column1 Column2

21. What’s the Purpose of
emerging designs of
toothbrushes

23. ORAL-HYGIENE
Removal of food particles
Plaque Removal
Gum Stimulation

24. COMPETITORS

25. Choosing of Brand- Choice of Brand
1. Features
2. Comfort
3. Professional

27. COMPETITION

28. Increase in sales and volume
% for Colgate plus under
professional segment market

29. ADVERTISING
 Increased advertisement and promotion
seemed to fuel consumer demand
 By analyzing growing competition
increases consumer promotions

31. Colgate Advertising Strategies

32. Colgate toothbrushes combined with
Colgate tooth paste in a single
display increased sales by 170%

33. Distribution of Products
In 1987 food stores filled with 75% Oral Care Product but by 1992 accounted for 43%
toothbrush sales and 47% toothpaste sales achieved.
Distribution Channels

34. Because of high margin of 25%-35% in toothbrush retailers added
toothbrush than toothpaste

35. KMART
INCREASED
SHELF SPACE
FOR
TOOTHBRUSHES

36.  ORAL-B has high market share from the following Exhibit.
 With dedicated sales force ORAL-B dominates Toothbrush market
segment.
Market share analysis

37. What's the future of Colgate
Palmolive in Toothbrush
segment

38. Sustainability
through-
PRECISION
MARKETING MIX

39. In 1989 CP had established a task force
comprising from R&D and Marketing
 It’s mission was to develop a superior, technical,
Plaque removing device, under guidance of
Susan stein berg.

40. PRODUCT DESIGN
Precision Toothbrush was a technical innovation
 It is a Unique Brush with bristles of three different
lengths and orientation.
 Longer Outer Bristles- Cleans around the gum line
Longer Inner Bristles - Cleans between teeth
Shorter Bristles - Cleans the teeth surface

41. Major Goals are
Understanding techniques of brushing
Testing the between teeth access of different tooth brush
designs
Establishing an index to score clinical Plaque removal
Making designs for maximum plaque removal
Determining the efficacy

42. Launch of Precision Toothbrush in
1993 as Super Premium Segment
product

43. TESTING ANALYSIS
• TESTED IN CLINICAL LABORATORY, BRUSH ACHIEVED 35% INCREASE IN
PLAQUE REMOVAL COMPARED WITH ORAL-B AND REACH.

44. HOW TO POSITION
PRECISION
TOOTHBRUSH

45. POSITIONING THE
PRECISION TOOTHBRUSH

46. CAPACITY AND INVESTMENT COST

47. PRICING STRATEGEY
According to Stein berg-
Under Niche position strategy price to trade would be
$2.13 at parity with Oral-B Indicator.
Under Mainstream position strategy price would be
$1.85 at parity with Oral-B Regular

48.  Main Stream pricing leads to cannibalization of Colgate
Plus product and inadequate supply of product due to
hot product situation.
 Niche pricing leads to decrease in sales.
PRICING ANALYSIS

50. Steinberg employed initial
Niche pricing strategy and later
broadened to mainstream with
additional capacity of
production

51. POSITION DECISION MAKING
Placed in shelves in between Colgate
Plus and Oral-B product lines, with
Colgate Classic product line on
other side of Colgate Plus

52. Positioned as Niche product
carried out primarily by food and
drug stores.
Positioned as Mainstream
product carried out by Mass
merchandisers and club stores.

54. Name Test conducted for
choosing brand names.
Alternative names like
Colgate Sensation, Colgate
Advantage, Colgate 1.2.3,
Colgate system III etc.
Colgate Precision name was
consistently viewed more
favorably.

55. BRANDING ANALYSIS
Conflicts between PRECISION and COLGATE names.

56. It was solved by stressing
PRECISION brand name so
that cannibalization will
reduce and protects from
increasing cannibalization
by 20% if COLGATE brand
name was stressed.

57. COMMUNICATION
 To communicate
efficiently task force
conducted four
Concept Tests.
 Conducting surveys
and awareness
programs.

58. COMMUNICATION ANALYSIS

59. ANALYSIS SHOWN
THAT PREVENTING
GUM DISEASE
INFLUENCES MORE
CONSUMERS.

60. How to Promote Precision
Toothbrush without
declining its others products
sales

61.  75% of Advertising and Promotion
Expenditure employed for
Precision Toothbrush.
 25% of Advertising and Promotion
Expenditure employed for Colgate
plus and continued support was
essential to defend its market
position against competition.
 Professional Dentist Endorsement for
sampling.

62. Will the
company Break
Even

63. Fixed costs
= $950,000 = 47MM units

65. Niche product Mainstream product
Total selling price=2.49*Units sold
in year 1
Total selling price=2.89*Units sold
in year 1
=2.89*4*13mm
=37.57 mm
=2.49*13mm
=104.58 mm
Selling price
Variable cost = Investment + Depreciation + Manufacturing + Advertising +
Consumer Promotions + Trade promotions (cost in MM)
=3.250+0.31667+0.66*13mm+5+4.6
+1.6
= 23.34666 mm
=9.1+0.886667+0.64*42+15+13+4.8
=69.666 mm

66. Niche product Mainstream product
Total Gross margin = Total selling price-Total Variable cost
Fixed Cost = No fixed cost is
mentioned in any
exhibits. As
assumption it is of
Zero value
No fixed cost is
mentioned in any
exhibits. As assumption
it is of Zero value
=37.57 – 23.34666 (mm)
=14.22334 (mm)
=104.58 – 69.666 (mm)
=34.914(mm)

67. Break Even Analysis
Niche product = +14.22334
Mainstream = +34.914
Total = +49.13734
= Positive Value
= Profit for the FIRST year
COLGATE PRECISION
BREAK EVENS