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Similar to Colgate palmolive - the precision toothbrush hbr case
Colgate palmolive - the precision toothbrush hbr case
- 2. Founded by WilliamColgate in 1806 Global leader in household and personal care products with 1991 sales of $6.6 billion and gross profit of $2.76 billion Rueben mark, CP’s CEO since 1984 had widely been praised for his leadership transforming a “sleepy and inefficient” company into a lean and profitable one CP’s five year plan for 1991 to 1995 emphasized on new product launches and entry into new geographic markets.
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- 6. • In 1992there were 3 big players who dominated the toothbrush market , namely CP, Johnson • & Johnson whose brushed were at value or professional segment and Oral-B whose brushed were from super premium segment.
- 7. • Healthy Gums– Primary Issue • Cavity Prevention- Secondary Issue • Consumer ready to pay for premium products • Most consumers agree that toothbrushes were as important as toothpastes • They believed that primary role of toothbrush is to remove food particles and gum stimulation were considered Secondary.
- 8. 46% Therapeutic brushers 21%Cosmetic brushers 33% uninvolved brushers
- 9. Fits most comfortablyin mouth – 63% Best for getting at had to reach places – 52% Bristles are of right softness – 46% Bristles are of right firmness - 36% Dentist Recommendation – 35% Important part of oral regime - 30%
- 10. Oral-B has beenmarket leader since 1960s Held 23.1% volume market share and 30.7% value share in US Launched Indicator Brush in 1991, priced at 15% premium to its other brushes.
- 11. • Johnson &Johnson ranked 3rd in US retail toothbrush market with 19.4% volume share and 21.8% value share • The reach line was positioned as the toothbrush which enabled customers to brush to event he hardest parts, thereby increasing efficiency of brushing • J&J’s expected 1992 operation margin on toothbrushes, after ads and promotion costs was 8.4% of factory sales.
- 12. • P&G wasexpected to launch Crest complete nationally by September 1992 • Claimed to have ability to reach teeth up to 47% farther than leading flat brushes • Expected to capture 2.0% volume share and a 2.6% value share by end of 1992.
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- 17. Political: Relatively Insignificant Economic:New entrants appeared in early 1990s P&G and Smithkline Beecham Positioned in Super premium category Social : Aesthetic appeal in late 1980’s An additional Social development concern for gum hralth – baby boom population Cavity prevention was a serious concern
- 18. Technological : • Newproducts were introduced in 1980s and early 1990s • Design of the handles and head of the toothbrush • Action of Bristles • Super Premium toothbrush – greater plaque removal and gum care
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- 20. NO.1 company inUS RETAIL markets Extensive International Reach Exclusive R&D team working on new technologies Innovate product Designs Diversified Products
- 21. Lack professional Dental endorsements Smallermedia expenditure layout compared to rivals Educational marketing is required for their products to sell.
- 22. 55% of testershave given positive feedback for COLGATE- precision 77% claimed that this product was more effective than any other brush Informed customers are willing to pay more Convert unplanned toothbrush purchases into sales through well directed ads. Baby boomers are willing to spend as they are highly concerned with gum issues. Emerging as the best product in super-premium category
- 23. Product Cannibalization Intense Segmentrivalry Threat of substitute Products ( Electronic Brushes ) Most of the purchases are unplanned, hence converting such customers in extremely difficult and unreliable.
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- 26. Positioning ( 1/4) Allowsfor a concentrated marketing campaign who care about gum care Niche marketing accounts for 46% of dollar sales and premium consumers are willing ot pay higher prices Precision wont have a chance to cannibalize Colgate plus or Colgate classic Precision has a ready to go production schedule
- 27. Positioning ( 2/4) Lesserrevenue than mainstream positioning Product reach is limited to specific section
- 28. Positioning ( 2/4) Simpleand direct campaigning Greater and quicker return on investment Large market share
- 29. Positioning ( 2/4) Almost1/3 population have little interests in oral hygiene , Precision wont appeal to them. Cannibalization of Colgate plus and Colgate classic Mainstream market is steadily declining
- 30. Precision Should beplaced in niche market Distinctive product like this will grow faster Later it can be moved to mainstream to get better revenues
- 32. Colgate precision appearedto be more popular from a survey but also increased the risk of cannibalization of Colgate plus by 20% Precision by Colgate had no cannibalization risk but it was unable to harness Colgate brand Equity
- 33. Special coupons :A 50% off offer on any size of Colgate toothpaste ( up to a volume of $1.00 in conjunction with a coupon on Precision Brush in strong Colgate markets. Buy 1 Get 1 : A free 5oz. Of Colgate toothpaste with the purchase of Colgate precision in strong competitive markets Concept Testing : Once product has been designed 4 concept test were run b/w 1990-1991 amongst ages of 18-54. They were exposed to the various ads and claims and later asked the likelihood of purchase of this product.
- 34. • Niche Positingof the product is more profitable in such kind of products • Try to appeal to therapeutic consumers • Market the product as providing superior and distinctive oral care • New product development specifically on gum care • Price precision at competitive levels with super premium products so as to offer more value to the consumers • Leverage existing distribution channels • Invest industry standards amounts of capital into the promotion of new toothbrush.
- 35. Created by Bharat Maniam,VIT Vellore, during a marketing Internship under Prof. Sameer Mathur, IIM- Lucknow