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
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.
11.
12. • In 1989 Colgate entered toothbrush market.
• Consumer increased frequency of buying due to increase media support
by 49%.
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.
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
36. ORAL-B has high market share from the following Exhibit.
With dedicated sales force ORAL-B dominates Toothbrush market
segment.
Market share analysis
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
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
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.
53.
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.
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.
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.
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