Defining the Problem
The focal issue of this case is to determine the best marketing strategy for the launch of the new Colgate Precision. The issue can be divided into the following four major areas: 1.
Positioning: Which market should be targeted?
Branding: Should Colgate make the most of the company’s brand? 3.
Communication & Promotion: How does Colgate distribute its advisement expenditures among products? How much should Colgate invest in advertising Colgate Precision? 4.
Channel: Which distribution channel should Colgate use?
Our team must analyze the two differing launch strategies – niche and mainstream – and select the path that is the best fit given consumer need and competition in the marketplace. We will be using thorough analysis to calculate the revenues and costs of each strategy, as well as analyzing the various marketing components of the launch, in order to make an informed decision for Colgate-Palmolive. 3C Analysis
While Colgate has not previously competed in the super-premium segment, it offers a high-quality product – Colgate Plus – that can compete with super-premium brushes such as Oral-B’s products. As a result of its popularity, Colgate Plus’ dollar market share has grown from 12.6% in1989 to 18.5% in 1992. One of Colgate’s competitive advantages is its toothpaste brand, which held 43% of the world market share in 1991. Although Colgate’s products are described as “oddly-shaped”, by combining its toothbrush with Colgate-branded toothpaste in a single display, toothbrush sales grew by 170%. Additionally, Colgate’s facility is aligned with mass production, it adopts streamlined manufacturing, and it also has a strong distribution channel in “Food and Mass” trade classes. Customers can be classified into three segments: Therapeutic, Cosmetic, and Uninvolved. As competitors have been launching a variety of new products, customers have increasingly emphasized a preference for toothbrushes with performance benefits. Specifically, the Therapeutic segment – which makes up 46% of adults and is Colgate Plus’ main user – prefers to focus on their gum health rather than on cavity-prevention. In addition, Precision specializes in being able to clean around the gum line via its outer bristle. Another important point is that one-fourth of customers use brushes given to them by their dentists, so professional dentists are a primary channel to access customers. Competition is particularly severe in the super-premium segment, with Oral-B being the market leader. While Oral-B touts itself as the brand of toothbrush “more dentists use”, the company also produces several oral care products like mouthwash and dental floss, possibly weakening its power in the toothbrush market. Other major competitors are J&J, P&G, and Smithkline, all of which plan to launch new super-premium toothbrushes or consumer promotion programs. Although the competition is increasing as new product lines are introduced into the market, each product is somewhat differentiated (e.g. Aquafresh has a flexible neck while Reach provides angled neck and rippled bristles). Therefore, Colgate can distinguish itself from competitors’ products based on its “efficacy and plaque focus”. From the promotion perspective, it can be assumed that J&J, P&G, and Smithkline will react aggressively when Colgate launches Colgate Precision by utilizing their vast advertising budgets. Segmentation, Targeting, and Positioning
As mentioned above, consumer segmentation in the toothbrush industry is broadly comprised of three categories: Therapeutic, Cosmetic, and Uninvolved. With the development of the Precision, Colgate has attempted to identify a new sub-segment – consumers concerned about gum care. Based on the results of concept tests detailed in Exhibit 17, 80% of test subjects responded favorably to the claim that Precision removed 35% more plaque than competitors and helped prevent gum disease. Similarly, 87% of test subjects acknowledged they would buy a...
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