Assessing the US market conditions
From Table B in the case, CP and P&G are on a head to head competition for the 2004 value share of toothpaste market with 34.8% and 31.6% value share respectively. Exhibit 2A shows that in terms of US Market Toothpaste Benefit Importance, cosmetics benefits such as ‘breath freshening’ and ‘whitening’ are at 3rd and 5th places respectively while therapeutic benefits : ‘protection against cavities/contains fluoride’, ‘reduces plaque buildup’ and ‘controls tartar’ are at 1st, 2nd and 4th places respectively. This shows that in the US market there is more therapeutic benefits sought from toothpastes. Exhibit 2B on the other hand qualifies that consumer benefit data. It shows that between 2000 and 2004 data. There is a dwindling importance of the therapeutic benefit : ‘anti-cavity/tartar’ at -22.7% while there is a growth in cosmetic benefits : ‘whitening’ at +16.4% and ‘freshening/cleaning’ at +2.9%. For 2004, therapeutic benefits total at 53.4% while cosmetic benefits add up to 46.6%.
CMF’s success in the US market is attributed to the fit in the needs, wants and expectations of the consumers with the products main benefits : breath freshening and teeth whitening. Although Exhibit 2B seems to contradict Exhibit 2A but it actually clears up the current trend: that therapeutic benefits are becoming threshold features in terms of the customers’ benefits while it shows that for the US market the competitive advantage arena is in the cosmetic features of teeth whitening and breathe freshening.
On entering the Chinese Market
The compounded annual growth rates (see Exhibit 1) based on Table C in the case shows that Colgate Equity products are growing at 5.3%, while CP products including Darlie and San Xiao brand are growing at 6.2%. Crest on the other hand has grown at 15.8% over a four year period. In 2004, Crest is behind Colgate Equity products at a slim margin of 2.4% value shares in China. It seems that CP has been complacent in growing their brand in the Chinese market. Looking at the Pro-Forma Profit and Loss statement at Exhibit 13, there is a mismatch in the projection spread which is limited to two years while it says in the case that in 2004, 40% of total company sales were from products launched within the past 5 years. In which case the full effects of the CMF campaign will probably not reflect in 2 years time. There should be a parallel projection spread given that one of CP China’s main challenge is to restore the Colgate Equity franchise which cannot happen overnight or in two years. Perhaps that is why the 2-year pro-forma statements resulted in negative operating profits.
There are some inconsistencies in the tally of Exhibit 7A but it is interesting to note the 10% increase in the therapeutic segment for ‘herbal/natural’. I think this might be the possible reason why Crest has grown strong in the Chinese market especially with their Crest Tea Fresh product. Given the limited data in the case I would assume and generalize that if Americans are burger-loving people, the Chinese on the other hand love tea. It would be better if CP concentrate on Tea-variant flavors instead of marketing the 3 flavors : tea, citrus and mint. Exhibit 7B on the other...