COLGATE - PALMOLIVE COMPANY: THE PRECISION TOOTHBRUSH
In 1992, Colgate-Palmolive (CP) was the global leader in household and personal care products like toothbrushes and toothpastes. In 1991, its sales topped at $6 billion and profits at $2.76 billion and it cornered 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. It was also the leader in retail toothbrush sales in the United States.
Prior to the 1990s, consumers were satisfied with toothbrushes that were aesthetically pleasing. But the 1990s saw that baby boomers were becoming increasingly concerned with their oral health, specifically their gums. This led to a rise in the sales of therapeutic toothbrushes. The toothbrush industry experienced a massive influx of worthy competitors and this led to the formation of a niche, super-premium market. In order to gain an edge each competitor worked on developing new toothbrush technology, forming alliances with dental professionals, expanding advertising budgets and offering promotions that would grab consumer attention.
In August 1992, Colgate – Palmolive was poised to launch a new toothbrush in the United States, tentatively named Colgate Precision in the super-premium market. Precision, was proven to be very effective in removing plaque – 35% more effective than existing brands – and in preventing gum disease. This advantage has been attributed to the innovative design, high-tech research using CAD and infrared scanning, consumer research and extensive product testing. CP’s Oral Care had been developing this technologically superior toothbrush for over three years. But the market was highly competitive with new products already in the fray. CP had to market Colgate Precision as per existing market strategies that include proposed strategies involving product, price, place, and promotion. The issues and Challenges, Analysis and Recommendations of the case are enumerated in the succeeding paragraphs.
II-SSUES AND CHALLENGES
In 1991, CPs sales topped at $6 billion and profits at $2.76 billion and it cornered 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. In the United States, the world’s largest market, Colgate-Palmolive held the number one spot in toothbrush sales with a market share of 23%. Its international sales accounted for 64% of total sales and profits account for 67% of the total profits from international operations. The impending release of Colgate-Palmolive’s new toothbrush, Precision, may affect sales of its existing toothbrush lines. This may lead to a “cannibalization” of the Colgate Plus and Colgate Classic’s market of up by 35% to 60%. of the expected Colgate Precision sales. Since the existing toothbrush lines are the “cash cows” of the company’s oral care division, a dismal performance by the new Colgate-Palmolive Precision might drain the “cash cows” of its their resources market share altogether.
Colgate-Palmolive’s media expenditure layout is very small compared to its rivals. It spent only $7 million dollars on marketing Colgate-Palmolive Plus. Since media exposure fuels consumer demand for a new product, this is one area where Colgate-Palmolive needs to have its expenditures equivalent to that of its rivals. Colgate-Palmolive’s media expenditure layout is very small compared to its rivals.
CP could be positioned as a niche product to be targeted at consumers concerned about gum disease as such; it could command the 15% premium over Oral-B and would be expected to capture 3% of the US tooth brush market by the end of first year following its launch. Alternatively Precision could be positioned as a mainstream brush with the broader appeal of being the most effective brush available on the market. It was estimated that as a mainstream product, Precision could capture 10% of the market by the end of the first year. CP already had another toothbrush in the mainstream...
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