Colgate Precision

Topics: Oral hygiene, Economics terminology, Baby boomer Pages: 9 (3411 words) Published: March 7, 2008
FACTORSBranding: Should the name of the product on the package and in advertising be "Colgate Precision" or as "Precision by Colgate"Communication and promotion: This is an effective way to pull a market share because it is hard to increase primary demand unless stealing sales from existing productsMajor competitors in the super-premium segment: Oral-B, Reach Advance Design, Crest Complete, and Aquafresh FlexDifferential pricing structure: Niche market vs. Mainstream marketDifferent advantages/ disadvantages: Niche market vs. Mainstream marketDramatically change in technology advances: new toothbrushes come out very quickly and frequentlyCannibalization: New Precision toothbrush might taken away positioning of Colgate Plus and Colgate ClassicConsumer purchasing power: Personal preferences, behavior, product evaluation, and reasons in buying toothbrushesFactors impact consumers' decision: Great influence from dental professional for people who concern about gum diseaseDesigning a pro-forma income statement to compare the profit implications of the niche vs. mainstream positioning strategiesCENTRAL ISSUEHow can Colgate-Palmolive manage its new Precision toothbrush's position, brand, and communication strategies and achieve the market leader position in the toothbrush market. BACKGROUND________________________________________COMPANY BACKGROUNDAs a global leader with 1991 sales of $6.06 billion and a gross profit of $2.76 billion, Colgate had spent about five hundred millions in its R&D and advertising. CP's five-year plan had three strategies which are:1.Launch new product (275 worldwide new products) and entry into new geographic markets (acquisition of Mennen men's toiletries company, manufacturing in China and Eastern Europe);2.Improve efficiencies in manufacturing and distribution (upgrade 25 CP's manufacturing plant;3.Focus on core consumer products continuously. Colgate-Palmolive's Oral Care Business and The U.S. Toothbrush Market:In 1991, CP held 43% of the world toothpaste market and 16% of the world toothbrush market. In 1991, the toothpaste accounted for 46% of the U.S. Oral Care market, mouth rinses 24%, toothbrushes 15.5%, with dental floss and other products making up the remainder. Until the late 1970s, consumers view the toothbrushes as a sensitive priced commodity. More launched new products and performance benefits determine the purchase decision. In 1992, the sales of toothbrushes had grown so fast. PRODUCT SEGMENTSTwo segments are created in the toothbrush category in the 1980s: value and professional (higher-priced toothbrushes). The late 1980s, the super-premium brushes were emerged. By 1992, super-premium brushes, with retail prices between $2.29 and $2.89, accounted for 35% of unit volume and 46% of dollar sales. In the other hand, Professional brushes accounted for 41% and 42% and value brushes accounted for 24% and 12%. Toothbrushes differed by bristle type (firm, medium, soft, and extra soft) and by head size (full/adult – 69%, compact – 17%, and child/youth – 13%). Firm-bristle brushes were 8% of the toothbrushes sold but the decline in growth were 13%. The medium one was 39% with 4% in the decline of growth. The soft one held a 48% market share (the highest) with 7% of growth's increase. The extra soft held a 5% share with rapidly growth. By 1991, new product introductions were focused on technical performance improvements, such as greater plaque removal and ease of use. CP's consumer research indicated that consumers of the baby boom generation (adults born in the 1940s, 1950s and early 1960s) were becoming more concerned about the health of their gums as opposed to cavity prevention and were willing to pay a premium for new products addressing this issue. COMPETITIONMajor competitors in the super-premium segment were: Gillette, J&J, P&G, Smithkline Beecham. The market leader in the super premium segment was Oral-B (owned by Gillette) positioning which was known as "the dentist's toothbrush." Its...
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