Fall 2011 - October 6th 2011
MGTC05 Case Analysis
Colgate-Palmolive Company: The Precision Toothbrush
Colgate-Precision (CP) held the number one position in the US retail toothbrush with 23.3% volume share in 1991; they are a global leader in household and personal care products. They currently have 2 toothbrush products in the market, but have been working on a three-year project in developing a technologically superior toothbrush into the market. This product, tentatively named Colgate Precision will be ready to be released into the market in late 1992. However, the toothbrush market has been evolving quickly and Precision product manager Susan Steinberg needed to establish the appropriate positioning, branding and communication strategy in light of all internal and external factors that will potentially affect the business. One of the big questions Susan had to answer was: Should Precision be positioned as a niche product or mainstream product? (See Exhibit 1 for a comparison between launching the product in the niche /mainstream market) Alternative A – Precision in Niche Market
With the recent introduction of the new “super-premium” sub-category, CP has the option of revealing Precision as a niche product. Serving to the ‘therapeutic brushers’ who are in search of functionally effective products and are generally the most concerned group of consumers in regards to their oral health. This alternative poses a few strengths if chosen. First of all, there are fewer competitors in the “super-premium” market. Second, since existing CP toothbrushes participate in the “professional” and “value” market, introducing the Precision into the “super-premium” market will cause less erosion of Colgate Plus. Third, CP can take this chance to submerge itself into the “super-premium” market since none of its existing products are in this segment. Lastly, no existing SKUs will need to be dropped if CP chooses this alternative. Despite all this, there are weaknesses to this alternative as well. Lower sales and market share is expected if Precision is positioned as a niche product. Furthermore, the “super-premium” market is an unfamiliar segment for CP to enter; hence the company has less experience handling unanticipated matters if faced with any. Alternative B - Precision as mainstream product
An alternative direction CP can pursue with Precision is to market it as a mainstream product. This positioning will have a broader appeal of being the most effective brush available on the market. In spite of this, as a mainstream product, Precision will have a lower list price that may cannibalize Colgate Plus sales. Existing SKUs will have to be dropped from the Colgate Plus line as additional production demands are needed for the Precision. What’s more, production schedule pressure will arise as production was previously intended for supplying Precision as a niche product. Consequently, there will be inadequate supply of products to meet purchase demands. On the other hand, some executives feel that the lack of supply may drive the perception of a “hot” product in the market and can drive consumers to want to chase for the product. Alternative C - First Niche, Second Mainstream
In this alternative, CP can first launch Precision into the niche market for the first year or so. As demand and sales start dropping off later on the product life cycle, Precision can move into the mainstream market. One critical advantage of this option is that all production pressures will be lifted and there will be sufficient time to arrange and prepare for mainstream productions. In addition, initially positioning Precision as a niche product can allow CP to conquer all the therapeutic brushers first. As competitors start introducing more advanced products into the market, Precision can move into the mainstream market, targeting cosmetics brushers. Nevertheless, niche market positioning will only capture a small percentage of the...
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