economic analysis on colgate

Topics: Economics, Costs, Variable cost Pages: 7 (2506 words) Published: December 25, 2013
The objective of this report is to analyse the main economic factors on Colgate-Palmolive Company. Upon analysing the business’ operating market, demand and supply, the report focus on the company’s main sector, which is a wide range of toothpaste products. By gathering information in a logic structure, the report states the previous and current impact of external factors and the way in which internal factors take place in the company. Using several figures from reliable sources, the report aims to give an apparent economic picture and draw a future scenario of Colgate.

History and Overview
Colgate-Palmolive Company is one of the world’s largest multi-national companies specialised in consumer products. The business obtains its market on over 200 countries and territories all over the world. The business was founded in 1806 by William Colgate under the name William Colgate & Company, producing starch, soap and candle. After substantial changes in its management, the companywas acquired by Palmolive-Peet in 1928. It was finally renamed to Colgate-Palmolive Company in 1953 and maintainedbusiness operation under this title up to now.(, 2013) Colgate-Palmolive has operation in two product segments: Oral, Personal and Home Care, and Pet Nutrition. For Oral, Personal and Home Care segment, the business gains about 86% of net sales for these products. Main products which generate most of its sales revenue are the range of oral care products, namely Colgate Total, Colgate Max Fresh, Colgate Optic White toothpastes, Colgate 360o toothbrushes and Colgate Plax mouth rinses. These can be considered the strongest products that contribute to the business income. Other products in this segment include Palmolive shower gels and some brands of dishwashing detergents and household cleaners.(, 2013)(, 2013) The Pet Nutrition segment, which presents on market as brand name Hill, accounts for 14% of the company’s net sales. (, 2013) Target Market

Colgate’s toothpaste products aim to serve customers at any age from children to teenagers and adults across the country. Along with Colgate Kids for children, the company manufactures a wide range of toothpastes for elder age groups. Regarding products for teenagers and above, together with the range of toothpaste which provides general oral care, Colgate Total, the company has launched a wide range of toothpastes with different features that meet the demands of different customers. For instance, people who want to have an attractive smile with brighter teeth can consider among whitening toothpastes such as Colgate Sparkling White and Colgate Optic White; people who need special care for oral problems may consider Colgate Triple Action, Colgate Cavity Protection, or Colgate Tartar Protection. Colgate also developed the Colgate Sensitive varieties for people whose teeth are so sensitive that normal toothpastes would cause pain for them. (Colgate Website, 2013)  

Market Structure
The toothpaste market is where a number of manufacturers selling a similar product. There are plenty of toothpaste brands on the market and new companies are free to join the market. These characteristics make it first look like a perfect competitive market. However, each brand is divided into many product lines in order to obtain its own market. Toothpaste manufacturers struggle to differentiate their products from competitors’ products. In order to draw the attention of customers, newly developed toothpaste must have somewhat different and impressive features that make them want to try and experience the difference. For example, while Colgate Cavity Protection is basically developed with active fluoride to help fight cavities, Aim Cavity Protection from Church & Dwight is added with mint taste. Customers are always surrounded by lots of choices as a result of product differentiation. Therefore, the...
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