colgate

Colgate Palmolive Company: The Precision Toothbrush

How should Colgate-Palmolive ‘position’ the new precision

toothbrush brand in its target market?

1/5

How should Colgate-Palmolive ‘place’ the precision toothbrushes

in the retail outlets for maximum sales?

2/5

What should be Colgate-Palmolive’s optimum pricing

strategy for the precision toothbrush brand?

3/5

How should Colgate-Palmolive ‘brand’ the precision

toothbrushes?

4/5

What should be the marketing and promotion strategy for maximising the product’s

market reach?

5/5

Background

Colgate Palmolive Company: A Background

Global leader in household and personal care products.

$6.06 Billion sales and $2.76 Billion gross profit (1991)

Strong international sales: Accounting for CP’s 64% sales and 67%profits.

Held 43% of world toothpaste market and 16% of world toothbrush market.

Colgate-Palmolive Income Statement

The U.S. Toothbrush Market

U.S. Oral Care market was at $2.9 Billion in retail sales (1991) and had grown by 6.1%annually.

Toothbrush accounts for 15.5% or $453 million in retail sales(1991)

47 new products or line extensions during 1991-92

Product Introductions

Product Segments

Based on Cost

Value Professional Toothbrush

Value:Priced on an average $1.29,

Accounted for 24% unit volume and 12% dollar sales.

Professional:Priced between $1.59 and $2.09

Accounted for 41% unit volume and 42% dollar sales.

Super-Premium:Emerged out of the professional segment

Priced between $2.29 and $2.89Accounted for 35% unit volume and

46% dollar sales.

Products in the super premium segment

• Bristle Type: Firm, Medium, Soft, Extra Soft

• Head Size: Full/Adult, Compact, Child/Youth

Other Segments

Consumer Behaviour

• Before Breakfast: 45%• After Breakfast: 57%• After Lunch: 28%• After Dinner: 24%• Before Bed: 71%

Brushing Behaviour

• Toothbrush visibly worn: 70%• After seeing the dentist: 11%• On Impulse: 3%

Trigger to purchase

Basis of brand choice

Involvement in oral hygiene

Positioning and Pricing

There are two possible options:1. Positioning as a niche product,

targeted at consumers concerned about gum disease

Positioning and Pricing

2. Positioning as mainstream brush, with the broader appeal of being the most effective one in the market

Positioning scenario for both the cases

The products are however composed as:

Wouldn’t be a source of revenue !

Pricing Of Professional Sale Units

Units which are targeted for sale through professionals have been priced at $0.79/unit and sold at $0.95/unit.

Anticipated Profit for year 1

Niche:Profit per unit (retail): $1.36 x Units: 8 MM = $10.88 M

Profit per unit (professional): $0.16 x Units: 3 MM = $0.48 M

Total = $11.36 M

Normalised = $11.36 M/ 11 M = $1.03 Mainstream:Profit per unit (retail): $1.12 x Units: 26.8 MM = $30.02 M

Profit per unit (professional): $0.16 x Units: 8 MM = $1.28 M

Total = $31.3 M

Normalised = $31.3 M/ 34.8 M = $0.89

Niche performs better on an average, disregarding the fixed expenses

Further supporting the argument

The percentage of consumers involved in oral health is 46%(Therapeutic Brushers) + 21%(Cosmetic Brushers)= 67%

These essentially form the target market

Further supporting the argument

This shows that the customers are willing to pay more for the sake of their oral health

Further supporting the argument

This shows that the customers are willing to pay more for the sake of their oral health

Positioning

• The product should be positioned in the ‘niche market’

• This market will attract less competitors being a highly sophisticated segment

• There would be no risk of cannibalisation of the Colgate plus brand

• There would be lesser pressure on the production schedule owing to limited demand in the segment

Pricing

• The product’s recommended retail price of $2.89 is relevant given that it would be positioned in the super premium category, else it would lose the brand value associated with the segment.

• The budget and units allocation for promotion samples should be reduced and should be compensated by the sales through professionals, this would give a higher profit margin

Placing

• Colgate precision should be placed on a separate shelf, away from the existing product lines of Colgate-Palmolive , but close to other super premium toothbrushes

• This would not divert the attention of middle and lower economic class customers from the classic product line, and on the other hand, would increase the brand value being places with other super premium brands

Branding

• The product should bebranded as ‘Precision’ by Colgate, rather than ‘Colgate Precision’

• Stressing ‘Precision’ reduces cannibalisation risks.

• Building a separate brand would also reduce the bias of premium customers towards the value brand image of Colgate

Promotions

• There could be a comprehensive dental care policy collaborated with the ‘precision’ brand, to convey the oral health benefits to the customers

• There can be celebrity endorsements related to the cosmetic advantages of the product, to build the brand image