colgate palmolive company: precision toothbrush
TRANSCRIPT
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Colgate-Palmolive Company:
The Precision Toothbrush
HARVARD BUSINESS SCHOOL CASE
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What is Colgate
Precision?
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•A new product, toothbrush launched by CP in August 1992
•Developed over a period of 3 years
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Who is Susan
Steinberg?
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• Precision Product Manager• The person who managed the entire product development process• Responsible for recommending the POSITIONING , BRANDING and COMMUNICATION strategies
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The U.S. Toothbrush Market
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Product Segments
•Value•Professional•Super-Premium
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Consumer Behaviour
• CP’s Consumer Research indicated that the Baby Boom Generation were now becoming more CONCERNED about the HEALTH OF THEIR GUMS AS OPPOSED TO CAVITY PREVENTION and,
• were WILLING TO PAY A PREMIUM FOR NEW PRODUCTS ADRESSING THIS ISSUE.
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Consumer Segmentation of Toothbrush Users
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Brand Decision Factors for Consumers
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Competition
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Principal Toothbrush Brand Product Lines :
August 1992
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Advertising and Promotion
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Media Expenditures
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TELEVISION & ADVERTISING COPY STRATEGIES & EXECUTIONS
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CP TELEVISION ADVERTISING
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ADVERTISING EXPENDITURE FOR CP TOOTHBRUSHES:
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Distribution• In 1992, 22% of all toothbrushes
were expected to be distributed to consumers by dentists.
• Manufacturer margins on toothbrush sales through dentists were less than half those achieved through normal retail distribution
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The Precision Marketing Mix
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Product Design and Testing
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In 1989, CP had established a task force comprising executives from:• R&D and Marketing•Dental professionals, and •Outside consultants
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s:
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•Understanding the varying techniques consumers used when brushing their teeth.
• Testing the between-teeth access of different toothbrush designs.
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• Establishing an index to score clinical plaque-removal efficacy at the gum line and between teeth.
• Creating a bristle configuration and handle design offering maximum plaque- removing efficacy.
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•Determining, through clinical and consumer research, the efficacy and acceptance of the new toothbrush design.
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Positioning • Precision was developed with the
objective of creating the best brush possible and as such, becoming a top-of-the range, super-premium product.
• It could be positioned as a niche product to be targeted at consumers concerned about gum disease.
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Volumes• With a niche positioning Precision retail
sales would represent 3% volume share of the toothbrush market in year 1 and 5% in year 2.
• With a mainstream positioning, these volume shares would be 10% in year 1 and 14.7% in year 2.
• Total category unit volumes were estimated at 268 million in 1993 and 300 million in 1994.
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Capacity and Investment Costs
Three types of equipment were required to manufacture the Precision brush:
1.Tufters2. handle molds3. packaging machinery
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Production Costs and Pricing
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Production costs included:
•warehousing costs • Transport costs
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Breakeven Analysis
• Total Manufacturing Costs + Total Advertising Costs = Input Cost( Variable + Fixed costs)
• Total Profit = Retail Price * number of brushes – Input Cost
• For Breakeven , Input Cost = Total revenue generated by selling the Precision brushes
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Two tests carried out:
• CONSUMER CONCEPT TESTS
• NAME TESTS
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Outcome Under the mainstream and niche
positioning scenarios –
• 1. Cannibalization figures for Colgate Plus would increase by 20% if the Colgate brand name was stressed.
• 2. Remain unchanged if the Precision brand name was stressed.
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Communication and Promotion
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Four Tests
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Including in-home usage tests revealed
• 55% of test consumers found Precision to be very different from their current toothbrushes.
• 77% claimed that Precision was much more effective than their current toothbrush.
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Conclusion Steinberg believed that Precision was
more than a niche product line extension and that the proven benefits to consumers represented a technological breakthrough. Precision was positioned , branded, and communicated to consumers after proper analysis. Market mix was developed that enabled Precision to reach its full potential.
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DisclaimerCreated by Nikhil Chaudhary, NIT Goa, during a marketing internship by Prof. Sameer
Mathur, IIM Lucknow.: