to be or not to be - oral b
TRANSCRIPT
This case was prepared by Gurudas Nulkar as a basis of class discussion. This is not meant to depict a right or
wrong decision. The author may have disguised some names to protect confidentiality. Copyright © 2013 : Gurudas Nulkar
Oral B : To be or not to be
It’s not often that you see Bollywood actors on
stage with toothpastes in their hand. As Madhuri
Dixit walked in, Kainaz Gazder, Marketing Head
P&G India, hoped that with her million dollar smile
would work up their charm on Indian consumers.
This was the launch of the Oral-B Pro-Health
toothpaste – a first in this category for P&G India.
Even for an established giant like P&G, Kainaz knew
it was no small task to grab a market share from
Colgate Palmolive and Hindustan Unilever.
Between these two, they shared a whopping 76%
market of the estimated INR 6000 crores.
P&G India
Established in 1964 P&G India today serves over
650 million consumers. It is one of the largest
consumer goods companies in India. Its trusted brands are household names across India. These
include Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene, Oral-B, Head &
Shoulders, Wella and Duracell. P&G owns five plants and has more than nine contract manufacturing
sites which create over 26,000 jobs directly or indirectly. Consumer driven product development, a
robust supply chain and large promotion budgets ensure P&G is one of the enjoys large market
shares across Beauty & Grooming, the Household Care segment and the Health & Well Being
segments. Worldwide, P&G has two brands in the toothpaste market – Crest and Oral-B, but none in
India. With the launch of Oral-B, P&G hope to get a piece of this pie too.
The toothpaste market in India
In terms of in dental hygiene, India is still a nascent country, with majority of the population still
relying on traditional cleaning materials like coal ash, tobacco paste and Babool or neem sticks.
These still rule the rural areas. The oral care industry in India is worth nearly INR 6000 crores
annually (Table 1). Per capita consumption of toothpaste in India
stands at 127gms/year; one of the lowest in the world (Figure 1).
55% of Indians use toothpaste and only 15% brush twice a day.
The toothpaste demand is growing at a slow pace or about 8-10 %
annually.
The toothpaste category is dominated by two players - Colgate
Palmolive & Hindustan Unilever which account for nearly 76 % of
the market. For years, Colgate has dominated the toothpaste market in India. The Company is India's
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biggest oral care products company with more than 95 % of its sales coming from this product
category. The rest of the market is shared by few brands from local and multinational companies
(Table 2)
The way ahead for Oral-B
When Madhuri Dixit launched the Oral B Pro-Health, perhaps no one else was watching it more
closely than Prabha Parameswaran, MD of Colgate. P&G’s entry would lead to increased ad spend by
other players as they try to protect their market shares. Abneesh
Roy of Edelweiss Securities opines that Colgate, which has a strong
presence across all segments and price points, will be in a better
position to counter the new entrant. Colgate is already sharpening
its axe. Controlling more than half the market, Parameswaran will
fiercely guard every inch. A heap of Colgate toothpaste packs greets
customers at a leading supermarket across India. Most of them
have either BOGO (buy one get one) printed on it or sport reduced
price tags. Colgate wants to bully P&G out of any shelf space across
4.5 million retail outlets. They are throwing toothbrushes, pastes,
and brand events and promotions with trade partners, and
discounts, all to deny or delay giving P&G a toehold. With such
promotional activities, several large retailers haven't even stocked
P&G's new toothpaste since margins offered were lower than
Colgate and GSK. Colgate has hiked its advertising and promotion
spends by 31% during the first half of this calendar year. And yet,
P&G is not a novice to such intense rivalry. In the US, they have had numerous skirmishes with arch
rival Unilever in various product categories. However, in India, P&G takes on Colgate for the first
time.
Dabur too is an aggressive player. In 2011, they have expanded their oral care portfolio by launching
Dabur Super Babool+Salt Power Toothpaste. Strongly positioned on
traditional Indian dental care, this product ropes in Bollywwod actor
Irrfan Khan as the face of the brand. The Babool name and Irrfan’s
persona both have a rural appeal. Moreover, Dabur’s wide range
and popular brands like Chyawanprash, Vatika and Dabur Red make
it a formidable force in the market.
P&G feels that their launch of Oral B toothpaste and initial plans are
on track. In India, Oral-B has an wide range of toothbrushes
including CrossAction Pro-health 7 Benefits, CrossAction Pro-health
Superior Clean and Advantage Sensitive toothbrush. Oral-B’S floss
range includes Ultra Floss & Essential Floss. Oral-B has, close to a
30% market share in the toothbrush category in India and a strong
brand recall. P&G hopes to cash in on this brand recognition for
their new launch. The Oral-B Pro-Health has been specially
formulated for India and contains a patented ingredient, stabilised stannous-fluoride complex which
helps give significant and advanced at-home oral care, by providing the mouth all-round protection,
P&G India Brands
AmbiPur
Ariel
Duracell
Gillette
Head & Shoulders
Olay
Oral-B
Pampers
Pantene
Tide
Vicks
Wella
Whisper
Colgate Palmolive
Toothpaste Brands Colgate Dental Cream
Active Salt
Max Fresh
Total
Visible White
Sensitive
Pro-Relief
Colgate Kids
Colgate Herbal
Maxwhite
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the company says. Oral B Pro-Health already has a facebook campaign in place which reaches out to
the target segment.
Kainaz Gazder knew this fight was going to be a long one – a war, a clash of titans – one where P&G
would have to bring out its best innovations in differentiation, communication and channel
management. As she sat preparing for a sales meet, several questions were uppermost in her mind.
How do you differentiate the product in a market which has almost everything already? How do you
communicate this differentiation in a market which has over 300 TV channels and 100 newspapers?
Why would stores stock this new kid on the block if it has no market pull? Oral B is a large
international brand, how can this be useful in India, where domestic players connect well? The task
may get tougher as the Indian economy expanded at the slowest pace in a decade. P&G’s Healthcare
and Hygiene’s profit growth slowed Colgate’s Indian unit reported a drop in its net income for two
straight quarters.
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Table 1 Breakup of the Oral care market in India
Category Share
Toothpastes 60%
Toothpowder 23%
Toothbrushes 17%
Table 2 Sub-categories in the toothpaste market
Sub-category Approximate market size
White 50%
Gel 25%
Herbal 20%
Others 15%
Figure 1: Per capita consumption of Toothpaste
Table 3 : Other brands in the toothpaste category
Close up – targeted at the youth, this opaque, mint-flavoured gel debuted in 1967. With a mouthwash in the toothpaste, it is positioned as a confidence booster in those close & personal situations.
Meswak – Launched by Dabur, this herbal toothpaste with extracts of the indigenous Meswak plant is fast growing in a market which trusts traditional medicine.
Pepsodent – This toothpaste from the giant Hindustan Unilever is the serious competition to Colgate. With a range of over 6 products for adults and 4 for kids, Pepsodent taps a large spectrum of the market segments in India.
Vicco Vajradanti – This is home grown toothpaste developed by Vicco Laboratories operates in the niche segment of traditional herbal dental creams. Their tooth powder is strong in rural markets and gets it the strong brand recognition.
Sensodyne the largest brand for GSK and the oral care as a segment contributes 30 per cent to the overall global turnover. GSK India expects to tap almost five per cent market share.
Oral-B Pro-Health toothpaste will be available in mint flavour, in 140 grams tube for Rs 98 and 75
grams tube for Rs 59.