CASE STUDY COLGATE PALMOLIVE COMPANY THE PRECISION TOOTHBRUSH REPORT Submitted By Group-2, Section-D Abhishek Chowdhary, PGP2011507 Baljinder Singh, PGP2011587 Jubin Mahajan, PGP2011668 Rishabh Ratna, PGP2011825 Roopak Bhartee, PGP2011833 Vasanth C, PGP2011930 Vineeta Singh, PGP2011940 Executive Summary The Colgate-Palmolive case involves the Precision toothbrush, which was entered into the market in 1993 by Colgate-Palmolive.
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This marketing plan summarizes the company’s situation at the time the Precision toothbrush was introduced, and the different marketing strategies that we believe would be best for Colgate-Palmolive and their new toothbrush. The marketing strategies include proposed strategies involving product, price, place, and promotion. Included in the marketing plan are pro-forma income statements for Colgate Palmolive if they were to launch the product, and also if they were to choose not the launch the product. Also included is an advertising budget. Situation Analysis Colgate Palmolive, having sales of $6. 6 billion and a gross profit of $2. 76 billion, was poised to launch a new toothbrush “Colgate Precision” in the United States. From early 1990s, therapeutic toothbrushes were gaining acceptance among common people. As a result, the toothbrush industry experienced a massive influx of competitors and formation of a niche market. In order to gain an edge each competitor worked on developing new toothbrush technology and offering promotions that would grab consumer attention. Competitors Major competitors for Colgate Palmolive are as following: * Oral-b: Indicator * Proctor & Gamble: Crest Complete Johnson & Johnson: Reach * Smithkline Beecham: Aquafresh Flex Many competitors are striving to succeed in oral care market. The pricing and promotion of these products is not enough, product innovation is the major driver to gain maximum share of the market. Oral-B held 23. 1% of the market share and Johnson & Johnson held 19. 4% of the market share. Colgate-Palmolive not only had to worry about cannibalizing their own products, they also had to worry about the new line of products that were being introduced by such companies as Oral-B, Johnson & Johnson, and Procter and Gamble. Industry Analysis
Not only can the industry be broken down by price models (super-premium, professional, and value), it can broken down a second time into niche and mainstream offerings. Consumers of this industry can be sorted into three categories: Therapeutic, Cosmetic, and Uninvolved. Distribution Food stores played a key role in the distribution of oral health care products. Mass merchandisers are also gaining acceptance because of increased promotional support in the store itself. This increased demand for these products also increased the shelf life for oral care products. This will be a big advantage for CP to market precision toothbrush.
Dentists also play a significant role in distribution network of oral care products. Promotion Pricing Both Colgate-Palmolive and their competitors spent a lot of money on the promotion of their new products. Johnson & Johnson spent $8 million in media support to introduce its new Reach brush; Oral-B spent $10 million to launch its new Indicator brush; and Proctor & Gamble was expected to support its Crest Complete brush with $15 million in media expenditures. Advertising Companies began to offer purchase deals: Special percent off coupons, Buy one get one free and rebates on products.
Total media spending is estimated to be of $55 million in 1992 and $70 million in 1993. Colgate’s tag line was “In the fight against plaque, it’s a Plus”. Position of Precision in the Industry * As a Niche, Super-Premium Adult Product: No current offering in this segment from Colgate Palmolive. Highly competitive, unique segment. Projected market share for1993 is 3% and for 1994 is 5%. Promotion: 35% more effective on surface teeth and 100% more effective at gum line or between teeth at removing plague when compared to product offering from the competition.
Price: Can be equal to Oral-B indicator. At a premium when compared to Oral-B regular. Distribution: Majority through retail outlets, specifically through drug stores when people will be searching for the best protection against gum disease. * As Mainstream, professional Product: Premium offering compared to other products in this segment Promotion: Best of the segment offering Price: Value for money. Best value for level of efficiency Distribution: 80% distributed through offices of dental professionals and the rest through retail outlets.