ColgateColgate-Palmolive is recognized as the world’s leader in personal care sales which included oral hygiene products like toothbrushes and toothpastes. In 1991, its sales topped at $6 billion and profits at $2.76 billionand as it cornered 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. In the United States, the world’s largest market, ColgateColgate-Palmolive holds the number one spot in toothbrush sales with a market share of 23%. From these statistics, one of Colgate-Palmolive’s main strengths is being the market leader inpersonal oral care products. is one of Colgate
ColgateColgate-Palmolive’s extensive overseas reach is another main strength. Based on the data in the case study, ColgateColgate-Palmolivehas introduced 275 new products worldwide and setup manufacturing facilities in China and Eastern Europe, breaching the new emerging economies inof the 21st century. On top of that, international sales accounted for 64% of total sales andand profits from international operations account for 67% of the total profits for ColgateColgate-Palmolive.-Palmolive
ColgateColgate-Palmolive hasa very large an extensive Research and Development department with a strength of boasting 170 employees worldwide. Though having a large R&D department does n’t not directly contribute to increased necessarily constitute improvements in profits, ColgateColgate-Palmolive’s history of innovation1 in the toothbrush market is linked to its current position as the market leader in the toothbrush industry. Therefore ColgateColgate-Palmolive’s-Palmolive’s strong commitment to innovation through investment in R&D is amajor prominent strength. factor.
With an energetic and visionary leader like Reuben Mark at the helm of ColgateColgate-Palmolive, the company has transformed itself into a lean and profitable machine, from its inefficient past, leading to increased ing profit margins and volume growth.2. Clearly, having a visionary CEO is a strength.
ColgateColgate-Palmolive’s-Palmolive’s positioning strategyof for its toothbrush line in food stores has aided in capturing a largetheir current dominant market share. Its in-store displays, combining toothbrushes with toothpaste packs and locating the ColgateColgate-Palmolive line of toothbrushes in the middle of the stores’ shelves have contributed to this dominance. its increasing market share. This strategy has been successful, asis good because toothbrush sales through food stores, drug Sstores and mass merchandising channels have produced the greatest volume and dollar are some of the top channels in terms of dollar and unitsales historically.3.
ColgateColgate-Palmolive -Palmolive has a large number of stock keeping units for their toothbrush line.4. Multitudes of SKUs indicate that ColgateColgate-Palmolive-Palmolive is targeting a broad spectrum of market segments in the toothbrush market, which spreads ing tthe risk inherent to carrying any product. Diversification of product types within the toothbrush market is another strength factor Colgate-Palmolive holds. , which is a strength factor.
ColgateColgate-Palmolive’s-Palmolive’s secret weapon in the war for supremacy in the super-premium market, ColgateColgate Precision, is proven has been foundto be very effective in removing plaque – 35% momore effective than existing brands – and in preventing gum disease. This advantage can be has beenattributed to the innovative design, high-tech research using CAD and infrared scanning, consumer research and extensive product testing. of the product. Though we plan to suggest positioning ColgateAlthough this technology is a strong argument for positioning Precision in the “super-premium” category, Colgate-Palmolive could also use its the design aspects can be copied to Colgateto improve Colgate-Palmolive’s existing “professional” and “value” toothbrush linesin the “professional” and “value” category in order to increaseimprove their respective market shares. Colgate-Palmolive’s patented5 innovation for Precision also stands as a strength upon which Colgate-Palmolive can lean for other market differentiating advancements.
ColgateColgate-Palmolive’s -Palmolive’s recent plans to infuseion of new capital into its manufacturing facilities will bode well as it prepares to battle for market share in the new “super-premium” market segment. It Colgate-Palmolive will be able to canleverage its existing relationship with its manufacturing partner, Anchor toothbrush, to quickly and increase production of any new product release.cost-effectively product its newest product. Weaknesses
The impending release of ColgateColgate-Palmolive’s -Palmolive’s new toothbrush, Precision, may affect sales of its existing toothbrush lines. This may lead to a “cannibalization” of the ColgateColgate Plus and ColgateColgate Classic’s market of up by 35% to 60%.6 of the expected Colgate Precision sales. Since the existing toothbrush lines isare the “cash cows”7 of the company’s oral care division, a dismal performance by the new ColgateColgate-Palmolive Precision might drain the “cash cows” of its their resources market sharealtogether.
ColgateColgate-Palmolive’s media expenditure layout is very small compared to its rivals.8 It has spent only $7 million dollars on its ColgateColgate-Palmolive Plus marketing efforts and has only a 19% of the share voice. Since media exposure fuels consumer demand9 for a new product, this is one area where ColgateColgate-Palmolive needs to have its expenditures equivalent to that of its rivals. Another marketing weakness that ColgateColgate-Palmolive faces is thatits lack of professional dental endorsements, with less than half that in market share and dollar sales than that of their largest competitor, Oral-B. toothbrushes are not endorsed by dentists. This technique has been effectively used by Oral-B, Colgate-Palmolive’s competitor in increasing toothbrush sales. Similar to Colgate-Palmolive’s lack of professional endorsement, the Precision toothbrush does not have the fullest endorsement from the American Dental Associations (ADA). Although the ADA issued its seal to the product, the seal alone stands for little more than recognition that the toothbrush works. In fact, only when the ADA issues its seal and an official quote stating that a product is superior to similar product types, does a product receive the fullest support possible. Not having the full backing of the ADA is a weakness which Colgate-Palmolive may have to overcome to gain the professional endorsement they seek.10 Opportunities
The emergence of the niche “super-premium” category presents a golden opportunity for ColgateColgate-PalmolivePalmolive to increase market share for several reasons. First, alTthough its competitors, i.e. Oral-B, Johnson & Johnson and Procter & Gamble, have gained a foot-hold in this niche market already, ColgateColgate-Palmolive -Palmolivecan still make a dent with its new Precision toothbrush, thus enabling them to enter a new and potentially highly profitable market segment. This niche category commands a premium price, which in turn results in a higher profit margin. Since Tthe “super-premium” category accounts for 35% of the volume salesand 46% of the dollar sales of toothbrushes sales11. this niche category may in turn result in a substantial profit margin.
Secondly, Wwith the baby boomers and younger generations becomingbeing more concerned with the health of their gums, they arewill be willing to pay athe above mentioned premium for a toothbrush12 which is optimized for better gum care. This is a demographic segment ColgateColgate-Palmolive-Palmolive can capitalize upon this demographic segment to ensure a successful with therelease of their “super-premium” Precision toothbrush.
Finally, Ssince 82% ofthe toothbrush purchases are unplanned and many consumers are unaware of the technological and cost variation among prices of varioustoothbrush brands,13, ColgateColgate-Palmolive-Palmolive could establish a media blitz with educational ads depicting that are educational and shows ColgatePrecision toothbrushesto be as technologically superior to its rivals at an equivalent cost. and accent the fact that its prices are cheaper than most rivals. The ads can also serve to educate the consumersto about proper toothbrush replacement schedules to ensure replace the toothbrushes more often so that brushing can be moreeffectiveagainst plaque removal and gum disease prevention. Ultimately, Colgate-Palmolive could leverage their advertising campaign to boost sales and revenues. Microeconomic
One of ColgateColgate-Palmolive’s -Palmolive’scompetitors, Johnson & Johnson,14, ranked third in toothbrush sales, was phasing out one of its toothbrush lines at the time of the Precision introduction. As the toothbrush market remains rather constant, courting customer from other brands, particularly ones being phased out, is a tremendous opportunity to gain market share.15 This opens the way for Colgate-Palmolive to muscle in J&J’s market share with its own toothbrush line. Another competitor, Smithkline Beecham,16 was to make predicting an operating loss in its toothbrush business. 17 If the losses are sustained, it Sustained losses might cause Smithkline Beecham to move out of the toothbrush business all together, yet again opening the door for further gain of market share. Another competitor, Lever did not have a track record of innovation and has a small market share. Colgate-Palmolive can “eat” up the competition. Colgate-Palmolive’s constant innovation also provides an opportunity to convert consumers away from less advanced toothbrushes, such as those offered by Lever.
Threat of intense segment rivalry
The super-premium toothbrush market is highly competitive, hosting many brands and private label toothbrushes. If any of these rivals creates a toothbrush which tops or even equals the technology of Precision, specifically if done at a lower production cost, ColgateColgate-Palmolive Colgatemay lose market share. Threat of new entrants
Along with intense rivalry from existing competitors, Colgate-Palmolive has to deal with new competitors. In 1991, the toothbrush market exploded with a dramatic increase in new entrants. Proctor and Gamble introduced Crest Complete, their first toothbrush18. Smithkline Beecham entered the market with Aquafresh Flex and a 9% market share volume for 1991. Levre, Pfizer and Sunstar all entered the market in 1991 and earned a total 11% market share. These numbers reinforce the seriousness of the threat of new entrants that Colgate-Palmolive will have to contend with when they launch Colgate Precision.
Threat of substitute products
Electric toothbrushes can usurp market share from the “super-premium” category. Similar to many industries, oral care technology has advanced tremendously since its inception in approximately 3000 B.C. The introduction of the nylon bristled toothbrush in 193819 represents one of the latest quantum improvements for the industry, however it was not the last. The introduction of electronic toothbrushes and water picks are threatening to usurp traditional oral care product’s market share. This is a threat which Colgate-Palmolive needs to heed, despite its confidence in the technology of Precision.
Threat of suppliers’ growing bargaining power
ColgateColgate-Palmolive -Palmolive depends on Anchor toothbrush for its outsourced manufacturing. Hence,If Anchor toothbrush has a decided supplier advantage in the relationship with Colgate-Palmolive. If Anchor toothbrush were to increase its supply cost, it wouldraises its rates, this will affect ColgateColgate-Palmolive’sPalmolive production costs whichin in turnwill affect would impact Precision’s market share by potentially pricing it above even the super-premium segment. Colgate-Palmolive needs to maintain a healthy relationship with Anchor toothbrush to reduce the risk of a costly supplier switching process. Threat of buyers’ growing bargaining power
One of the factors which can cause buyers’ bargaining power to grow is when the switching costs for buyers are low. Even if Colgate-Palmolive were to position Precision as the most expensive toothbrush on the market, it is still a relatively inexpensive product, compared to many daily purchases (i.e. lunch in NYC or a cup of coffee at Starbucks). Therefore, buyers can easily switch between toothbrush brands without giving the decision much thought. To combat this threat, Colgate-Palmolive could position Precision as a superior toothbrush that customers can not afford to be without.
In 1992, after evaluating the current market condition and completing its research and development, Colgate-Palmolive was ready to begin marketing its newest toothbrush, Colgate Precision. Of major concern to Colgate-Palmolive was how to position, brand and communicate this new product to the general population. Colgate-Palmolive also had to develop budget constraints and generate a marketing mix that would maximize the sales and revenues of the new product.
Colgate-Palmolive was faced with the decision of whether to promote the new product as a high quality niche product marketed mainly towards individuals concerned about gum disease, or as a mainstream toothbrush that would be marketed as the best toothbrush available. If marketed as a niche product, Colgate-Palmolive would target a smaller market segment without as many competitors vying for market share. A niche market segment would also be willing to pay a premium for the new toothbrush. If, however, the toothbrush were marketed as a high quality mainstream toothbrush, Colgate-Palmolive would realize revenues from larger volumes of sales despite a lower price and more competition.
To reach its verdict, Colgate-Palmolive analyzed forecasted data with regard to potential sales volumes and prices, advertising, packaging, and manufacturing costs, among other factors. A summary of this analysis, and a marketing strategy recommendation follows.
EVALUATION OF ALTERNATIVES
In August 1992, Colgate-Palmolive had two options regarding the positioning strategy for their new toothbrush titled Colgate Precision. Their choice was to position the product as a mainstream offering or target the Precision toothbrush to a niche market. The positioning of the product would have little to do with any modifications to the actual design of this toothbrush, but would effect the perception of the toothbrush within the market. Mainstream or mass marketing refers to the mass production, distribution and promotion of a single product to all potential buyers.2021 Contrarily, niche marketing is a form of micro-marketing. It refers to a specifically defined group of consumers with a need that is not currently well served. A
niche is created from a subdivision of a market segment.22 Due to the diversity of these two market types, the decision to market the Precision toothbrush as a mass-market product or as a niche product involves analysis of the advantages and disadvantages for each. Mainstream Marketing
The primary reasons to use a mainstream marketing approach is that the product is made accessible to a larger market. Marketing to a more diverse audience would enable Colgate-Palmolive to construct a more simple and direct campaign that would address the common concerns of all toothbrush buyers. Consequently, the use of television and radio would be more cost effective as it would reach this larger audience. The obvious goal of such a position would be to capture a greater return on the investment Colgate-Palmolive made on this product’s research and development effort. It is estimated that within twelve months this product could secure 10% of the market and a volume share of 14.7% by its second year. This would equate to 27 million retail unit sales in year one and 44 million in the second year, if positioned as a mainstream product.23 Disadvantages
There are also many problems with marketing Precision to the masses. In the mainstream market a higher price makes a product less attractive to the average consumer. This means that Colgate will have to price their product within reasonable alignment of other similar products in order to be a serious competitor inside this market, ultimately diminishing their potential profit margin and return on investment. There is a variance amongst consumers in relation to oral hygiene. They are classified into three groups: Involved oral health consumers – Therapeutic brushers
Involved oral health consumers – Cosmetic brushers
Uninvolved oral health consumers
These segments are divided into relative percentages of adult toothbrush users. They are 46%, 21% and 33% respectively.24 This illustrates that one third of the toothbrush using adult population has only little interest in oral hygiene and are probably not a worthwhile audience to which to pitch the Precision toothbrush. The expense of including these consumers in the
target market would not be advisable. In the design and testing phase of the Precision toothbrush, Colgate-Palmolive accrued significant clinical data concerning the product. This information would not be relevant to the mainstream market that most likely would view it as too scientific. The Precision toothbrush was originally conceived to be a “top-of the-range, super-premium product”25 indicating that production schedules had been developed in line with a niche marketing strategy. Mainstream marketing would require a greater volume production of the toothbrush with an estimated ten month lead time to achieve sufficient quantities of the product. This could result in an inadequate supply of the product at the outset.26 The objective of the research and development group working on the product was to “develop a superior, technical, plaque-removing device.”27 It was produced to be “the best toothbrush possible” and become the “top-of the-range, super-premium product.”28 All of these phrases are heavily skewed towards niche merchandising. A mainstream product should aim to serve all of the people, all the time. This product clearly was created with niche-oriented goals. The greatest issue facing Colgate-Palmolive if they were to promote this product in the mainstream market is that it would be distributed through the same channels as an existing Colgate-Palmolive toothbrush called Colgate Plus.29 Colgate Classic was the company’s original entry in the toothbrush sector and was positioned as a value segment. The Colgate Plus came later and was placed in the professional segment as a higher quality product.30 Including Precision as a high-end, mainstream product could potentially “cannibalize” Colgate Plus sales. Finally, Susan Steinberg, the product manager of Precision, felt that incorporating the new product into the mass market would require the company to delete one or more of the seven existing SKUs (stock keeping units) that Colgate-Palmolive produced.31 This strategy could result in a loss of market share in the value or high-end segments. Niche Marketing
Advertising companies have access to audience profiles through a wide variety of media products, such as television, radio and print media. This is the fundamental basis for successful niche marketing. A great advantage of offering any eligible product to a niche market is that it allows for a
concentrated, specific advertising campaign, targeted to a specific demographic, psychographic, behavioral or geographic segment through whichever medium is most effective at reaching the specific population.32 This allows efficient use of advertising budgets. Precision falls within the class of goods that could tender itself as a niche product. Developed to be the best toothbrush possible and placed in the super-premium category, this toothbrush is inherently a niche product. Members of the public most interested in this toothbrush would be those in the “Involved oral health consumers” groups; therapeutic and cosmetic brushers. Therapeutic brushers are interested in functionally effective products and differentiate between brands.33 Both segments of customers would appreciate the scientific data Colgate-Palmolive has complied on this toothbrush. The facts that the initial clinical trials removed an average of 35% more plaque over that of Reach and Oral-B, and that it assists in the reduction of the likelihood of gum disease, would be effective information for this group.34 Unlike the mass market, these are issues which a niche market segment would comprehend and about which they would care. Niche market participants are also more likely to pay a premium for this product due to the fact that Precision caters to a distinct set of needs they have. With this type of positioning, a 15% increase in price above Oral-B regular would be anticipated, bringing the cost to consumers to $2.13 per unit (more aligned with Oral-B Indicator). A mainstream market could only be anticipated to pay $1.85, in accordance with the Oral-B regular line.35 As Precision was conceived more as a niche-type product, initial production was set for the lower demands of the smaller market segment. As discussed previously, to change the natural emphasis of the toothbrush to mainstream distribution would require a major overhaul of projected production schedule and costs due to the increase number of units required. Additionally, to keep Precision as a specialized product means that the new product is less likely to invade the market share of other Colgate-Palmolive products, like the Colgate Plus. This would also preserve the number of SKU that Colgate-Palmolive currently produces in the toothbrush sector. Niche markets historically attract fewer competitors.36 This gives time and room for a new product such as Precision to establish itself and build up a market share before it may have to fight against a new contender. Disadvantages
Marketing the Precision product to a niche market would generate less revenue for Colgate-Palmolive than a mainstream approach. Working with the estimated figures for the first two years of release generates the following table.
No. units sold
Factory list price
Total revenue generated
Obviously, the niche market revenue is significantly less than the mainstream market revenue, despite the 13% higher price. Conclusion
Developing and communicating a positioning strategy for a product is necessary and critical. Differentiating a product, and the degree to which that product is differentiated, can be guided by quantifying the following criteria: Importance
Using these parameters, a company can provide the public with a reason to buy their product.37 Another tool used in solving the marketing mix problem companies face when launching a new product is a perceptual map.38 This is a graphic representation of two or more features against which similar products can be ranked. When graphed, the resulting map displays areas to which the product types cater, revealing both areas of over population and areas of potential opportunity. Clusters of products exist when similar products appeal to the same consumer market participants. In these areas, competition is intense, therefore, they are not as attractive when positioning a new product. An optimal plan is to create a space within the product market that is relatively free of rivals and can enable a new product to develop and dominate. A perceptual map for Precision was created from the following data:
Butter GUM Microtip
Butter GUM Supertip
Oral-B cross action
Generic Eckerd Interdental
Generic Eckerd Angle
Using these evaluative criteria in relation to the advantages and disadvantages of niche and mainstream marketing, we believe that Colgate-Palmolive should position the Precision toothbrush as a niche product. This would establish Precision as the leading toothbrush on the market at a competitive price. It would be a superior and distinctive oral care product. However, we believe this product would also work in the mainstream market and we envision it moving towards the mass market in the future. Once the toothbrush has established itself as a high quality product with specialty features, we believe that Colgate-Palmolive could
transition the product to a wider audience. This will also allow time for Colgate to reconcile the position that the Colgate Plus product will hold relative to the Precision line. Further, we anticipate no significantly negative issues will be encountered by initially marketing Precision as a niche product and then moving it into the mainstream market. We do not believe the opposite would be true, as a niche market will most likely not accept a product that has been offered to the masses as the best value, and then marketed as a specialty item. The anticipated cyclical nature of the product on the market is well illustrated by the Boston Consulting Group’s Growth-Share matrix.39 The Precision toothbrush will begin as a “question mark.” This means the company will spend money developing and establishing the product in anticipation of increasing its market share. Subsequently, the hope would be for Precision to become a “star,” meaning it has been successful by obtaining a high market share and growth rate. If the product evolves into a mainstream offering by this time, the company will reap higher rewards. Going even further into the future, the toothbrush will most likely decrease its market growth rate while maintaining its high market share. At this phase the product will be a “cash cow.” Revenues produced from Precision at this phase can be used to establish other “question marks” and/or subsidize other “stars” if required. The final phase in this product’s life cycle will be a decline into “dog” status. This refers to the product when it has weak market share and low growth. At that point, Precision would need to be removed from the company’s product line, allowed to decline further or all together repositioned in the market.
At this point, the research and development phase for Precision has been completed, a thorough analysis has been performed on the current market situation, and a marketing strategy has been recommended. The final aspects of launching a new product must now be investigated – product, price, place and promotion.
Colgate-Palmolive has many important decisions to make regarding the new toothbrush before it becomes available on store shelves for customers to purchase, including the positioning strategy for the new toothbrush. To
reach a conclusion, the new toothbrush must be analyzed on three product levels – the core product, the actual product, and the augmented product – so that customer’s needs are fully understood and the Precision toothbrush is correctly marketed to meet those needs. Since we are recommending that Colgate-Palmolive choose a niche market for Precision, the core benefit that the toothbrush will deliver to its users is plaque removal. Less plaque in turn leads to the added benefit of a reduction of the likelihood of gum disease. This is the primary reason that the target niche customers will purchase the toothbrush. Colgate-Palmolive must therefore position itself as the premiere benefit provider to these consumers. To do so, the toothbrush must be positioned and marketed with regard to the physical or actual product. This incorporates the products brand name, the products features and style, the packaging, and the quality of the product. Colgate-Palmolive’s branding decision resulted from four concept tests used to evaluate the effectiveness of potential names. Ultimately, the name “Precision” emerged from the others as it brought to mind connotations of an oral care product that cleans one’s teeth completely and consistently. Further, the word Precision exudes many of the qualities that are desirable in a brand name, such as positive attributes, high quality and a name which is easy to pronounce, recognize, and most importantly, remember. Regardless of which name was chosen, however, the individual product’s branding would also be able to take advantage of the brand recognition of Colgate-Palmolive – a household name that the majority of the population associates with good dental care. Colgate-Palmolive could have also considered utilizing the line extension tactic of “introducing additional items in the same product category under the same brand name,”40 thereby marketing the toothbrush as “Colgate Precision.” This brand name, as with other Colgate-Palmolive products, should come to signify Precision’s intentions to deliver features that are synonymous with the consumers need for good dental health as offered by a well recognize and trusted company. As mentioned above, a brand name should bring certain attributes, benefits and values to the minds of consumers. Consumers should recognize the physical attributes of the Precision toothbrush as an advantageous design that will work better than the majority of the toothbrushes on the market. The benefits that the consumer should associate with the Precision toothbrush should include
noticeably cleaner and healthier teeth and gums. The values inherent to Precision should be an effective tool for improved oral care. Combining the attributes, benefits and values of Precision into a readily recognizable product is a step towards Colgate-Palmolive’s ultimate goal – brand loyalty to Precision.
Precision has patented the design and features of the triple action bristles that work with one another so that the short, long, and angled bristles remove 35% more plaque then a standard toothbrush.41 There are, however, some aspects of the toothbrush that still need to be defined, such as the cosmetics. Most people undoubtedly associate toothbrushes and general oral hygiene with a dentist. To capitalize on this association, Colgate-Palmolive could make the Precision toothbrush a metallic, silver color so that consumers immediately conjure images of the dental equipment that is known to technically and thoroughly clean teeth. To add a touch of flare, and for convenience, the toothbrushes could also be designed with a bright streak of color within the silver background for easy differentiation when multiple household members use Precision toothbrushes. These bright streaks should also be the palate upon which the name Precision should be set to serve as a constant reminder of the brand name. To maximize on these cosmetic suggestions, the new toothbrush should be offered with a multitude of color stripes, full and compact heads, and with sensitive, soft, and medium bristles. The silver trade dress will eventually become known to represent the Precision toothbrush and will signify a high quality item that consumers will know by visual cue.
Since packaging in and of itself is an effective marketing tool, the package of the Precision toothbrush should be carefully designed. The toothbrush should be packaged so as to emphasize the recommended trade dress of the silver toothbrush. The toothbrush should be packaged in a clear plastic tube. The name Colgate Precision should be written in bold, silver lettering along the length of the tube, but it should not cover the bristles since their unique design is also a distinguishing mark. This would place emphasis on the main features of the toothbrush, which are the triple action bristles, and the silver, metallic color of the base of the toothbrush. To
distinguish the product further, the packaging should be completely round and contoured to the toothbrush itself. Similar to the trade dress, this package would be beneficial to the Precision product because the round tube would come to be recognized as the Precision packaging and consumers would begin to shop for the product based on visual recognition. The tube would also provide an extra value to consumers as its innovative, reusable design could also serve as a travel container for the toothbrush. This packaging will be more costly to produce then the generic cardboard backed, plastic bubble wrapped toothbrush, however, since the toothbrush is a niche product and customers will be willing to pay a premium (see Price section below), the cost involved with the pricier packaging will be offset. The label on the tubing and on the product also represents an important branding opportunity, as it will be viewed by consumers every day. The label font should remain constant on all printed material including the packaging, print advertisements and the toothbrush itself. The name “Precision” should be written in a unique font to further distinguish it, and the “Colgate” should be written in Colgate-Palmolive’s traditional print font. The labeling on the package itself should mimic the bright, bold colors so as to off set the silver background. Consistent, fluent branding is key to the success of any new product – Precision is no exception.
The product quality of the precision toothbrush should be extremely high. The toothbrush should live up to its claims of decreasing gum disease by removing 35% more plaque than a regular toothbrush. If the product quality is high and meets customer’s prior expectations, they will be satisfied with the toothbrush. Having satisfied customers is important for non-durable items such as toothbrushes, which are purchased frequently, so as to ensure repeat purchases. Ultimately, customer’s brand loyalty will increase with product satisfaction. The final level of analysis for Precision – the augmented product – includes post-purchase services offered for the product. Precision should offer a warranty on its products so that customers who are unhappy with the product can return it. Since we anticipate that most people who purchase the toothbrush will not be dissatisfied with the product, the warranty will pose a minimal financial strain on Colgate-Palmolive. Precision should also be accompanied by a toll-free
phone number which customers could call should they have questions or concerns about the product.
Despite Colgate-Palmolive’s dominance in the toothbrush market, Precision represents its first endeavor into the super-premium category – a segment filled with intense competition. Hence, pricing Precision so that it will have an extensive life cycle, as established above, is yet another critical step towards ensuring its survival. Of the four pricing theories offered by today’s market, rapid skimming is by far the most appropriate for Precision.42
First, as a niche market product, Precision will be offered at a cost equivalent to that of the highest priced toothbrush currently available, $2.13 per unit.43 This immediately eliminates both penetration pricing theories, as offering Precision at a value based cost level would all but bankrupt the product line. Additionally, although the $2.13 per unit cost may be high relative to all toothbrushes, Precision is being targeted towards a specific group of consumers who have a demand for a superior oral care product. Thus, relative to the super-premium segment, Precision is actually the best purchase available, as it offers superior technology and improved oral health care for no additional cost.
Secondly, Precision’s unique and innovative design has created its own category of toothbrush within the super-premium segment, as it is distinctly different from the other currently available toothbrushes. Consequently, the public must be educated about the attributes, benefits and values of this new product. Educating the public is a costly endeavor unto itself regardless of the product, but Colgate-Palmolive has the added force of keeping pace with the increased promotional expenditures of its competitors as well. We are therefore also recommending that Colgate-Palmolive spend approximately 8% of the advertising budget on product promotions such as two-for-one purchases and discount coupons to attract attention to Precision in non-mass-media ways.
Finally, as mentioned above, Colgate-Palmolive’s ultimate goal is to create total brand loyalty among the niche market participants. Such loyalty is hard to come by and fragile at best given the non-durable nature of a toothbrush. However, promoting and pricing precision accurately will nurture customers into repeat purchasers.
Choosing the appropriate place to sell Precision is, relatively, the least complicated matter which Colgate-Palmolive will undertake in the process of launching the new product. After all of the painstaking research, in-depth analysis, evaluations, and endless financial and production planning, one statement rings true throughout – it’s a toothbrush. No one will ever, specifically go out of their way to purchase a toothbrush as it ultimately holds no inherent moral, financial or social value. Colgate-Palmolive should not try to create an exclusive clique of Precision toothbrush owners (such a Ferrari does with its super-premium race cars) by choosing an exclusive or selective distribution channel. Precision is a toiletry, and it needs to be available through intensive distribution in every possible place that toiletries are sold, otherwise the risk of losing – or more to the point, never gaining – market share due to simple inconvenience is monumental. Additionally, negotiating exclusive or selective distribution agreements with vendors would be prohibitively costly for both Colgate-Palmolive and the vendor. Instead, Colgate-Palmolive should focus their efforts on intensive distribution, maintaining and increasing the strength they have in their current shelf positioning, display models and vendor relationships.
Promoting Colgate Precision requires effectively communicating the proper message to the right audience through the appropriate channels. Kotler identifies eight steps as essential for marketers to accomplish those goals (page 552). The first and second steps impact each other and can be reviewed together, as opposed to in a linear fashion. Kotler lists them as 1) identifying the target audience and 2) determining the communication
objectives. We recommend marketing Precision to a niche market. There are eight essential steps to which Colgate-Palmolive must adhere to achieve an effective promotion campaign.44 The first step in the campaign is to determine the audience to which the promotion will be directed. As concluded from the analysis above, we recommend that Colgate-Palmolive target both involved oral health consumer groups. Defining these two groups more thoroughly, and thereby fine tuning the promotion message,specific niche requires determiningwhich group(s) of people would be most likely to value that the core benefits Precision offers are indeed a concern for the target audience. . Research indicates that there is a change in oral care concerns among baby boomers. Those born in the 1940’s, 50’s and early 60’s seem to tend to placee more importance on gum disease prevention as opposed to cavity prevention.45 (case page 28). Information we gathered from a dentist interview not only echoed this statement, Further research butalso indicatesd that today’s younger generations are even more concerned about their oral care routines than previous generations.46 (Meg’s dentist interview). Even with the trend towards better oral care, recent segmentation of toothbrush users shows that only 4667% of adults are “Therapeutic brushers” “Involved oral health consumers”.47 (case page 29). Although Tthis 46 67% of therapeutic brushers comprises the niche to whomwhich we recommend Colgate- Palmolive market their new Precision toothbrush,. there remains one third of the total population of toothbrush users to which Precision would not be appealing. From reviewing Simmons research data, we can also make some additional target assumptions. By assessing the index figures for the Aqua-Fresh Flex, another super-premium product, we can speculate which demographics would be suitable for Colgate Precision: single, college-educated professional women and men, 18-34 years, earning over $40,000, living in New England48 (just to name one possible set of target criteria). Having now identified our target audience, we can move on to the next step in the promotion campaign – determining the communication objectives. Buying a toothbrush is a fairly easy process and rarely a high involvement purchase for consumers. Therefore, although we recommend that Colgate-Palmolive’s spromotion ofmarketing for Precisionshould follow the AIDA response hierarchy model so as to include all , taking the customer through the three stages of
responses – ; cognitive, affective and behavior – we believe that the emphasis should be placed on. However, given the relatively quick decision-making process for toothbrushes, Colgate needs to develop marketing that will getting the customer’s’ attention and quickly moveing them through the interest and desire stages, straight to action;: purchasing the toothbrush. The communication objective for the new product becomes to convince therapeutic and cosmetic brushers that they should purchase and use Colgate Precision because Precision is designed to be the best toothbrush for preventing gum disease removing plaque and preventing gum disease. The next step to developing effective communications for the Colgate Precision promotion is designing the message. Factors to consider include message content and message structure. MMessage content should align with the communication objectives for the target audience – Precision removes plaque better and prevents gum disease. It will be important to place certain message emphasis on the prevention of gum disease, as this is a differentiator not only against the ad campaign for Colgate Plus – “In the fight against plaque, it’s a Plus.”49, but also against all the other toothbrushes in the super-premium category. Precision will be the first toothbrush to use such a strong oral care message in its positioning. What would make them change their behavior and purchase Colgate Precision? Two appropriate approachesfor Precision marketing to communicate Precision’s core values would be messages appealing to either the rational or emotional sides of consumers. A rational appeal centers around how the product will benefit consumers, whereas an emotional appeal tries to affect purchasing behavior by stimulating emotions such as fear, shame, guilt, humor, love or joy. Exhibit A is a print ad demonstrating a rational appeal to consumers. The ad clearly identifies the most importantbenefits value of using Colgate Precision. or oIt rationally promises consumers results if they use Precision instead of another toothbrush. Exhibit C also clearly states the benefits, yet does so using a humorous message and image. Message structure helps to determine an advertisement’s effectiveness. Kotler tells us that “rResearch indicates that the best ads ask questions and allow readers and viewers to form their own conclusions.”50 (page 557) See eExhibit A_ depicts this for an example of how this technique can be applied to Colgate Precision advertising.by asking the audience “Why do none of these stand out
from the crowd?” The ad encourages the audience to consider the alternatives, and then provides an answer in support of Colgate Precision. Although this may be effective, Exhibit B shows the same ad, with a shorter headline, “Lost in the crowd”. The shorter headline allows the audience to scan the ad and get to the message of the core benefits more quickly. Of the five print ads presented in the Appendix, we believe Exhibit B would be the most effective. The next step in developing effective communications is to strategically very important (along with step 6, deciding on the marketing mix). Colgate Palmolive must determine which communication channels to use to promote Precision. One option, Ppersonal communication channels, center around people communicating face-to-face, such as inor by word-of-mouth. sources. Compared to purchasing a car purchaseor a pair of jeans where others’ opinions are very influential, purchasing a toothbrush typically does not require high involvement purchase decisions,. and there would thereforeTherefore, not be muchword-of-mouth buzz around any specific toothbrush is all but non-existent, and consequently would not be an effective promotion channel. The only people who really matter tocould potentially influence consumers’ intoothbrush-making decisions are dentists. In 1992, Oral B had 34% of the market share of sales to dentists, dominating the market and outperforming Colgate-Palmolive by $14.3MM to $6.7MM. To acquire more market share, Colgate Palmolive would have to invest millions of dollars more into their sales force, and even then there would be no guarantee that they would succeed in increasing their sales to dental professionals. According tothe dental interview we conducted our research, toothbrush promotions through professionals have little to do with the effectiveness of the toothbrush itself, and moresales in the industry are all about to do with whowhom you know, who youtakes you to lunch, and who you takewhich company takes you to the golf course.51 (quote from dentist here? – footnote). Therefore, we recommend that Colgate-Palmolive would be wise to continue their focus on consumer sales through non-personal communication channels, such as print media and broadcast media (to be discussed in more detail in step 6six, deciding the marketing communications mix). Step 5five is to establish the total marketing communications budget and allocate it amongst the different communication channels. Colgate Precision is a new product launch, and as such we recommend it have enough
budgetary support to help it succeed. In 1991, Oral-B spent $10 million, Reach $15.5 million, and Procter and Gamble was expected to spend $15 million to support Crest Complete. While it is helpful to understand competitors’ budgets, we do not subscribe to the comparative-parity method of developing promotion budgets. There are too many factors and objectives involved in developing a budget to base decisions solely on what the competition is doing. The case study recommendsAnalysis indicates that a total of $11.2 million, split between advertising, consumer promotions and trade promotions52 (page 35). We agree that $11.2 million, split wisely and spent wisely, will be sufficient to support Precision in reaching its sales goals. Although Colgate-Palmolive’s own evaluation determined that t The case study splitshe budget for Precision as a niche product should be split as such follows: advertising, $5 million; consumer promotions, $4.6 million; and trade promotions, $1.6 million, we recommend Colgate-Palmolive position Precision as a niche product, we feel Colgate should spend less money on consumersconsumer’s promotions. One of the key insights we have into the target audience is that they will pay a premium for a toothbrush if they feel it is a newsuperior product that will keep their gums and teeth healthy. Therefore, Colgate-Palmolive will have less need to spend millions on consumer coupons, 2-for-1 deals, and rebates. However, as discussed above, Colgate-Palmolive still needs to maintain industry standard levels of consumer promotion expenditures as they are an effective method of introducing a new product. Additionally, we recommend Colgate spend only $0.9 million in their first year on consumer promotions because the niche market will be willing to pay a premium for the values and benefits Precision offers. Therefore, they do not need as many free or discounted product promotions. Also, consider the prices of super-premium toothbrushes: they range from $1.67 to $2.13. The cost differential of $.46 is less than the price of making a call from a payphone (now $.50). We anticipate that consumers in the therapeutic and cosmetic brusher segments will not consider $.46 as a cost barrier and will pay the premium $2.13 without hesitation. Conversely, Colgate-Palmolive should spend more money on trade promotions. Colgate-Palmolive has had much success to date with trade promotions and we feel they should capitalize on their existing trade relationships to get the product effectively placed “on theshelvesf” and
featured prominently. We recommend a split of $5.75 5.3, $0.9 1.8, and $4.55 4.1 million for advertising, consumer promotions and trade promotions, respectively, for a total of $11.2 million. Step 6six is deciding on the marketing communications mix – ; taking allocating the budget of $11.2 millionand deciding how exactly to spend it in the most advantageous method possible considering the full range of possibilities. The recommended budget for advertising is $5.75 5.3 million, which we recommend splitting among print media (newspaper and magazines) and broadcast media (radio and television ads). Both print and broadcast media can serve to build awareness and understanding of the new Precision product at the introduction phase of its lifecycle. Further, Pprint media can be targeted to the niche market participants to a certain extent. The media plan should includea couple of several demographically -appropriate newspapers, such as The New York Times and The Boston Globe (read by college-educated men and women in New England, one of our hypothetical markets). Magazines can target segments to an even greater extent. Self, Shape and Outdoors would all reach therapeutic and cosmetic brushers. with the desired demographics. Broadcast media, however,although it is more suited to mainstream targeting, as there is no way to control who hears the broadcasts, with national buys. can still serve as a very effective and cost conscience communication channel as the niche market is compiled of two-thirds of the toothbrush-using population. Instead of national buys, Colgate should focus on spot or local buys in New England and Southern markets. Consumer sales promotions are important in the toothbrush industry, but we recommend Colgate spend only $1.8 million in their first year on consumer promotions. As mentioned before, the niche market is willing to pay a premium for their goods/services and therefore does not need as many free or discounted product promotions. Also, consider the prices of super-premium toothbrushes: they range from $2.32 to $2.65. The cost differential of $.33 is less than the price of a phone call (now $.50). We presume that consumers in the therapeutic brusher segment will not consider $.33 as a cost barrier and will pay the premium $2.65 without hesitation. For the Precision launch, we recommend Colgate spend $4.55 4.1million on trade promotions. The case study mentions that tThe “Colgate Palmolive toothbrush line held[holds] 25% to 40% of category shelf space in most stores.”53 (page
31) These figures are not coincidental.CP has a sales force doing what they have to do to meet objectives. As Colgate Precision is a new product launch, retailers will have to be persuaded to even carry the new toothbrush, or in some cases, to carry more units than they normally would. When retail stores feature Colgate-Palmolive toothbrushes through in-store displays, sales increase by 90%. Trade promotions dollars would work to ensure that these displays get featured prominently in retail stores, leveraging Colgate-Palmolive’s existing dominance in this area. The second to last stage is measuring the results of the communications’ effectiveness. As the recommended marketing mix is not immediately measurable (unlike using direct marketing), Colgate- Palmolive would have to undertake additional research to evaluate the promotion’s impact on the target audience, therapeutic and cosmetic brushers. Colgate-Palmolive should conduct focus-group research to explore responses and evaluate creative. The last step to developing effective communications is organizing integrated marketing communications. This As mentioned above, consistent and fluent communication is a vital component of any marketing plan;: makingMaking sure all communications have compatible themes and are speaking to customers in one voice Colgate-Palmolive can accomplish this by either using one agency for all marketing needs, or by creating an inter-agency task force whose responsibility is to ensure communications are developed along the same theme understandingUnderstanding the customers and their needs
Colgate-Palmolive can continue to conduct customer-focused research to learn how to better market to their customers ensuringEnsuring that customers have positive experiences with the company across all points of contact Colgate-Palmolive could use “mystery callers” to test the Customer Service Representatives on their 800#, which would give them important feedback about their ITM channel Colgate Palmolive could develop a survey on their website, to capture data on customers. CP could then market to these customers via direct mail or e-mail. E-mail is more cost effective than direct mail, but direct mail can be produced for pennies a package, depending on quantity of the mailing.
In summation, we recommend that Colgate-Palmolive position the Precision toothbrush as a niche market product during its introductory and growth life cycle stages. Thereafter, during the products’ maturity, Precision should be repositioned to the mainstream market. Our analysis has conclusivly explained that the attributes, benefits and values of the product are best suited for niche consumers and would therefore enjoy the greatest success in such a market. To ensure the success of Precision, Colgate-Palmolive should: Ensure the product does, and continues to, address the specific needs of the stated consumer segments; Price Precision at competitive levels within the super-premium segment so as to offer more value than competitors, for an equivalent cost; Leverage their existing intensive distribution channel relationships to ensure that Precision receives the most effective placement; And, invest industry-standard amounts of capital into the promotion of the new toothbrush.
Kerr DDS, Matthew. Telephone interview. 26 March 2002.
Kotler, Philip. Marketing Management: The Millennium Edition. Upper Saddle River, New Jersey: Prentice Hall, 2000.
Laidler, Nathalie. “Colgate-Palmolive Company: The Precision Toothbrush.” Harvard Business School Case Study (1993): 1-24.
Mediamark Research. 1997 Print Volumes: 32.
United States Patent and Trademark Office, 2002 Online. Available: http://www.uspto.gov/patft/index.html 2002.