Presentation based on Harvard Case Study "Colgate-Palmolive Company: The precision toothbrush"

2. Company Background
 In the year 1991 :
Sales: - $ 6.06 billion
Gross Profit:- $ 2.76 billion
Source:- Harvard Case Study

3. The U.S oral care market-1991
46%
24%
15%
15%
Sales
Toothpaste Mouth Rinses Toothbrushes Others
Source:- Harvard Case Study

4. Major Companies in the market
Major three players in the U.S toothbrush market:-
 Colgate-Palmolive
 Johnson & Johnson
 Oral –B
New entrants:-
 P&G
 Smithkline Beecham

5. Product Segment-1
41%
50%
1%
8%
Sales
Medium-bristle Soft-bristle Extra-soft bristle Firm-bristle
Pie-chart showing sales of different brush types in the U.S
Market(based on bristle strength)

6. Product Segment-2
70%
17%
13%
Sales
Full-sized Compact- sized Youth-sized
Pie chart showing sales of different brush types in the U.S
Market(based on head size)

7. Consumer Behavior(General)
 CP’s consumer research revealed consumers of baby
boom generation became more and more concerned of
their oral health.
 Most consumers believed primary purpose of
toothbrush was removing food particles; plaque
removal was secondary.
 Handle, bristles and head shapes were perceived as
most important physical features of a toothbrush.

8. Consumer Behavior(Specific)
 Therapeutic brushers:- Main aim is to avoid oral care
problems, differentiate among products and search
functionally effective products.
 Cosmetic brushers:- Main aim is to prevent bad breath
and ensure white sparkling teeth.
 Uninvolved Oral Health brushers:- Not affected much
by product type unless faced by some oral care issues.

9. Statistics of various consumer
types
46%
21%
33%
Sales
Therapeutic Cosmetic Uninvolved

10. Competitors to CP
 Oral-B
 Johnson&Johnson(J&J)
 Procter & Gamble(P&G)
 Smithkline Beecham
 Lever
 Pfizer
 Sunstar

11. Oral-B
Market leader since 1960s.
In 1991, held 23.1% volume market share and a 30.7% value
share of the market
Relies heavily on professional endorsements
Well known for its advanced and innovative products ex:- The
“indicator” toothbrush.
Perhaps the biggest competitor for CP due to the dominant
presence in the market sector and a strong brand image.

12. Johnson & Johnson
Entered the U.S market in the 1970’s with its Reach brand.
In 1991, it was ranked third in the U.S market with a 19.4%
volume share and a 21.8% value share.
Relies heavily on television commercials.
New products were launched in the 1990 and 1991.
“Reach Between” is scheduled to be launched in
September’92.

13. Procter & Gamble
Most recent entrant in the toothbrush market with “Crest
Complete”.
After performing sample tests, P&G is expected to launch its
“Crest Complete” in September ,92.
Relies on media for marketing.
Expected to capture 13% value share in the market.
CP needs to critically look for “Crest Complete” as both the
companies are launching their products during the same
time.

14. Smithkline Beecham
Entered the U.S toothbrush market in 1991 with “Aquafresh
Flex”.
By the end of 1991, Aquafresh Flex had a 0.9% share by volume
and 1.1% by value of U.S retail market.
In September 1992, the company expects to expand its
product line.
Smithkline is expected to make an operating loss in 1992.

15. Advertising and Promotion(1992)
0
5
10
15
20
25
30
35
Series 1
Series 2
Bar Graph showing Media Advertising Expenditures
for various companies(1992)

16. Advertising and Promotion
Expenditure for CP(1992)
40%
29%
31%
Expenditure
Media Consumer Promotions Trade Promotions

17. Distribution(1992E)
0
5
10
15
20
25
30
35
40
45
50
Volume Sales
Value Sales
Bar graph showing retail toothbrush sales through different
channels

18. The Precision Marketing Mix

19. Perceived POD’s for Precision
 The Precision toothbrush was a technical innovation.
 Through infrared motion analysis the company
tracked plaque removal from different parts of the
mouth.
 Based on this study, the toothbrush was designed.
 As a result the brush was able to remove 35% more
plaque compared to its competing brands such as
Reach and Oral-B.
 Its design was far more superior compared to
Oral-B and Reach.

20. Positioning comparison:
Niche Vs Mainstream
8
2 3
26.8
7
1.8
Retail Promotion Samples Professional Samples
Unit Volumes reaching customers
Niche Mainstream

21. Positioning comparison:
Niche Vs Mainstream
 The company had two options to launch Precision
either as a Niche product or as a Mainstream
product.
 I feel launching the product as a Mainstream product
is a better option as with help the product in having a
wider connect with the customers.
 The company should effectively communicate about
the technical advancement of the product in a rational
manner.
 The drawback of this is cannibalization of its other
products.

22. Pricing for Precision
•The company needs to work carefully on its pricing strategy.
•The company first needs to stand firm as to whether it
wishes to sell Precision as a Niche or a Mainstream product.
•This will play a critical role in deciding its price.
•The company should base its pricing having calculated all
its all expenses.
•The company should price its Precision product at a
relatively lower price compared to Oral-B. This will help the
company to gain dominance in the market.
•Even though the product is technically superior, too high
prices will not help the product in the long run.

23. Branding
 The question was whether to brand the Precision as an
“independent product” or under the “Colgate brand
name” only.
 Continuing under the Colgate brand would be helpful
for it, owing to the brand image of Colgate, but at the
same time it will pose a risk of cannibalizing the other
products.
 On the other hand branding it as an independent
product reduces the risk of cannibalization but
additional resources will be required to build the
brand name.

24. Communication and Precision
 As the market study revealed that prevention of gum
diseases was perhaps the greatest motivation to
purchase a toothbrush.
 Therefore the company while promoting Precision
should not only advertise its 35% higher plaque
removal capability but also link this with brush’s
ability to prevent gum diseases.
Continued…

25. •Precision should be marketed as a product which will not
only help its customers preventing gum disease but also
help in combating gum problems.
•The company should portray Precision as a “superior
toothbrush” which is far more efficient than other similar
products in the market.
•As far as the advertising budget is concerned the company
should focus equally on all its products(Precision,Classic &
Plus).
•Spending on a single product can prove out to be extremely
risky for the company in case of product failure.
•The company should keep Classic and Plus as a backup.