Case analysis on Colgate-Palmolive Company: The Precision Toothbrush.

1. KEY PEOPLE
Susan Steinberg –
Precision Product Manager
Nigel Burton -
General Manager

2. YEAR 1991 FOR C-P
Sales $6.06 billion Gross Profit $2.76 billion
R&D $114 million Media Advertising $428 million
Oral care products
Toothbrushes
Total volume share
• Sales increment 12%
• $1.3 billion
• Sales $77million
• Profit $9.8 million
• 23.3%

3. C-P FIVE YEAR PLAN(91-95)
OBJECTIVES
• New product launches
• Entry into new geographic
markets
• Improved efficiencies in
manufacturing
• Continuing focus on core consumer
products.

4. REFORMS DONE BY C-P
•$243 million was spent to upgrade 25 of CP’s
91 manufacturing plants
• 275 new products were introduced worldwide
•Several strategic Acquisitions
•Manufacturing began in China and Eastern Europe

5. C-P Under REUBEN MARK (CEO since 1985)
Sleepy
Inefficient
Lean
ProfitableTRANSISTION

6. ECONOMIC EVALUATION
INCREMENT IN THE SALES OF C-P TOOTHBRUSHES SECTOR

7. CHRONOLOGY OF INNOVATIONS IN TOOTHBRUSHES

8. CONSUMER BEHAVIOUR

9. UNPLANNED BUYING OF TOOTHBRUSHES – 82%

10. COMPETITORS IN ORAL HYGIENE INDUSTRY
• ORAL –B
• JOHNSON AND JOHNSON
• PROCTOR AND GAMBLE
• SMITHKLINE BEECKHAM

11. Oral-B
Volume market share 23.1%
Value share of U.S retail sales 30.7%
SKUs 27
Relied heavily on professional endorsements
Known as “the dentist’s toothbrush.”

12. Johnson & Johnson
New entrant – Reach brand
Volume share 19.4%
Value share 21.8%
SKUs 18
New products included -
Glow Reach (1990)
Advanced Design Reach (1991)

13. Proctor and Gamble
New entrant – Crest Complete
Value share 13%
Media expenditures for the last quarter
of 1992 - $6.4 million
Television commercials theme “Teeth aren’t flat, so
why is your brush.”

14. Smithkline Beecham
New entrant – Aqua Fresh Complete
Volume Share 0.9%
Value share in U.S. retail market 1.1%
SKUs - 6
Television commercials to demonstrate
the “flexibility and gentleness”

15. Need for Advertising
and Promotion?
In Toothpaste Market
Primary Demand
Is Stangant
Advertising Visibilty Demand
And promotion

16. MEDIA EXPENDITURES BY VARIOUS COMPANIES

17. MEDIA EXPENDITURES OF C-P

18. STRATEGIES ADOPTED -1/2

19. STRATEGIES ADOPTED -2/2

20. EVOLUTION OF
DISTRIBUTION
WITH TIME &
ITS EFFECT ON
MARKET SHARE?

21. 1987
Traditional food stores
sold 75% of
oral care products.
Mass merchandisers gained share due to
increased in-store promotional support.

22. 1992
SKU’s for mass merchandisers -35
SKU’s for drug stores -34
SKU’s for food outlets-35
22% of all toothbrushes were
expected to be distributed to
consumers by DENTISTS.

23. Distribution revenue versus Market Share

24. QUALITATIVE EVALUATION

25. INFERENCE –
People preferred plaque
remover brush

26. C-P ‘s
PRECISION MIX
MARKETING

27. REASON TO BUY???
WHAT’S NEW???

28. REMOVES
35% MORE
PLAQUE
THAN
RIVAL
ORAL –B

29. GOALS OF PRODUCT DESIGN AND TESTING
DONE IN TWO STEPS-
• CUSTOMER FEEDBACK
• CLINICAL TRIALS

30. CUSTOMER FEEDBACK 1/2
Consumer brushing style were noted
and accordingly brush was designed
taking care of the point that plaque is found
between gum and teeth surface

31. CUSTOMER FEEDBACK 2/2
Extensive consumer research
was carried out over a period of
18 months to test product
design and characteristics,
marketing concept, and
competitive strengths.

32. CLINICAL TRIALS 1/3
To ensure plaque is
completely removed
each tooth was divided
into 9 areas and the pre
and post brushing plaques
amounts were measured .

33. CLINICAL TRIALS 2/3
To design a bristle and handle
configuration for maximum
plaque removal it was
considered that they need
to all sizes for their free
movement which is crucial for
cleaning all the plaque present.

34. CLINICAL TRIALS 3/3
To ensure cleaning either
horizontally or vertically
removes equal amount
of plaque.

35. DISPLAY TYPES
Counter tops -24-36 brushes
Floor stands – 72 brushes
Side Kicks – 144-278 brushes
Water falls – 288-576 brushes

36. HOW COULD PRECISION BE POSITIONED
AS IN THE MARKET?
MOST EFFECTIVE BRUSH
IN THE MARKET.
CAPTURES 10% OF THE
MARKET SHARE IN FIRST YEAR.

37. PROMOTIONS
Free 5 oz. tube of Colgate toothpaste with the
purchase of a Precision brush
A 50%-off offer on any size of
Colgate toothpaste.
A 50¢ coupon on the Precision brush in
strong Colgate markets.

38. COLGATE PRECISION
• More than a niche product.
• Unique brush with different
lengths and orientation.
• Removes 30% of the plague.
• Could lower the sales of Colgate plus.
• Production capacity is debatable.

39. DISCLAIMER
CREATED BY VARDAN GAIROLA , UPES DEHRADUN , DURING A MARKETING
INTERNSHIP UNDER PROF . SAMEER MATHUR , IIM LUCKNOW