This presentation has been created during marketing internship under Prof Sameer Mathur, IIM Lucknow.

1. Colgate Palmolive Company :
The Precision Toothbrush
Harvard Business School Case

2. Company Background

3. In 1991
Total sales : $6.06 billion
Gross profit : $2.76 billion
R & D expenses : $114 million
Advertisement expenses : $428 million

4. • It emphasized new product launches and
entry into new geographic markets.
• 91 manufacturing plants & 275 new products
were introduced worldwide
• Gross margin rise 39% to 45%
• Annual volume growth : 5%
• International sales accounted 64% of sales

5. The Main Players

6. • Reuben Mark, CP’s C.E.O
• Susan Steinberg, Precision product manager,

7. Colgate-
Palmolive’s
oral care
business

8. • World toothpaste market share – 43%
• World tooth brush market share – 16%
• Worldwide sales - $1.3 billion
• Operating profits - $9.8 million
CP held the number one position in the U.S.
retail toothbrush market with a 23.3% volume
share.

9. Operating statements for CP’s U.S.
toothbrush business since 1989.
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
1989
1990
1991
1992E

10. The U.S Toothbrush Market

11. • US oral care Market worth : $2.9 billion
• Dollar sales of toothbrushes had grown at an
average rate of 9.3% per annum.
• In 1992 they increased by 21% in value and
18% in volume, due to the introduction of 47
new products and line extensions.

12. Oral care Market
Retail sales ($453 millions)
Toothpaste
Mouth rinses
Toothbrush
dental floss and others

13. New product introductions since 1980
DATE New Product Introductions Main Feature
1950s Oral-B Classic Traditional square head
1977 Johnson & Johnson Reach First angled handle
1985 Colgate Plus First diamond-shaped head
1986 Lever Bros. Aim Slightly longer handle
1988 Johnson & Johnson Prevent Aids brushing at 45 angle
Colgate Plus Sensitive Gums Softer bristles
1989 Pepsodent “Commodity” brush
Oral-B Ultra Improved handle
1990 J&J Neon Reach Neon-colored handle
Oral-B Art Series Cosmetic feature
1991 Colgate Plus Angle Handle Diamond-shaped & angled
Colgate Plus Wild Ones Cosmetic feature
J&J Advanced Reach Design Rubber-ridged, non-
slip handle
Oral-B Indicator Bristles change color
Aquafresh Flex Flexible handle neck
Pfizer Plax Groove for thumb
1992 Crest Complete Rippled bristles
Colgate Precision Triple action bristles

14. Product Segments
Value
Proffesional

15. Sales Share
Product segment Price Unit volume sales Dollar sales
Super premium
brushes
$2.29 - $2.89 35% 46%
Professional brushes $1.59 - $2.09 41% 42%
Value Around $1.29 24% 12%

16. Toothbrushes differed by bristle type
PRODUCT NATURE UNT VOLUME’S SALE GROWTH RATE
Firm bristle brushes 8% -13%
Medium bristle brushes 39% -4%
Soft bristle brushes 48% 7%
Extra-soft bristle brushes 5% rapidly

17. Consumer Behaviour

18. CP estimated that 82% of toothbrush
purchases were unplanned, and research
showed that consumers were relatively
unfamiliar with toothbrush prices.

19. CP’s consumer research indicated that
consumers of the baby boom generation were
becoming more concerned about the health
of their gums as opposed to cavity prevention
and were willing to pay a premium for new
products addressing this issue.

20. Brushing Habits
Before
breakfast
45%
After breakfast
57%
After lunch
28%
After dinner
24%
Before Bed
71%

21. Brush changing Behaviour
48% changed brushes at least 3 months
When their toothbrushes became worn – 70%
After seeing dentist – 11%
Switch by impulse – 3%
65% of consumers had more than one toothbrush
24% kept a toothbrush at work.
54% had a special toothbrush for traveling.

22. Reason for using a brand
Main Reasons for Using a Brand Percent of Consumers
• Fits most comfortably in my mouth 63%
• Best for getting at hard-to-reach places 52%
• The bristles are the right softness 46%
• The bristles are the right firmness 36%
• Toothbrush my dentist recommends 35%
• Important part of my oral care regimen 30%

23. INVOLVED ORAL HEALTH
CONSUMERS - THERAPEUTIC
BRUSHERS (46% of adults)
INVOLVED ORAL HEALTH
CONSUMERS - COSMETIC
BRUSHERS (21% of adults)
UNINVOLVED ORAL HEALTH
CONSUMERS (33% of adults)
85% brush at least twice a day,
62% use a professional brush
and 54% floss regularly
85% brush twice a day,
81% use mouthwash,
54% use breath fresheners,
69% floss,
54% use a professional brush
20% brush once a day or less,
28% use only regular
toothbrushes
54% floss
66% use mouthwash
Major toothbrush brands used
are Oral-B Angle and Oral-B
Regular followed by Colgate
Plus
and Reach.
Major toothbrush brands used
are Colgate Classic and Oral-B
Regular followed by Colgate
Plus and Oral-B Angle
Major toothbrush brands used
are
Colgate Classic and Oral-B
Regular
followed by Colgate Plus and
Reach

24. Major Competitors
MAJOR
COMPETIT
ORS

25. Toothbrush brand prices : 1992
Super-premium Average retail selling price
• Oral-B Indicator $2.65
• Oral-B Regular $2.51
• Crest Complete $2.40
• Reach Advanced $2.38
• Aquafresh Flex $2.32
Professional
• Colgate Plus $2.00
• Reach Regular $2.01
• Pepsodent Prof. $1.88
Value
• Colgate Classic $1.22
• Pepsodent Regular $1.25

26. Number of Stock-keeping units
Brand Adult Teen/Child
Colgate 28 8
Oral B 16 5
Reach 14 4
Crest complete 10 0
Aquafresh flex 6 1
Lever 7 2
Plax 2 1
Total 83 21

27. Advertising

28. Principal Toothbrush Media Advertising Expenditures
and Shares of Voice: 1991-1992E
1991 1991 1992E 1992E
Media $MM Share Voice(%) Media $MM Share Voice(%)
Colgate Plus 7 19 8 15
Reach 15.5 42 17.1 31
Oral B 10.2 27 11.2 20
Crest Complete 0.4 1 6.4 12
Aquafresh flex 0.4 1 10 18
Pfizer Flex 2.3 6 2.2 4

29. Tag lines of competitor brands
Crest Complete
“Only Crest could make a
brush
this complete.”
Aquafresh Flex
“For gentle dental care”
Advanced Design Reach
“Advanced Design Reach”
Oral-B Indicator
“The brand more dentists
use”
Plax
“The new Plax, plaque
removing toothbrush”

30. Advertising and Promotion Expenditures for Colgate-Palmolive
Toothbrushes: 1989-1992E ($ in thousands)
1989
Media
Consumer
promotions
sales
promotion
1990
Media
consumer
promotions
trade
promotions
1991
media
consumer
promotions
trade
promotions
1992E
media
consumer
promotions
trade
promotions

31. Distribution

32. As a result, many retailers were more receptive to adding new
toothbrush products than new varieties of toothpaste.
Toothbrushes provided retailers with an average margin of
25% and 35%

33. Retail Toothbrush Sales: 1989-1992E
1989 1990 1991 1992
Food stores 175 175 192 236
Drug stores 123 131 148 168
Mass
merchandisers
31 69 89 114
Military 5 5 5 6
Club stores 4 11 15 19
Others 4 4 4 4

34. Competitor Market Shares: 1991-1992E
Brand (Parent Co) Market Share (%) 1991 Market Share (%) 1992E
Oral-B (Gillette) 34.0 31.9
Butler (Sunstar) 20.2 18.9
Colgate (CP) 16.1 19.4
Reach (J&J) 9.5 8.9
Pycopy (Block) 8.1 7.6
Aquafresh Flex (Beecham) 0 0.9
Crest Complete (P&G) 0 1.7
Other 12.1

35. The Precision Marketing Mix

36. Product Design & Testing
Researchers used infrared motion analysis to
track consumers’ brushing movements and
consequent levels of plaque removal.

37. CP developed a unique brush with bristles of
three different lengths and orientations

38. In initial clinical tests, the brush achieved an
average 35% increase in plaque removal,
compared with other leading toothbrushes,
specifically Reach and Oral-B.

39. At the gum line and between the teeth, the brush
was even more effective, achieving double the
plaque removal scores of competitor brushes.

40. R&D taskforce had 5 main goals.
Determining the acceptance of the new toothbrush design
Creating a bristle configuration and handle design offering maximum plaque- removing
efficacy
Establishing an index to score clinical plaque-removal efficacy
Testing the between-teeth access of different toothbrush designs.
Understanding brushing techniques

41. How to position the product and
the corresponding branding and
communications strategies ?

42. Positioning
Niche positioning OR
Mainstream positioning?

43. How units volume reach consumer
• Units retail
• Units consumer
promotional
sampling
• Units through
proffesionals
• Niche positioning
strategy
• Year 1 8MM
• Year 2 15MM
• Year 1 2MM
• Year2 2MM
• Year 1 3MM
• Year 2 3MM
• Mainstream
positioning
strategy
• Year 1 26.8MM
• Year 2 44.1MM
• Year 1 7MM
• Year2 7MM
• Year 1 8MM
• Year 2 8MM

44. Capacity & Investment costs
Investment Cost Annual Capacity Depreciation time
Tufters $500,000 3MM Units 15 years
Handle Molds $300,000 7MM Units 5 years
Packaging $150,000 40MM Units 5 years

45. Alternative Positioning Scenarios for Precision
Precision as a Niche Product Precision as a Mainstream
Product
Planned capacity unit volume 33 MM units 101 MM units
Investment in capacity, $4.550 M $13 M
Depreciation costs $766,667 $2,156,667
Manufacturer per unit cost $0.66 $0.64
- Manufacturer price
- Suggested retail price
$2.02
$2.89
$1.76
$2.49
Advertising and promotion
costs
$22.9 Million $61.8 Million

46. A financial analysis estimated profits
for both market positions
Niche estimated net profit over 2 years :
$12,527,333Mainstream estimated net profit over 2 years :
$9,515,333

47. BRANDING

48. Colgate Precision, Colgate System III, Colgate
Advantage, Colgate 1.2.3, Colgate Contour, Colgate
Sensation, and Colgate Probe.
Colgate Precision was viewed
appropriate

49. “Colgate Precision” or “Precision by
Colgate.”

50. Precision by Colgate
Stressing Precision as opposed to Colgate would,
it was argued, limit the extent of
cannibalization of Colgate Plus.

51. COMMUNICATION AND
PROMOTION

52. The results of these tests indicated that a claim
that the toothbrush would prevent gum
disease motivated the greatest purchase
intent among test consumers.

53. You can really
feel it working
• “You can really feel it
worki

54. There was considerable debate over the CP toothbrush
advertising and promotion budget, which amounted to
$24.1 million in 1992, with $9.6 million in advertising
and $14.4 million in consumer and trade promotion.

55. Free 5 oz. tube of Colgate toothpaste (retail value of
$1.89) with the purchase of a Precision brush
50%-off offer on any size of Colgate toothpaste (up to
a value of $1.00) in conjunction with a 50¢ coupon
Consumer promotions

56. Another important tactic was to use dentists to
sample consumers since professional
endorsements were believed important to
establishing the credibility of a new
toothbrush.

57. Copies
of the
Adverti
semen
ts used
in the
Consu
mer
Conce
pt
Tests

58. DISCLAIMER
This presentation is created by Anirjit
Mitra, Jadavpur University during a
marketing internship under Prof
Sameer Mathur, IIM Lucknow