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Colgate Palmolive Case Report

Essay by 24  •  April 5, 2011  •  1,302 Words (6 Pages)  •  964 Views

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Colgate-Palmolive (CP), the leading retail toothbrush manufacturer in the United-States is looking to expand its market share by entering into the competitive high-end toothbrush market segment with the introduction of its technologically innovative Precision. Though the product's introduction promised highly profitable returns, it also presented Colgate with a number of challenges including a significant financial investment, fierce competition, manufacturing limitations, and potential cannibalization. After assessing the company's positioning in the market with the consumers perception of the colgate brand and the nature of its competitors SWOT and market share, CP is faced with the decision of how to position, brand, and communicate the Precision advantage to the market. This must be done without a detriment to the already existing product's market or profit. The proposed strategy will conform to the stated corporate goals and mission statement of CP while maximizing long-term profit gain.

The Industry:

The marketing of toothbrushes changed to aesthetic features while dividing into two functional segments - value and professional markets in the 1980's. Later on in the 1980's, the professional market was further segmented and led to the development of the super-premium niche. In 1992, the super premium niche accounted for 35% of toothbrush unit volume and 46% of sales. The three identified market segments are the super-premium segment (price range: over $2.00, unit volume: 35% and dollar sales: 46%), professional segment ($1.59-2.09, 41%, 42% respectively) and value segment (below $1.29, 24% and 12% respectively). The major players in the toothbrush market are CP and Johnson & Johnson, Oral-B. The impending release of the Colgate Precision toothbrush will be CP's first entry into the super-premium market segment that Oral-B virtually controls.

After extensive testing, results show that CP Precision showed a 35% increase in plaque removal and is twice as effective as the leading competitors Oral-B and Johnson & Johnson in the ability to clean at the gum line and between teeth. With this in mind increased advertising and promotion of toothbrushes enhanced the category's visibility contrary to the results in the case of toothpaste and basically have fueled consumer demand for the competition. There is growing competition in the toothbrush market with new entrants into the market sensing an opportunity to grab market share. Toothbrushes provide its main retailers, mass merchandisers, drug stores and food outlets an average margin between 25% and 35%, which has allowed a consistent growth in the shelf space and number of SKU's for toothbrush. A breakdown of the leaders in each market is below.

Mass Merchandisers-Colgate Precision

Drug Stores-Oral B

Food Outlets-Colgate Precision and Johnson & Johnson

Dental Clinics-Oral B

Market Segment

With the increase of the baby-boom generation now at a point where they control most of the nations disposable income, the time has come for them to pay more attention to their teeth and demand or better increase the demand for toothbrushes and other oral care products that will help them. This increased demand for better more effective oral care products is what developed this niche in the early 1990's in the oral care industry.

Therapeutic Brushers: This segment of the market is the newest developing market and CP's newest endeavor with Precision. These consumers use a toothbrush as a tool that helps protects gum disease, tooth decay and gingivitis. The primary aim for these brushers is to avoid oral care problems. They will most likely visit the dentist at least 2 times in a year for routine check-up and follow recommendations of the oral care professional more religiously than others. The leading brand of preference in this group is Oral-B Angle and Oral-B Regular.

Cosmetic Brushers: This segment of customers focus on the cosmetic advantage that toothbrushes give them. This segment can fall prey to the claims of a toothbrush to provide cleaner, whiter teeth and long lasting fresh breath than the other toothbrushes. They are not as religious with following oral care professional's advice, but will follow it because of cosmetic benefits. If the classical or Plus offering can take care of their needs they would not bother with the super premium class toothbrush. Right now, CP's Plus and Classic hold a huge market share in this segment.

Uninvolved Brushers: Consumers in this category are basically indifferent to the advantages of one brand or class over the other. Their primary decision maker for a toothbrush is the convenience to acquire one. The two decision makers that determine their purchase are the ease of availability and most attractive price. The plus will be the obvious choice for most of the brushers in this market segment, but in time, Precision will attract them, with specials and stock-outs of other brands and segments.

Niche vs. Mainstream Marketing

Niche Marketing

Positive: By targeting the Therapeutic brushers CP would be able to:

Charge a Premium

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