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Colgate-Palmolive Company: The Precision Toothbrush

Essay by 24  •  December 9, 2010  •  1,773 Words (8 Pages)  •  2,508 Views

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I. Problem Definition

Colgate-Palmolive (Colgate) needs to determine how Precision should be positioned in the tooth brush market. Colgate must decide what segment of the market to target and how Precision should be marketed to its target market.

II. Solution Possibilities

Colgate's objective is to position and market Precision to fully utilize the products potential. To accomplish this objective, Colgate must determine what segment Precision should target, the super premium niche or the broader professional brush market, and the marketing mix that would be most effective for that position.

Colgate can position Precision as a niche product. Colgate does not have a tooth brush currently positioned in the super premium niche. Oral B, Johnson & Johnson, Procter & Gamble and Smithkline Beecham currently compete in this product segment. Due to the number of quality competitors in the tooth brush market, product innovation is an important factor to be able to differentiate the product and to succeed. Precision was developed to compete in the super premium segment focused at consumers who are concerned about gum disease. As a niche product, Precision is expected to extract a 15% price premium above Oral-B and to gain a 3% market share in its first year and 5% in year two. Precision's factory list price would be priced at $2.13.

The super premium niche is growing. It accounts for 35% of unit volume and 46% of dollar sales. Baby boomers are more concerned about the health of their gums as compared to cavity prevention. Baby boomers are also willing to pay a premium for toothbrushes that address this issue. The target customer segment for Precision in the super premium niche is therapeutic brushers, who make up 46% of adults. (Table B) Therapeutic brushers are high involvement users and differentiate among products to search out functionally effective oral health products.

Precision can be marketed to these consumers using a niche positioning strategy. Precision's design meets baby boomers, and in particular, therapeutic brushers expectations. It was designed using infrared motion analysis to track brushing movements and plaque removal. The three different lengths of bristles provide a triple action brushing effect to clean the teeth surface, in between teeth and around the gum line. Precision achieved a 35% increase in plaque removal and at the gum line was twice as good as its competitors in removing plaque. Precision can effectively differentiate itself within the super premium niche and command a higher price.

Another option for Colgate is that instead of positioning Precision as a niche product, Colgate could position Precision in the mainstream. If Precision were positioned with a mainstream strategy, Precision would have the opportunity to realize its sales and profit potential. With a mainstream positioning strategy, Precision would be priced at $1.85 in the professional segment. Precision would expect to gain 10% of the market in its first year and 14.7% in year two. A mainstream positioning strategy would focus on overall benefits of the toothbrush instead of being more focused on the prevention of gum disease.

If Precision is positioned as a niche product, there is not an issue with production capacity. When Precision was designed, the production schedule was based on it being a niche product. If Precision is positioned as a mainstream product, this would put a strain on production capacity. First year production would jump from 13 million units in a niche positioning strategy to 42 million units in a mainstream positioning strategy. It would take a 10 month lead time to increase capacity. Switching to a mainstream strategy at this time would likely result in shortages of available product. While being perceived as a "hot product" may be desirable, the consumer will purchase a competitors product if your "hot product" is not available. When it comes to be the next time for the consumer to purchase a new toothbrush, it may be more difficult to draw them away from the brand they purchased when your "hot product" was unavailable. Thus, market share potential may not be realized.

In addition to the shortage of available product issue, the capital investment necessary to take a mainstream positioning strategy is much greater. The capital investment for the first 2 years of production in a mainstream positioning strategy would be $13 million as compared to $4.55 million in a niche positioning strategy. Thus, there is more capital at risk positioning Precision as a mainstream product versus a niche product.

One issue consumer testing showed that Precision must overcome is that the brush looked unusual and consumers had mixed first impressions. However, testing showed that once consumers tried Precision, 77% claimed it was much more effective than their current toothbrush and that "You could really feel it working." The more consumers learned about Precision, the more consumers liked it. Thus, the niche positioning strategy where the strengths of the product can be stressed may be more effective in obtaining consumer use and acceptance of Precision. There is a strong risk that Precision's appearance will be a detriment in the mainstream positioning strategy.

Precision's advantage over its competitors is its effectiveness against gum disease based upon plaque removal. It is difficult to communicate the primary benefit of reduced gum disease from extra plaque removal for broad consumer appeal to compete in the mainstream positioning. (Table B). Other than Colgate Plus, there is only one competitor, Plax, who currently stresses plaque removal. (Ex. 9) Precision could be advertised with a broader message, but that would ignore its primary advantage over its competitors.

Increased competition has caused greater spending on advertising and promotions. (Exs. 8 and 11). Also, the frequency and value of consumer promotions, such as free tooth paste when a toothbrush is purchased, coupons, buy one get one free promotions, have increased. In 1992, media support increased 49% and consumer coupons increased 48%. Using a niche positioning strategy, advertising costs, consumer promotions and trade promotions would be significantly less than a mainstream position strategy. (Table E). Advertising costs would be approximately 3 times more in a mainstream strategy than the niche strategy. As a result of marketing Precision as a mainstream product Colgate

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