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Global Adventures Of Colgate Palmolive

Essay by 24  •  November 7, 2010  •  1,857 Words (8 Pages)  •  1,302 Views

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Today there are many firms whose products are widely known and are available

in many countries all over the world, but international marketing is not a simple activity that can be successfully applied by every firm. First, to achieve success in international marketing activities, a company should consider economic, social and cultural facts about the countries which the firm plans to expand its activities to. These facts are extremely important because they have a great impact on the demand for a certain product. William M. Pride and O.C. Ferrell states that "the effects of environmental forces on customers and marketers can be dramatic and difficult to predict" (pp.6). This results in the need for a reliable and carefully developed marketing research. A company should conduct marketing researches to bring down the level of uncertainty and risk to minimum, by acquiring true and accurate information about the environmental forces. Thus marketing research, environmental scanning and analysis are crucial for a company which involves in international marketing activities. And finally the choice of the level of commitment plays an important role on the success of international firms. A company considering marketing in a foreign nation may prefer expansion through a joint venture or a trading company rather than direct ownership, if there are many uncertainties about the marketing environment of that country. Colgate-Palmolive is a good example of the companies which are successful in international marketing and its success is a result of its expansion strategy which emphasizes on all these essential facts.

Colgate-Palmolive Co. was founded in 1806 by William Colgate, and today the company sells its well-known products in more than 150 countries. Colgate-Palmolive is in a very desirable position, which many other firms can only dream of. However the firm does not seem to be satisfied with all its successes and achievements; and is directed towards new regions to seek new opportunities. In early 1990s Colgate-Palmolive began its attempts on expanding its marketing activities into the former East Germany, Poland and Mexico.

After the fall of the Berlin Wall, a new market formed which meant new market opportunities for Colgate-Palmolive Co. as well as for many other companies from around the world. The changing political, social and economic forces in the region had strongly influenced the marketing strategy that the company adopted for its expansion into the former East Germany.

As historical data states, after years of communist and socialist regime, East Germany combined with West and adopt liberalism. However the old regime left some problems, one of which is the lack of sales force. Since the government was producing and distributing goods to citizens, the term "sales" nearly dissappeared. It was very difficult to find people to hire, with sales and marketing skills. Colgate-Palmolive adopted a proactive approach and got rid of this problem by establishing sales training programmes in the region; but the company was aware that those training programmes would be time-consuming and costly. To avoid losing time Colgate-Palmolive hired experienced West German salespeople while new ones were being trained.

The company might also have faced the problem of inadequate marketing channels, which are organizations directing products from producers to customers. Colgate-Palmolive Co. needed marketing channels to make products available when the customer wanted them, in locations where the customers wished to purchase them. Without distribution channels, exchange transactions would be much more complex and costly. Since there were not enough wholesalers in East Germany, the company had to deal with hundreds of shops to market its products. To minimize the complexity and the costs of distributing products, Colgate-Palmolive Co. should have focused on the distribution and developed an efficient strategy.

Despite those problems, Colgate-Palmolive had some advantages that would help the company to succeed in the former East Germany market. For consumers living in the region, the product adoption did not seem to be a serious problem because people already had an image of Colgate-Palmolive's products. They were aware of the products and had interest on them, since they had seen advertisements of Colgate (toothpaste), Palmolive (shampoo), Fab (cleanser) and many other products of the company on West German television at times that they were unable to buy them. Although they had not used any of the firm's products, East German consumers considered those as high quality products and were eager to get them. This was very important because Colgate-Palmolive did not need to put that much emphasis on promotion strategy as it did on distribution. So the company adjusted its marketing strategy according to the requirements of the environmental situation. While developing its marketing mix, it focused on the distribution variable and gave less importance to promotion variable. By doing so it might have used a part of the budget separated for promotion to finance distribution activities.

These are the environmental facts that Colgate Palmolive had to consider and cope with in the former East Germany. The firms which are eager to expand into regions or countries with full of economic and political uncertainties and risks, should always exercise a degree of caution. In such regions the environment is very unstable and full of fluctuations; so the environment should be carefully analyzed. But not only the firms expanding in such regions need to be cautious but every firm should consider the changing environmental forces and should take necessary precautions. Changes in the marketing environment may create threats as well as opportunities for the firms. W.M.Pride and O.C.Ferrell claims that "monitoring the environment is crucial to an organization's survival and to the long term achievement of its goals"(pp.25). Therefore companies should always be vigilant to survive in regions like the former East Germany and; environmental scanning, environmental analysis and marketing research help firms to be on alert all the time.

Colgate-Palmolive Co. gave more importance to the use of marketing research in Mexico which is an other area that the firm wanted to extend its marketing activities. It conducted a marketing research whose main purpose was to clarify the social and cultural differences in Mexico; in order to take advantage of marketing opportunities and to avoid unpleasant surprises.

The company conducted a "video anthropological study" to collect primary data about how certain products were actually used and how lifestyles of Mexican consumers influenced this. The research

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