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Secondary Research of a Fmcg Brand Colgate Palmolive

Essay by santosh.jadhav01  •  February 7, 2019  •  Case Study  •  3,081 Words (13 Pages)  •  157 Views

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Abstract:

This analysis is based on secondary research of a FMCG brand Colgate Palmolive which is famous worldwide famous for oral care products. Will also study Colgate Palmolive current

Channel structure, product strategy, pricing structure and promotional strategy and suggest a new approach against each one of them.

Keywords:

FMCG Industry, Colgate Palmolive, Colgate toothpaste, Sensodyne toothpaste, Channel structure, Product Strategy, Pricing Structure, Promotional strategy.

Critical appraisal of the FMCG Industry

Fast moving consumer goods (FMCG) are the fourth largest sector in the Indian economy. There are 3 main segments in this sectors – food & beverages accounts for 19 percent of the sector, healthcare accounts for 31 percent and household & personal care which accounts for remaining 30 percent. (NA, 2010)

The FMCG sector has grown at a faster pace from US $31.6 billion in 2011 to US $ 52.75 billion in 2017-18.

The sector is further expected to grow at a compound annual growth of 27.86 percent to reach US $ 103.7 billion by 2020. FMCG urban segment have steady revenue growth of 8% in FY 19, urban segment to grow at the rate of 15-16 percent of total income of FY 19. (NA, 2010)

The revenue shares from rural segments accounts to 45 percent due to good manufacturing and distribution channel, remaining 55 percent revenue share is from urban segments. The demand for FMCG goods still shown good signs of growth in rural segment due to increase in literacy rate and people Income. (NA, 2010)

FMCG companies are looking to invest heavily in order to bring efficiency in manufacturing to provide products at a lower cost to Indian population. Patanjali planning to spend US $ 743.72 million in food parks of Maharashtra, Madhya Pradesh, Assam, Andhra Pradesh and Uttar Pradesh. Dabur is planning to invest 250-300 crore in FY19 for capacity expansion and domestic market acquisitions (NA, 2010)

Growing awareness, literacy rates will contribute towards growth of consumer market. The government initiatives in agriculture, education and healthcare in the union budget 2018-19 will further benefit the FMCG industry (NA, 2010)

[pic 1]

Source: https://www.ibef.org/industry/fmcg-presentation

Introduction:

Colgate Palmolive is a top global maker and marketer of tooth paste, soap and cleaning products. It also provides pet nutrition products through subsidiary Hills pet nutrition.

The company has operations in 80 plus countries and products in more than 200 countries.

Colgate Palmolive has products for 2 segments – personal, oral and homecare constitutes for 85 percent of sales, and pet nutrition constitutes for 15% of sales. In larger segment, oral care alone constitutes for 45 percent of sales, whereas personal care and homecare each constitutes 20% of sales. (Inc., 2019)

About 75%o of revenue is generated from outside of US, from emerging markets – Latin America, Asia and Central Europe. Colgate Palmolive markets its products through TV, print and other promotional activities. It’s sell to Walmart constitutes 10% of entire sales. (Inc., 2019)

Colgate is a well-known brand of personal care that is based out in the United states. They sell products related to oral hygiene like toothpaste, toothbrushes, mouthwashes and dental floss. It was found in year 1873. The company has around 38000 employees worldwide.

Colgate Palmolive India

  • Headquartered in Mumbai with an annual turnover around 1100 crores
  • Market leaders in oral care
  • Consistently won award for India’s no. 1 of brand consecutively for 3 years.
  • Awarded as Best Employer in India. (Mukherjee, 2019)

Following are the various Colgate products in oral healthcare:

  • Colgate Sensitive
  • Colgate Sensitive-Pro-Relief
  • Colgate Max Fresh
  • Colgate Kids Tooth Paste
  • Colgate Fresh Energy Gel
  • Colgate Herbal
  • Colgate Cabana Family Protection10
  • Colgate Active Salt
  • Colgate Maxwhite (Mukherjee, 2019)

  1. Colgate Pricing Strategy

The amount of money one has to pay to buy a product is price. The other elements of marketing mix recover the cost, while the price generates the revenue to the organization.

The Colgate sets its pricing strategy as per the value delivered to the customer from customer perspective and also takes into consideration the competitor products and prices. (Paul, 2016)

Colgate has used competitive pricing strategy to combat with various competitors. The prices are same as that of competitors or slightly higher. It has also used physiological pricing to play with consumer minds and to its advantage. (https://www.marketing91.com/marketing-mix-of-colgate/, 2018)

In order to meet the various consumer meets, the products have dissimilar pricing. For instance, visible white toothpaste has higher price than that of Max Fresh. Also, the products are available in various sizes like 50gm, 100gm, 200gm, 500gm, so that customer can buy as per needs. The price gets discounted as the quantity/size of toothpaste increases. (https://www.marketing91.com/marketing-mix-of-colgate/, 2018)

Whenever Colgate launches a product it sets the pricing low so that customer can take a trial of it. The Colgate considers the following while setting price of its product. (Paul, 2016)

  • Pricing objectives, value delivered to the customer.
  • Importance of pricing for target customers and how it impacts.
  • Identifies the demand in the market
  • Estimated cost for product manufacturing
  • Competitors price for similar products (Paul, 2016)

[pic 2]

Source :

  1.  Recommended Pricing Strategy

Following are recommendation for Colgate

  • It should make it products available through

Mechanism of Distribution Channels of sector:

The Supply chain in the FMCG is one of the longest supply channel which involves up to 5 levels of intermediaries from manufacturing till the product reaches the market.

Though FMCG are big multinational companies, they don’t have enough sales force to sell the products directly to the end customer, hence there are multiple intermediaries involved like distributor, wholesaler and retailer. The FMCG product costs higher as each of intermediaries adds up to 2-5 percent extra cost to recover their expenses, until the product has reaches to final end customer. (NA, https://www.scribd.com/doc/38538121/Role-of-Distribution-Channel-in-FMCG-sector, 2019)

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