Colgate-Palmolive Case Study Essay Sample

July 26, 2017 Marketing

I. Problem.

In 1991 and 1992 Colgate-Palmolive ( CP ) been a dominant force in the Oral Care industry. chiefly in the toothbrush section. CP has been an successful company since the debut of Colgate Plus. a toothbrush with a diamond-shaped caput. in 1985. CP has systematically continued with research and development since the Colgate Plus discovery. However. when Aim entered the market in 1987. they focused on comfort. which made Colgate’s market portion suffer. CP has a alone toothbrush that is certain to be successful in toothbrush market once it the merchandise launches. Preciseness. There are several issues that CP must turn to in order to derive full-potential market incursion for the new Precision. A selling mix must foremost be created to guarantee full-potential market incursion. Besides Precision needs to be communicated and branded. and to the consumer in such a manner that it is more desirable than other toothbrushes on the market. Then an advertisement and publicities budget must be constructed. in order to perforate the market. Finally. an acceptable profit-and-loss pro forma must be created enabling Precision to make its full potency.

In order for Preciseness to be a successful merchandise in the toothbrush market the following two aims must be met:

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* Increase market portion by 8 % within 2 old ages ( 3 % in twelvemonth 1 and 5 % addition in twelvemonth 2 ) .

* Decrease the hazard of cannibalization of the Colgate Plus market.

* Expand into new geographic markets.

II. Situation

Colgate Palmolive is a planetary leader in family and personal attention merchandises. The strengths of CP include the followers:

* Colgate is a well-known trade name name in the Oral Care industry.

* CP is making a new and advanced merchandise. Preciseness.

* CP has up-graded 25 of 91 fabrication workss.

* CP acquired Mennen. a men’s toilet articles company.

There are a twosome of failings that Colgate Palmolive has. The failings are:

* CP has been the dawdlers in advertisement and selling in the late 1980’s.

* Colgate has ne’er placed any toothbrushes in the “Super-premium” toothbrush class.

Consumers concerns sing have shifted from “cavity prevention” to “healthier gums. ” The babe boomers are more concerned with healthier gums instead than the whiteness of their dentitions and are willing to pay more for a superior toothbrush that would protect their gums against disease.

Initially there were two sectors of the toothbrush market: value and premium. There is now an chance for “super-premium” market to be created. Colgate Palmolive is concentrating on the new “super-premium” niche market and is determined to run into the babe boomer desire.

Oral-B is Colgate Palmolive’s major rival followed by Johnson & A ; Johnson. In the early 1990’s two big corporations companies. Proctor & A ; Gamble and Smithkline Beecham entered the Oral Care market. Both new rivals were trying to come in the “super-premium” toothbrush market.

The Marketing Mix below is dependent upon the undermentioned external chances:

* Penetration of foreign market.

* Consumers are presently concerned with gum-care.

* Food shops have dramatically increased the shelf infinite for Oral Care merchandises in 1992.

The one external menace that CP faces is the entryway of Procter & A ; Gamble and Smithkline Beecham into the Oral Care market. This is the merely major menace to CP ; nevertheless. it should non be taken lightly. In order to choose the proper monetary value. topographic point. and positioning for Precision the competition is the most of import factor.

Marketing Mix.

A. Merchandise

The Precision toothbrush that CP developed is a alone coppice with 3 different bristle lengths and angles. This design allows for 35 % more plaque remotion and besides proves to be more effectual in cut downing gum disease than the prima coppices. specifically Reach and Oral-B.

B. Monetary value

The monetary value of the Preciseness when marketed as a “super-premium” toothbrush would be $ 2. 02 and $ 2. 89 for maker retail monetary value and suggested retail monetary value. severally. The monetary value of the Preciseness when marketed as a premium toothbrush would be $ 1. 76 and $ 2. 13.

C. Place

The Precision toothbrush will be placed on the retail shelves between the Colgate Plus and Oral-B merchandise lines. Retail advertisement will dwell of in-store shows to increased toothbrush gross revenues. As a “super-premium” toothbrush. Precision would be carried chiefly by nutrient and drug shops. As a premium toothbrush. a larger proportion of gross revenues would happen through mass merchants and nine shops.

D. Promotion

A forceful advertisement run that demonstrates the advantage of the new toothbrush will be implemented if Precision is placed in the market as a niche merchandise. Preciseness positioned as a mainstream merchandise will be promoted through pecuniary inducements such as voucher or discounts. The Preciseness will besides be promoted to dentist offices. Free toothpaste will be included with the purchase of a Precision coppice.

III. Options

There are two options in which CP can market Precision. They can either market it as a premium toothbrush to the mainstream market or as a “super-premium” toothbrush to a niche market. There are advantages and disadvantages of each market scheme alternate. By weighing the advantages and disadvantages a determination will be made finding these factors.

There are a twosome disadvantages when marketing Precision as a premium toothbrush to the mainstream market. The drawbacks include:

* Cannibalization of the Colgate Plus.

* A slow traveling Children’s coppice line would necessitate to be eliminated

There are a twosome advantages when marketing Precision as a premium toothbrush to the mainstream market. The advantages include:

* The demand could make the consumers to do Preciseness a hot merchandise.

* Increase gross revenues and market portion.

There are a twosome disadvantages when marketing Precision as a “super-premium” toothbrush to a niche market. The disadvantages include:

* The mark market is much smaller than the mainstream market.

* There besides will be less part to net net income.

There are a several advantages when marketing Precision as a “super-premium” toothbrush to a niche market. The advantages include:

* The niche market could subsequently be broadened to mainstream place.

* Less cannibalization of the Colgate Plus.

* There is less competition in the “super-premium” niche market.

IV. Evaluation

Puting Precision into the mainstream market will increase the per centum of cannibalization of the Colgate Plus toothbrush. This is due to them viing in the same market section ; consumers would most likely purchase the Preciseness if it was in the same monetary value scope as the Colgate Plus. Besides. by extinguishing a slow moving Children’s line CP is now inquiring consumers of that line to exchange to a new merchandise. The consumers. or parent ( s ) for that affair. may take a different trade name all together. The Preciseness being introduced mainstream would most likely go a hot merchandise and the demand would be high. therefore increasing gross revenues.

By puting Preciseness in the “super-premium” niche market. the mark market is much smaller than the mainstream market. This would cut down the part to the net net income when compared to the mainstream selling attack. However. the niche market could subsequently be broadened to the mainstream market. This would let for much less cannibalization of the Colgate Plus. since most consumers in the mainstream market budget for the purchase of a toothbrush does non fluctuate much. Besides. there is much less competition for Colgate in the “super-premium” market. which will let for easier market incursion.

V. Recommendation & A ; Justification.

The recommendation is for Colgate Palmolive launch the Precision into the “super-premium” niche market. CP can take down monetary value of the toothbrush one time the gross revenues of the Precision tableland or diminution. which will let for premium toothbrush market incursion. This will let for maximal incursion and growing in both markets. On the undermentioned page is a Marketing Mix profit-and loss pro forma that displays the net incomes after twelvemonth 1 and twelvemonth 2.


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