Colgate MaxFresh Global Brand Roll Out Marketing & Management Strategy for China and Mexico
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Transcript of Colgate MaxFresh Global Brand Roll Out Marketing & Management Strategy for China and Mexico
Agenda
• Executive & Case Summaries
• Colgate-Palmolive Company
• Colgate Max Fresh/US Product Launch
• Mexico and China Launch
• Insights
• Recommendations
• Q&A
Executive Summary
• Organizational Restructuring
• Streamline Product Development
• Optimize Marketing Operations
Case Summary
• February 2005
• Nigel Burton - President of Global Oral Care
• China and Mexico
Colgate-Palmolive Global Financials 2004
• 7% Revenue growth (sales $) • 0.2% Growth in Gross profit • -2% Operating Profit • -7% Net Income
Colgate Max Fresh US Launch
• August 2004
• “Freshness + Whitening”
• “Breath strips” --- uniqueness
• Principal consumer benefit: cosmetic
• Value share for cosmetic benefit toothpastes up by 19%
(2000-2004)
• Main competitor: Crest Whitening Expressions (CWE)
• Big success
CP Organizational Structure Geographic Division – Asia/Latin America • EXECUTION • Responsible for all products in the region • Supervised regional CIC • P&L responsibility • Report to COO
Global Business Development Group – Oral Care (Category Lines) • STRATEGY • Evaluated on Global Market Share • Resource Allocation • Report to COO
Consumer Innovation Center (CIC) – Asia/Latin America
• Work on strategy with GBD Groups • Marketers and product developers • Involved in new product development (Global R&D) • Report to Regional Division Marketing VP
Country Subsidiary – China/Mexico • Develop and execute
local marketing campaigns
• Report to Geographic Division
Go to Market Team
• Launch plan and execution
$
$
$
2004 Toothpaste Market at a Glance
868
348
492.16
285.36
0
100
200
300
400
500
600
700
800
900
1000
China Mexico
US
$ in
Mil
lion
s Total Toothpaste Market
Colgate's Market Share
56.7% 82%
Reasons For Buying Toothpaste
China Shares by consumer benefit 2004
Mexico Shares by consumer benefit 2004
89.3
82.9
10.7
17.1
2000
2004
Total Therapeutic
Total Cosmetic
84.7
87.3
15.3
12.7
2000
2004
Total Therapeutic
Total Cosmetic
China’s preference to cosmetic benefit of toothpaste increased 6.4%; a reflection of changing purchase drivers.
Mexico’s preference to therapeutic benefit increased by 2.6%; a reflection of stronger traditional purchase drivers.
Source: Exhibit 14. Source: Exhibit 7A.
*In the US, therapeutic benefit decreased and cosmetic benefit increased.
CMF China TV Advertisement
CMF Market in China
• $868 million retail toothpaste market
• 1.1% decrease of value shares in 2004 of Colgate Equity from 2001
• 8.4% increase of value shares in 2004 Crest from 2001
• “Fresh breath” top reason for buying toothpaste in China
Sources: Table C & Exhibit 7B.
CMF Adaptation Strategies in China
Adaptation Need Costs Time Frame
New Commercial/TV Ad ✓ $500,000 -
Renaming of “Breath Strips” ✓ - -
Celebrity Endorser ✗ Up to $1,000,000 -
New Flavors* ✗ $200,000 32 weeks
Filling Machines !!! $1,500,000 -
Packaging Research I !!! $7,000 12 weeks
Packaging Research II !!! - 24 weeks
Color Testing* ✗ $7,000 4 weeks
*Does not fall in either Therapeutic or Cosmetic Value Share.
New packaging is 20% variable cost premium/package. Packaging for existing tube in carton format is 40% of COGS
CMF Mexico TV Advertisement
CMF Market in Mexico
• $348 million retail toothpaste market
• 82% market value share of Colgate
• 10% approximated market share of Crest
• Relatively flat toothpaste demand
CMF Adaptation Strategies in Mexico
Adaptation Need Costs Time Frame
New Commercial/TV Ad ✓ $500,000 -
Renaming of “Breath Strips” ✓ - -
“New Freshness” Message* ✓ - -
Pricing Strategy ✓ - -
Sources of Volume ✓ - -
*An additional “Therapeutic Benefit” message would have possibly increased sales.
CMF Adaptation Matrix
Adaptation China Mexico
New TV ad Must have Must have
Celebrity endorser Nice to have Nice to have
New Flavors Nice to have Nice to have
New Packaging Nice to have Nice to have
Pricing Must have Must have
Sizes Must have Must have
Renaming “Breath Strips” Must have Must have
China adapted to their local market better than Mexico, according to concept and product tests. However, better test results do not necessarily mean that there will be better profits.
CMF Comparative Media Investments
China • 13.5 million dollars • 6 months duration • 6% expected share of voice (SOV)
– Internet ads – Dedicated website – PR event – in-store displays – trade support – consumer sampling advertising to
communicate
WHOLE NEW DIMENSION OF FRESHNESS
Mexico • 2 million dollars • 8 months duration • 14.7% expected share of voice
(SOV). – In-store merchandising – Sampling – Advertising – Public Relations will communicate
single-minded benefit of:
NEW DIMENSION OF FRESHNESS
CMF Launch Pro-Forma Profit-and-Loss 2005 & 2006
China Mexico
10336
4848
5488
1406
1500
2582
13487
5458
8029
1834
1400
4795
Net Sales (In millions)
Cost of Goods Sold
Contribution Margin
NonVariable Ovherhead
Marketing Expenses
Operating profit
Mexico Year 1
Mexico Year 2
20303
10054
10249
4710
15880
-10261
23773
9745
14028
5515
10000
-1487
Net Sales (In millions)
Cost of Goods Sold
Contribution Margin
NonVariable Ovherhead
Marketing Expenses
Operating profit
China Year 1
China Year 2
Source: Exhibit 13 Source: Exhibit 20
Projected CMF Growth & Marketing Campaign ROI
Market Sales (tons) Growth YOY 2005-2006
Net Sales Growth YOY 2005-2006
ROI 2005 ROI 2006
China 12.5% 17% -165% -85%
Mexico 15% 30% 72% 242%
More marketing dollars spent does not necessarily lead to more sales & profits.
Source: Computed from Exhibits 13 & 20
CMF Launch Pro-Forma Profit-and-Loss 2005 & 2006
China Mexico
10336
4848
5488
1406
1500
2582
13487
5458
8029
1834
1400
4795
Net Sales (In millions)
Cost of Goods Sold
Contribution Margin
NonVariable Ovherhead
Marketing Expenses
Operating profit
Mexico Year 1
Mexico Year 2
20303
10054
10249
4710
15880
-10261
23773
9745
14028
5515
10000
-1487
Net Sales (In millions)
Cost of Goods Sold
Contribution Margin
NonVariable Ovherhead
Marketing Expenses
Operating profit
China Year 1
China Year 2
Source: Exhibit 13 Source: Exhibit 20
Gross Revenue : Cost Ratio Year 1
$0.64 : $1
Gross Revenue : Cost Ratio Year 2
$1.40:$1
Gross Revenue : Cost Ratio Year 1
$3.65 : $1
Gross Revenue : Cost Ratio Year 2
$5.70: $1
Recommendation 1
Organizational Restructuring • Geographic Divisions, Global Business
Development Units and the Consumer Innovation Center groups should have communication and reporting protocols in place.
• Everyone should have ROI accountability
• Control and allocation of marketing budget
Change in Organizational Structure Geographic Division – Asia/Latin America • EXECUTION • Responsible for all products in the region • Supervised regional CIC • P&L responsibility • Report to COO
Global Business Development Group – Oral Care (Category Lines) • STRATEGY • Evaluated on Global Market Share • Resource Allocation • Report to COO
Consumer Innovation Center (CIC) – Asia/Latin America
• Work on strategy with GBD Groups • Marketers and product developers • Involved in new product development (Global R&D) • Report to Regional Division Marketing VP
Country Subsidiary – China/Mexico • Develop and execute
local marketing campaigns
• Report to Geographic Division
Go to Market Team
• Launch plan and execution
$
$
$Product launches evaluated by ROI
Recommendation 2
Streamline Product Development • Develop product features and packaging with
strict regulations in mind to avoid waste of R&D resources.
• Local market adaptations and added complexities should only be executed if it can contribute to the bottom line.
Recommendation 3
Optimize Marketing Operations • Marketing dollars need to be spent with ROI
in mind.
• Marketing campaigns should be executed by country subsidiaries because they have better knowledge of the market.
Contact Us
Stella Schour
[email protected] Linkedin.com/in/sdschour
Ognyana Toneva
[email protected] Linkedin.com/in/ognyanatoneva