Colgate Precise :A Harvard case study
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Transcript of Colgate Precise :A Harvard case study
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• The Colgate-Palmolive Company is an American worldwide consumer products company focused on the production, distribution and provision of household, health care and personal products.
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• In 1992, Colgate-Palmolive was poised to launch a new toothbrush in the US, named Colgate Precision.
• Susan Steinberg Precision product manager, now had to recommend positioning, branding, and communication strategies for Precision toothbrush.
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• Developing marketing mix for technologically superior toothbrush to faced a highly competitive market with substantial new product activity.
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• What should be the marketing strategies(Positioning , Branding and Communication strategies) for the new toothbrush-Colgate Precision ?
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Prior to finding solution we must first analyse the US toothbrush market to understand the market.
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• In 1991, the U.S. Oral Care market was $2.9 billion in retail sales and had grown at an annual rate of 6.1% since 1986.
• Toothpaste accounted for 46% of this market, mouth rinses 24%, toothbrushes 15.5% , with dental floss and other products making up the remainder.
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• Brand choice was based on features, comfort and professional recommendations.
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• Consumers chose a brush to fit their individual needs: size and shape of the mouth, sensitivity of gums, and personal brushing style.
• The handle, bristles, and head shape were perceived to be the most important physical features of a toothbrush.
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• Oral-B became market leader because of professional endorsements and was known as “the dentist’s toothbrush.”
• The Reach line by Johnson & Johnson (J&J) was positioned as the toothbrush that enabled consumers to brush in even the hardest-to-reach places, thereby increasing the efficiency of brushing.
• Procter & Gamble (P&G) entered with Crest Complete which claimed to have “the ability to reach between the teeth up to 37% farther than leading flat brushes.”
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• As the pace of new product introductions quickened the advertising media expenditures rose.
• Growing competition also increased the frequency and value of consumer promotion events.
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• The longer outer bristles cleaned around the gum line.
• The long inner bristles cleaned between the teeth.
• A superior ,technical, plaque removing device.
• The shorter bristles cleaned the teeth surface.
• The Brush achieved 35% increase in Plaque removal compared to other leading toothbrushes.
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• When positioned as Niche product ,it would target at consumers concerned about gum diseases.
• As such ,it could command a 15% price premium over ORAL-B and would be expected to capture 3% of the U.S toothbrush market by the end of 1st year following its launch.
• No SKU’s Needed to be dropped!
• If Precision is positioned as a Mainstream brush, Precision would capture 10% of the market share at the end of 1st year following its launch.(Very high when compared with Niche positioning)
• The volume shares when positioned as mainstream would be 10% in 1 year when compared to 5% when positioned as Niche product!
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• Mainstream was more appealing as it proclaimed larger market share & volume share at the end of 1 year after launch.
• Greater proportion of sales would occur through mass merchandisers and club stores.
• Raised concerns about ‘CANNIBALIZATION’ of Colgate plus and about pressure on Production Schedules that had been developed for Niche positioning.
• Production capacity increases required 10months lead-resulting in inadequate supply of product.
• Positioning Precision as a mainstream product with 7 SKU’s would probably require dropping one or more existing SKUs.
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• Executives believed that Product should stand alone and the PRECISION brand name should be emphasized.
• Stressing Precision as opposed to Colgate would-limit the extent of Cannibalization of Colgate plus.
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• The toothbrush’s feature of preventing Gum disease motivated the greatest purchase intent among test consumers.
• Additional consumer research revealed that 55% of test consumers found Precision to be very different from their current toothbrushes.
• The research also revealed that the more the consumers were told about Precision and how it worked, the greater the enthusiasm for the product.
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• However, the clichéd look of the brush put the consumers in dilemma.
• Also it was difficult to translate the message of greater plaque removal with a broad consumer appeal, since few consumers acknowledged that they might have gum disease.
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COLGATE-PALMOLIVE should select mass positioning for precision toothbrush. • Majority of consumers tend to focus on technical
characteristics over the aesthetic functional features which make Precision perfect choice for mass market.
• Positioning Precision as the best toothbrush on the market as super premium brush with strong promotion activities.
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• Mainstream Product strategy will bring higher Net Profit of $ 31 and $ 69.7 millions in the first and second year respectively , which is $20 and $ 42 millions respectively.
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• Investing a little more on Advertising and Promotion would not do much harm as it shall give a head start to this potential product.
• Since sampling would be critical to Precision’s success, it would be better to use Dentists to sample consumers since professional endorsements were more credible.
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This presentation was created by Sudeepta Mohanta under the guidance of Prof. Sameer Mathur,IIM L .