TUGAS MANAJEMEN PEMASARAN

CASE COLGATE PALMOLIVE COMPANY :

THE PRECISION TOOTHBRUSH

Daniella Tello Rioja

Tiara Putri G.H
Annisa Noor
Wisnu Harimurti
Eko Cahyo W.
Magister Manajamen XLII Sore
UNIVERSITAS AIRLANGGA 2014/2015

Colgate - Palmolive Company:

The Precision Toothbrush
Case Summary
In 1992, after evaluating the current market condition and
completing its research and development, Colgate-Palmolive was ready to begin
marketing its newest toothbrush, Colgate Precision.

Of major concern to

Colgate-Palmolive was how to position, brand and communicate this new product
to the general population.

Colgate-Palmolive also had to develop budget

constraints and generate a marketing mix that would maximize the sales and
revenues of the new product.
Colgate-Palmolive was faced with the decision of whether to
promote the new product as a high quality niche product marketed mainly towards
individuals concerned about gum disease, or as a mainstream toothbrush that
would be marketed as the best toothbrush available.

If marketed as a niche

product, Colgate-Palmolive would target a smaller market segment without as

many competitors vying for market share.

A niche market segment would also

be willing to pay a premium for the new toothbrush.

If, however, the toothbrush

were marketed as a high quality mainstream toothbrush, Colgate-Palmolive would

realize revenues from larger volumes of sales despite a lower price and more
competition.
To reach its verdict, Colgate-Palmolive analyzed forecasted data
with regard to potential sales volumes and prices, advertising, packaging, and
manufacturing costs, among other factors.

A summary of this analysis, and a

marketing strategy recommendation follows.

Situation Analysis
Environmental Analysis
In 1992, Colgate-Palmolive (CP) was the global leader in household and personal
care products. It was also the leader in retail toothbrush sales in the United States.

Prior to the 1990s, consumers were satisfied with toothbrushes that were
aesthetically pleasing. As therapeutic toothbrush sales rose it became apparent
that baby boomers were becoming increasingly concerned with their oral health,
specifically their gums. As a result, the toothbrush industry experienced a massive
influx of worthy competitors and the formation of a niche, super-premium market.
In order to gain an edge each competitor worked on developing new toothbrush
technology, forming alliances with dental professionals, expanding advertising
budgets and offering promotions that would grab consumer attention.
Industry Analysis
Not only can the industry be broken down by price models (super-premium,
professional, and value), it can broken down a second time into niche and
mainstream offerings. Consumers of this industry can be sorted into three
categories: therapeutic, cosmetic, and uninvolved.
Competitive Analysis
One promising conclusion that can be drawn from the competitive analysis is that
every company has been caught off guard by the change in consumer behavior,
emergence of new technology, and introduction of new players entering the
playing field. For example, in 1988, Johnson & Johnson introduced new brush
technology only to phase it out by 1992.
In order to get an edge, competitors, Johnson & Johnson, Oral-B, Procter &
Gamble, and Smithkline Beecham (latter two are new competitors), are offering
promotions in the form of coupons, mail-in refunds, and bundles.
Environmental Analysis
Strengths
With 43% of the global toothpaste market and 16% of the global toothbrush
market, CP has defined itself a leader of household and personal are products
worldwide, and positioned itself as the number one retailer of toothbrush products
in the United States. CP utilizes a cutting-edge infrared motion analysis and
technique to measure exact levels of plaqueremoved by its products in consumer
tests. CPs Triple Action head removes 35% more surface plaque and 100% more

gum line and in-between teeth plaque than its competitors products. As a
company with years of experience, CP has formed a strong relationship with
subcontracting manufacturer, Anchor Brush. It has also put together a task force
of research & development, marketing experts, dental professionals, and outside
consultants. Because of its good standing relationship with retail stores, it is able
to position its products on the middle shelf, right between its competitors, Reach
and Oral-B.
Weaknesses
Although industry players are manufacturing products to improve oral health, it
has been difficult to educated consumers of the importance of preventing gum
disease (which is a common motivator to improve dental care habits). One major
advantage that the competitor, Oral-B, has over the other companies is the ability
to say it is recommended by dental professionals. By seeking accreditation from
the American Dental Association, partnering with dental providers, and offering
support to elementary school dental education programs, CP could not only work
on educating the public, it would also position itself to steal market share away
from its main competitor, Oral-B.
Opportunities
In consumer tests, 55% of consumers found the CP Precision model was very
different from other brushes and 77% claimed it was more effective. Seeing as a
majority of consumers are willing to experiment with new brands/models, CP
could make being new, different, and effective the major tenants of its marketing
messaging; along with including messaging concerning their incredible ability to
fight gum disease, it should have a rock solid campaign.
Threats
Because of the recent market saturation, the various producers of oral health care
products have rushed to offer promotional incentives including two-for-one,
buy-one-get-one-free and mail-in refund coupon deals. In order combat this threat,
CP could plan to launch the Precision brush paired with similar promotional offers
and introduce fresh promotional offers such as coupling the toothbrush with
Colgate brand toothpaste. With the increase of in-store advertising, toothbrushes

and toothpastes have been found to sell 170% better when located in close
proximity. The most worrisome threats to CP are from the company itself. If CP
were to release the Precision brush into the mainstream market as the Colgate
Precision, not only would it knock the childrens Plus brush off of the shelves, it
would also cannibalize its flagship Plus model. In order to avoid this, CP should
introduce the model into the niche, super-premium market as the Precision by
Colgate.

Assignment Questions
1. What changes are occurring in the toothbrush category? Asses Colgate
Palmolives competitive position.
Toothbrush manufacturers have poured millions of dollars and hours, to marry
form and function in oral health care products that enable their users to brush
frequently, comfortably, and above all, properly. Along the way, they have built the
U.S. oral care market into a $2.9 billion industry, changed the brushing habits of
millions and turned the lowly toothbrush into a trendy lifestyle accessory.

As the

consumers are becoming more concerned about the health of their teeth, the
toothbrush companies are focusing on helping them have an optimal dental health,
and offering various types of toothbrush; to do this they must be all the time
focused on what the customer's needs are.

And for this reason, the toothbrush

companies have made numerous functional and aesthetic changes to the heads
and bodies their products. Some toothbrushes have an indicator who tells you
when to change the toothbrush; handles were thickened for a more comfortable
grip and lengthened to extend the reach of the bristles. Shaft materials changed,
incorporating translucent and more flexible plastics in the handle and rubber
components fashioned into thumb ridges to help prevent slippage. The toothbrush
market has become very competitive, and Colgate-Palmolive is facing strong
competition for its products from existing companies like Johnson & Johnson and
Oral-B and new companies such as Procter & Gamble and Smith Kline Beecham
who positioned their new product lunches in the super-premium toothbrush

segment.

In 1991, CP launched new products in the U.S market CP and held

43% of the world toothpaste market and 16% of the world toothbrush market.
Other oral care products included dental floss and mouth rinses. In 1991,
worldwide sales of CP's oral care products increased 12% to $1.3 billion,
accounting for 22% of CP's total sales.
Positioning of Precision in the Industry
Niche, Super-Premium, Adult Mainstream, Professional
Product
Niche, Super Premium, Mainstream, Proffesonal
Adult
Product

Competitive,
effective,
unique; no current CP
offering
in
the
super-premium range.

Premium
offering
compared to others in this
market segment.
Promotion

Distribution

35% more effective on

surface teeth and 100%
more effective at gum
line/between teeth at
removing plaque when
compared to product
offerings
from
the
competition.
Equal to Oral-B Indicator;
premium when compared
to Oral-B Regular.
Majority through retail
outlets, specifically drug
stores where people will
be searching for the best
protection against gum
disease.

Best of the mainstream

offerings.
Price

Promotion
Prices

Best value for level of

efficiency
80% distributed through
offices of dental
professionals; rest
through retail outlets (e.g.
mass merchandisers,
club stores,
and food stores).

2. How is the toothbrush market segmented ? Compare consumer behavior for

toothbrushes and toothpaste ?
The toothbrush category is divided into two segments: value and professional.

Also, the toothbrushes are differed by bristle type ( firm, medium, soft and extra
soft) and by head size (full/adult, compact and child/youth). In the beginning the
toothbrushes were introduced on the basis of functional features but in the late
1980's this changed and many new toothbrushes were introduced on the basis of
aesthetic and of course this changed because in 1991 new product introduction
were again focused on technical performance improvements. Generally, different
people have various needs for buying toothbrush.
Furthermore, we have three groups of consumers:
Involved oral health consumers- therapeutic brushers 46%
Involved oral health consumers- cosmetic brushers 21%
Uninvolved oral health consumers- 33%
So we have consumers who search out functionally effective products in
order to avoid oral care products, consumers who search for products that deliver
cosmetics benefit (such as preventing bad breath and/or ensuring white teeth)
and the last group who views the products as the same. These kind of consumers
are not motivated by oral care benefits and adjust their behavior only when they
confront oral hygiene problems.
For most consumers toothbrushes were as important as toothpaste to
effective oral hygiene and that the primary role of a toothbrush was to remove
food particles; plaque removal and gum stimulation were considered secondary.
CP estimated that 82% of toothbrushes purchases were unplanned. The average
or replacements of the toothbrushes were only once every 8.6 months in 1990,
7.5 in 1991 and due to the prevalence of "two-for-one" the average was 12.4
months in 1990 and 9.7 months in 1991.
Consumer behavior for toothbrushes and toothpastes is different. The
toothpaste is shared by members of the same hoysehold. Consumers are more
careful in choosing the right toothbrush rather than toothpaste. People are
choosing the toothbrush based on their individual needs about size, the handle,
the bristles and head shape of the toothbrush and all that based on the shape of
the mouth.

3. What are the arguments for launching Precision as a) a niche product and b) a
mainstream brand?

Mainstream Marketing
Advantages
The primary reasons to use a mainstream marketing approach is that the
product is made accessible to a larger market.

Marketing to a more diverse audience

would enable Colgate-Palmolive to construct a more simple and direct campaign that
would address the common concerns of all toothbrush buyers. Consequently, the use
of television and radio would be more cost effective as it would reach this larger
audience.
The obvious goal of such a position would be to capture a greater return on the
investment Colgate-Palmolive made on this products research and development
effort.

It is estimated that within twelve months this product could secure 10% of the

market and a volume share of 14.7% by its second year.

This would equate to 27

million retail unit sales in year one and 44 million in the second year, if positioned as a
mainstream product

Disadvantages
There are also many problems with marketing Precision to the masses.

In the

mainstream market a higher price makes a product less attractive to the average
consumer. This means that Colgate will have to price their product within reasonable
alignment of other similar products in order to be a serious competitor inside this
market, ultimately diminishing their potential profit margin and return on investment.
There is a variance amongst consumers in relation to oral hygiene.

They are

classified into three groups:

Involved oral health consumers Therapeutic brushers

Involved oral health consumers Cosmetic brushers

Uninvolved oral health consumers

These segments are divided into relative percentages of adult toothbrush users. They
are 46%, 21% and 33% respectively. This illustrates that one third of the toothbrush

using adult population has only little interest in oral hygiene and are probably not a
worthwhile audience to which to pitch the Precision toothbrush.

The expense of

including these consumers in the target market would not be advisable.

In the design and testing phase of the Precision toothbrush, Colgate-Palmolive
accrued significant clinical data concerning the product.

This information would not

be relevant to the mainstream market that most likely would view it as too scientific.
The Precision toothbrush was originally conceived to be a top-of the-range,
super-premium productindicating that production schedules had been developed in
line with a niche marketing strategy.

Mainstream marketing would require a greater

volume production of the toothbrush with an estimated ten month lead time to
achieve sufficient quantities of the product.

This could result in an inadequate supply

of the product at the outset.

The objective of the research and development group working on the product
was to develop a superior, technical, plaque-removing device. It was produced to
be the best toothbrush possible

and become

the top-of the-range,

super-premium product. All of these phrases are heavily skewed towards niche
merchandising.

A mainstream product should aim to serve all of the people, all the

time. This product clearly was created with niche-oriented goals.

The greatest issue facing Colgate-Palmolive if they were to promote this
product in the mainstream market is that it would be distributed through the same
channels as an existing Colgate-Palmolive toothbrush called Colgate Plus.

Colgate

Classic was the companys original entry in the toothbrush sector and was positioned
as a value segment.

The Colgate Plus came later and was placed in the professional

segment as a higher quality product. Including Precision as a high-end, mainstream

product could potentially cannibalize Colgate Plus sales.
Finally, Susan Steinberg, the product manager of Precision, felt that
incorporating the new product into the mass market would require the company to
delete one or more of the seven existing SKUs (stock keeping units) that
Colgate-Palmolive produced. This strategy could result in a loss of market share in the
value or high-end segments.

Niche Marketing
Advantages
Advertising companies have access to audience profiles through a wide variety
of media products, such as television, radio and print media.
basis for successful niche marketing.

This is the fundamental

A great advantage of offering any eligible

product to a niche market is that it allows for a concentrated, specific advertising

campaign, targeted to a specific demographic, psychographic, behavioral or
geographic segment through whichever medium is most effective at reaching the
specific population. This allows efficient use of advertising budgets.

Precision falls

within the class of goods that could tender itself as a niche product. Developed to be
the best toothbrush possible and placed in the super-premium category, this
toothbrush is inherently a niche product.
Members of the public most interested in this toothbrush would be those in the
Involved oral health consumers groups; therapeutic and cosmetic brushers.
Therapeutic brushers are interested in functionally effective products and differentiate
between brands.

Both segments of customers would appreciate the scientific data

Colgate-Palmolive has complied on this toothbrush.

The facts that the initial clinical

trials removed an average of 35% more plaque over that of Reach and Oral-B, and that
it assists in the reduction of the likelihood of gum disease, would be effective
information for this group. Unlike the mass market, these are issues which a niche
market segment would comprehend and about which they would care.
Niche market participants are also more likely to pay a premium for this product
due to the fact that Precision caters to a distinct set of needs they have. With this type
of positioning, a 15% increase in price above Oral-B regular would be anticipated,
bringing the cost to consumers to $2.13 per unit (more aligned with Oral-B Indicator).
A mainstream market could only be anticipated to pay $1.85, in accordance with the
Oral-B regular line.
As Precision was conceived more as a niche-type product, initial production was
set for the lower demands of the smaller market segment. As discussed previously, to

change the natural emphasis of the toothbrush to mainstream distribution would

require a major overhaul of projected production schedule and costs due to the
increase number of units required.
Additionally, to keep Precision as a specialized product means that the new
product is less likely to invade the market share of other Colgate-Palmolive products,
like the Colgate Plus.

This would also preserve the number of SKU that

Colgate-Palmolive currently produces in the toothbrush sector.

Niche markets historically attract fewer competitors.

This gives time and room

for a new product such as Precision to establish itself and build up a market share
before it may have to fight against a new contender.
Disadvantages
Marketing the Precision product to a niche market would generate less revenue
for Colgate-Palmolive than a mainstream approach.

Working with the estimated

figures for the first two years of release generates the following table.

No. units sold

Niche marketing

Mainstream marketing

Year 1

Year 2

Year 1

Year 2

8MM

15MM

27MM

44MM

Factory list price

Total

revenue

$2.13
$17,040,000

$31,950,000

$1.85
$49,950,000

$81,400,000

generated
Obviously, the niche market revenue is significantly less than the mainstream market
revenue, despite the 13% higher price.
Conclusion
Developing and communicating a positioning strategy for a product is
necessary and critical.

Differentiating a product, and the degree to which that

product is differentiated, can be guided by quantifying the following criteria:

Importance

Distinctiveness

Superiority

Preemptiveness

Affordability

Profitability

Using these parameters, a company can provide the public with a reason to buy their
product.
Another tool used in solving the marketing mix problem companies face when
launching a new product is a perceptual map. This is a graphic representation of two or
more features against which similar products can be ranked.

When graphed, the

resulting map displays areas to which the product types cater, revealing both areas of
over population and areas of potential opportunity.

Clusters of products exist when

similar products appeal to the same consumer market participants.

In these areas,

competition is intense, therefore, they are not as attractive when positioning a new
product. An optimal plan is to create a space within the product market that is
relatively free of rivals and can enable a new product to develop and dominate.
A perceptual map for Precision was created from the following data:
Toothbrush

Price

Benefits

Class

Colgate Precision

0.8

0.9

Super Premium

Oral-B Indicator

0.8

0.8

Super Premium

Oral-B Regular

0.7

0.6

Super Premium

Crest Complete

0.5

0.6

Super Premium

Reach Advanced

0.6

0.5

Super Premium

Aquafresh Flex

0.7

0.7

Super Premium

Colgate Plus

0.4

0.4

Professional

Reach Regular

0.3

0.4

Professional

Pepsodent Professional

0.2

0.4

Professional

Colgate Classic

-0.4

-0.1

Value

Pepsodent Regular

-0.3

-0.1

Value

Butter GUM Microtip

0.3

-0.1

Value

Butter GUM Supertip

0.4

0.1

Value

Menedent Pro-Core

0.7

0.7

Professional

Oral-B cross action

0.8

Super Premium

Generic Eckerd Interdental

-0.5

-0.2

Value

Generic Eckerd Angle

-0.7

-0.2

Value

Crest Advantage

0.8

Super Premium

4. What marketing recommendations would you make to Steinberg?

we recommend that Colgate-Palmolive position the Precision toothbrush as a niche
market product during its introductory and growth life cycle stages.

Thereafter,

during the products maturity, Precision should be repositioned to the mainstream

market. Our analysis has conclusivly explained that the attributes, benefits and values
of the product are best suited for niche consumers and would therefore enjoy the
greatest success in such a market.

To ensure the success of Precision,

Colgate-Palmolive should:

Ensure the product does, and continues to, address the specific needs of the stated
consumer segments;

Price Precision at competitive levels within the super-premium segment so as to

offer more value than competitors, for an equivalent cost;

Leverage their existing intensive distribution channel relationships to ensure that

Precision receives the most effective placement;

And, invest industry-standard amounts of capital into the promotion of the new
toothbrush.