Colgate-Palmolive Company:

The Precision Toothbrush

Marketing Plan

10/6/2017
Student Name: Mary Pauline Gamboa
Student Number: 2007768091
Table of Contents
Table of Contents ......................................................................................................................................... 1
Executive Summary ...................................................................................................................................... 2
Situational Analysis ...................................................................................................................................... 3
Market Analysis ......................................................................................................................................... 3
Market Demographics............................................................................................................................... 3
Market Needs............................................................................................................................................ 5
Market Trends ........................................................................................................................................... 5
Market Growth ......................................................................................................................................... 5
SWOT Analysis........................................................................................................................................... 6
Competition .............................................................................................................................................. 7
Product Offering........................................................................................................................................ 8
Marketing Strategy....................................................................................................................................... 9
Mission ...................................................................................................................................................... 9
Marketing Objectives ................................................................................................................................ 9
Positioning................................................................................................................................................. 9
Target Market ......................................................................................................................................... 10
Strategies ................................................................................................................................................ 12
Financials .................................................................................................................................................... 14
Break-even Analysis ................................................................................................................................ 14
Pro-forma Income Statement ................................................................................................................. 14
Financial Summary .................................................................................................................................. 15
Controls....................................................................................................................................................... 17
Implementation ...................................................................................................................................... 17
Marketing Organization .......................................................................................................................... 17
Contingency Planning.............................................................................................................................. 17
Bibliography................................................................................................................................................ 18

1
Executive Summary
In July 1992, CP senior management will launch their newest toothbrush brand, the Precision, set in early
1993. In order to meet consumer demand, CP decided to enter the super-premium segment for Precision but
will also take note of other segment like value and professional. The positioning will be introduced to niche
positioning and mainstream positioning. It will be decided how to introduce the product using standardized
naming conventions and introducing a new label system, and arrived to Colgate Precision brand. CP could
leverage existing industry relationships and make an effort to form new ones in order to gain competitive
edge. At launch, CP could plan to offer competitive promotions, a popular offering that was slowly becoming
standard practice in the oral care industry. The company could also increase its advertising budget to include
educating the public on the dangers of gum disease. Depending on how it chooses to introduce the Precision
toothbrush to the market, 1992 could serve as an important year for CP to establish itself as the definitive
oral health care company.

2
Situation Analysis
In 1991, Colgate-Palmolive (CP) Company was a global leader in household and personal care products.
Toothbrushes represented 19% of CP’s U.S. Oral Care Division sales and profits, and CP held the number one
position in the U.S. retail toothbrush market with a 23.3% volume share. In the late 1980s, many new
toothbrushes were introduced on the basis of aesthetic rather functional. By 1991, more new products
introduction were developed to be technical performance improvement over aesthetic toothbrushes
resulting to the super-premium segment. In order to gain advancement to competitors with their
technology, cost of advertising and promotion are increasing every year, and getting partnership with dental
professionals to attract consumers.

Market Summary
Industry executives divided the toothbrush category into three segments: value, professional, and super-
premium. The positioning category can be broken down into two strategies: niche and mainstream.

Target Markets
 Involved oral health consumer – Therapeutic brushers
 Involved oral health consumer – Cosmetic brushers
 Uninvolved oral health consumer

Market Demographics
Below is the chart of consumer segmentation of toothbrush users.

Toothbrush Users Segmentation

33%
Therapeutic Brushers
46%
Cosmetic Brushers
Uninvolved Oral Health

21%

3
Involved oral health consumers – Therapeutic Brusher

Therapeutic Brushers

Brush at least twice a

54% day
85%
Use a professional
brush
Floss regularly
62%

 Aimed to avoid oral care problems

 Search out functionally effective products
 Buy and use products for themselves

Involved oral health consumers – Consumer Brusher

Cosmetic Brushers
Brush at least twice a
day
54%
85% Use mouthwash

54% Floss regularly

81% Use a professional

69%
brush
Use breath fresheners

 Emphasized preventing bad breath and/or ensuring white teeth

 Search for products that effectively deliver cosmetic benefits
 Buy and use products for themselves

4
Uninvolved oral health consumers

Uninvolved Oral Health Consumers

Brush once a day or less
20%

66% Use only regular

28% toothbrushes
Floss

54% Use mouthwash

 Not motivated by oral care benefit and adjusted their behavior only when confronted by oral hygiene
problems
 View products as the same
 Buy and use products for all family members

Market Needs
Colgate-Palmolive is introducing the Colgate Precision toothbrush that enables to achieve an average of 35%
increase in plaque removal compared with other leading toothbrushes. CP mission was to “develop a
superior, technical, and plaque-removing device.”
 Quality expertise – the consumer is willing to pay for a premium price for a toothbrush that would
prevent oral problems.
 Well-thought-out design – the toothbrush market has been evolving that provides consumers high
quality product that delivers satisfying brushing experience and offers new designs or variety to cater the
needs of the consumers.

Market Trends
CP will distinguish itself by marketing the Colgate Precision toothbrush under the super-premium segment. In
the early 1980s, toothbrushes category is divided into two segments – value and professional. Many
consumers opted to upgrade their toothbrush to professional resulting to loss of value segment despite the
growth in private-level sale. On that period, saw the emergency of super-premium brushes. Therefore, the
marketing is being directed toward this segment. CP’s Colgate Precision will be introduced as super-premium
toothbrush that achieves an average of 35% increase in plaque removal. While Colgate Classic and Colgate
Plus will be serving value segment and professional segment, respectively.

Market Growth
Brand unit and dollar market share for toothbrush market were competitively increasing every year.
Competitors are entering the oral care market and increasing the choices of toothbrush for the consumers.
Total category unit volumes were estimated at 268 million in 1993 and 300 million in 1994.

5
SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company and described
the opportunities and threats facing CP’s Colgate Precision.

Strengths
 CP’s strong commitment to innovation through investment in Research and Development – CP has an
extensive Research and Development department consist a team of 170 researchers worked on new
technologies for oral care products.
 CP has a large number of stock keeping units (SKUs) for their toothbrush line – Multitudes of SKUs
indicate that CP is targeting a broad spectrum of market segment, which spreads the risk inherit to
carrying any product. Having different SKUs in every target locations bring different variety to consumers
to choose from.
 CP new product launches and enter new geographic market – CP spent $243 million to upgrade 25 of its
91 manufacturing plants, introduced 275 new products, several strategic acquisitions were completed,
and operating on overseas manufacturing. International sales are accounted for 64% of sales and 67% of
profits.

Weaknesses
 Cannibalization of the Colgate Classic and Colgate Plus – The proposal to increase total CP category by
$11.2 million and allocate it to launch Colgate Precision might hinder to defend Colgate Classic and
Colgate Plus in the market.
 CP media advertising expenditure is low compared to competitors – In 1991, CP’s Colgate Plus voice
share is 19% compared to its rivals J&J Reach with 42% voice share and Oral-B with 27% voice share.
Media advertisement fuels the consumer demand that a new product is releasing and to promote
Colgate Precision, CP must increase it voice share to increase consumer demand for Colgate Precision.
 CP lacks of professional dental tie-ups – Compared to Oral-B, its toothbrushes is recommended by
American Dental Association (ADA) to give support and inform consumers that it is the recommended
toothbrush by dentist. For Colgate Precision, with its newly design technology brush, it is wiser to make
partnership with the ADA for give full support and educate consumer of the latest improvement of CP’s
toothbrush line.

Opportunities
 The emergence of super-premium brushes – Although CP competitors already launched their niche
strategy in the super-premium market CP may use this opportunity to launch Colgate Precision. Since
super-premium category accounts for 35% unit volume and 46% of dollar sales, Colgate Precision enters
a new and profitable market segment.
 Demographic segment opportunities – Baby boom and younger generations are becoming more
concerned with oral health of their gums as opposed to cavity prevention and they are willing to pay a
premium price for new products addressing this issue. Which Colgate Precision is offering in the market,
and if CP can optimize its demographic segment it may result to a successful product launching.
 CP can leverage its advertising campaign to boost sales and revenues – CP estimates that 82% of
toothbrush purchases were unplanned and consumers were relatively unfamiliar with toothbrush prices.
Advertising campaigns helps CP’s Colgate Precision to educate consumers on the advance development
compared to its rivals and its prices. It can also discuss the advantages of effective plaque removal and
gum disease prevention.

6
Threats
 Threat of new entrants – Procter & Gamble and Smithkline Beecham both positioned their new product
launches in the super-premium segment. Procter & Gamble introduced Crest Complete. The brand
captured a 13% value share in test market. Smithkline Beecham introduced Aquafresh Flex. The brand
held a 0.9% share by volume and 1.1% by value of the U.S. retail market with six SKUs. Other competitors
arrived in the market including Lever offered three lines of toothbrushes: Aim, Pepsodent Professional,
and Pepsodent Regular, Pfizer entered the market with it Plax brush, and Sunstar with its Butler brand.
These are the competitors that CP Colgate Precision will have to contend.
 Threat of substitute products – In the twentieth century, the first nylon-bristle brush has been
developed and in the late 1940s, Oral-B began selling a soft-bristle brush which was better for the gums.
In 1961, Broxodent launched the first electric toothbrush although they were used by only 6% of U.S.
households. Nonetheless, the industry keeps producing new products that will be a threat to toothbrush
market and it will affect the traditional oral care product’s market share.
 Threat of suppliers’ bargaining power – Though Colgate Precision will be priced at a premium price
compared to its competitors it is not expensive to other products that sold in the market – like
shampoos, body soap, lotions. It is easier for consumers to pick whatever it is available in the shelf
regardless of the price. CP could position Colgate Precision as a top-quality toothbrush that consumers
understand it is a necessity to have.

Competition
CP’s Colgate Precision is entering the super-premium segment. Although there are a few toothbrush
companies that consumer already uses, CP’s Colgate Precision is the only brand that is truly designed for
plaque removal. The few competitors’ already launched their product line in the market but they are not
designed for a specific need. After many years in the market, these companies will develop their existing
product that would cater and provide for efficacy for the consumers.

Below are the CP major competitor brands in the super-premium segment.

 Oral-B (owned by Gillette) had been the market leader since 1960s. In 1991, it held a 23.1% volume
market share and a 30.7% value share of U.S. retail sales, with 27 SKUs. Oral-B launched the Indicator
brush, priced at a 15% premium to its other brushers. In 1992, consumer promotions were expected to
cost $4.5 million (5% of sales) and include $1.00-off coupons, “buy-one-get-one-free” offers and $2.00
mail-in refunds. Media expenditures for 1992 were estimated at $11.2 million (12.7% of sales). In 1991,
Oral-B’s operating margin on toothbrushes, after advertising and promotion costs, was estimated to be
approximately 20% of factory sales.
 Johnson & Johnson (J&J) entered the U.S. toothbrush market in the 1970s with the Reach brand
comprised 18 SKUs. In 1991, J&J ranked third in the U.S. retail market with 19.4% volume share and a
21.8% share. Consumer promotions in 1992 were estimated at $4.6 million (8.6% of sales) and included
60₵ coupons, $1.00 refunds by mail, and “buy-two-get-one-free” offers. Media expenditures were
expected to reach $17.1 million (31.7% of sales) with heavy reliance on television commercials. Johnson
& Johnson’s expected 1992 operating margin on toothbrushes, after advertising and promotion costs
was 8.4% of factory sales.
 Procter & Gamble (P&G) was the most recent entrant in the toothbrush market with the Crest
Complete, an extension of the company’s toothpaste brand name, Crest. The brush had captured a 13%
test markets and was expected to reach similar total market share levels in its first year after full launch.
It was expected to capture a 2.0% volume share and a 2.6% value share of the U.S. retail market by the
end 1992. Consumer promotions already announced included 55₵ coupons and $1.99 refunds on
toothbrushes purchased from floor stands. Media expenditures for the last quarter of 1992 were
estimated at $6.4 million.

7
 Smithkline Beecham entered the U.S. toothbrush market in August 1991 with Aquafresh Flex, an
extension of the company’s toothpaste brand. By the end of 1991, Aquafresh Flex held a 0.9% share by
volume and 1.1% by value of the U.S. retail market with 6 SKUs. The 1992 promotion plan, estimated at
$4.6 million (25% of sales), included $1.99 mail refunds, ”buy-one-get-one-free” offers, toothbrush on-
pack with toothpaste, and a self-liquidating premium offer of towels. Media expenditures at $10 million
(almost 50% of sales) included television commercials.
 Lever offered three lines of toothbrushes: Aim, Pepsodent Professional with 5 SKUs, and Pepsodent
Regular with 4 SKUs. Lever held a 7.2% volume and 6.6% value share of the U.S. retail market in 1991.
 Pfizer entered the market in June 1991 with its Plax brush, it had captured 1.8% of the retail market by
the end of the year.
 Sunstar with its Butler brand, held 2% of the retail market in 1992 and 19% of the $45 million in
toothbrushes distributed though dentists.

Product Offering
CP Colgate Precision was a technical innovation. CP developed a unique brush with bristles of three different
lengths and orientation. The longer bristles cleaned around the gums line, the long inner bristles cleaned
between the teeth, and the shorter bristles cleaned the teeth surfaces. The result was a triple-action
brushing effect. In initial clinical tests, the brush achieved an average of 35% increase in plaque removal,
compared with other leading toothbrushes. At the gum line and between the teeth, the brush was even more
effective, achieving double plaque removal scores of competitor brushes.

8
Marketing Strategy
The key to the marketing strategy is focusing on the therapeutic and cosmetic consumers. CP can cover about
67% of the toothbrush market because it produces the super-premium segment. However, CP is able to
address all segments with the market, although each segment is distinct in terms of usage, its products are
useful to all of the different segments.

Mission
In 1989, CP has established a task force comprising executives from R&D and Marketing, dental professionals,
and outside consultants. Its mission was to “develop a superior, technical, plaque-removing device.”

Marketing Objectives
 Colgate Precision was develop with the objective of creating the best brush possible and as such,
becoming a top-of-the-range, super-premium product.
 Colgate Precision niche positioning retail sales would represent 3% volume share of the toothbrush
market in year 1 (1993) and 5% in year 2 (1994).
 Colgate Precision mainstreaming positioning volume shares would be 10% in year 1 (1993) and 14.7% in
year 2 (1994).

Positioning
 Colgate Precision could be positioned as a niche product to be targeted at consumers concerned about
gum diseases.
 Alternatively, Colgate Precision could be positioned as a mainstream brush, with the broader appeal of
being the most effective brush available in the market.
 Below are the following details for Colgate Precision positioning strategy:

Niche, Super-Premium, Adult Mainstream, Professional, Adult

Market Share 3% year 1 (1993), 5% year 2 (1991) 10% year 1 (1993), 14.7% year 2
(1994)
Retail price (per unit) $2.89 $2.49
SKUs 4 adult, 6 colors 6 adult, 1 child, 6 colors
Manufacturer cost (per $0.66 $0.64
unit)
Manufacturer price $2.02 $1.76
Factory price (per unit) $2.13 $1.85
Dentist (professional) None 80% of sales, $0.79 per unit
Effect on other CP SKU None Slow-moving children brush from
Plus line will drop
Main distribution channel Drug Dentists, Drug, Food, Mass
Target Segment Therapeutic Therapeutic, Cosmetic, Uninvolved
Where to focus message Plaque-removal, gum disease Super-premium product on the
prevention market

9
Target Markets

Product
Colgate-Palmolive has many important decisions to make regarding the new toothbrush before it becomes
available on store shelves for customers to purchase, including the positioning strategy for the new
toothbrush. The core benefit that the toothbrush will deliver to its users is plaque removal. Less plaque in
turn leads to the added benefit of a reduction of the likelihood of gum disease. This is the primary reason
that the target niche customers will purchase the toothbrush. This incorporates the products brand name,
the products features and style, the packaging, and the quality of the product.

Brand Name
 The Colgate Precision name was consistently viewed more favorably – it was deemed appropriate by 49%
of concept acceptors and appealing by 31%.
 Ultimately, the name “Precision” emerged from the others as it brought to mind connotations of an oral
care product that cleans one’s teeth completely and consistently.
 Precision exudes many of the qualities that are desirable in a brand name, such as positive attributes,
high quality and a name which is easy to pronounce, recognize, and most importantly, remember.
 This brand name should come to signify Precision’s intentions to deliver features that are synonymous
with the consumers need for good dental health as offered by a well recognize and trusted company.

Features and Style

 Colgate Precision has patented the design and features of the triple action bristles that work with one
another so that the short, long, and angled bristles remove an average 35% more plaque then a standard
toothbrush.
 The longer outer bristles cleaned around the gum line, the long inner bristles cleaned between the teeth,
and the shorter bristles cleaned the teeth surface.
 The toothbrushes could also be designed with a bright streak of color within the silver background for
easy differentiation when multiple household members use Colgate Precision toothbrushes.
 To maximize on these cosmetic suggestions, the new toothbrush should be offered with a multitude of
color stripes, full and compact heads, and with sensitive, soft, and medium bristles.

Packaging
 Packaging in and of itself is an effective marketing tool the package of the Precision toothbrush should be
carefully designed.
 The toothbrush should be packaged in a clear plastic covering.
 The name Colgate Precision should be written in bold, silver lettering along the length of the tube, but it
should not cover the bristles since their unique design is also a distinguishing mark.
 This would place emphasis on the main features of the toothbrush, which are the triple action bristles,
and the colorful designs, metallic color of the base of the toothbrush.
 Suggesting a round tube would come to be recognized as the Precision packaging and consumers would
begin to shop for the product based on visual recognition.

Quality
 The product quality of the precision toothbrush should be extremely high. The toothbrush should live up
to its claims of decreasing gum disease by removing 35% more plaque than a regular toothbrush.
 Having satisfied consumers is important for non-durable items such as toothbrushes, which are
purchased frequently, so as to ensure repeat purchases.
 Consumer’s brand loyalty will increase with product satisfaction.

10
Price
Despite CP’s dominance in the toothbrush market, Colgate Precision represents its first endeavor into the
super-premium category – a segment filled with intense competition. Hence, pricing Colgate Precision so
that it will have an extensive life cycle, as established above, is yet another critical step towards ensuring its
survival.

 As a niche market product, Colgate Precision will be offered at a cost equivalent to that of the highest
priced toothbrush currently available, $2.13 per unit.
 Although the $2.13 per unit cost may be high relative to all toothbrushes, Colgate Precision is being
targeted towards a specific group of consumers who have a demand for a superior oral care product.
 Relative to the super-premium segment, Colgate Precision is actually the best purchase available, as it
offers superior technology and improved oral health care for no additional cost.

Place
Choosing the appropriate place to sell Colgate Precision is, relatively, the least complicated matter which CP
will undertake in the process of launching the new product.

 Mass merchandiser gained share due to increase in-store promotional support. Many retailers were
more receptive to adding new toothbrush products than new varieties of toothpaste.
 Colgate Precision is a toiletry, and it needs to be available through intensive distribution in every possible
place that toiletries are sold, otherwise the risk of losing – or more to the point, never gaining – market
share due to simple inconvenience is monumental.
 Negotiating exclusive or selective distribution agreements with vendors would be prohibitively costly for
both CP and the vendor.
 CP should focus their efforts on intensive distribution, maintaining and increasing the strength they have
in their current shelf positioning, display models and vendor relationships.

Promotion
Promoting Colgate Precision requires effectively communicating the proper message to the right audience
through the appropriate channels.

 To develop effective communications for the Colgate Precision promotion is designing the
message. Factors to consider include message content and message structure. Message content should
align with the communication objectives for the target audience – “Brush with PRECISION – A Better Way
to Avoid Gum Disease… Because it Removes More Plaque.”
 In developing effective communications is to determine which communication channels to use to
promote Precision. One option, personal communication channels, center around people
communicating face-to-face, or by word-of-mouth.
 To establish the total marketing communications budget and allocate it amongst the different
communication channels. Colgate Precision is a new product launch, and as such it has enough
budgetary support to help it succeed.
 Although CP’s own evaluation determined that the budget for Colgate Precision as a niche product for
year 1 should be split as follows: advertising, $5 million; consumer promotions, $4.6 million, and trade
promotions, $1.6 million. It indicates that $11.2 million will be split between advertising, consumer
promotions and trade promotions that will be sufficient to support Colgate Precision reaching its goals
 Broadcast media, although it is more suited to mainstream targeting as there is no way to control who
hears the broadcasts, can still serve as a very effective and cost conscience communication channel as
the niche market is compiled of two-thirds of the toothbrush-using population.

11
 As Colgate Precision is a new product launch, retailers will have to be persuaded to even carry the new
toothbrush, or in some cases, to carry more units than they normally would.
 Another consumer promotion to back launch: a free 5 oz. of Colgate toothpaste (retail value of $1.89)
with the purchase of a Precision brush in strong competitive market, and a 50%-off offer on any size of
Colgate toothpaste (up to a value of $1.00) in conjunction with a 50₵ coupon on the Precision brush in
strong Colgate markets.

Strategies

Product
Precision exudes many of the qualities that are desirable in a brand name, such as positive attributes, high
quality and a name which is easy to pronounce, recognize, and most importantly, remember. CP’s stated
corporate strategy was to build on the Colgate brand equity. In doing so, CP decided to use “Colgate
Precision” as the brand name so the consumer will be able to recognize the new product and it is easier to
remember. Moreover, its features and design, the toothbrushes could also be designed with a bright streak
of color within the silver background for easy differentiation when multiple household members use Colgate
Precision toothbrushes. These bright streaks should also be the palate upon which the name Precision
should be set to serve as a constant reminder of the brand name. The name Colgate Precision should be
written in bold, silver lettering along the length of the tube, but it should not cover the bristles since their
unique design is also a distinguishing mark. The design of the packaging must be a sleek-looking type to
elaborate the features of the product. Furthermore, its whole quality that Colgate Precision makes it
different, it delivers plaque-removing, triple-action brushing effect that baby boom and young generation
were willing to pay for a premium price for a superior toothbrush.

Price
Precision’s unique and innovative design has created its own category of toothbrush within the super-
premium segment, as it is distinctly different from the other currently available toothbrushes. Consequently,
the public must be educated about the attributes, benefits and values of this new product. As mentioned
above, Colgate-Palmolive’s ultimate goal is to create total brand loyalty among the niche market participants.
Since Colgate Precision will be priced at the super-premium segment, the value of it will be much higher than
the others. Such loyalty is hard to come by and fragile at best given the non-durable nature of a toothbrush.

Place
Mass merchandiser gained share due to increase in-store promotional support. Many retailers were more
receptive to adding new toothbrush products than new varieties of toothpaste. Colgate-Palmolive should
focus their efforts on intensive distribution, maintaining and increasing the strength they have in their
current shelf positioning, display models and vendor relationships.

Promotion
To develop effective communications for the Colgate Precision promotion is designing the message. Factors
to consider include message content and message structure. Message content should align with the
communication objectives for the target audience – “Brush with PRECISION – A Better Way to Avoid Gum
Disease… Because it Removes More Plaque.” In developing effective communications is to determine which
communication channels to use to promote Precision. To accomplish this perfectly, make sure all
communications have compatible themes and are speaking to customers in one voice. CP can accomplish this
by either using one agency for all marketing needs, or by creating an inter-agency task force whose
responsibility is to ensure communications are developed along the same theme. Understanding the

12
customers and their needs, CP can continue to conduct customer-focused research to learn how to better
market their customers and ensuring that consumers have positive experiences with the company across all
points of contact.

13
Financials
This section will offer the financial overview of CP Colgate Precision related to marketing activities. Colgate
Precision has two strategies – niche and mainstream – and will evaluate both strategies which will provide
financial status.

Break-Even Analysis
The break-even analysis indicates that will require in sales revenue to reach the break-even point under niche
and mainstream positioning are as follows:

NICHE
Year 1 Year 2
Units break-even 13,237,548 13,965,517
Sales break-even 38,256,514.52 40,360,344.83
Assumptions:
Average per unit revenue 2.89 2.89
Average per unit variable 2.02 2.02
Estimated fixed costs 11,516,667.00 12,150,000.00
Depreciation 316,667.00 450,000.00
Advertising 5,000,000.00 5,000,000.00
Consumer Promotions 4,600,000.00 4,000,000.00
Trade Promotions 1,600,000.00 2,700,000.00

MAINSTREAM
Year 1 Year 2
Units break-even 46,146,119 41,465,753
Sales break-even 114,903,836.75 103,249,726.03
Assumptions:
Average per unit revenue 2.49 2.49
Average per unit variable 1.76 1.76
Estimated fixed costs 33,686,667.00 30,270,000.00
Depreciation 886,667.00 1,270,000.00
Advertising 15,000,000.00 12,000,000.00
Consumer Promotions 13,000,000.00 10,000,000.00
Trade Promotions 4,800,000.00 7,000,000.00

Pro forma Income Statement

Given with the consolidated best estimate of the cost and price data for Colgate Precision, a pro forma
income statement can be generated for niche and mainstream position strategies. Below are the pro forma
income statements for niche and mainstream positioning and the explanation will be given at the end:

14
 NICHE
Year 1 Year 2
Revenue (units - 8MM Y1, 15MM Y2) 23,120,000.00 43,350,000.00
Cost of Goods Sold 16,160,000.00 30,300,000.00
Gross Profit 6,960,000.00 13,050,000.00

Fixed expenses
Depreciation 316,667.00 450,000.00
Advertising 5,000,000.00 5,000,000.00
Consumer Promotions 4,600,000.00 4,000,000.00
Trade Promotions 1,600,000.00 11,516,667.00 2,700,000.00 12,150,000.00
Net income/(loss) (4,556,667.00) 900,000.00

For the niche positioning strategy, it was given that in Year 1 there will be 8MM and Year 2 there will be
15MM units in retail sales to be distributed to the consumers. Niche positioning will target therapeutic
consumers which consist of 46% of total market. Suggested retail price is at $2.89 per toothbrush and the
manufacturing cost price is at $2.02 in both Year 1 and Year 2. As seen above, in Year 1, there will be a net
loss of $4.6 million due to the high expense on advertising and promotions but it will gain an increase of 16%
on net income in Year 2.

MAINSTREAM
Year 1 Year 2
Revenue (units - 27MM Y1, 44MM Y2) 67,230,000.00 109,560,000.00
Cost of Goods Sold 47,520,000.00 77,440,000.00
Gross Profit 19,710,000.00 32,120,000.00

Fixed expenses
Depreciation 886,667.00 1,270,000.00
Advertising 15,000,000.00 12,000,000.00
Consumer Promotions 13,000,000.00 10,000,000.00
Trade Promotions 4,800,000.00 33,686,667.00 7,000,000.00 30,270,000.00
Net income/(loss) (13,976,667.00) 1,850,000.00

For the mainstream positioning strategy, it was given that in Year 1 there will be 27MM and Year 2 there will
be 44MM units in retail sales to be distributed to the consumers. Mainstream positioning will target
therapeutic, cosmetic and uninvolved consumers which consist of the total market. Suggested retail price is
at $2.49 per toothbrush and the manufacturing cost price is at $1.76 in both Year 1 and Year 2. As seen
above, in Year 1, there will be a net loss of $14 million due to the high expense on advertising and
promotions but it will gain an increase of 12% on net income in Year 2.

Financial Summary
Niche and mainstream positioning will have a loss on the first year of brand launching. CP allocated their
budget to the advertising and promotions and the development for Colgate Precision. It has said that the
Precision toothbrush was a technical innovation and technology comes in an expensive cost. The product
itself comes at higher cost providing a new design for bristles. The designed colors and how Colgate Precision

15
will attract consumers and how the quality of the product. Since, it was niche positioning will be solely to
therapeutic brusher thus it will be Drug class trade. While mainstream positioning will be serving the total
market, it will be distributed to Food and Mass trade, and to the Professional. Mainstream positioning will
deliver a high volume of share since it gathers the cosmetic and uninvolved consumers and target for that
market will be high. Furthermore, niche positioning will also deliver a competitive market share since
therapeutic consumers are willing to pay for a premium price for a toothbrush that will provide them gum
diseases prevention. Nonetheless, niche positioning might look uninteresting with it comes to the pro forma
income statement but on the delivery and promoting the toothbrush, 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.

16
Controls
The purpose of CP’s marketing plan is to serve as a guide for the organization. The following areas will be
monitored to gauge performance:
 Revenue: monthly and annual
 Expenses: monthly and annual
 Consumer satisfaction
 New-product development

Implementation
In July 1992, CP senior management decided to launch Colgate Precision early in 1993.

Marketing Organization
Susan Steinberg, Colgate Precision product manager, had managed the entire new product development
process and recommended Nigel Burton to be the division general manager responsible for positioning,
branding, and communication strategies.

Contingency Planning

Difficult and Risks

 Problems launching a super-premium toothbrush, a function that will cannibalize the Plus line.

Worst-Case Risks
 Determining that the product line cannot support itself because of high allocation of budget on
advertising and promotions.

17
Bibliography and References
1. Marketing Management, 14th Edition, P. Kotler and K.L. Keller
2. Colgate-Palmolive Company: The Precision Toothbrush, Harvard Business School, Research Associate N.
Laidler, Prof. J. Quelch
3. http://mbacase.blogspot.com/2012/05/marketing-colgate-palmolive.html
4. https://www.academia.edu/6406505/Case_Analysis_Colgate-
Palmolive_Precision_Toothbrush_Priestley_Winter_2011_MCDM_COM588_Digital_Media_Marketing_a
nd_Branding
5. https://anthonygarver.files.wordpress.com/2013/06/colgate-case-write-up-aag.pdf
6. https://www.accountingtools.com/articles/how-to-calculate-break-even-sales.html
7. https://www.slideshare.net/SnehAnkur/colgate-palmolive-company-the-precision-toothbrush-70938158

18