severemigrain66331493804397

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SUBMITTED TO: MA’AM SHAHNAZ MEGHANI

DUE DATE:

SESSION: MONDAY-WEDNESDAY, FIRST SESSION

SEMESTER: FALL 2006

SUBMITTED BY: MUHAMMAD ZUHAIB 2006-01-20-6297

MARIUM HASSAN RIZVI 2006-01-20-6633

ASMA IQBAL 2006-01-20-6507

NAVEED AHMED SHAIKH 2006-01-20-6666

NABEEL SHAHID 2006-01-20-6605

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TABLE OF CONTENTS

S.# PARTICULARS Page #3 INDUSTRIAL BACKGROUND 6

4 COMPANY PROFILE 7

5 COMPANY VISION & MISSION STATEMENT 8

6 PORTFOLIO 9

7 MARKET STRATEGY AUDIT 10

STRATEGIC OBJECTIVES 10

8 MACRO ENVIRONMENT 10-11

9 SWOT ANALYSIS 12-13

10 TASK ENVIRONMENT AUDIT 14-16

COLGATE-PALMOLIVE BCG GROWTH MATRIX 14

TARGET MARKET 15

SEGMENTATION 15-16

11 COMPETITIVE ANALYSIS AUDIT 16-19

MARKET SHARE AS COMPARED TO COMPETITORS 18

BRAND COMPETITION: PERCEPTUAL 19

12 EXTERNAL ANALYSIS 20-21

INDUSTRY LIFE CYCLE 20

PRODUCT LIFE CYCLE STAGES IN COLGATE 20

MARKET SIZE ANALYSIS 21

13 MARKETING MIX AUDIT 21-24

14 CONCLUSION & RECOMMENDATIONS 25

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INDUSTRIAL BACKGROUND

Plaque is the major contributing factor to dental caries and periodontal disorders. As part of good oral hygiene measures, toothpastes play an important part in disease prevention. In addition to flavoring, toothpastes basically contain detergents and polishing agents.

Additionally, toothpastes may contain additives for particular benefits, such as antiquaries or ant microbial effect or inhibition of the formation of tartar.

TOOTHPASTES IN PAKISTAN

The total market of toothpaste in terms of usage is not very large because it is only used in urban areas of the country.

Toothpaste can be divided into 5 categories. These categories identified by a dentist are:

Medicated toothpaste

Whitening toothpaste

Fresh breathe toothpaste

Anti-cavities toothpaste

Other toothpastes

Other toothpaste of that does not fall under the four broad categories.

There are number of companies with different Brand Names Operating in Dental Care, some of the well-known consumed in Pakistan are:

Colgate Tooth Paste.

Medicam Tooth Paste.

MacLean’s Tooth Paste.

Close-up Tooth Paste.

Sparkle Tooth Paste.

Dentonic Tooth Paste.

English Tooth Paste etc

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COMPANY PROFILE

COMPANY BACKGROUND

Colgate Palmolive (Pak) Limited (CPPL) is a joint venture of Colgate Palmolive Company USA,

a global company operating in more than 200 countries. The company is a part of the Lakson

Group of Companies in Pakistan. Colgate Palmolive owns a number of world-renowned brands in

categories including Toothpaste, Toothbrushes, Soaps and Shampoos. Their specified fields of

operations are:

Oral care

Fabric Care

Household Surface Care

Personal Care

In Pakistan it was introduced in 1988 and is one of the largest consumer product companies. Its

well-known brands are Colgate, Palmolive, Brite, Express, Bonus, Max Bar, Azadi Bar, and

Sparkle.

The rapid expansion in various markets of Pakistan is facilitated by Colgate’s proven

quality products, duly supported by their marketing thrust; down-scale distribution drive covering

towns and villages, creative media advertising and 360 degree marketing.

The success and growth of CPPL in Pakistan is attributed to their market leadership,

acquired through the speed in introducing powerful brands in various markets according to price

and income strata. The latest business tools are used, and highly motivated and dedicated

professionals work as a team. Colgate Palmolive operates in an environment of mutual respect,

trust and commitment, consistent with the global Colgate values of caring, teamwork and a drive

towards continuous improvement.

Colgate Palmolive has its Head Office in Karachi. All the products sold by CPPL are

manufactured in the factory situated in Kotri, near Hyderabad. Inventory is dispatched to six

warehouses, namely, in Hyderabad, Sukkur, Multan, Faisalabad, Lahore and Islamabad.

Registered Office Address is:

Lakson Square, Building No.2, Sarwar Shaheed Road, Karachi.

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COMPANY VISION

“As we plan our strategies to sustain growth for the year to come, our core values of Caring, Global Teamwork and continuous improvement will continue to drive our future initiatives”

MISSION STATEMENT

Our three fundamental values Caring, Global Teamwork and Continuous Improvement are part of everything we do.

They are the foundation for our business strategy and are reflected in every aspect of our work life.

CaringThe Company cares about people: Colgate people, customers, shareholders and business partners. Colgate is committed to act with compassion, integrity, honesty and high ethics in all situations, to listen with respect to others and to value differences. The Company is also committed to protect the global environment, to enhance the communities where Colgate people live and work, and to be compliant with government laws and regulations.

Global TeamworkAll Colgate people are part of a global team, committed to working together across countries and throughout the world. Only by sharing ideas, technologies and talents can the Company achieve and sustain profitable growth.

Continuous ImprovementColgate is committed to getting better every day in all it does, as individuals and as teams. By better understanding consumers' and customers' expectations and continuously working to innovate and improve products, services and processes, Colgate will "become the best."

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PORTFOLIO

COLGATE-PALMOLIVE PRODUCT MIX

Fabric Care

Oral CareSurface Care

Personal Care

Brite Total Express

Power Bonus

Toothpaste Colgate Regular Colgate Herbal Colgate CDC Colgate Total Fresh

Stripe Colgate Herbal

White Colgate Whitening Colgate Fresh

Energy Gel Colgate Clove Colgate Miswak

Toothbrush Colgate Navigator

Plus Colgate Plus Colgate Premier Colgate Extra Clean Colgate Super

Flexible

Sparkle Sparkle Toothpaste

Max Bar Azadi Dish Bar Max Scourers Max Liquid Max

Antibacterial

New Palmolive Naturals

Azadi Carbolic Soap

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MARKET STRATEGY AUDIT

In order to achieve this mission, Colgate Palmolive Pakistan Limited must create value for all the constraints they serve, including consumers, customers. The CPPL creates value by executing comprehensive business strategy guided by six key beliefs:

Consumer demand drives everything we do. Brand Colgate is the core of our business Will serve consumers a broad selection of the fresh breath, cleaned environment and

beauty throughout the day. Will be the best marketers in the world. Will think and act locally. Will lead as a model corporate citizen.

Strategic objectives

1. Selectively broaden the family of personal and family care to drive profitable growth.

2. Grow system profitability and capability together with packaging and distribution

partners.

3. Serve customers with creativity and consistency to generate growth across all channels.

4. Direct investments to highest potential areas across markets.

5. Drive efficiency and cost-effectiveness everywhere.

MACRO ENVIRONMENT

The macro environment of any industry consists of those factors which affect the broad

spectrum of the industry’s external environment. The toothpaste industry is mainly affected by

the following factors in its macro environment:

Social factors

Economic factors

Technological factors

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DRIVING FORCES AND TRENDS IN THE INDUSTRY

The marketers at Colgate perceive the following factors as driving forces of the

toothpaste industry:

ECONOMIC CLIMATE

All FMCGs are directly affected by the economic climate. Similar is the case with toothpaste,

where growth of the industry is directly attributed to increases in disposable income. Hence

factors like reduced inflation and sales tax, and growth in the GNP per capita is desired for the

market to expand. Currently, 65% of the potential market lies in the rural areas where traditional

forms of dentifrice are still used. Improvements in the economic climate of the country are ideal

for the expansion of the market as a whole.

SOCIO – POLITICAL CLIMATE

Although political factors do not directly affect the industry performance, social factors such as

income distribution and population growth do play a major role. With the ever–increasing levels

of population growth, there is more and more room for Colgate to realize its vision of having a

cavity–free generation. However, considering the fact that most of these increases in population

are in the lower segment, and the income distribution in the country is by no means equal or even

equitable, these are major considerations in the way the industry is evolving. These factors have

led to the range of products available in the toothpaste market, not only in terms of flavors and

purposes but also in terms of prices.

DEMOGRAPHIC:

For any company its target market is very important. Colgate focus on almost all age groups

except younger than 3 years age. Ages, genders and classes show demography of any region. As

far as Pakistan is considered it has younger population than in comparison with many European

countries. Therefore Colgate has to follow different strategy to cater the need of younger

generation.

Besides the younger generation Colgate also target other demographic variables as it is a mass

consumed product.

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SWOT ANALYSIS

COLGATE’S INTERNAL ANALYSIS

STRENGTHS

Focus on innovation and new product launches.

Colgate business planning initiative.

Colgate Palmolive has the wide distribution system in Pakistan, which is a major advantage over its competitors.

Strong financial Position.

Strong social image of the Company

Parent support: Colgate-Palmolive Pakistan Limited has a strong support from its parent Company, which is a world leader in oral care company, with a presence in almost every country.

Colgate-Palmolive Pakistan Limited is a market leader in oral care market having presence since 25 years.

WEAKNESSES

The major weakness of Colgate-Palmolive is that its IT system is not up to mark because of recent implementation of SAP and their IT department still lack competency to run it and need training, which makes it difficult for the company to use e-commerce as part of its business, sales and promotion strategy. Competitors have an edge in IT integrated systems that the company is trying to improve.

The Company has high reliance on a single category, Oral Care, which accounts for more than 65 per cent of the company revenue and profit. The other two categories, Personal care and household care, contribute less than 35 per cent to the company revenue.

Only emphasize on urban market while suburban and rural areas are neglected to some extent.

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COLGATE’S EXTERNAL ANALYSIS

OPPORTUNITIES

There is low penetration level for oral care in rural market. Most the user in rural market use traditional products like manjan, misvak or other herbal ingredients. Hence there are still lots of untapped potential in rural market.

Emerging markets growth due to change in demographic characteristics of people.

Advance technology which is Enterprise Resource Planning- SAP is implemented in August 2009 which is not fully utilized and still there is opportunity to get the maximum results through efficient and effective utilization.

Colgate-Palmolive highlighted a new segment which is capturing the children and Colgate will be planning to launch three new flavor toothpaste for children which include chocolate, fruity and orange.

THREATS

A major threat to Colgate Palmolive is that it is competing with two huge multinational companies involve Unilever and GlaxoSmithKline.

Colgate-Palmolive is working as a joint venture with the LAKSON group, which is a local company. So its success depends on the success of the lakson group.

Competition in low end segment is quite high because many regional players apart from some big players are having huge offering in oral care.

Inflation cause continuous increase in prices of their product.

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Colgate

Max Bar

Express

Power

Brite Total

TASK ENVIRONMENT AUDIT

COLGATE-PALMOLIVE BCG GROWTH MATRIX

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TARGET MARKET

Demographics:

Male and Female

Teens and Young Adults

Children

Behavior:

Regular Users

Heavy Users

Potential Users

Psychographics:

High Autonomy

Value Oriented

Hypochondriacally

Conservative

High Sociability

Active

High Self Involvement

Hedonistic

SEGMENTATION

Geographic

City or metro size

Density

1.8 Million and Above

Urban, suburban, rural

Demographic

Age

Gender

Family size

Family life-cycle

08-65

Male, female, children

1-2, 3-4, 5+

Above 7

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Income

Occupation

15000+

Professional, Student, Housewives

Psychographics

Social class

Lifestyle

Personality

Upper, lower uppers

Fulfillers, achievers, experiencers and believers

Action-oriented

Behavioral

Occasions

Benefits

User status

User rates

Loyalty status

Readiness stage

Attitude toward product

Regular

Anti-Cavity, Anti-Plaque, Fresh Breath and

whitening features

Potential users

Medium user

Medium

Intending to buy

positive

COMPETITIVE ANALYSIS AUDIT

There are many local and multinational direct competitors operating in Pakistan which are mentioned below:

1. Soda White Toothpaste by English Laboratories (Pvt) Ltd2. English Toothpaste by Pak English Laboratories3. Macleans, Aqua Fresh and Sensodyne Toothpaste by GlaxoSmithKline4. A-1, Snowwhite, Doctor And Mr.White Toothpaste by Ansar Harford Ltd, London5. Medicam by Medicam Laboratories6. Close Up and Pepsodant by Unilever7. Crest by Procter & Gamble

Medicam and Closeup are the major competitors of Colgate. Although the industry has

established brand identities (Colgate, Close Up, Medicam, McLean’s and so forth), and

newcomers may have difficulty in accessing distribution channels, the threat of new entrants is

extremely high in the toothpaste industry since there are no proprietary product differences in the

industry and neither are licenses, insurance or qualifications difficult to obtain. Moreover, start-up

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and equipment costs are minimal. However, switching costs may be reasonably high if consumers

switch from a low quality brand to a higher quality one. And even though new comers can expect

strong retaliation from established companies in the industry, new entrants are only on the lower

side, which means that companies which started with bigger brands, premium prices and larger

SKUs have now begun to offer smaller SKUs and lower prices in order to increase market

captivity.

Toothpaste substitutes include natural dentifrice such as ‘Miswaak’, ‘Neem’, ‘Clove’ and tooth

powder. Although current toothpaste users are not likely to shift to these substitutes, the major

challenge for the industry is to convert users of these substitutes who mainly reside in the rural

and surrounding areas of the country. These traditional dentifice-users represent approximately

65 percent of the market and this is virtually a virgin market for toothpaste manufacturers. These

natural means of oral care are not only rooted in the lifestyles of these people but are also more

economical. Hence, substitutes are a huge and daunting threat for the toothpaste industry.

Since the toothpaste industry caters to end users, it is easy to assume that the bargaining power of

buyers is low because an individual buyer cannot have any influence on a company or the

industry as a whole.

Hence, competing organizations vary in sizes, resources and market share. The main driver behind the growth and rivalry is hence, the price competition, the ease of entry into the industry, the vastly untapped rural market and the established brand identities.

MAPPING MARKET SHARE AS COMPARED TO COMPETITORS

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Colgate Toothpaste (Regu-lar)66%

Macleans &

Medicam34%

Colgate Toothpaste (Regular)Macleans & Medicam

According to the retail shop survey it has been observed that Colgate has approx. 66%

Share of the toothpaste market in Karachi comparing with MacLean’s toothpaste and Medicam

Dental Cream. The survey has been conducted from posh class area’s small and super stores in

Karachi. The main competitors of Colgate toothpaste are Medicam in terms of volume, and Close

Up in terms of a similar product range. Colgate captures a market share of 21 percent while Close

Up holds 9 percent and Medicam holds 23 percent. The rest of the market is held by other non-

premium brands.

Colgate competes with Close Up on the basis of herbal, whitening and gel segments; and with

Medicam on the basis of their claim of tooth decay prevention as compared to Medicam’s claim

of prevention and cure.

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HIGH QUALITY

LOW QUALITY

Colgate

Medicam

Macleans

Closeup

Sparkle

English

Dentonic

LOW PRICE

HIGH PRICE

BRAND COMPETITION: PERCEPTUAL

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EXTERNAL ANALYSIS

INDUSTRY LIFE CYCLE

The toothpaste industry is in the growth stage of its life cycle. There is a massive market of 65%

that has not been penetrated as yet. It consists of the rural areas where traditional dentifice is

currently and widely used. Presently the industry has only captured 35% of the total potential

market.

Tooth Product Introduction Growth Maturity Decline

Gels X

Regular X

Herbal X

Herbal Whitening X

Medicated X

COLGATEThe different segments of Colgate tooth care are shown below with respect to their PLCs.

They are in the process of penetrating the rural market with a goal to have a cavity free

generation.

PRODUCT LIFE CYCLE STAGES IN COLGATE

Toothpaste Introduction Growth Maturity Decline

Colgate Gels X

Colgate Regular X

Colgate GRF X

Colgate Herbal X

Colgate Herbal White X

Colgate Whitening X

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Different flavorsDelivery & credit

Customer care centre

Soft tube

Clean teeth & fresh breath

Premium quality

Quality verification by PDA

MARKET SIZE ANALYSIS (LAST FOUR YEARS)

Product Volume (Million Pieces) Growth

P.A. ( % )

2007 2008 2009 2010

Gel 7.0 6.5 6.5 6.0 4.94

Regular 64 69 74 80 7.7

Mix 36 38 28.5 27 8.25

Herbal/Herbal

White

1.0 1.0 12 14 9.22

Medicated 20 24 27 33 18.24

MARKETING MIX AUDIT

PRODUCT

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PRICING STRATEGY

PRICING OBJECTIVE:

To setup a competitive price that can justify the quality of the product through profit.

Colgate PricesColgate Maximum Cavity Protection

Colgate Max Fresh

Colgate Herbal Colgate Miswak

Product Price Product Price Product Price Product Price30 gm Rs. 20 30 gm Rs. 23 50 gm Rs.32 50 gm Rs.

3575 gm Rs. 52 75 gm Rs. 50 100gm Rs.65150 gm Rs. 90 125 gm Rs. 85

Competitors Prices

Close Up Sensodyne (Red) Sensodyne (Green)

Product Price Product Price Product Price

30 gm Rs. 25 40 gm Rs. 60 50 gm Rs. 57

70 gm Rs. 50 110 gm Rs. 115 80 gm Rs. 85

ANALYSIS:

Colgate is the only market leader in the oral care in Pakistan and offers its product at a

competitive price as compare to its rivals. However Unilever, GlaxoSmithKline are having good

contribution in the market. P & G is its world wide competitor but P & G is not marketing its

brand Crest tooth paste in Pakistan. English laboratories (English tooth paste) But Medicam is

categorized in the medicated tooth pastes.

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PLACE

DISTRIBUTION ANALYSIS

The above mention distribution structure shows that how the oral care industry transfers their goods to the end user. There are 450 Distributors across Pakistan through which the product of Colgate-Palmolive Company reaches to end user. The company is divided into 8 zones on the basis of distribution.

Karachi Lahore Hyderabad Rawalpindi Multan Gujranwala Faisalabad

The trend which is mentioned in the distribution structure shows that the consumers are moving towards the key accounts and modern trade because the standard of living is increasing day by day so every segment is increasing their sales through key accounts and modern trades.

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Distribution Channels

Household ConsumerCommercial Buyers

HostelsHotelsUtility Stores

Key Accounts

Modern Trade

Medical Stores

General

Shops

Oral Care Industry

Warehouse

Respective Zones & Distributors

Wholesalers

Commercial InstitutionsRetailers

PROMOTION

PROMOTIONAL OBJECTIVE AT TIME OF LAUNCH:

Like all new brands, Colgate’s first promotional objective was to create awareness among

potential consumers. It was promoted extensively through television and print media. Back then,

promotion costs were not as much and the company’s promotional budget was minimal as

compared with today. Colgate-Palmolive has been using percentage of sales method for fixing its

promotional budget for years.

PROMOTIONAL BUDGET:

Colgate’s promotional budget for the year 2009 was 15% of it sales of the previous year,

accounting to approximately Rs.18 million

PROMOTIONAL TOOLS USED BY COLGATE:

Colgate’s promotion mix consists of consumer promotions as well as trade promotions.

Consumer promotions include television advertising, ground promotions, short-term sales

promotions, public relations and posters.

Recently Colgate has come up with a scheme on its regular pack, “25% extra toothpaste”

at the same price. Advertisements on television support this sales promotion plan. Colgate is also

planning to set up billboards in Gulshan and Clifton areas promoting this scheme.

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CONCLUSION & RECOMMENDATIONS

Colgate has just moved into the cash cow phase. To help revitalize the cash cow, it has already

come up with the “25% extra” toothpaste scheme. We would also like to recommend a few tips to

Colgate-Palmolive as a way of helping them stabilize and increase their market share.

1. It is said that there is a 65% unexplored market, which is the rural sector. Colgate should

try to promote its product in rural areas and educate the people of its benefits and uses.

Also, it can launch new low-priced brands to sustain the premium image of Colgate.

2. The company should come up with highly innovative and exciting new flavors from time

to time. A new flavor like lemon and mint could be introduced which would give a

feeling of cleanliness and freshness.

3. They should worry about the new competition coming into the market and not just worry

about the big names already in the industry.

4. They should explore new frontiers like promoting through fairs, festivals and exhibitions.

5. They should come up with different uses for their product. This would automatically

increase their market share as the usage rate of the product increases. A few suggestions

are:

a. It acts as a cure for burns.

b. It acts as a cure for acne (pimples).

6. Colgate can also expand its product line by introducing new mouth wash products in

different flavors.

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