Colgate-Palmolive Company: The Precision Toothbrush

Presented by: Group 2

Section D

Vishrut Joshi Apalak Kashyap Felix Joy Rakesh Boddu Deepika Kumari Bhairavi Gupta

Strategic Positioning

Target Market

Marketing Mix

Marketing Strategy

Time Related Details

Marketing Plan

Marketing Management

A firms Marketing Program

Niche Market:Manufacturing ring cost per unit for precision = $0.66 per piece.

1st Year:

No. of brushes would be manufactured = 13 million

Total manufacturing Cost = 8.58 million

Total Expenditure for Advertisement, consumer

and trade promotion = 11.2 million

Total Cost to the company = 19.78 million

Add Capital expenditure = $ 3.25 million

Add depreciation = $316667

Net Cost= $ 23.30 million

According to Steinberg, if Precision were positioned in niche market

1st Year: Brushes selling = 8million

Manufacturers Price =$ 2.02

Income = $ 16.16 million

Similarly: 2nd Year:

Expenditure = $ 26.65 ml

Sales = 15 million brushes

Income = $30.3 million

Considering no more capital expenditure from 3rd year, stagnant demand and similar promotional expenditure as that in the 2nd year breakdown would occur in the 33rd month.

Next year profit= $4.95 million

Total profit at the end of 5th year = $11.14 million

Main Stream ProductManufacturing ring cost per unit for precision = $0.64 per piece.

1st Year:

No. of brushes would be manufactured = 42 million

Total manufacturing Cost = $26.88 million

Total Expenditure for Advertisement, consumer

and trade promotion = $32.8 million

Total Cost to the company = $56.68 million

Add Capital expenditure = $9.1 million

Add depreciation = $88667

Net Cost = $69.68 million

According to Steinberg, if Precision were positioned in mainstream market

1st Year: Brushes selling = 26.8 million

Manufacturers Price =$ 1.76

Income = $ 47.17 million

Similarly: 2nd Year:

Expenditure = $ 71.93 million

Sales = 44.1 million brushes

Income = $ 77.62 million

Considering no more capital expenditure from 3rd year, stagnant demand and similar promotional expenditure as that in the 2nd year breakdown would occur in the 46th month.

Next year profit= $9.59 million

Total profit at the end of 5th year = $11.18 million

Positioning Mainstream Strategy

Advantages Disadvantages

• Unsatisfied demand could create the perception of a new and innovative product

• Possible increase in sales

• Greater erosion of Colgate Plus• May require dropping slow moving

Children brush from the plus line• More competition• Possible pressure on production

schedules resulting in inadequate supply of product

Positioning Niche Market Strategy

Advantages Disadvantages

• Easy transition in product life cycle

• Less erosion of Colgate Plus• Entry into superior toothbrush

market in which CP has very less market share

• Less competition in the market

• Less contribution to net profit in future

• Low volume of sales as compared to mainstream market

Positioning of Niche, Super premium Toothbrush models

Positioning of Mainstream, professional toothbrush models

Recommendations

Positioning

Short term Niche Long term Mainstream

• Niche strategy cannot hold long

• Relatively easier to move from high end to low end

• Less cannibalization of products

• Production capacity require 10months lead time so this sudden change may cause shortage in supply

Product life cycle of 5 years is very difficult for a product like tooth brush as continuous technological development is happening everyday. Hence niche market should be better idea for the period of 5 years

Branding Emphasizing the Colgate name on the new precision toothbrush would

cause additional cannibalization of the existing Colgate toothbrushes(estimated at 20%)

Extra emphasis on precision to limit the collusion

Precision by Colgate will also be congruent with Colgate’s strategy to build the Colgate brand equity

Product Segmentation:

Toothbrush industry is divided into mainly three segments on the basis of price:

1. Value: (Value brushes priced average at $1.29 accounted for 24% of unit volume and 12% of dollar sales)

2. Professional: (Professional brushes, priced between $1.59 and $2.09, account for corresponding 41% and 42%.)

3. Super Premium: (Super Premium brushes category emerged in late 1980s and by1992, its retail prices

were between $2.29 and $ 2.89 and it accounted for 35% of unit volume and 46% of dollar sales)

On the basis of attributes: In this, toothbrush differed by bristle type( firm, medium, soft ,and extra soft) and by head size( full/adult, compact , and child/youth)

Product: Our recommendation is to work in a Niche Market

1. Core Product: Niche Market so Core benefit is Plague

Removal, removal of likelihood of gum

disease

Good brand image

Brand name brings certain attributes(better than others), benefits(reduction in gum disease) and

values(improved oral care)

Combining above 3 will result brand loyalty of Colgate

1. Core Product2. Actual Product3. Augmented

Product

2. Actual Product:

3. Augmented Product:

(Post purchase service

offered for the product)

Multi-coloured handles with full and compact heads Sensitive and soft bristle Silver trade dress will become visual cue Good packaging will be needed to attract target market

Warranty Other additional offers

Price

As it is a niche market product, hence Precision should be offered at a cost equivalent to that of a highest priced toothbrush currently available i.e. $2.29

Secondly as the product is high priced hence customers are need to be educated towards the product. Educating the product is costly. So 6-8% of total advertising budget should be given to this process

Goal of Precision is to gain customer loyalty but loyalty is very difficult to gain and maintain in the nature of tooth brush. Hence promoting and pricing will be very important for the company else failure of the product at a matured stage will lead to big losses

Place

No one goes exclusively to buy a tooth brush. So CP should not try to create an exclusive clique of Precision toothbrush owners

It is a toiletry so it should be available through intensive distribution in every possible place where toiletries are sold

Promotion1. Campaign to determine the audience to which promotion will be directed

Involved oral health consumer group

Future opportunity: Babies or children

2. Determining communication Objective

3. Developing effective communication for the promotion

Message Content and Message Structure

4. Use of communication channel (Continue with their print media and broadcast media)

5. Allocate total marketing communication budget and allocate it in different promotional channels

It should focus more on trade promotion since it has more success in this field which will help in effectively placing the product

Increase overall ads & promotions budget from $24.1mn to $43.4mn

6. Deciding marketing communication mix

Advertising

Print Media and Broadcast Media

7. Result of communications effectiveness

Marketing mix is not immediately measurable, hence company has to make additional research to evaluate promotional impact

Focus group research to evaluate creative and explore response

8. Organizing integrated marketing communication

All communication should have compactible theme

Use one agency and form inter-agency task force whose responsibility to ensure same themed communication

Understanding customer needs

Continue with customer focused research to make better market for the customers

Ensures customers have positive experience with the company across all point of contact

Use of mystery callers

Ad Strategy Emphasis directly on functionality superiority over other competitors

77% of in-home usage claimed Precision was much more effective

Sampling will be critical for the success

Precision

TV Commerci

als

Radio Ad

Billboard

Magazine Ad

Accreditation from ADA

Consumer Dental Care Education

Side Plan

s

Ad Channel

Slogan:

Your Dentist in your Home

Conclusion

CP should,

Ensure the product continues to address the specific need of new consumer segments

Price precision at competitive levels within the super premium segment so as to provide more value than its competitors

Invest industry standard amounts of capital into the promotion of the new tooth brush

THANK YOU!!