Colgate Palmolive Case Report

Colgate-Palmolive (CP), the leading retail toothbrush manufacturer in the United-States is looking to expand its market share by entering into the competitive high-end toothbrush market segment with the introduction of its technologically innovative Precision. Though the product's introduction promised highly profitable returns, it also presented Colgate with a number of challenges including a significant financial investment, fierce competition, manufacturing limitations, and potential cannibalization. After assessing the company's positioning in the market with the consumers perception of the colgate brand and the nature of its competitors SWOT and market share, CP is faced with the decision of how to position, brand, and communicate the Precision advantage to the market. This must be done without a detriment to the already existing product's market or profit. The proposed strategy will conform to the stated corporate goals and mission statement of CP while maximizing long-term profit gain.

The Industry:

The marketing of toothbrushes changed to aesthetic features while dividing into two functional segments - value and professional markets in the 1980's. Later on in the 1980's, the professional market was further segmented and led to the development of the super-premium niche. In 1992, the super premium niche accounted for 35% of toothbrush unit volume and 46% of sales. The three identified market segments are the super-premium segment (price range: over $2.00, unit volume: 35% and dollar sales: 46%), professional segment ($1.59-2.09, 41%, 42% respectively) and value segment (below $1.29, 24% and 12% respectively). The major players in the toothbrush market are CP and Johnson & Johnson, Oral-B. The impending release of the Colgate Precision toothbrush will be CP's first entry into the super-premium market segment that Oral-B virtually controls.

After extensive testing, results show that CP Precision showed a 35% increase in plaque removal and is twice as effective as the leading competitors Oral-B and Johnson & Johnson in the ability to clean at the gum line and between teeth. With this in mind increased advertising and promotion of toothbrushes enhanced the category's visibility contrary to the results in the case of toothpaste and basically have fueled consumer demand for the competition. There is growing competition in the toothbrush market with new entrants into the market sensing an opportunity to grab market share. Toothbrushes provide its main retailers, mass merchandisers, drug stores and food outlets an average margin between 25% and 35%, which has allowed a consistent growth in the shelf space and number of SKU's for toothbrush.