Colgate-Palmolive case study - Promotion Strategy
Colgate-Palmolive is the global leader in the domain of Personal care products including toothbrushes and toothpastes. During the 1990s it sales reached the pinnacle of of six million dollar that became the catalyst of 2.76 billion US dollar profit. Furthermore, Colgate-Palmolive is also enjoying the forty three percent of share of global toothpaste market and sixteen percent share of global tooth brush market. in the USA its share is twenty three percent in the domain of tooth brush sales ("Our company"). “For the full year 2010, worldwide sales were $15,564 million, up 1.5% versus full year 2009. Global unit volume grew 3.0%, pricing was flat with the year ago period and foreign exchange was negative 1.5%. Organic sales (excluding foreign exchange, acquisitions and divestments) grew 3.0%. Net income and diluted earnings per share for full year 2010 were $2,203 million and $4.31, respectively, compared to $2,291 million and $4.37, respectively, in 2009. As previously disclosed, full year 2010 results were reduced by a one-time, non-cash after tax charge of $271 million ($0.53 per diluted share) resulting from a required accounting change related to the transition to hyperinflationary accounting in Venezuela as of January 1, 2010. Full year 2010 results also include $61 million of after tax charges ($0.12 per diluted share) for termination benefits relating to ongoing overhead reduction initiatives, a $30 million aftertax gain ($0.06 per diluted share) from the sale of non-core product lines and a benefit of $31 million ($0.06 per diluted share) resulting from a non-recurring tax initiative relating to an overseas subsidiary. Excluding these items, net income was $2,474 million and diluted earnings per share was $4.84, increases of 8% and 11%, respectively, versus full year 2009. "Colgate's global market shares in toothpaste and manual toothbrushes are both at record highs year to date. Colgate's share of the global toothpaste market strengthened to 44.2% year to date, led by share gains in Brazil, China, India, Venezuela, France, Greece and the United Kingdom. Colgate also strengthened its global leadership in manual toothbrushes, with its global market share in that category reaching 31.6% year to date, up 1.6 share points versus year ago.” (Thompson , & Spiller, 2011)
Discussion about product, product strategies, products positioning and other related aspects.
Besides, Colgate-Palmolive’s strategy to reach and reap the cross borders market and its benefit is the key catalyst that gives a power to its strength. in that connection Colgate introduced a range of 275 new products globally with building the factories in Europe and china. Because of this unique and dedicated strategies Colgate profit and growth is increasing by leaps and bounds and during the 1990s its sales totaled to 1.03 billion US dollar with overall profit of 9.8 million US dollar. (Harvard). This was the time period when Colgate further thrust to its rivals by introducing its new breed of tooth brush with unique branding.
It should be noticed that the key strength that give the edge to the Colgate-Palmolive among its rivals under the domain of niche market, is its product that are promoted in the market as Colgate® 360° that is proven as a effective and efficient plaque remover that is comparatively 35% more smarter than its rival products. These advantages are key characteristics that are attributed to the dedicated research by using CAD and infrared scanning and innovative design. Because Colgate treat toothbrushes regarding policy as “technical innovation, researchers used infrared motion analysis to track consumers’ brushing movements and consequent levels of plaque removal” (Harvard).
The top of the Colgate® 360° toothbrush are comprised with the diverse angles of bristles and every angle having its own characteristics. This characteristic leads the 360 to product life cycle from launching as the toothbrush to the oral health care tool. (Harvard). This unique designing of bristles give the edge to the Colgate® 360° to remove the plaque efficiently and comparatively 35% more than to its rival products.
The classification of the product is totally dependent upon the consumer needs and perceptions; they may consider it as homogeneous or heterogeneous both. The homogeneous in that perspective, all toothbrush perform same action, therefore, the lowest price is their choice and as a heterogeneous because of the efficiency and quality.
The key purpose to select the brand name is to avoiding the perplexity to consider it new product as homogeneous one. Colgate did consider different name in that regard such as “Colgate System III, Colgate Advantage, Colgate 1.2.3, Colgate Contour, Colgate Sensation, and Colgate Probe” (Harvard).
As far as the positioning concern, it could either be niche or mainstream. following are the advantages and disadvantages of both markets.
Advantages of Niche market
The Colgate has the option an opportunity to set the price, according to its desire without fear about the rivalry. the issue of cannibalization can be reduced such as Colgate Extra clean, etc. and develop the equity of brand ("Colgate 360," ). The Colgate has the vast room to produce the product adequately as well as to translate from one market to another one according to the available capacity. this niche market is the catalyst to reach and fulfill the demand of those clientele who are sensitive about the oral hygiene such as therapeutic and cosmetic brushers as well as different type of gum disease.
However, there are also flip sides that are following:
The organization will have the fewer market shares comparatively than the mainstream market. it will has to face the high entry barriers into the niche market domain. Furthermore, Colgate can take a position as a mainstream brushes to promoting the highest effective brushes that are available for users.
Advantages of Mainstream market
In the Mainstream market, Colgate has the comparatively big share. The new products as effective and efficient tool to clean the teeth and gum will have the bigger realization from the whole clientele. As far as the disadvantages are concerned, the organization may face the supply barrier because of not producing the enough products. The new product may create the hype of “hot in the market” but there could be a possibility not to get the predefined revenue target because of low price and volume. The Colgate has to acquire further uncertainly investment to full the product demand. The new product could be the catalyst to lead the Colgate to off their existing any stock keeping units. (Laird, Boivin, Shelton, Srivannusorn, & Chanprasert)
The price of the product is the type of barometer at some extent that set customer mind in the perspective of product quality. it is obvious that pricing of the new product will be different from the existing one because of the research and production cost but Colgate should set the prices after analyzing the market and consumer trend properly.
Recommendation about the Promotion Strategy(s)
As far as the pricing, strategies and recommendation is concerned, in the domain of niche market, Colgate can set the price after analyzing the consumer behavior and market trend, it could be lower, equal and greater than the existing product range but the core focus should be on the uniqueness so that customer attention could not only be developed but also retained. for branding the new product will be called as Colgate® 360°. For attracting the customer and enjoy the lion share of niche market, Colgate can promote its new product as an efficient, effective an unique gum remover with the flexibility to clean those part of the teeth that are generally unreachable by the standard tooth brushes. In that connection, Colgate can setup the workshop and free sample testing to have the customer confidence ("Identify the leading," 2006). For the mainstream market, in the perspective of pricing, Colgate also needs to be more cautious as should use its goodwill to gain the customer confidence. For promoting, Colgate should display their product in all types of stores, including grocery stores, etc. for branding; Colgate should the same niche market technique as described above. for having the attention of mainstream market’s costumers, Colgate should use the general ideas such as it is the product that is developed after the highly dedicated research that enabled it to portray as a totally unique breed of tooth brush that was not available in the market before. Sample testing facility will also work here as in the niche market (Kotler, 2000). Besides, to promote the new brand, Colgate should also focus the colleges and university students by giving them a special discount on the basis of confirmation of their college or university identity cards, etc. The reason behind is that fast food and choloclates are the common among the students, and these type of foods are the key source of plaque and gum in the teeth, in case of careless behavior regarding teeth. Therefore, promotimg this product among the juvenile students will open the new door of cash inflows.