Leader Hits Back At Colgate-Palmolive India Ltd. (CPIL), the question is how to fight back and take charge of the market that is nearly lost to Hindustan Lever Ltd (HLL). GLORIOUS PAST Till the late 1980s, it was pretty much smooth sailing for CPIL. Smaller toothpaste brands like Promise, built a strong franchise in the early 1980s and then began to flag. Others, such as Forhans and Binaca (that later became Cibaca, and is now part of Colgate), faded away into the background. Then came Lever. For decades, oral-care had been a single-product market with Colgate’s white paste offering the twin benefits of dental hygiene and bad breath prevention (with its ‘ring of confidence’ pledge). Rivals such as Promise had not tried to change the market’s basic rules; they had only tried to hew out niches for themselves. But now suddenly, in the late 1980s, Lever wanted to change the very way the market was carved up. It was moving aggressively to segment the market into two distinct need areas, with sharply defined brands for each: Close-Up, a gel paste, for conveyable fresh breath (a youth need) and Mentadent for strong gums and healthy teeth (a task taken on later by Pepsodent), With Lever's advertising, the very dynamics of toothpaste marketing started changing. Soon enough, the white paste was viewed as a boring paste for oldies, and CPIL had to counter each of Lever’s brands with offerings of its own. The great toothpaste war had begun, Colgate matched Close-Up with a gel variant of its own, aimed at those who wanted to keep their partners happy (perhaps even attracted by their breath), Simultaneously, CPIL’s regular paste turned up the volume on tooth-decay-fighting benefits. For both these campaigns, teenagers and children were the focus of attention. Lever had a stronger distribution network to leverage, and its advertising blitz was paying off. What it had done to one-time leader Halo shampoo of CPIL, it was keen on doing in toothpaste. Its earlier forays, with Signal and Pepsodent, had been disasters. But this was the 1990s, and now with Close-Up leading the charge, and with urban youth more receptive to a proposition of getting up close with the opposite sex, the company was finally making headway. Over the early part of the decade, Lever made rapid gains in market share, rising from almost nothing to a fifth of the toothpaste market.216 Cases in Rural Marketing CPIL brought Colgate Total, a top end formulation of its US-based parent, to India, priced at 2.5 times its regular paste. The product failed to justify its premium to the consumer, this tartar-fighter was supposed to be the knight in shining armour, and its failure dealt a severe blow to CPIL’s leadership of the market. Meanwhile, Colgate’s advertising had become ‘globally aligned’ with US-based Young & Rubicam (which tied up with Rediffusion in India), and lost some of its local zest. Meanwhile, Close-Up even used the historical story of Salim’s love affair with Anarkali. In fact, by the mid-1990s, FMCG market analysts had started looking up to Lever with a combination of awe and reverence. India’s most admired FMCG marketer had managed to contain the challenge posed by Procter & Gamble (P&G) in detergents, and virtually demolished the P&G-Godrej alliance in the soaps market. The buzz now was that P&G wouldn't dare launch its toothpaste, Crest, for fear of Lever—rather than CPIL. No wonder market analysts were talking of Lever’s ascendancy to the top in this category as an inevitability. Colgate Fights Back But CPIL saw the opportunity. The market expansion was to be done as the 90,000 tonnes, ( Rs. 200 crore) toothpaste market had barely grown 3 per cent in 2000 (down from 6 per cent the previous year and 12 per cent before that). “There’s been very little conversion to the toothpaste market,” admits Vikram Kaushik, Marketing Director, CPIL. There is a need to raise the entire consumption pyramid’s value. gate 's Product Strate Segment Brand Price Rs. (100 g) Top End Colgate Total 36 Breath freshness Segment Colgate Gel 35 Oral Hygiene segment Colgate Sensitive Care 38 Regular Paste Colgate Dental Cream 30 ‘Natural Colgate Herbal 23 Economy Colgate Cibaca Top 16.50 Tooth Powder Colgate Tooth Powder 19 At the market's apex , Colgate Total, relaunched at a revised price, has started doing well in the past two years, Total is a medically superior formulation that is big in high-awareness markets (such as Australia where it commands 12-15 per cent market share). “Ideally, Total should be the biggest sub-brand,” says Samuel, who was earlier heading Colgate’s Australian operations, “but since it is pitched at a therapeutically aware consumer group, it will grow only as consumers become more aware”. Indeed, Total seems just the perfect product to stimulate upgradations, for it satisfies oral needs on a higher plane by assuring the consumer bacterial-free mouth for 12-hours after brushing and clambering into bed. Importantly, Total can upgrade users of gels as well as protective pastes. The strategy is expected to undo the 1990s" segmentation by harmonizing the two different needs (of partner-satisfaction and oral hygiene) that remain split into two segments in the zone one rung below the market's apex. That too, in a more clinically effective manner (the product addresses the root cause, the germs that cause bad-breath and infections too). Does it stand a chance? It is hypothesized that people outgrow their teenage fixations themselves once they enter mature relationships. CPIL on its part could help with an advertising campaign that shows the value of transcending artificial market divisions. ‘The action in the economy segment is complex because of the presence of multiple brands. Balsara’s Babool was already a success. Colgate acquired Cibaca and relaunched it as Colgate Cibaca Top in a modernized package. Colgate Herbal, is launched as a part of its flanking strategy against Aim, a neemLeader Hits Back 217 toothpaste by Lever. Aim was a price aggressor, priced at Rs. 6 for a $0-gm tube almost half of Colgate Dental Cream, Colgate Herbal sells at a premium overseas. But it is priced to penetrate in India by providing a value-added option (it contains Indian ingredients such as tulsi, neem, clove and mint) to the conservative buyer of low-priced toothpastes who can’t afford to move upscale yet. It is promoted as a toothpaste with the ‘science of Colgate and the goodness of nature’. THE REAL GAME The real game is at the lower end of the pyramid. The challenge is to rouse the latent brand equity into action. Tooth powder users can be converted to the white paste, and below that, non-users can be converted to the powder. It is a market placed at 26,000 tonnes per annum growing at 2 per cent. Adds Kaushik, “It’s challenging that only about 4.5 out of 10 Indians use toothpaste. Only 6 out of 10 use either toothpaste or tooth powder. The other four use other stuff such as twigs or ash. The task, therefore, is to get people to start using a dentifrice product. With penetration still low in rural areas, where 73 per cent of India’s population lives, only 35 per cent of the population uses modern dentifrices”. In North India, Colgate’s white powder, famous for its minty flavour, has a strong competitor in Dabur, which sells its red powder in highly fragmented states such as Bihar and Uttar Pradesh (UP). RURAL MARKETING Promotion and distribution are meticulously designed and implemented by Colgate. Promotion In 1976, Colgate launched “Operation Jagruti” programme, to create oral-hygiene awareness. Nearly 100 vans went deep into rural areas to generate trials through its 30-gm pack. While most of the FMCG products, reach only about 20,000 villages, Colgate reaches 60,000 villages and 18 million rural consumers. Overall, an important part of the education programme is CPIL’s association with the Indian Dental Association (IDA). Over the past 25 years, CPIL claims to have reached out to 18,500 dentists (of India’s total 30,000) in 1,280 towns and cities. Colgate also sponsors dental conventions and gives scholarships to aspiring dentists. CPIL also runs a programme called ‘Bright Smiles Bright Futures’, which takes dentists to schools to teach children how to keep their teeth healthy. So far, it claims to have covered 33,000 schools and 15 million children from 112 towns across the country. DISTRIBUTION The philosophy of distribution is like this. A toothpaste is still not a high-involvement, purchase, and consumers can be easily swayed. Availability drives consumption especially in rural markets. Colgate’s distribution strategy is a three-pillar one. ‘Physical distribution reach, the width and depth of it. © Customer marketing approach. ‘* Modernization of sales operations and enhancement of sales efficiencies. Colgate tries to make its presence felt heavily in ‘haats’ and ‘shandies’, as it finds these to be ideal locations to carry out promotions. But by and large, it’s the regular system that must do the job. If it weren't well managed, it would be a logistical nightmare. Reaching out to every single village (width) and retail kiosk (depth) is a mind-boggling task. India has around 3 million retail outlets that stock toothpaste,218 Cases in Rural Marketing ranging from roadside kiosks to fancy supermarkets. Colgate supplies stock which are ‘key account holders’, supplying supermarket chains and the like. Directly, Colgate sells products to about 850,000 outlets. The customer approach is one that treats everyone involved in distribution as a customer who must be kept satisfied. Each stockist, for example, is part of Colgate's incentive plan, such as the ‘Colgate Dil Se’ plan for wholesalers. Says Hegde, “A stockist should earn at least twice the return that he gets from a bank deposit, since he’s investing in our business”. Retail margins vary by product category. In an effort to modernize its sales operations, Colgate is automating its stockists, to try and track market data on a real-time basis. This would give it a better feel of the market pulse. As it is, it rans on a fairly well-oiled system, with speed to market (from factory to deepest rural retail outlet) being about two weeks, Products move ftom factory to a central warehouse in each state, and then to the stockists, who in tum distribute the stuff to retail outlets by vans. Since stockists are Colgate’s redistributors, it’s easy to track demand by watching their numbers. That's the basis for its forecasting, on a monthly basis. Once the entire system is automated, Hegde hopes, it could reduce to a weekly basis. However, in the smaller Kirana stores (corner shops), the toothpaste wars take on a different hue. Here, it’s a brawl for signage and shelf space, and Lever has the advantage of having a powerful portfolio of other products, which gives it a greater hold on shopkeepers. For larger retail stores, CPIL acts as the Colgate Shoppe program, which is a shop-within-shop concept. The company rents out the shelf space to display its products. For smaller retailers, POP material is made available. GROWTH AGENDA Says the Managing Director, “With our strategy in place, and the organization completely aligned with that strategy, we have created a more exciting environment at Colgate. We want to drive growth while continuously looking at reducing costs, especially in our supply chain. We increasingly have a team approach to our strategy”. The fact that all CPIL employees have to undergo an in-house dental check-up twice a week is testimony to how seriously it takes its job of keeping people’s teeth in good order. Brand signage needs powerful product portfolio, In India, CPIL’s product range is narrow. With its R&D centre in Mumbai, CPIL boasts of product development (and speed of hitting the market) as a key strength. It took the company only six weeks to respond to Aim with Cibaca Top. The main elements of its growth strategy are: Expand product offering—straddle varied segments, upgrade consumers. Improve efficiencies—enhance vendor management. Widen coverage—through rural, urban, new products and dental programmes. Partner dental profession—through grants, sponsorships and scholarships. Leverage technological leadership—faster speed to market through R&D. Empower and energize human capital—build a seamless organization. Strengthen brand building—renew advertising vigour. QUESTIONS 1. Explain in detail how Colgate regained its hold in the toothpaste market? 2. Considering the growth agenda of Colgate, suggest appropriate measures to gain stronghold in tural markets. Source A&Ms