Rural and Social Marketing

PESTLE Analysis of Colgate

Submitted by:
Sumit Kumar Patwari
FF4
PESTLE Analysis

Scan of the external macro-environment in which the firm operates can be expressed in terms of

the following factors:

 Political

 Economic

 Social

 Technological

 Legal

 Environment

The acronym PESTLE is used to describe a framework for the analysis of these macro

environmental factors. A PESTLE analysis fits into an overall environmental scan as shown in

the following diagram:

    Environmental Scan

     / \

External Analysis     Internal Analysis    

/           \

Macro environment

  P.E.S.T.L.E
Political Factors

Political factors include government regulations and legal issues and define both formal and

informal rules under which the firm must operate. Some examples include:

• tax policy

• employment laws

• environmental regulations

• trade restrictions and tariffs

• political stability

Economic Factors

Economic factors affect the purchasing power of potential customers and the firm's cost of

capital. The following are examples of factors in the macro economy:

• economic growth

• interest rates

• exchange rates

• inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro environment.

These factors affect customer needs and the size of potential markets. Some social factors

include:

• health consciousness

• population growth rate

• age distribution

• career attitudes

• emphasis on safety

Technological Factors

Technological factors can lower barriers to entry, reduce minimum efficient production levels,

and influence outsourcing decisions. Some technological factors include:

• R&D activity

• automation

• technology incentives

• rate of technological change

Introduction

Colgate Palmolive is a reputed multinational corporation that is engaged in the manufacture, as

well as distribution of household, health care and personal products. It also manufactures

veterinary products under the brand name of Hill's.

 The history of Colgate Palmolive goes back to 1806 when William Colgate a manufacturer of

soap and candle funded the William Colgate & Company. In the meanwhile B.J. Johnson

Company was becoming popular thanks to its Palmolive soap. Another company by the name of

Peet brothers merged with the latter company and was named Palmolive-Peet Company. This

company took over Colgate Company in 1928 and resulted in the formation of the Colgate-

Palmolive-Peet Company.

 In 1817 the first advertisement of the company was printed in a newspaper in New York. It was

in 1953 that the company adopted its present name. In 1857 after the death of William Colgate,
the founder of the company, it was renamed as Colgate & Company and was placed under the

charge of his son, Samuel Colgate. In 1914 the company founded its first subsidiary outside of

the parent country in Canada. In the 1920s Colgate Palmolive spread its businesses in Africa,

Latin America, Asia and Europe. In 1930 the company figured for the first time on the New

York Stock Exchange.

 During the 1960 and the 1970s George Henry Lesch was at the helm of affairs of Colgate

Palmolive and he brought about major changes in the company and led it to rake in profits and be

successful. The businesses of Colgate Palmolive revolve around three core values of the

company including continuous improvement, global teamwork, and caring. The company's main

focus is the people with whom it does business. It strives to fulfill the needs of the people it deals

with. The employees of the company belong to the global team and work by sharing ideas and

expertise. This helps the company to work towards a profitable growth. Colgate Palmolive was

voted to be one of the best places to work for by the working mothers.

 The businesses of Colgate Palmolive focuses on a wide array of products in a range of

categories including oral care, personal care, home care, and pet nutrition. While Colgate

produces a range of products there are many countries where the name is synonymous to

toothpaste. In 1976 the company bought Hill's pet nutrition. It is at present the best company in

pet nutrition. In 2006 the company made its foray into the naturals segment when it bought

Tom’s of Maine.

 Colgate Palmolive is committed in its efforts to take care of the environment. The company is

also actively involved in community services. For the last 34 years the company has been

sponsoring a sports meet that is targeted at women and is known as the Colgate Women's Games.
External Analysis

Macro

The macro environment consists of larger societal forces that affect the micro environment

including demographic, economic, natural, technological, political and cultural forces.

Political Factors

Political factors play a vital role for the business prevailing in the country. If the government is

inactive then the company advances at a standard rate but the other way round, a drastic fall can

be seen.

Economical Factors

Another important external force that directly affects our decisions is the economic variation. If a

country experiences inflation then it will have a negative impact on the businesses running in

that country. So our product is directly influenced by this factor.

Socio-cultural factors

The main forces affecting decisions about our product are the social and cultural factors. Before

taking any decision we have to keep in mind the specific religious and cultural key factors for

our survival in the industry because people will repel the product that their religion or culture do

not prefer.
Technological factors

Technology is a factor whose value cannot be ignored. Technologies vary with the passage of

time in all industries. We also make our techniques and methodologies up to date for keeping our

product preferable in the market.

SWOT Analysis

Strengths

• Qualified sales staff

• Strong financial backup

• Orange Gel

• Orange Crystals

• Maximum Protection

• Friendly Environment

Weaknesses

• Due to high rate of taxes our prices are higher

• Giant competitors like pepsodent and close-up.

Opportunities

• Large investment

• Intensive distribution

• Stable economic conditions

• Globalization

• Technology
Threats

• Chances of Failure

• Competitors

• Unstable political conditions

Market Segmentation

Geographic

They have divided Pakistan in four segments on the basis of provinces. But their targeted segment

will be the biggest Province of Pakistan, Punjab keeping in mind the factor of population. As

Punjab is the biggest province according to population so they started their business from Punjab. They

have selected Punjab for different reasons. One major reason has been mentioned earlier that

Punjab is the biggest province of Pakistan and this is the safest market to do business. Some other

reasons are that Punjab is the most prospered and developed province and there are much developed

cities than other provinces like Lahore, Multan and Faisalabad, Islamabad and Rawalpindi etc.

Demographic

The basic selected variable from demographic segmentation is age. Their product Colgate Junior

is specifically manufactured for kids. This is the reason why they have targeted kids from 4 to 9

years of age. As mentioned earlier, the product is designed keeping in mind the younger

population nevertheless people ranking above the age limit can also utilize their product as it is

not a detrimental product.

Psychographic

Psychographic segmentation has been done on the basis of social class. Middle class and High

class are targeted because their product will not be within the means of middle class society.

They have specifically designed their marketing strategy according to their selected segments.

Behavioral

According to a national survey by Colgate Palmolive in 1999 only 16% of the total population of

Pakistan had been using toothpastes as a mean of daily oral cleansing. Since now toothpaste is a

product which is not used occasionally in urban areas round the country. People use toothpastes

daily and their attitude towards toothpaste is quite positive because dentists advise to clean teeth

after every meal and at least twice a day for healthy teeth. Kids are specially advised to use

toothpaste because of different reasons. So to attract the kids towards toothpaste they have

introduced orange flavor of Colgate.

Conclusion

With the intensive study of the PESTLE, the company will continue to emerge and

develop if they manage to find solutions in different challenges that the entire organization might

face.