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Colgate- Palmolive Company: The Precision Toothbrush

Case Study

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Assistant Professor

Colgate-Palmolive would realize revenues from larger volumes of sales despite a lower price and more competition. after evaluating the current market condition and completing its research and development. If marketed as a niche product. One major concern to Colgate-Palmolive was how to position. The positioning of the product would have little to do with any modifications to the actual design of this toothbrush. Colgate-Palmolive faced with the decision of whether to promote the new product as a high quality niche product which was marketed mainly towards individuals concerned about gum disease. Colgate-Palmolive also had to develop budget constraints and generate a marketing mix that would maximize the sales and revenues of the new product. Colgate-Palmolive had two options regarding the positioning strategy for their new toothbrush titled Colgate Precision. or as a mainstream toothbrush that would be marketed as the best toothbrush available. Evaluation of Alternatives In August 1992. Their choice was to position the product as a mainstream offering or target the Precision toothbrush to a niche market. the toothbrush were marketed as a high quality mainstream toothbrush.Problem/Issues In 1992. A niche market segment would also be willing to pay a premium for the new toothbrush. Colgate-Palmolive was ready to begin marketing its newest toothbrush. Colgate Precision. Colgate-Palmolive would target a smaller market segment without as many competitors compete for market share. . however. brand and communicate this new product to the general population. but would affect the perception of the toothbrush within the market. If.

A niche is created from a subdivision of a market segment. the decision to market the Precision toothbrush as a mass-market product or as a niche product involves analysis of the advantages and disadvantages for each. Disadvantages There are also many problems with marketing Precision to the masses. The obvious goal of such a position would be to capture a greater return on the investment. This would equate to 27 million retail unit sales in year one and 44 million in the second year. This means that Colgate will have to price their product within reasonable alignment of other similar products in order to . Mainstream Marketing Advantages The primary reason to use a mainstream marketing approach is that the product is made accessible to a larger market. Contrarily. It refers to a specifically defined group of consumers with a need that is not currently well served. In the mainstream market a higher price makes a product less attractive to the average consumer. It is estimated that within twelve months this product could secure 10% of the market and a volume share of 14. Marketing to a more diverse audience would enable ColgatePalmolive to construct a more simple and direct campaign that would address the common concerns of all toothbrush buyers.Mainstream or mass marketing refers to the mass production. Due to the diversity of these two market types.7% by its second year. 1. if positioned as a mainstream product. distribution and promotion of a single product to all potential buyers. Colgate-Palmolive made on this product’s research and development effort. niche marketing is a form of micro-marketing.

ultimately diminishing their potential profit margin and return on investment. The expense of including these consumers in the target market would not be advisable. super-premium product” indicating that production schedules had been developed in line with a niche marketing strategy. They are classified into three groups: • • • Involved oral health consumers – Therapeutic brushers Involved oral health consumers – Cosmetic brushers Uninvolved oral health consumers These segments are divided into relative percentages of adult toothbrush users. In the design and testing phase of the Precision toothbrush. This illustrates that one third of the toothbrush using adult population has only little interest in oral hygiene and are probably not a worthwhile audience to which to pitch the Precision toothbrush. 21% and 33% respectively. Colgate-Palmolive accrued significant clinical data concerning the product. This information would not be relevant to the mainstream market that most likely would view it as too scientific. This could result in an inadequate supply of the product at the outset. Mainstream marketing would require a greater volume production of the toothbrush with an estimated ten month lead time to achieve sufficient quantities of the product. .be a serious competitor inside this market. The Precision toothbrush was originally conceived to be a “top-of the-range. They are 46%. There is a variance among consumers in relation to oral hygiene.

The greatest issue facing Colgate-Palmolive if they were to promote this product in the mainstream market is that it would be distributed through the same channels as an existing Colgate-Palmolive toothbrush called Colgate Plus. Finally. psychographic. The Colgate Plus came later and was placed in the professional segment as a higher quality product.” All of these phrases are heavily skewed towards niche merchandising. all the time. Colgate Classic was the company’s original entry in the toothbrush sector and was positioned as a value segment. 2.The objective of the research and development group working on the product was to “develop a superior. super-premium product. specific advertising campaign. plaque-removing device. mainstream product could potentially “cannibalize” Colgate Plus sales. This allows efficient use of advertising budgets. Including Precision as a high-end. This product clearly was created with niche-oriented goals. felt that incorporating the new product into the mass market would require the company to delete one or more of the seven existing SKUs (stock keeping units) that Colgate-Palmolive produced. the product manager of Precision. This strategy could result in a loss of market share in the value or high-end segments. technical. Precision falls within the class of . Susan Steinberg. Niche Marketing Advantages A great advantage of offering product to a niche market is that it allows for a concentrated. A mainstream product should aim to serve all of the people. behavioral or geographic segment through whichever medium is most effective at reaching the specific population.” It was produced to be “the best toothbrush possible” and become the “top-of the-range. targeted to a specific demographic.

A mainstream market could only be anticipated to pay $1. With this type of positioning. The facts that it removed an average of 35% more plaque over that of Reach and Oral-B. To change the natural emphasis of the toothbrush to mainstream distribution we would require a major overhaul of projected production schedule and costs due to the increase number of units required. This would also preserve the number of SKU that Colgate-Palmolive currently produces in the toothbrush sector.13 per unit (parity with Oral-B Indicator). bringing the cost to consumers to $2. As Precision was conceived more as a niche-type product. in accordance with the Oral-B regular line.goods that could tender itself as a niche product. a 15% increase in price above Oral-B regular would be anticipated. this toothbrush is inherently a niche product. and that it assists in the reduction of the likelihood of gum disease. initial production was set for the lower demands of the smaller market segment. Both segments of customers would appreciate the scientific data Colgate-Palmolive has on this toothbrush. . Members of the public most interested in this toothbrush would be those in the “Involved oral health consumers” groups. Niche market participants are also more likely to pay a premium for this product due to the fact that Precision satisfies the distinct set of needs they have. would be effective information for this group. therapeutic and cosmetic brushers. like the Colgate Plus. to keep Precision as a specialized product means that the new product is less likely to invade the market share of other Colgate-Palmolive products.85. Therapeutic brushers are interested in functionally effective products and differentiate between brands. Developed to be the best toothbrush possible and placed in the super-premium category. Additionally.

Colgate-Palmolive decided upon the name Precision.85 $49. Disadvantages Marketing the Precision product to a niche market would generate less revenue for ColgatePalmolive than a mainstream approach. Branding Colgate-Palmolive considered many different names. “Colgate System III. Ultimately.950. Niche Marketing Year 1 Number of units sold Price Revenue 8MM $2. the niche market revenue is significantly less than the mainstream market revenue.85 $81.400.950. because they did not want a name that could lead customers to associate the new toothbrush with their already existing toothbrush.3. Colgate Contour.000 Year 2 15MM $2. and Colgate Probe” (Harvard). This gives time and room for a new product such as Precision to establish itself and build up a market share before it may have to fight against a new contender. Colgate Sensation. the name “Precision” .2.040.000 In spite of the 13% higher price. Colgate 1.000 Year 2 44MM $1.13 $17. This is called cannibalization. Colgate Plus.000 Mainstream Marketing Year 1 27MM $1.Niche markets attract fewer competitors.13 $31. Working with the estimated figures for the first two years of release generates the following table. Colgate Advantage. which included.

remember. At that point. Subsequently. This refers to the product when it has weak mark et share and low growth. Regardless of which name was chosen.” This means the company will spend money developing and establishing the product in anticipation of increasing its market share. however. At this phase the product will be a “cash cow. the individual product’s branding would also be able to take advantage of the brand recognition of Colgate-Palmolive – a household name that the majority of the population associates with good dental care. high quality and a name which is easy to pronounce. Further. Precision would need to be removed from the company’s product line. If the product evolves into a mainstream offering by this time. The Precision toothbrush will begin as a “question mark. allowed to decline further or all together repositioned in the market. .” meaning it has been successful by obtaining a high market share and growth rate.” Revenues produced from Precision at this phase can be used to establish other “question marks” and/or subsidize other “stars” if required. The final phase in this product’s life cycle will be a decline into “dog” status. BCG Analysis The cyclical nature of the product on the market is well illustrated by the Boston Consulting Group’s Growth-Share matrix.emerged from the others as it brought to mind connotations of an oral care product that cleans one’s teeth completely and consistently. recognize. the word Precision provides many of the qualities that are desirable in a brand name. and most importantly. such as positive attributes. Going even further into the future. the toothbrush will most likely decrease its market growth rate while maintaining its high market share. the company will reap higher rewards. the hope would be for Precision to become a “star.

and. and then marketed as a specialty item. for an equivalent cost. we recommend that Colgate-Palmolive position the Precision toothbrush as a niche market product during its introductory and growth life cycle stages. . we believe that Colgate-Palmolive could transition the product to a wider audience. We also can leverage their existing intensive distribution channel relationships to ensure that Precision receives the most effective placement. Precision should be repositioned to the mainstream market. Further. we believe this product would also work in the mainstream market and we envision it moving towards the mass market in the future. Colgate-Palmolive should continue to address the specific needs of the stated consumer segments. We believe that Colgate-Palmolive positioning the Precision toothbrush as a niche product would establish Precision as the leading toothbrush on the market at a competitive price. However. This will also allow time for Colgate to reconcile the position that the Colgate Plus product will hold relative to the Precision line. we anticipate that no negative issues will be encountered by initially marketing Precision as a niche product and then moving it into the mainstream market. We should also price Precision at competitive levels within the super-premium segment so as to offer more value than competitors. Thereafter. It would be a superior and distinctive oral care product. To ensure the success of Precision. Once the toothbrush has established itself as a high quality product with specialty features. invest industry-standard amounts of capital into the promotion of the new toothbrush. as a niche market will most likely not accept a product that has been offered to the masses as the best value.Recommendation In summation. during the products’ maturity. We do not believe the opposite would be true.