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Did CP Mexico manage its CMF launch better than CP

In January 2005 Colgate Palmolive was a 10.6 billion global company operating in 200
countries worldwide. According to the case study, Colgate was the leading toothpaste and
toothpaste brand.
In 2004 was a very strong year for growth with 7 % sales dollar growth and +0.1% point
growth in gross profit margin to 55.1%. Even though this area looked on paper, the
operating and net income showed -25 and -7% in comparison to 2003. This was caused
by more marketing costs and increases in raw material and packing material costs.
CPs main aim was to focus on growth. So, targeted areas were selected and two of the
five selected was Mexico and China. This created some challenges for CP. The biggest
problem was communications challenges. Now this was never an issue in the US market
of course.
CPs R&D came up with a new toothpaste formula that was sensorial driven, breath
freshening product later launched as Colgate Max Fresh. This patented formula contained
dissolvable mini breath strips. In 2004 CMF contributed to CPs record share of 34.8% in
Value shares of leading US Toothpaste Manufacturers.
So, the attempt was to expand the Chinese and Mexican market. Now these two markets
were developing countries compared to the US. The US is considered to low context
culture and the Chinese and Mexican market were considered high context cultures.
Now the Chinese market was a tricky and an expensive campaign.
The concept of Freshness was a new idea for the Chinese consumers, so communicating
this was expected to be a challenge.
According to the Case study, the media advertising used to create awareness accounted
for 73% of the year one budget. This included celebrity spokesman like the actor Emily
Proctor, a well know actor from the show CSI in the US. Well this wouldnt work in the
Chinese market because she is unknown in that part of the world. CPs advertising
agency believed there was a need to connect with the consumer on an emotional level and
scrapped the idea of using Emily Proctor in the Chinese campaign. For the Chinese
market, advertising was developed using the leading rock star in China Jay Chow.
The cost for shooting a new commercial would cost about $500,000 plus talent fees that
could reach around $1 million. Along with this cost was an additional flavor, change of
color for the mint flavor and was created which cost over $200,000 more. The flavor and
color change cost added about $1.77M to the capital cost and delayed launch.
Colgate dominates in Mexico with an 82% value share of the $348 million retail
toothpaste market in 2004 according to the case study. New shelf space for new products
was hard to achieve with the toothpaste demand being very flat.
Along with that, price sensitivity was high as the average income per capita just over
$4,000 dollars a year. It was believed as the case study mentioned that adaptation was
more important than to rush the product to launch. So, Mexicos launch didnt happen till
2005, one year after Crests launch of Crest Cool Explosions. CP Mexico did however
develop new advertising where talent and production combined totaled $500,000.
Overall, I believe CP Mexico did a better job launching the new product line. CP Mexico
however had an advantage. Colgate dominated the Mexican market. They were able to

get away with lower Advertising cost of $1,500,000 dollars versus china with
$15,880,000 and launching late. So, it was never a true apples to apples comparison.