TEETHING TROUBLES?

A Case of Brand Management

ABC is a leading manufacturer and marketer of consumer products in the United States.
The business of the multinational is divided into two areas, personal care products and
food products. The company has a strong hold in oral care segment and has a string of
international brands in its kitty. These brands cater to premium segment. The company
in its recently held board meeting decided to give extra thrust to personal care area and
decided to increase their global presence. The decision to enter the Indian toothpaste
market is part of this foray. The company has no prior experience in Indian Market and is
unable to decide upon an ideal strategy to enter the market. The firm would like to
develop an aggressive brand strategy for the next 3 years, with the launch slated to be in
January 2001.
The Vice-President - Marketing approaches you, a well renowned BRAND GURU, to
design an effective integrated brand strategy.

Industry History
The history of toothpaste goes back to 300-500 years before the birth of Christ but
toothpaste and powders first appeared in printed pots round the 1860's. By the 1880's
many chemists were making their own toothpaste, packaged in their own printed pots.
The date of the first manufactured toothpaste was 1873 but it was not until 1896 that a
product similar to that on the market today appeared. In 1873, Colgate introduced
aromatic toothpaste in a jar in the U.S. In 1896, Colgate Dental Cream was the first to be
packaged in collapsible tubes similar to those in use today. The number and varieties of
toothpaste being manufactured by high street chemists started to decline as large scale
manufacturing chemists were able to supply such outlets with mass produced toothpaste
sold in metal tubes. Toothpaste today is chiefly packaged in plastic rather than metal
tubes and the choice of flavours is fairly uniform.

The Indian Scenario

The oral care sector consists of three main segments toothpaste, toothpowder and the
toothbrush. Prior to the 80s, Colgate was the dominant player in the Indian toothpaste
market with its leading brand namely Colgate Dental Cream. The rest of the market was
fragmented and some of the better known brands were Binaca, Forhans, Vicco, Signal

and Close Up. In the toothpowder segment, Daburs Lal Dant Manjan - red toothpowder
and Bandar Chaap black toothpowder manufactured by the unorganized segment were
the two well known brands.
In the early 80s, Balsara Hygienes Promise was able to achieve a product
breakthrough with its positioning of the product on clove oil ingredient. Indians have
been traditionally using clove as a household remedy for cavity problems. Promise
quickly garnered 12% market share. Balsara Hygiene introduced another product,
Babool at a significant price discount catering to the lower end of the market. Promise
and Babool together had a market share of about 15% till 1987. In 1987, Hindustan
Lever was a minor player with 5% market share represented mainly by Close Up. HLLs
other brand Signal had a negligible share and was later withdrawn. Even with the
reduced market share, Colgate was still the dominating player in the toothpaste market
with a 65% share.
The late 80's witnessed a significant shift in Industry structure and positioning platforms.
Forhans was withdrawn from the Indian market in 1987 due to problems with fluoride
formulations. Close Up was re-launched in 1988 with the proposition of gel and
mouthwash. The new look close-up was positioned as the toothpaste, enhancing social
interaction, offering value propositions like good breath, white teeth etc and was backed
by an extremely successful advertising campaign. Close-Ups market share rose
consistently thereafter from 5%(1987) to the present 22%. Colgate responded to Close
Up by launching Colgate Gel in 1990, which achieved an 8% market share by 1991.
Balsara Hygienes Promise as well as Babool lost market share rapidly during the period
due to strong competitors and lack of proper marketing strategy. Colgate lost some
market share in the early 90s, but its takeover of the Cibaca brands (4% share) helped
salvage its market position. In its successful drive the new close up also managed to
create a new Social Interaction segment and this segment recorded strong growth with
Close up maintaining leadership and Colgate Gel at No 2 position.
In 1993, HLL launched Pepsodent in direct competition to Colgates flagship product
Colgate Dental Cream. But Pepsodent could achieve only 4-5% market share. In 1996,
Pepsodents proposition was changed to Germicheck protection (an extended
protection from germs), which received tremendous success. In August 97, HLL added
an anti-bacterial agent Triclosan to its Pepsodent brand. It re-launched the New
Pepsodent on the germicheck platform with claims of 102% superiority to any other
ordinary toothpaste, based on the 0.2% content of Triclosan in its toothpaste brand.

Triclosan is a proven anti-bacterial agent, which was also used by Colgate in its costlier
Colgate Total brand. The aggressive marketing of New Pepsodent against Colgate
Dental Cream led to a marketing war between the two. Colgate questioned the claim of
Pepsodents superiority and the matter was referred to MRTP Commission to determine
the validity of HLLs claim. Colgate's CDC witnessed a rapid decline in market share (by
over 5-6% points) during this period. Pepsodent on the other hand has gained strength
and currently has a market share of 15%.

Consumer Pattern
Worldwide annual per-capita consumption of toothpaste averaged 363 grams while
consumers in India used only 107 grams of toothpaste annually. The average annual
per-capita consumption of toothpaste in India is lower than the worldwide average due to
a lower average personal income and a lack of consumer education.
Currently, only 47% of the population use toothpaste, 23% use toothpowder and the rest
neither. The 77000 tonne toothpaste market is dominated by white toothpaste followed
by Gel and then stripes. Toothpaste is primarily an urban product, where its penetration
is significantly higher at 71.2% (up from 62% in 92-93). Also, it is tilted heavily in favor of
large metros, where penetration is higher as compared to smaller towns. Toothpaste
penetration in rural areas at 33% is significantly lower, but has been rising at 9-10%. In
relative terms, penetration of toothpaste is higher in south. This could be due to higher
education, purchasing power and urbanization in the south.
Consumers in the lower end of the market in rural/semi urban areas use toothpowder
and natural products such as neem, tobacco, and black powder for cleaning their teeth.
These products are largely manufactured by unorganised sector. The upper class
consumers in urban areas are looking for specialized product with cosmetic promises
like fresh breath, white teeth and functional benefits of controlling plaque, preventing
cavity etc. The average brushing frequency among toothpaste users is 1:15 times i.e.
about 15% of consumers brush twice a day.

Segmentation
The Toothpaste market in India is segmented on the basis of benefits sought from the
product. They are broadly classified into four segments.
Protection

The value proposition offered to this segment is protection of teeth & gums from germs,
preventing cavity and controlling plaque. This segment largely comprises of family. The
brands, which are sold under this proposition, are Colgate Dental Cream, Pepsodent,
Aqua fresh, Forhans etc.
Social Interaction
The sale is on proposition of fresh breath and white teeth. This segment is dominated by
Gel toothpaste. These benefits are particularly sought by teens and young adults. The
brands which are very prominent in this segment are Close up Gel, Colgate Gel, Anchor
Gel etc.
Economy
The toothpaste sale is on Value for money proposition. This segment usually
comprises of family and with low to medium income level. The price has significant
importance in this segment. Promise, Babool etc are the toothpaste is sold in this
segment.
Therapeutic
This is a niche segment. The toothpaste is positioned to offer medicinal benefits. They
offer protection from aliments like bleeding of gums, prevention of tooth decay etc. The
brands like Mentadent, Pepsodent G etc.
With 60% of sales on protection and economy platform, these segments dominate the
market. The social interaction segment commands about 35% of Industry sales and
therapeutic segment accounts for 5% of industry sales.

Product
Toothpaste is formulated to provide varied value propositions like protection from bad
breath, cavity, plaque etc. Toothpaste is marketed as squeeze tube manufactured using
HDPE, LLDPE and PP polymers. Over the years, the technological advancement has
changed the role of packaging in Toothpaste industry from a carrier and protector to that
of a marketing tool, performing a vital role in brand communication and on-shelf
differentiation.
All the players in the market offered Toothpaste in various sizes designed for varied
purposes like travelling, family use etc. The performance characteristics of toothpaste
included white teeth, fresh breath, plaque control, cavity prevention etc. For the brand
switchers, the size and prices of toothpaste were important attributes. The range of

packaging size were from 50 gms to 250 gms and price varied from Rs.12 to Rs.110.
Annexure A gives the SKUs and prices for different brands.
Vehicles of Advertisement
Advertisement of Toothpaste is extremely complex and involved a wide variety of
vehicles. One important vehicle is launching an event and sponsoring various shows. In
an effort to connect with youth-the Close-Up brand's target audience-HLL recently
launched a marketing initiative in Mumbai, called ``Close-Up: Thank God It's Saturday!''.
The initiative comprises a series of cultural shows targeted at teenagers. Sanjay Mathur,
manager associated with launching explains
``On an emotional level, we wanted to connect with our target audience. While on a
functional level, we wanted our brand to be relevant. Which is why, we launched this
exercise.''
Another important vehicle is extensive sampling. Sampling began in rural areas in an
effort to convert the non users and users of unorganized sector. Also, it is extensively
carried out to launch new brands. A spokesperson of the leading player in the industry
says
``Sampling will continue to be apart of our marketing programme for a long time,''
The most important marketing vehicle for toothpaste was consumer advertising.
Advertising employed all the major media: network and spot televisions, radio, local
newspapers and specialized magazines. The national brands used a spot TV overlay to
reinforce sales in problem markets. The spot relay usually consists of 30 seconds film
and is used extensively in the rural market.
Demand
With population of 950 Million and population growth rate of 1-2%, India provides a huge
potential market for toothpaste. Estimates for the rate of future growth of toothpaste
varied but all observers agreed that growth would continue. Growth estimates were a
function of forecast births, toothpaste penetration, and the intensity of usage.
The toothpaste market has recorded a 8% CAGR in the last five years. Demand growth
of toothpaste in urban area has been growing at 2-3% pa, whereas the same is much
higher in rural areas at about 12-14%. Amongst various segments, protection &
economy segment is growing at 5-6% pa whereas the social interaction is growing at a
fast pace of 10-12% pa.

The growth in the Toothpaste market demand can be attributed to a number of factors.
Perhaps the two most important are rising penetration and higher intensity of use.
Penetration is driven by purchasing power, reach of media, availability and also price.
Growth in the rural areas is driven by conversion of non-users. Various initiatives such
as distribution of free samples, low unit price packs in small sizes and conducting oral
care education in the rural areas are being undertaken by leading players.
Paralleling these trends had been dramatic increase in Advertising expenditure and new
value proposition introduced by the players in the market. The cumulative of above
initiatives had been to increase the consumer awareness in rural areas and conversion
of non-users to branded product.

Competition
Profiles of the leading branded competitors in the Toothpaste industry are given below,
with a summary of their financial positions.
Colgate Palmolive (I) Ltd.
Colgate Palmolive (India) Ltd. (CPIL), a 51% subsidiary of US$ 9.1 billion ColgatePalmolive Company (CP), USA, has been a leading player in Oral Care category for
over 5 decades in India with sales of Rs. 10,736.7 million and net income of Rs 517
million in FY00. Colgate spends heavily on advertising and promotions. The selling
expenditure amounts to 19.9 % of the revenue. CPIL derives around 85% of its revenues
from the Oral Care category. Colgate had a market share of about 65% till the late 80s.
With the increased competition, Colgates market share was considerably hit in the early
90s and so to salvage its position Colgate took over Ciba Geigys oral care business.
But Colgates market share continued to fall and currently stands at around 50% from a
high of 65% in 1995. Colgate managed to gain a 2% market share in FY00 after
considerable advertising but its bottomline got hit in the process and it reverted back to
its lower ad spend regime. But still Colgate continues to be the numero-uno in this sector
and its brand Colgate, was adjudged as India's #1 brand across all categories in seven
out of the last eight years by A&M Magazine's annual survey of India's top brands.

Its traditional strategy of targeting non-users in rural India, and converting them into
consumers of toothpaste has been one of Colgate's strong points. Colgate spends Rs 4
Crore every year to preach the value of using branded oral-care products to villagers,
using 72 vans, covering 78,000 villages per annum. Using a 30-minute film as its

communication vehicle, the company distributes for free an average of 7 million

toothbrushes every year to initiate toothpaste-usage. And Colgate has also launched
toothpaste and toothpowder in sachets -- Rs 2 for 15-gm, and Rs 1.25 for 10-gm,
respectively -- as well as a special 30-gm tube priced at Rs 9 -- with a free toothbrush
thrown in -- to offer an entry pricing-point for the low-spending customer.
This thrust has brought Colgate Dental Cream a distribution reach of 46 per cent in rural
markets versus Close-Up's 20 per cent and Pepsodent's 12 per cent. Trouble is, it is
losing a larger proportion of consumers at the upper end than it is adding at the entrylevel. Thus, Colgate's rural marketshare has fallen from 70.30% in 95 to 68.50 % in 99.
CPILs focus in urban markets is primarily on conversion of non-users, encouragement
of the habit of brushing twice a day and meeting the evolving needs of consumers by
providing a variety of differently formulated toothpaste offering unique benefits.
Colgate is the dominant player in the oral care market with a market share of 50% in the
toothpaste, 45% in toothpowder and 30.8% in toothbrush segments. Colgate has
significant presence in protection, social interaction and economy segment. Some of the
prominent brands of Colgate are Colgate super shakti, Colgate gel, Colgate total etc.

Hindustan Lever Ltd.

Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods company,
with leadership in Home and Personal Care Products, Foods and Beverages and
Specialty Chemicals with revenues of Rs.10137 Crores and income of Rs. 1066 Crores.
Amongst the competitors, HLL has highest advertisement expenditure in value terms.
The selling expenditure of HLL amounts to 10.8 % of the revenue. The leading business
magazine, Forbes Global, has placed Hindustan Lever at the top among the best
consumer household products companies worldwide for the current year.
HLL derives 56% of its revenues from personal care products of which soaps constitute
37.8%, detergents 31% and other personal care products constitute the rest. Foods and
beverages constitute about 30% of its revenues. The oral care segment contributes
about 4% to its revenues but its bottomline has been hit due to the heavy advertising
costs and sales promotion.
HLL has been a small player in the oral care sector until 1987 when it repositioned
Close-up as a gel and mouthwash targeted at the youth. After 87 HLL has been
consistently gaining market share and currently holds around 36%. HLLs efforts have
been complimented by the Hindustan Lever Research Center, which is the largest

research center in Indias private sector, gave HLL an edge over competitors by coming
out with innovative products and processes, many of which are patented. Apart from the
research, HLLs stronghold has been its brand equity and distribution network, which is
unparalleled in India. HLL has about 100 manufacturing facilities all over India and also
has manufacturing arrangements with third parties. HLL has strong presence in all the
segments with Pepsodent G being prominent in therapeutic segment. Some other strong
brands are Close Up super fresh, Close up oxy fresh, Pepsodent etc.

Dabur
The story of Dabur goes back to 1884 when a young doctor, Dr. S.K. Burman, laid the
foundations of what is today known as Dabur India ltd. The brand name Dabur is derived
from the words Da for Daktar or doctor and bur from Burman. Dabur set up its first
manufacturing plant in 1896 and in 1900 takes a decision to enter the ayurvedic
medicine market. The 1940s saw Dabur diversifying into hair oils with the launch of
Dabur amla hair oil. In 1970, Dabur expanded its personal care portfolio by adding oral
care products. Dabur Lal Dant Manjan was launched and it captured the Indian rural
market.
Dabur is an important player in oral care segment with revenue of Rs. 1000.3 Crore and
net income of 77.6 Crore. Dabur, like its competitors, also has heavy advertising and
promotion expenditure. The selling expenditure amounts to 15.7 % of its revenue. The
Oral care segment contributed about 12% to the revenues of Dabur in 99. Daburs red
tooth powder, Lal Dant Manjan is the leading colored tooth powder brand. Sales in 1999
recorded a sharp 19% yoy decline in volumes, with a shift in consumption towards white
toothpowder, which are marketed aggressively by MNC players. Dabur had bought the
Binaca brand in 1997. Binaca toothbrushes have been launched in Jun 98.
Dabur has 12 manufacturing facilities in India, Nepal and Egypt. It also boasts of a
transnational distribution network serving 1.3 million retail outlets and product availability
in 50 countries around the globe. The quality of Dabur products has been its greatest
strength throughout and to support this the Dabur Research Foundation (DRF), an
independent company is set up to spearhead Daburs multi-faceted research. Dabur has
presence in economy segment with Dabur being its prominent brand.
Balsara Hygiene
Balsara Hygiene Products Limited, founded in 1925, operated as a family owned and
controlled private enterprise till 1980. The business was transferred to Balsara Hygiene

Products Ltd. in July '80. The company has a domestic annual sales turnover of
Rs1.31bn and has net income of Rs. 8mn.Its selling expenditure amounts to 17.3 % of
the revenue. It also has a rapidly growing international sales turnover of Rs. 350mn. The
Balsara group is professionally managed, with manufacturing, sales, distribution and
administrative operations located throughout India and internationally. The company has
a national sales and distribution network of 600,000 retail outlets.
Balsara derives 60% of the sales from its oral care products and the rest of it comes
from its household products. In the international market, Balsara supplies a wide range
of personal and household care products to 40 countries around the world. The
company's flagship brand, Promise toothpaste, is marketed in 29 countries.
The Balsara group has a toothpaste manufacturing capacity of 38,000 tons pa, the
largest in India. It is one of the lowest cost producers of toothpaste and manufactures a
wide range of toothpaste formulations such as natural, herbal, fluoride, baking soda,
tartar control, and gel and for sensitive teeth. High volumes and low input costs due to
in-house availability of product ingredients and packaging materials from companies
within the Balsara group, allows Balsara to provide quality products at extremely
competitive rates. Balsara group has presence in economy and protection segment. The
prominent brands are Babool, Promise etc.

ANNEXURE A
BRANDS OF THE TOOTHPASTES IN THE MARKET
!

Colgate Super Shakti

Colgate Gel

Colgate (fresh energy gel)

Colgate Energy (Gel)

Colgate Total

Colgate Herbal

Close Up (ultra whitening)

Close Up oxy fresh

Close Up super fresh

Pepsodent (gum care with vitamin)

Pepsodent (2 in 1)

Pepsodent germi check

Anchor White

Anchor Gel

Forhans

Forhans (new improved)

Forhans (feel fresh)

Aqua Fresh

Babool

Dabur

AIM

Vicco Vajradanti

Meswak

Dento lac (T)

Dento lac (snuff)

IPCO

Glisters

Crest

ANNEXURE B
BRAND

SKU
(Stock Keeping Unit)
Colgate Super Shakti (with calcium)
50 gms
Colgate Gel
50 gms
Colgate Super Shakti (with calcium)
100 gms
Colgate (fresh energy gel)
100 gms
Colgate Gel
100 gms
Colgate Super Shakti (with calcium)
150 gms
Colgate energy gel
150 gms
Colgate Gel
150 gms
Colgate Total
150 gms
Colgate Herbal
200 gms
Colgate Super Shakti (with calcium)
200 gms
Colgate Super Shakti (with calcium)
250 gms
Colgate Super Shakti (free Palmolive 250 gms
shaving Cream of Rs.18.00)
Close Up (ultra whitening)
50 gms
Close Up (oxy fresh)
50 gms
Close Up Minty green
100 gms
Close Up oxy fresh
100 gms
Close Up super fresh
100 gms
Close Up super fresh (Red/Blue/White)
150 gms
Pepsodent (germi check)
50 gms
Pepsodent (2 in 1)
50 gms
Pepsodent (gum care with vitamin)
50 gms
Pepsodent (2 in 1)
150 gms
Pepsodent germi check
200 gms
Forhans (free Toothbrush)
100 gms
Forhans (new improved)
100 gms
Forhans (feel fresh)
100 gms
Forhans (new improved)
150 gms

PRICE
Rs.14.00
Rs.16.00
Rs.27.00
Rs.30.50
Rs.30.50
Rs.37.50
Rs.40.50
Rs.40.50
Rs.45.00
Rs.41.00
Rs.50.00
Rs.54.00
Rs.50.00
Rs.15.00
Rs.16.65
Rs.27.00
Rs. 27.50
Rs.33.00
Rs.44.50
Rs.14.50
Rs.16.65
Rs.15.00
Rs.45.10
Rs.49.50
Rs.22.50
Rs.24.75
Rs.29.50
Rs.32.25

ANNEXURE B(cont.)
BRAND
Anchor White
Anchor Gel
Anchor White
Anchor Gel
Anchor White
Anchor Gel
Aqua fresh
Aqua fresh
Aqua fresh
Babool
Dabur
AIM
Dento lac (T)
Dento lac (snuff)
Meswak
Meswak
IPCO (Creamy Snuff Cream)
Vicco Vajrdanti
Vicco Vajradanti
Glisters (Amway)
Crest (P& G)

SKU
(Stock Keeping Unit)
50 gms
50 gms
100 gms
100 gms
200 gms
200 gms
50 gms
100 gms
150 gms
200 gms
60 gms
100 gms
50 gms
100 gms
100 gms
200 gms
75 gms
100 gms
200 gms
200gms

PRICE
Rs.14.00
Rs.15.00
Rs. 27.00
Rs.29.00
Rs.47.00
Rs.40.00
Rs.15.75
Rs.29.50
Rs.37.50
Rs.35.00
Rs.12.00
Rs.15.50
Rs.19.50
Rs.41.00
Rs.25.00
Rs.45.00
Rs.34.00
Rs.47.15
Rs.67.00
Rs.99.00
Rs.110