COLGATE MARKETING PLAN

University of Applied Sciences Leiden

NAMES: JESCA LEMMENS S1099585

LAURA HUGUES S1100247
JOEY BOL S1084113
COURSE: GLOBAL MARKETING
TEACHER: JEAN-PIERRE SCHEURS
COMPANY: COLGATE-PALMOLIVE
TITLE: MARKETING PLAN
DATE: 16 JUNE 2016
VERSION: 1
Table of contents
1 Introduction .......................................................................................................................................... 2
2 Purpose................................................................................................................................................. 3
3 Internal Environment ........................................................................................................................... 4
3.1 Product description ....................................................................................................................... 4
3.2 Business definition ........................................................................................................................ 4
4 Market External analysis ...................................................................................................................... 6
4.1 Customer analysis.......................................................................................................................... 6
4.2 Competition analysis ..................................................................................................................... 7
4.3 Five forces model Porter ............................................................................................................... 7
4.4 External analysis: Macro................................................................................................................ 8
4.5 SWOT analysis ............................................................................................................................. 11
5 Marketing strategy ............................................................................................................................. 14
6 Marketing costs & break even times .................................................................................................. 15
6.1 China ............................................................................................................................................ 15
6.2 sMexico........................................................................................................................................ 15
7 Marketing mix..................................................................................................................................... 17
8 Operational marketing plan ............................................................................................................... 18
8.1 Implementation in China ............................................................................................................. 18
8.2 Implementation in Mexico .......................................................................................................... 18
8.3 Social media................................................................................................................................. 19
8.4 Timeline ....................................................................................................................................... 19
8.5 Evaluation .................................................................................................................................... 20
Bibliography........................................................................................................................................... 21

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1 Introduction
In order to grow, a large company like Colgate needs a marketing plan. It will include the current
situation and all the aspects of the brand, about the markets, the finance, the manufacturing, the
suppliers, the customers, and so on (focus on China and Mexico). The marketing plan has to identify
what is the main goals, who are the target customers, and how to reach it. The market plan will allow
the company to put into practice the marketing strategy for the coming year, and give all the keys
required to make it. (Lavinsky, 2013)

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2 Purpose
Colgate-Palmolive is the concern for many customers product brands. Its broad portfolio includes
toothpaste, soap, Pet nutrition, Deodorants, Fabric softeners, Household cleaners and Detergents.
The Brands of the company include Ajax, Fab, Mennen and Hill's Science Diet, and of course the well-
known brands that make the company's name: Colgate and Palmolive. Palmolive soap is the world's
third largest soap brand, now covering a growing range of hair care products as well as soaps.
Colgate is the world's number one toothpaste and toothbrush brand. This marketing plan will be
focused on this last brand: Colgate: World of Care.

Colgate operates in more than 70 countries and sells products in more than 200 countries. The group
operates in North America, Latin America, Europe, Asia and Africa ( Colgate-Palmolive Company,
2015). But not every country is the same, not all the customers have same needs. In this marketing
plan the Mexican and Chinese markets will be discussed.

Both country have some potentials, but can also bring some difficulties for the company. The goal of
this marketing plan is to find out what these are. What is the Colgate’s orientation? What are the
opportunities and threats of Colgate in these markets? What are Colgate’s strengths and
weaknesses? How can we combine these strengths with the opportunities and create a solution for
the central problem? How can Colgate successfully improve Colgate Max Fresh competitive position
in emerging markets such as Mexico and China, while standing out against all its competitors with
sufficient marketing?

Based on these potentials, a recommendation will be given to Colgate for how they can optimize
their approach to the Mexican and Chinese markets. This new marketing strategy will be explained
by the marketing mix. Eventually, an implementation plan will provide insight into how it is
recommended to apply this new marketing strategy in the Mexican and Chinese market.

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3 Internal Environment
3.1 Product description
Colgate-Palmolive is a multinational concern that produces, distributes and supplies many different
products all over the world. Major product areas include household and personal care products,
food products, health care and industrial supplies, and sports and leisure time equipment. The first
and biggest brand they include is the oral care brand Colgate. This marketing plan will be focused on
Colgate.

3.2 Business definition

In this sector the business will be defined, using the Three Dimensional Business Definition model of
Abell (also known as Product Market Technology (PMT) model) (Vliet, 2014). The Abell model gives a
clear market definition of the activities of the organization.

Figure 1. Colgate’s business definition in Abell model. Based on “Abell Framework”, by Vliet, 2014.

Product

What does the company offer to satisfy their customers’ needs? Colgate is an oral health brand that
offers three different kinds of oral health products. These products are Toothpaste, toothbrushes
and mouthwash. Of each of these products Colgate created various types. Each with a different
feature. They also have products specially made for children. This marketing plan will be focused on
the toothpaste Colgate Max Fresh

Market

What is the customer group? Basically everyone who brooches their teethes is considered target
audience for Colgate. However, this marketing plan will be focused on the Mexican and Chinese
market. Colgate developed for different sorts of consumers different flavors and tastes. For instants,
in the toothpaste sector, they created the Herbal White for the nature sensitive users. The user that
wants natural ingredients that whitening and gives a feeling of fresh breath. Colgate also created the
anti-cavity protection tooth paste, that is designed to remove the cavity on teeth and for fresh

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breath. Also the Colgate Fresh Stripe Gel is for whitening teeth with fresh breath. And of course the
Colgate Max Fresh, for fresh breath, what you marketing plan will be about

Technology

In what way can the demands of the customer be addressed? As explained before, Colgate
developed different sorts of products for different sorts of consumers. All products they created have
one or more of the following features:

 Longer lasting fresh breath

 Prevention of dental plaque and gum problems
 Relief from sensitive teeth
 Teeth whitening

Mission & Vision

Colgate’s mission statement is: As a Company that strives to be the best truly global consumer
products company, we are committed to doing business with integrity and respect for all people and
for the world around us (Making a Fortune, n.d.).

Colgate’s vision statement is: As we plan our strategies to sustain growth for the years to come, our
core values of Caring, Global Teamwork and Continuous Improvement will continue to drive our
future initiatives (Making a Fortune, n.d.).

Values
Colgate has three core values: Caring, Global Teamwork and Continuous Improvement. Reflected in
the trusted quality of their products and the solid reputation of their company, these values are the
heart of the organization.

Caring
The Company cares about people: Colgate people, customers, shareholders and business partners.
Colgate is committed to act with compassion, integrity, honesty and high ethics in all situations, to
listen with respect to others and to value differences. The Company is also committed to protect the
global environment, to enhance the communities where Colgate people live and work, and to be
compliant with government laws and regulations.

Global Teamwork
All Colgate people are part of a global team, committed to working together across countries and
throughout the world. Only by sharing ideas, technologies and talents can the Company achieve and
sustain profitable growth.

Continuous Improvement
Colgate is committed to getting better every day in all it does, as individuals and as teams. They strive
to understand consumers' and customers' expectations and continuously work to innovate and
improve products, services and processes. By supporting the diversity of thinking that results from
the differences in experience, knowledge and background of their people, they enable the creativity
and innovation that helps them maintain a competitive advantage in the global marketplace
(Colgate-Palmolive Company, n.d.).

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4 Market External analysis
This chapter will discuss what the external environment of Colgate and will give insight into what the
threats and opportunities are for Colgate.

4.1 Customer analysis

This paragraph will give more insight on the customers of Colgate.

Segmentation
Colgate segments their target based on the following aspects (Quelch & Labatt-Randle, 2007):

- Young consumers in the age of 18-34 with a female skew;

- Fresh breath experientialist;
- Active;
- Social;
- They enjoy having interactions with other people.
- A clean fresh mouth is of the uttermost importance.

Product values
In China, the most important aspects of toothpaste are fresh breath, anti-cavity, and gum protection.
This is in line with the positioning of Colgate, which provides these 3 aspects, especially the aspect of
a fresh breath (Quelch & Labatt-Randle, 2007).

In Mexico, the majority of consumers decide which toothpaste they buy based on therapeutic
aspects such as basic oral care. Colgate is mainly focused on the cosmetic segment. This is not in line
with the positioning of Colgate Max Fresh (Quelch & Labatt-Randle, 2007).

Performance
China
The performance of Colgate Max Fresh in China has been falling back. During the fourth quarter of
2015, net sales have decreased 5 percent. The unit volume increased by 2.5 percent with a lower
pricing of 0.5 percent (Colgate-Palmolive, 2016).

There was an increase of 3 percent in operating profit in the fourth quarter of 2015 up to $184
million. The increase is due to an improving of the gross profit and decreasing in selling,
administrative and general expenses (Colgate-Palmolive, 2016).

Mexico
In the fourth quarter of 2015 net sales have decreased by 12 percent. Next to that unit volume
decreased 4 percent with 13 percent higher pricing (Colgate-Palmolive, 2016).

Operation profit decreased by 20 percent in all of Latin America to $280 million. The decrease in
operating profit is due to a decline in gross profit, which is due to a decrease in selling, administrative
and general expenses. Also, the higher packaging cost and higher manufacturing cost had influence
on the gross profit (Colgate-Palmolive, 2016).

Future
In China, oral care is expected to experience a stable compound annual growth rate of 5 percent. The
growth will be supported by unchanging demand, in particular for the upmarket and high-end
products, like premium toothpaste. The growing health consciousness of consumers will be the
major aspect of growth, together with the rise of household incomes (Euromonitor International,
2016).

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In Mexico, there is expected that the landscape is led by Colgate-Palmolive de México and Procter &
Gamble de México. It is not expected to experience any changes in the current landscape of
toothpaste in Mexico (Euromonitor International, 2016).

Customer satisfaction
In 2014, 90 percent of the customers in North America were very satisfied with the product of
Colgate. However, Colgate has no data about customer satisfaction in China of Mexico (Colgate,
2015).

4.2 Competition analysis

The main competitors of Colgate are Unilever, the Clorox Company, and Procter & Gamble. Basically,
the whole personal care industry is in control of these companies. To gain market share is to take it
away from one of the competitors. However, Colgate has to keep their eyes open because the
competition will try to do the same to them (Berger, 2010).

Procter & Gamble is Colgate’s main competitor with their toothpaste brand Crest. In comparison,
Colgate has six options available to choose from, while Crest has 10 options. This gives Crest a
competitive advantage seeing that they can offer consumer a greater variety of product to choose
from (Austin, 2016).

A disadvantage for Crest is that they are higher priced than Colgate. The differences in price can lead
up to $1.50 (Recomparison, n.d.).

Competitive advantage Colgate

Colgate has one main competitive advantage which is that their products are well known and has a
high trust value worldwide. The strength of their brand image is due to making their products very
simple: Colgate offers its consumers an all-in-one solution as well as toothpaste which follow new
care trends (Haig, 2004). Moreover, Colgate has established a good relationship with dental
cooperation which has led to the recommendation of Colgate toothpaste by dentist worldwide
(Colgate-Palmolive, 2009).

Another competitive advantage of Colgate is that their local management has the experience and
knowledge which is needed in order to reach the consumers (Colgate-Palmolive, 2009). In order to
perfect logistics, purchasing and sourcing processes Colgate integrated SAP technology. This results
in cost reduction and therefore is a significant advantage. The slogan “Clean your breath while
cleaning his teeth”, Colgate could distinguish itself from their competitors and thus gained a
competitive advantage (Batra, 2006). The slogan is associated with the product of Colgate being
unique: when they use the products of Colgate consumers will obtain healthy breath and teeth. Next
to that, Colgate has established cooperation with more than thousands local wholesalers and small
shop owners. The result of this cooperation is that Colgate’s products have greater availability and
that their products in each store are provided with the best visibility (Berger, 2010).

4.3 Five forces model Porter

In order to show the influence of the industry structure on profitability the Five Forces Model of
Porter.

Rivalry among existing firms

Rivalry among existing firms is high. The oral care market consists of a large number of brands. There
is not much room to compete with prices; they rather compete on brand image, innovation, and
research and development. This result in the rivalry among existing firms being very high (Quelch &
Labatt-Randle, 2007).

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Threat of new entrants
The threat of new entrants for the Mexican and Chinese market are low. In both markets, there are
already a great variety of products available. This makes it especially hard for new brands to enter
the market (Quelch & Labatt-Randle, 2007).

Threat of substitute products

The oral care market has a lot of different companies competing with each other. This means that
Colgate has to keep its eyes open because one mistake could be vital: everybody is trying to gain
their market share (Quelch & Labatt-Randle, 2007).

Bargaining power of buyers

The bargaining power of buyers is high. In China, the market is mostly focused on lower-priced
brands. This can imply that by offering toothpaste products at a high price sales numbers will
decrease (Quelch & Labatt-Randle, 2007).

Mexico also has high bargaining power of buyers, best example of this is that the first estimated price
for Colgate Max Fresh was 15.99 pesos but this higher than the price that Mexicans were willing to
pay for it (Quelch & Labatt-Randle, 2007).

Bargaining powers of suppliers

In the oral care market, there is a great number of suppliers and they compete on prices, quality,
innovation, and speed. The suppliers power is quite low because there is a great deal of suppliers in
this industry. Colgate has developed a Supplier Diversity Program which focuses on minority owned
and woman-owned business. This even creates more competition with other suppliers simply
because companies have even more suppliers from where they can go for their business (Glisson,
Kerschen , Martin , Ghaemmaghami, & Schreder , 2008).

4.4 External analysis: Macro

In order to analyze the external environment of Colgate in Mexico and China, we will use the DESTEP
model. It includes different aspects of the external environment: Demographic, Economic, Social,
Technological, Ecological, and Political.

Demographics
It is relevant to know some statistics about the human population in the both countries, Mexico and
China, including age, gender, population growing and so on.

The Mexican population is around 120 290 000 persons. If we look at the age, the median age is 27,3
years old. We can divide the population in 3 categories and we have 46% who is 0-24 years old,
40,4% who is 25-54 years old, and 13,6% who is between 55 years old and over. The ratio between
the genders is 0,96 male/female. The population is currently growing with a rate of +1,21%. The main
part of the population is urban (78%). The major city in terms of population is Mexico City (the
capital) with 20 446 000 people. (Indexmundi, Mexico Demographics Profile 2014, 2015)

In China, the population is around 1 355 692 576 persons. If we look at the age, the median age is
36,7 years old. We can divide the population in 3 categories and we have 31,8% who is 0-24 years
old, 47,2% who is 25-54 years old, and 20,9% who is between 55 years old and over. The ratio
between the genders is 1,06 male/female. The population is currently growing with a rate of +0,44%.
The part of urbanization is concerning the half of the population but there is an urbanization rate
which is growing with 2,85% of growth every year. The major city in terms of population is Beijing
(the capital) with 15 594 000 people. (Indexmudi, 2015)

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Economic
The economic situation of a country plays an important role in making decisions. The economic
variables include the purchasing power, the GDP, the different sectors of activity, and so on.

In Mexico, the GDP is over than 1.3 trillion of US dollar (exchange rate). If we divide it by sectors
there are 3,6% of the agriculture (corn, soybeans, rice, beans, cotton, fruit, etc.), 36,6% for the
industry (food and beverages, tobacco, chemicals, iron and steel, textiles, vehicles, consumer
durables and tourism) and 59,8% for the services. The labor forces are about 51,5 million of people
and the unemployment rate was 4,9% in 2013. The inflation rate was 4% in 2013.
Since the North American Free Trade Agreement (NAFTA) in 1994, the economy is more
manufacturing oriented. Mexico has become the second export market for the United States and the
third source for import. (Indexmundi, Mexico Economy Profile 2014, 2015)

In China, the GDP is over than 9.33 trillion of US dollar (exchange rate). If we divide it by sectors there
are 10% of the agriculture (rice, corn, potatoes, peanuts, tea, etc.), 43,9% for the industry (iron, steel,
aluminum, armaments, textiles, chemicals, automobiles, locomotives, ships, aircraft,
telecommunication, electronics, toys and satellites) and 46,1% for the services. The labor forces are
about 797,6 million of people and the unemployment rate was 4,1% in 2013. The inflation rate was
2,6% in 2013.
Since 1970s China is more market and business oriented and nowadays plays an important role in the
global economy. In 2010, China became the first exporter in the whole world. (Indexmundi, China
Economy Profile 2014, 2015)

Social
Mexican population is sharply divided because of the income and the education level. There are
ethnics groups: 60% of Mestizo (Amerindian-Spanish), 30% of Amerindian and 10% of Whites. In the
country there is also a problem with the living habits because Mexico is one of the country when
there the most of obesity. (Olty, 2010).

China emphasis on the education and the major part of the population is literate (around 90%). China
is also a collectivistic culture, which place the human and the relationship at the first plan. (Makos,
2015)

Technology
Let’s have a focus on technologies in the both countries, and specifically on some health
technologies.

In Mexico, there is a great emphasis on nanotechnology and biotechnology and they work on issues
about toxicity for human and environment. (Ortman, 2012)

In China, internet technologies know a very quickly expansion. The mobile technologies now are
involved in health care (especially in rural regions of the country). (Chinese Nursing Association,
2014)

Ecology
In Mexico, there is air and water pollution, especially in the capital Mexico City and in urban cities
along the border USA-Mexico. This pollution and the deforestation are considered as national
security issues by the government. (Olty, 2010)

In China there are environmental issues as well. First, coal production generates acid rain. There is a
lack of water. There are also natural disasters like floods and earthquakes. The country has clean
energies and low carbon technology. (Rizvi, 2013)

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Politics
Mexico is a federal republic. The chief of states (and head of government) is Enrique Pena Nieto.
The country is divides is 31 states and 1 federal district. About the law system, there are civil laws,
and there is an influence of the US constitutional laws. (Indexmundi, Mexico Government Profile
2014, 2015)

China is a communist state. The chief of states is XI Jinping, the Vice President is LI Yuanchao and the
head of government is LI Keqiang.
The country is divided in 23 provinces, 5 autonomous regions and 4 municipalities. About the legal
system, there are civil laws which are influenced by soviet and continental Europe. (Indexmundi,
China Government Profile 2014, 2015)

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4.5 SWOT analysis
This chapter will discuss the strengths, weaknesses, threats, and opportunities for Colgate.

Strengths Weaknesses
Brand awareness Saturated market
Protecting global environment Communication challenges are a problem for
Colgate. Sometimes they have to rebrand their
product to suit the market
Strong relationship with customers Limited brands
Strong R&D department

Opportunities Threats
Chinese market is not accustomed with Competition in the market
“freshness” concept
Emerging markets have not experienced the Brand switching
cosmetic benefits of toothpastes
Making the business stronger through mergers High costs of marketing
Table 1. SWOT analysis.

Strengths
This paragraph discusses the strengths of Colgate.

Brand awareness
Colgate has a high brand awareness seeing that is a household name. By using splendid advertising
and brand visibility of products they have created a strong customer loyalty which has helped the
brand to collide with other companies (Quelch & Labatt-Randle, 2007).

Protecting global environment

The company has pledged to protect the global environment, in order to improve the communities
where Colgate people live and word, and to be in line with government laws and regulations
(Colgate-Palmolive Company, n.d.).

Strong relationship with customers

Colgate maintains a strong relationship with its customers, shareholders, and business partners. No
matter how big or small a customer is everyone is just as important to Colgate (Colgate, 2008).

Strong R&D department

Colgate is devoted in getting better every day. They put a lot of effort in understanding consumers’
and customers’ expectations and implement this in their work to improve their products, services,
and processes (Colgate-Palmolive Company, n.d.).

Weaknesses
This paragraph discusses the weaknesses of Colgate.

Saturated market
The oral care market consist of a many local and global companies. This has resulted in the saturation
of the market and has left little room for growth whilst every company is trying to obtain more
market share (Quelch & Labatt-Randle, 2007).

Communication challenges
In Mexico it has proven to be a challenge to communicate the message of Colgate Max Fresh to the

11
consumers. As a result, Colgate is forced to rebrand the product to suit the market (Quelch & Labatt-
Randle, 2007).

Limited brands
In comparison with Procter & Gamble, Colgate has limited brands in the oral care market. This is
negative aspect for Colgate because this provides Procter & Gamble with a competitive advantage
(Quelch & Labatt-Randle, 2007).

Opportunities
This paragraph discusses the opportunities of Colgate.

Chinese market is not accustomed with “freshness” concept

In the Chinese market customers the freshness concept was quite new. This is a great opportunity for
Colgate to enter the market with this new product (Quelch & Labatt-Randle, 2007).

Emerging markets
Most of the emerging market do not know the cosmetic benefits of toothpastes and therefore is a
great opportunity. Colgate can persuade customers whom value the benefits of therapeutic
toothpaste to the benefits of cosmetic toothpaste (Quelch & Labatt-Randle, 2007).

Making the business stronger through mergers

Operating in the oral care market which contains many competitors it could be an opportunity to
strengthen Colgate’s position to merge with another company in other to gain more market share.

Threats
This paragraph discusses the threats of Colgate.

Competition in the market

As mentioned earlier, the oral care market is a market with many competitor. As a result, it is
becoming extremely hard for Colgate to differentiate itself from the other companies. Next to that
competitors can harm the image of Colgate with copied products (Quelch & Labatt-Randle, 2007).

Brand switching
The oral care market offers a lot of different brands which all claim different benefits; this makes it
very difficult to being loyal to one brand. Customers can be easily influence by group
recommendation, and price (Quelch & Labatt-Randle, 2007).

High costs of marketing

The different markets that Colgate wants to obtain require a different marketing strategy. This
results in higher marketing expenses, because for every different market, a different strategy is
needed (Quelch & Labatt-Randle, 2007).

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Conclusion
Colgate is a strong brand with a strong relationship to its customers and puts a lot of effort into their
R&D department. Moreover, emerging markets are not quite familiar with the cosmetic benefits of
toothpaste and possibility of mergers could strengthen the brand of Colgate.

In contrast, Colgate operates in a saturated market with lots of different players, which gives
customers a various amount to choose from. Trying to penetrate new markets bring
communicational issues with them, which result in high marketing cost. Next to that, the limited
brands of Colgate in comparison with Procter & Gamble do not benefit Colgate.

Central problem
The main problem Colgate should focus on can be described as followed: how can Colgate
successfully improve Colgate Max Fresh competitive position in emerging markets such as Mexico
and China, while standing out against all its competitors with sufficient marketing.

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5 Marketing strategy
This section will discuss about the Marketing Strategy. It is about giving some options in order to find
a solution for the central problem of brand concerning the improving of Colgate Max Fresh in Mexico
and China against the competitors.

Colgate-Palmolive has even experienced the potential of emerging markets, like Mexico and China.
They have 45 percent of their revenue which come from these markets, and profitability is equal or
higher than what they make in developed markets. (Gingrich, 1999)
But there is a strong competition with the other brands. For instance, Crest (Procter & Gamble’s
toothpaste), which is the main competitor, have launched his product “Crest Whitening Expression”
(which is similar of Colgate Max White) in first in the Mexican market. Colgate Max Fresh has to have
the advantage of the Mexican and the Chinese markets in order to rival the competitors. (Colgate
Case)
In order to reach to this goal they are some solutions:

- Focus on advertising

Two of the major opportunities of the brand concerning the Mexican and the Chinese markets are at
first, improve its penetration in China market thanks to the new concept of “freshness”, and then
inform and convince the both emerging market about the benefits of the toothpaste for the oral care
and the health. In order to aware both of the market on the concept of freshness or on the benefits
of toothpaste, the brand can focus on advertising and deliver messages through this way. Different
ways of advertisement will be used: Television, bill boarding and social medias. (Colgate Case)

- Merge

It could be a good opportunity for Colgate to merge with another company. It could permit to the
brand to get a lot of benefits. At first, economies of scale will be saved (through a managerial,
financial, marketing and technological point of view), it will reduce the international competition and
it could bring an evolution and a diversification to the product. (Economicshelp, s.d.)

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6 Marketing costs & break even times
This chapter will give insight in the budgets costs that will be used for promoting Colgate Max Fresh
in China and Mexico. Furthermore, it will predict the amount of time that is needed to break even.
This chapter will use information from the report about the introduction of Colgate Max Fresh in
2005 in China and Mexico, by Quelch and Labatt-Randle (2007).

6.1 China
The total marketing costs can be calculated as followed:

Marketing costs = $500.000 +$1.000.000 - $50.000 = $1.450.000

Changing packages = $1.500.000
Packages testing = $7.000
Color testing = $7.000
Cost for flavors = $200.000
--------------------------------------------------------+
Total of marketing costs = $3.164.000

Sales = 2% of total market = 2% of $868.000.000 = 0,02 * 868.000.000 = $17.360.000

Retail margins 50 g = 1 - (2,93/3,90) = 24,9%
Retail margins 100 g = 1 - (7.19/8,90) = 19,2%
Retail margins 165g = 1 – (9.64/11,90) = 19%
Retail margins (Exhibit 12) = (24,9% + 19,2% + 19%) = 21%

Manufactory turnover = 100% - 21% = 79%

$17.360.000 * 0,79 = $13.714.400

Contribution margin (Exhibit 13) =50% of $13.714.400 = 13.714.400 * 0,5 = $6.857.200

Net revenue = $6.857.200 = 12 months

Marketing costs = $3.164.000 = (3.164.000 * 12) / 6.857.200 = 5,5 months

The cost for the Colgate Max Fresh marketing in China will be $3.164.000 and the time to break even
will be 5,5 months.

6.2 Mexico
The total marketing cost for Mexico can be calculated as followed:

Incremental production and talent costs = $500.000

----------------------------------------------------------+
Total marketing costs = $500.000

Sales = 5% of total market = 5% of 348.000.000 = 0,05 * 348.000.000 = $17.400.000

Retail margins 75 ml = 1 – (11,64/14,93) = 22%
Retail margins 100 ml = 1 – (13,95/15,30) = 8,8%
Retail margins (Exhibit 19) = (22% + 8,8%) = 15,4%

Manufactory turnover = 100% - 15,4% = 84,6%

$17.400.000 * 0,846 = $14.720.000

Contribution margin (Exhibit 20) = 53% of $14.720.000 = 14.720.000 * 0,53 = $7.801.812

Net revenue = $7.801.812 = 12 months

Marketing costs = $500.000 = (500.000 * 12) / 7.801.812 = 0,8 months

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The cost for the Colgate Max Fresh marketing in Mexico will be $500.000 and the time to break even
will be 0,8 months.

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7 Marketing mix
A marketing mix is a combination of instruments that is used by organization to completion their
marketing strategy. In this section Colgate’s Max Fresh new marketing mix for the Chinese and
Mexican markets will be explained.

Product
In this subparagraph the core benefits for the consumer are discussed.

Colgate Max Fresh is an oral hygiene product. It’s a toothpaste wherein fresh breath is the key. The
freshness gives the customer a clean and fresh feeling in his mouth. The product gets a new
toothpaste bottle to maximize visual impact. Also the package style will be changed.

Price
In this subparagraph the cost for the customer are discussed.

In the United States Colgate Max Fresh was launched as a premium toothpaste. However, in the
Chinese and Mexican market there’s a high computation in low-priced toothpaste. Because of this,
Colgate should adjust the price of the Max Fresh toothpaste to compete with these other brands.

Place
In this subparagraph the convenience is discussed.

Colgate suppliers are: department stores, retail shops and co-operative stores. Besides these, the
brand has also deals with dental associations that helps them promotion their products. In this way,
dentists and medical stores have become its chief suppliers.

Promotion
In this subparagraph the communication is discussed.

Promotion of Max Fresh in China and Mexico will be focused on the freshness aspect of the product,
because this aspect has many grow potentials in these countries. Brand awareness will be created by
using a local celebrity the be ‘the face’ of the brand. The instruments that are going to be used are:
television commercials, billboards and instore sampling actions. Also social media will be used,
mainly Facebook, for interaction with the customers and increasing brand awareness trough actions
such as contests.

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8 Operational marketing plan
This chapter will discuss what Colgate has to do in order to use their new strategy effectively.

8.1 Implementation in China

In the past, Colgate already invested an extensively amount of capitol in Max Fresh marketing
campaign. In order to maximize that return of investment, Colgate should take the following actions:

- Design new toothpaste bottles to build higher brand awareness.

- Once higher brand awareness is achieved, switch to less expensive packaging materials.

Furthermore, Colgate has to develop a new marketing campaign for China. This new campaign must
be focused on the “freshness” concept of Colgate Max Fresh, stating its beneficial aspects about
clean breath. What is most important that they use Chinese celebrities for spreading their message
and speaks to Chinese civilization. This can be achieved through television commercials, billboard
advertising, giving free breath strips to consumers in supermarkets to let them experience the
benefits of Colgate Max Fresh.

Pricing China
When Colgate Max Fresh was first introduced in China in 2005, it outperformed in the customer tests
(Quelch & Labatt-Randle, 2007). However, Colgate has to deal with a lot of competition in the
Chinese market. The Chinese market consist of lower-priced brands.

Therefore, it would be wise for Colgate to keep the price low and follow the competition. One of the
most important factors of the Chinese customers is pricing. If Colgate follows this advice they have a
high chance of gaining market share.

Merger with LMZ

Another way for Colgate to successfully improve their position in the Chinese market is to look for
company in China to merge with. LMZ is a company with offers a variety of household products,
including toothpaste. LMZ is one of the leading brands in the Chinese toothpaste market and
therefore could be excellent partner to work with in order to control the market (LMZ, n.d.).

8.2 Implementation in Mexico

The implementation plan for Mexico, will be similar to the implementation plan in China. The main
focus will be on strengthen the market share position of Colgate. In order to achieve this, a new
marketing campaign will be launched consisting of television commercial, billboard advertising,
giving free breath strips to consumers in supermarkets to let them experience the benefits of Colgate
Max Fresh.

Pricing Mexico
When Colgate first introduced Colgate Max Fresh in Mexico it was priced at 15.99 pesos. However, it
became clear that with a price of 14.99 pesos volumes increased with 25% (Quelch & Labatt-Randle,
2007). We highly recommend Colgate to maintain this price in order to gain their market share.

Merger with Briden

In order to gain more market share in Mexico, a possible merger with Briden toothpaste can achieve
this. Briden is not a very big player in the toothpaste market in Mexico. However, they focus on clean
breath as well and therefore could strengthen the new marketing campaign for Colgate Max Fresh
(Quelch & Labatt-Randle, 2007).

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8.3 Social media
In order to gain market share in China and Mexico, social media can be used to achieve this.
Facebook seems the best medium to do this. Colgate Max Fresh now only has 947 likes; this means
that here is a lot of room for improvement. In order to gain more awareness on Facebook, Colgate
should organize contests. Engage people to try out Colgate Max Fresh by showing where they can get
a free sample. Moreover, Facebook can be used to interact with the customers.

8.4 Timeline
In order to make sure the new marketing strategy is implemented Colgate must follow the following
timeline.

Date Activity
October 1 - Launch television commercial China
- Launch television commercial Mexico

October 12 - Billboard advertising China

- Billboard advertising Mexico
November 1 - Offering free samples in
supermarkets China
- Offering free samples in
supermarkets Mexico
November 15 - Second run television commercial
China with information about
Facebook page
- Second run television commercial
Mexico with information about
Facebook page

November 25 - Facebook campaign China: encourage

people to share the page amongst
friends
- Facebook campaign China: encourage
people to share the page amongst
friends
December 5 - Facebook campaign China: start of
contest
- Facebook campaign Mexico: start of
contest
December 15 - Facebook campaign China: end
results
- Facebook campaign Mexico: end
results
Table 2. Timeline marketing strategy Colgate Max Fresh.

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8.5 Evaluation
In order to measure the results of the marketing plan, several actions will be made after the
implementation of the marketing strategy, in both countries: Mexico and China.

- Number of sales

Determined the number of sales of a quick way to determine if the marketing plan was effective. It is
about comparing the number of sales before, during and after the establishment of the marketing
strategy.

- Return on investment

Return on investment is an effective way to measure the results of a marketing strategy with
important costs, like in this case with the advertising campaign and the communication campaign.
The idea is to compare the money put in the marketing plan with the profit made during the same
period. The benefit is to know if the if the spent of money was useful or not.

- Feedback

Finally, it is useful the collect feedbacks in order to know the reactions the marketing plan creates. It
will be through online surveys for the customers, but also for partners: suppliers and vendors.

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