Problem Statement * Defining the Marketing strategy (Positioning, Branding & Communication Strategies) for the New Toothbrush — Colgate Precision Nature of Demand + Tooth brush market is close to a century old, but last few decades have witnessed many changes + Now, there is a shift in demanded benefits — Cavity Prevention — Healthier Gums — Young generation ready to pay for superior toothbrush * Market is emerging from value and premium range to a third category of “Super Premium” range — Enhanced Oral Care Extend of Demand * Current US Toothbrush market — US $ 330 MN + CP's share — US $ 77 MN * Market growth — 9.3% per annum since 1987 ($ sale) * Year 1992 — Market growth — 18% by volume, 21 % by $ sale * $ growth exceeded volume growth due to emerge of Super Premium Toothbrush = a i A a a Therapeutic brushers 46 Brush twice a day-85% Oral-B regular Use professional brush-85% Oral-B Angle Floss regularly-54% Colgate Plus Cosmetic brushers 21 Brush twice a day-85% Colgate classic Use mauth wash-8196 Oral-B regular Use professional brush-54% Colgate Plus Use breath fresheners-54% Floss regularly-69% Uninvolved 33. Brush once 2 day or less-20% Colgate classic Consumers Use mouthwash-66% Oral-B regular Use regular brush-25% Colgate Plus Floss regualrly-54% =o — -—— ee$05M*S $05M*7 $05M*14 $0.5M*20 a $03M*2 $03M*3 $03M"6 — $03M*9 $0.15M*1 $0.15M*1 $0.15M*2 $0.15M*2 317M —0.450M 887M 1.267. $0.66 $2.02 $iLaM_—SLL7M_—$32.8MPre-forma Income statement-cannibalization analysis as Niche Product re Kiakastrentes Rreduict v1 v2 vi v2 eT $26.26M $40.4M. $73.92M $103.84M fer ee $8.58M $13.2M $26.88M $37.76M OO ud $11.2M $11.7M $32.8M $29M Operating Profit $6.48M $15.5M $14.24M $37.08M ids Price: $1535 SI rena Te ee Classic Prive: $0.69 35% 60% 35% 60% ‘Gross Margin: 50% v1 v2 Y1 Y2 YL 2 Y1 Y2 Pele ALU La} 14.7 2065 252 354 ee ee ed 7.35 10325 126 17.7 tion Loss 992 1394 1701 239 7.5 1053 1285 1805 rofit (M) 432 2314 277 139 674 2655 139 1903 Recommendations = Launching Seaicae c + Target therapeutic and cosmetic brushers othbrush Ads & + Devote $32.: 5 to Precision, $10. 8 to Plus + Ads focused on Prevention of gum diseases, toothbrush effectiveness(nced to develop superiority claim) Positioning m= se Smonetcemt Bete ng term Madnstream a why? + 10 month lead time for Cost of shortage + Niche strategy cannot, Potential competiEnvironmental Climate * Political - Relatively insignificant + Economic = New entrants appeared in early 90s ~ Proctor & Gamble and Smithkline Beecham — Positioned in the super-premium segment + Technological — The new products in late 1980's & early 1990's — design of the handle and head of the tooth brush — the action of the bristles — Super premium toothbrushes - with an emphasis on greater plaque removal and gum care Environmental Climate — Cont.. * Social ~ Aesthetic appeal in the late 1980 = The children’s market + Glowsin-te-dark handles + Cartoon characters = New product - technological improvements ~ An additional social development - concern for ‘gum health - the baby boom population ~ Cavity prevention was the previous concem - willing to pay more for products designed for gum care Environmental Climate — Cont.. + Current status and future trend ~ The most current technology is the action of the bristles — Concern for gum health is demonstrated by the current population — New product offerings to feature technological improvements of aesthetic improvements Colgate Precision + Presently in Introduction stage + Planned promotion for entry into Super Premium segment + Expected ROI in few yearsProduct *+ The Precision toothbrush is 2 technical Innavaton + Using infrared motion analysis, CP developed 2 unigue brush wth bites of 3cfferent lenaths and orientations ‘+ Three brush designs evolved with 35% more plaque removing efficiency + The brush is also shown to be more effective In reducing gum csease than the leading brushes, spciially Reach and Oral-B Price Reta | Trade | Manutactre Price | Price | Price vain Swear Svaigy | $249 | $405 | $176 ice warketsvategy | $209 | s2ts | $202 * Greater discount may be given as rellecied inthe franca forecasts Promotion * Under the niche market ~~ Aggressive advertising campaign - demonstrate technical superiority of the toothbrush ‘+ Under the mainstream position = Through financial incentives + Coupon , buy one get one free ‘+ Through professional channels ~ Dentists, + Consumer promotions in strong CP market ~ a free 5 02. Tube of Colgate toothpaste with a Precision brush ~ 2 50%-off offer on Colgate toothpaste — a 50 cent. coupon Financial Forecast * A financial analysis indicates a profit over a ‘two year time frame for both market positions + The Niche position generates a greater estimated net profit over two years ($12,527,333) + The mainstream net profit over two years is estimated at $9,515,333 + In addition, some sales of the new product are anticipated to come at the expense of sales of other existing Colgate productsFinancial Forecast — continued. ‘+ In the niche position, an estimated 35% of sales would come form other products decreasing Colgate's overall toothbrush net profit by $2,507,400 in year one and $3,970,050 in year 2 ‘+ In the mainstream position, an estimated 60% Of sales would come from exiting products decreasing Colgate's overall toothbrush net profit by $15,044,400 in year one and $21,133,800 in year two. ‘+ Including cannibalization effect, only the niche ‘market generates a profit over a two year period ij Branding ‘+ Emphasizing the Colgate name on the new Precision toothbrush would cause additional cannibalization of the existing Colgate toothbrushes - estimated at 20% * Using the Colgate name would be congruent with Colgate’s strategy to build the Colgate brand equity Communication & Promotion * Information that may contribute to success — Four concept tests conducted among 400 adult professional brush users (Colgate Plus, Reach, and Oral B) = The results indicates - consumers were highly ‘motivated by the Precision toothbrush claims — Additional in-home usage tests were conducted + 77% aimed that Precision was much more effective than thelr current toathbcush + ther consumer research revealed thatthe higher the exposure to the product the greater ‘consumer acceptance Skills and Financial Resources * Colgate Palmolive has spent $243 million to upgrade 25 of its 91 manufacturing plants + Participated in several strategic acquisitions. E,g, Mennen, a men’s toiletry company ‘+ Manufacturing capabilities began in China and Eastern Europe * If needed, some production can be re- directed to manufacturing sub-contractors Which CP currently uses for other products.Skills and Financial Resources — Continued .. + CP holds 43 % of the global toothpaste ‘market and 16% ofthe global toothbrush market + Sales have increased 12% to $1.3 billion, ‘accounting for 22% of CPs total sales + Toothbrush sales amounted to $77 milion with operating profit of $9.8 milion + What does this mean? ~ Colgate Palmolive, without any doubt, has the ‘means and abies ta take on the endeavor Pros & Cons of Positioning Main Stream Strategy Cons "Unsaid demand could create the perception ofa Mot product, which may neease sate “+ Poss ines in sles + Grater erosion of Colgate Pus + May recurs ping one ofthe slow moving Clron's bash from ne Pasting + Posse pessue on prosucton Scholes rosuting in nadequste supply of rodut + More compton Pros & Cons of Positioning Niche Market Strategy Pros Cons 1. Nee counter bebreadened oa Imansveam ston a adel capscty care. ne. This woul Bean 235 tanston ine producti oe 2. Less ersten of Cage Pus. The 3. Enno new upeiotaahaah poston 1, Lose conrbution net peti feo yous Implementation + Professional endorsement from dentists ‘Pursue an aggressive advertising campaign + Match price-points with other super-premium brands ‘+ Associate @ super-premium toothpaste with Precision