Synopsis on Colgate
...s Steinbeck’s two options and their advantages and disadvantages based on four key criteria. Her decision is evenly balanced. Profit calculations and cannibalisation impacts are shown in Table 3 (appendix) Evaluation Criteria Niche Option Mass Market Option Conclusion Cannibalization Differentiation low cannibalisation Cannibalisation – loss of $8m for Yr 2 Niche is preferable Production Possible to meet product schedule Difficult to fulfil projected demand Niche is preferable Profitability Estimated $8.8m after 2 years Estimated $20.4m after 2 years Mass Market is preferable Promotion Message difficult to communicate Technical superiority Mass Market is preferable Table 1: Analysis of Steinberg's options What should Steinberg do? She needs to penetrate the market and gain market share. Using a mass market and niche message simultaneously would require two different marketing mixes and messages. This would probably confuse customers. Taking a mass market approach only, in essence trying to convince customers that the product is superior would be to compete directly with most of Colgate’s competitors who already use a mass marketing “technological superiority statement” position i.e. bristles / flexible handle etc. Colgate would not be clearly differentiating itself. The Precision is Colgate’s first “super-premium” product, so it needs to focus on building brand awareness and credibility within this segment using clear communication. Differentiation offers the best chance of capturing market share to move Precision from being a “?” to a “star” as shown in Figure 2. Steinberg should concentrate on a marketing mix that easily communicates the anti-plaque capabilities resulting in protection against gum disease. Communication is very important and Steinberg should look to use opinion leaders such as Dentists as well as in-store sampling to help make the message more easily understood by consumers. Table 2 outlines a Marketing Mix to give the Precision clear differentiation. Category Recommendation Rationale Price • Premium Price – slight premium to Oral B’s leading product • Maximises profit and allows penetration into market • Positions it as a premium product Product • “A technological innovation” that reduces plaque and fights gum disease • Soft bristles • Bristles are angled for superior cleaning • Clear differentiation message that reduces cannibalisation and creates clear message for consumers • Soft bristle brushes are the fasted growing type of brush Promotion Advertising • High promotion budget focusing on generating awareness of gum disease • Technological innovation • Position the Precision toothbrush with other Colgate brands • Use “compare ads” to other super premium brands • Discounts to Dentists and key distributors • Coupons through distributors • Discounts with complementary Colgate products • For Colgate to “break into this segment” strong advertising and promotion campaign required to generate awareness • Target Market are buying on a utilitarian basis and so want information on product features and relative advantages to other brands • Essential to build good relationships with re-sellers and distributors Place • Use all distribution channels wi...