Colgate - Palmolive: the Precision Toothbrush
...ate-Palmolive was the leading brand in 1991 in terms of volume in the lower sectors of the toothbrush market. However it was only second for dollar sales (exhibit 6) due to their focus on the value and professional segment. Their star product Colgate Plus was positioned in the professional segment. Colgate’s decision to develop a product for the super-premium segment showed their will-ingness to attract the higher value segment. Toothbrush market was growing according to unit sales and profit (Exhibit 1) as well as to total volume in the market (Exhibit 6 and 7). In 1990s this sub-segment of oral care grew faster than the main market and the value increased faster than volume (1992: 21% value increase and 18 % volume increase). How is the toothbrush market segmented? Compare consumer behavior for toothbrushes and toothpaste Toothbrushes are a submarket in very broad health and oral care markets. To plan the marketing mix for a new product in toothbrush submarket the managers needed to consider product-market dimensions and analyze market segmentation. Toothbrush market segments may be described by behavioral, psychographic and/or demographic dimensions. By analyzing markets and the toothbrush submarkets the segmentation has been made according to behavioral dimension to value, professional and super-premium segments. After determining and identifying the dimensions the managers needed to analyze the segmentation among customers and their behavior. The toothbrush market segmentation has been a two-step process. In the second step the consumer research has shown three different kinds of users among toothbrush consumers: therapeutic brushers, cosmetic brushers and uninvolved oral heath consumers. The consumer segmentation has been made mainly to find out consumers needs. Consumers have agreed that the primary role for toothbrushes is to remove food particles and plaque removal and gum stimulation is considered secondary. Anyway, both toothbrush and tooth-paste are agreed to be equally important for oral hygiene. Toothbrush is mainly purchased individu-ally and the choice of the brand is based on features, comfort and professional recommendations. Consumers have become more aware of the technical performance of the toothbrushes after inten-sive advertising, promotion campaigns and increased visibility. This way the producers have man-aged to influence on the basic need and to increase consumer demand. With the toothpaste category, it has been harder to increase primary demand and normally the toothpaste is shared among all the family members. What are the arguments for/against launching Precision as a) niche product and b) main-stream brand? Niche product Mainstream product Advantages - Higher price and margin - Lower cannibalization of other Colgate toothbrushes due t lower volume - Recommendation through dentists to build brand loyalty (usage) - Lower promotion and advertising and investment costs (narrower target mar-ket) - Easier to meet demands and market expectations with the actual production capacity - Helps to create a higher brand image - Broader target market in the growing super-premium segment which enables to capture a higher market share - High volume, higher sales in dollars - Value has increased faster than volume - Maintenance of the place as a market leader in volume - Colgate Plus is in market maturity cycle and may be replaced in near future *) - Colgate doesn´t have a product in super-premium segment Disadvantages - Low volume - Potential of the new product could be underused - Difficulty to communicate benefits of reduced gum disease into a message aiming at broad consumer appeal - Lower price and margins - Under production capacity, potential bottleneck - Possible drop of other Colgate SKUs - Higher cannibalization of other Colgate products, e.g. Colgate Plus (see attached calculation) *) Colgate Plus is in the market matur...