Colgate Toothpastes - Essay Example

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Colgate Toothpastes COLGATE TOOTHPASTES TABLE OF CONTENTS Executive Summary ………………………………………………………………………….. 2 Section 1 Introduction ……………………………………………………………………….. 2 Section 2 Situational Analysis ………………………………………………………………. 2 SWOT Analysis …………………………………………………………………………... 2 PESTLE Analysis ………………………………………………………………………..... 4 Section 3 Differential advantage/ Competitive edge (USP) ………………………………… 5 Section 4 Competition ………………………………………………………………………. 6 Section 5 Segmentation Targeting & Positioning (STP) ……………………………………. 7 Section 6 Marketing Objectives and Goals (SMART) ………………………………….….. 7 Section 7 Marketing strategies and programmes (7P’s) …………………………………… 8 Product ………………………………………………………………………………….. .. 8 Price ………………………………………………………………………………………. 9 Place ………………………………………………………………………………………. 9 Promotion …………………………………………………………………………………. 10 Packaging …………………………………………………………………………………. 10 Positioning ………………………………………………………………………………… 11 People ……………………………………………………………………………………... 11 Section 8 Conclusion ……………………………………………………………………….... 11 References …………………………………………………………………………………….. 15 Executive Summary This report gives an in-depth study of Colgate-Palmolive’s marketing strategy for its toothpaste line. It analyzes the environment where there is the presence of Colgate toothpastes. The 7Ps of marketing are discussed to give a clear understanding of the marketing strategy of Colgate for its toothpaste products. The various target markets of the different types of Colgate toothpastes are pinpointed. The positioning strategies of Colgate will also be ascertained. At the end of this report, some recommendations will be suggested to further strengthen Colgate toothpastes’ hold of the toothpaste industry. Introduction Colgate-Palmolive Company is a $16.7 billion global company which serves more than 200 countries (Colgate-Palmolive Company, 2011). It has operations in North America, Latin America, Europe/South Pacific, and Greater Asia/Africa. Their core business is in oral care, personal care, home care and pet nutrition. Their key products are toothpastes, toothbrushes, bar and liquid soaps, deodorants/antiperspirants, dishwashing detergents, household cleaners, fabric conditioners and specialty pet food. This study will focus on the marketing strategy of the toothpaste line of Colgate. It was in 1873 when Colgate introduced its first toothpaste in jars. Today, Colgate has a 44.7% global market share of the toothpaste market (Colgate-Palmolive Company, 2011). Situational analysis (SWOT) (PESTLE) A. SWOT Analysis 1. Strengths Has been in the toothpaste business since 1873 Strong financial position Consistent market leader and has strong presence worldwide Has a high brand awareness and has strong brand recall Offers a wide choice in toothpaste varieties Known to be the “No. 1 brand recommended by dentists” Has an image of producing high quality products Strong product development and research program which leads to consistent product innovation Wide channels of distribution 2. Weaknesses Too many toothpaste variants Colgate toothpaste is already in the mature stage of the product life cycle Highly leveraged 3. Opportunities The opportunities in the toothpaste market are centered mainly on rebranding and on the ability of a company to innovate by increasing the value of the product through additional benefits. These benefits may include fresher breath, healthier gums, whiter teeth and addressing sensitive teeth. It is projected that in the future, there is a high potential for growth for toothpastes targeted at children (Global Industry Analysts, Inc., 2010). Oral care is still projected to be a sunny industry 4. Threats The toothpaste market is already a mature market. The major threat that Colgate faces with regards to the toothpaste market is that approximately 97% of the population in developed countries already uses at least one variety of toothpaste (Global Industry Analysts, Inc., 2010). Expanding the market by adding new users is quite difficult. Another threat faced by Colgate is the rise of powerful low-priced retailers such as Walmart and Target, which exerts pressure on the pricing of consumer products. Some of these large retailers are even pushing their own lower-priced private label brands of toothpaste which gives them a higher margin than the Colgate brand (Wikinvest.com, 2012). B. PESTLE Analysis 1. Political It is a long standing policy of Colgate not to make any contributions to political parties or candidates (Colgate-Palmolive Company, 2012). Any indirect assistance to political fundraising events such as the purchase of tickets is not allowed. 2. Economic Colgate is affected by economic factors in so far as the increases in material costs are concerned. Stiff competition in the economic environment is another factor that affects the performance of the company. Because of Colgate’s global operations, it is highly sensitive to the strength or weakness of the dollar. The global recession has an effect on the spending behavior of consumers. Because of the economic slowdown, consumers might prefer to buy lower-priced toothpastes. 3. Sociological Through the various community programs initiated by Colgate, they are able to show their commitment to the society where they have a presence. These programs include Bright Smiles, Bright Futures Oral Health Programs and Colgate Women’s Games (Colgate-Palmolive Company, 2011). 4. Technological In order to develop new innovative products, the marketing personnel of Colgate works closely with scientists and researchers, as well as other external institutions. This is to ensure that the company has the right technology that is needed to meet the short and long-term needs of its clientele (Colgate-Palmolive Company, 2011). Colgate has a robust IT infrastructure which makes available immediately information about its millions of outlets (Kohli, 2011). 5. Legal Colgate complies with all the government laws and regulations in the countries where they operate. The company is governed by their Business Practices Guidelines which include the following: “1) international business activities; 2) conflicts of interest; 3) antitrust and trade regulations; 4) environmental, health and safety principles; 5) product safety research; 6) advertising guidelines and placement policies; and 7) proprietary company information” (Colgate-Palmolive Company, 2012). 6. Environmental Colgate’s concern for the environment can be gleaned from their 2011 Annual Report where they stated the following strategies which they are implementing: 1) reduction by 20% the energy consumption and carbon emissions associated with the manufacture and distribution of their products; 2) reduction by 15% the waste from operations that are sent to landfills; and 3) request from key suppliers to disclose information about climate change (Colgate-Palmolive Company, 2011). Differential advantage/ Competitive edge (USP) Colgate’s main competitive advantage is that it is known as a trusted brand worldwide (Berger, 2011). Berger goes on further to say that Colgate has a strong brand image which projects its toothpastes as an all-in-one solution (2011). Another competitive advantage of Colgate is its partnership with the dental profession. It is highly recommended by dentists worldwide (Berger, 2011). A differential advantage of Colgate is that it owns the patent for the special ingredients in its toothpastes, namely Triclosan and Copolymer which have an anti-bacterial effect (Berger, 2011). Another distinct competitive advantage of Colgate is its strong and long time presence in emerging markets. They pride themselves of really knowing their market through experience; therefore, they can easily reach their consumers and provide them with a wide range of toothpaste products (Berger, 2011). Another competitive advantage mentioned by Berger is Colgate’s relationship with small shop owners and the local wholesalers (2011). Colgate’s cooperation with these distributors assure them the right assortment of their products are always available and are properly displayed in the stores (Berger, 2011). The Unique Selling Proposition (USP) of Colgate according to Rosser Reeves is, “Clean your breath while cleaning his teeth” (Business Strategy Online, 2009). Reeves adds that this slogan made Colgate rule the market for decades (2009). Competition The participants in the global toothpaste market are composed of several large and medium international and domestic companies which battle in the highly competitive and segmented market (Global Industry Analysts, Inc., 2010). There are plenty of branded and private label companies in the toothpaste industry who wrestle for position of their products based on added value, functionality, price and sometimes packaging (Global Industry Analysts, Inc., 2010). The major competitors of Colgate in the toothpaste market are Church & Dwight, Gaba Holding AG, GlaxoSmithKline, Henkel AG & Co. KgaA, Johnson and Johnson, Procter & Gamble Company, Unilever N.V., and Hindustan Unilever Limited (Global Industry Analysts, Inc., 2010). The major competitor of Colgate toothpastes is Procter & Gamble’s Crest. Together, the market share of Crest and Colgate make up approximately 70% of the total toothpaste market in the US (Byron, n.d.). Segmentation Targeting & Positioning (STP) The target market of Colgate toothpastes are the middle and upper income families. However, each type of toothpaste developed by Colgate has a specific target market. For example, Max Fresh is targeted to the youth because of the fresh breath it exudes. Their Colgate Sensitive ProRelief is geared towards people who have sensitive teeth. The Kids’ Toothpastes was launched to persuade children to brush their teeth. The Colgate 2in1 is targeted for people who wants both healthy teeth and fresh breath. The whitening toothpastes of Colgate are geared towards people who want whiter teeth. In short, Colgate developed a whole line of toothpastes to capture all segments of the toothpaste market. Marketing objectives and goals (SMART) According to 2011 Colgate’s World, the company focuses on four strategic initiatives (Colgate-Palmolive Company, 2011): Engaging to build our brands Innovation for growth Effectiveness and efficiency Leading to win “Colgate is committed to doing business with integrity and respect for all people and for the world around us” (Colgate-Palmolive Company, 2011). Colgate’s core values are caring, global teamwork and continuous improvement which are all reflected in their marketing objectives and goals (Colgate-Palmolive Company, 2011). Colgate’s marketing objective is to have “a dynamic relationship with consumers by listening and learning about consumer needs, responding to research and feedback and providing the best products possible to enhance consumer lives” (Colgate-Palmolive Company, 2011). Marketing strategies and programmes (7P’s) A. Product The Colgate brand boasts of 16 types of toothpastes which cater to different segments of the market. The Table below shows the types of Colgate toothpastes currently in the market and its descriptions (Colgate-Palmolive Company, 2012): Type of Colgate Toothpastes Description Colgate Total Advanced Combines the proven 12-hour germ-fighting formula of Colgate Total® with an advanced cleaning silica system to help maintain a dentist-clean feeling Colgate Optic White Uses a unique technology with hydrogen peroxide to make it easier to achieve visible whitening every day Colgate Total Delivers 12-hour germ-fighting protection to help prevent many common oral health conditions Colgate Sensitive Pro-Relief Clinically proven to relieve sensitivity faster vs. a leading sensitivity toothpaste within 2 weeks. Lasting pain relief with continued use Colgate Max Fresh Wipes out bad breath with our freshest line of minty, cool toothpastes Colgate Luminous Reinforces enamel layers to help protect against stains and yellowing that occur over time Colgate ProClinical White Provides professionally inspired, clinically proven results Colgate Sensitve Provides clinically proven, everyday protection from painful sensitivity Colgate 2in1 Available in five convenient liquid gel varieties so you can enjoy a brighter fresher smile Colgate Sparkling White Clinically proven, stain protection formula for sparkling, healthy white teeth with two unique flavors Colgate Cavity Protection Strengthens teeth with active fluoride; fights cavities and leaves your mouth with a fresh feeling Colgate Baking Soda and Peroxide Whitening Bubbles Refreshes and cleans for whiter teeth; removes stains, protects against tartar and fights cavities Kids’ Toothpastes Designed to make brushing enjoyable so your children will develop great habits for life Colgate Tartar Protection with Whitening Fights tarter for whiter teeth; removes stains and fights tartar build up for a brighter smile Ultrabrite Cleans and removes surface stains so your teeth look and feel clean and smooth Colgate Triple Action Cavity protection, whitening and breath freshening for the whole family B. Price Being the market leader, Colgate uses the premium pricing strategy. This strategy works well with Colgate because of the perceived high quality of its toothpaste. The price range of toothpastes in the market can be as low as $1 to $50 for whitening strips and is considered one of the widest in the consumer products (Byron, n.d.). C. Place The distribution outlets used by Colgate are supermarkets, mass merchandisers, drug stores, warehouse stores, convenience stores and other small retail outlets. Colgate distributes its products through large global chains as well as small rural chains. Some Colgate products are distributed through dentists and dental clinics. D. Promotion Colgate makes use of integrated marketing campaigns through “a combination of traditional media outlets, in-store communications and newer digital outlets including social media” (Colgate-Palmolive Company, 2011). The company’s advertising media include print, television and radio. Colgate also uses consumer promotions such as giveaways especially during product launches. Advertisements are placed in dental offices and billboards too. For new products, Colgate uses in-store displays. Colgate’s main lead global marketing agency is Young & Rubicam, which handles the advertising of Colgate since 1983 (McMains, 2011). In 2009, Colgate ranked No. 3 in terms of advertising expenditure in their oral care line, lagging behind No. 1 spender P&G’s Crest. GlaxoSmithKline with its Aquafresh and Sensodyne came in second to P&G in terms of advertising budget (Neff, 2010). Of the $165 million Colgate spent on advertising in the US in 2009, $93 million was allocated for their toothpaste line (Neff, 2010). D. Packaging Colgate redesigned the packaging of some of its toothpaste tubes and caps to reduce the “consumption of non-renewable energy and natural resources by 30% and greenhouse gas emissions by about 50%” (Colgate-Palmolive Company, 2011). The company continues to package some of its toothpastes in smaller sizes to make it more affordable. Colgate began using holographic toothpaste boxes in some of its toothpaste products. These are recyclable materials. Colgate standardized the sizes of its logo, the “sub-brand” and the flavor for the benefit of its consumers (Byron, n.d.). An important aspect of the packaging of Colgate’s toothpaste is the seal of the American Dental Association because it signifies “that the product has been tested, that it's effective in doing what it says it's going to do, and has the right mix of ingredients" (Byron, n.d.). Colgate comes in several sizes such as 4.0oz, 4.2oz, 5.8oz, 6.0oz, 6.4oz, 7.6oz and 7.8oz. E. Positioning Colgate toothpastes are positioned in the high quality, high price quadrant. Section 5 above discusses positioning in greater detail. F. People Colgate is concerned with all its stakeholders. Colgate has always been concerned with the quality of its toothpaste products to meet the needs of its consumers who are the focus of their global strategy. Colgate values the insights of its consumers and they use it as a basis for their product development and marketing campaigns. Aside from the consumers, Colgate values its approximately 39,000 employees (Colgate-Palmolive Company, 2011). Colgate considers their employees as their greatest asset; thus, they are committed to maintaining a working environment that recognizes and rewards people for their contribution to the company. Colgate’s shareholders are important to the company. To protect their interests, Colgate makes sure that the company is profitable to make it a worthy investment. Conclusion After a thorough analysis of the marketing strategy of Colgate, one came up with several recommendations for its toothpaste line to ensure that it will retain and even extend its market share in the toothpaste industry. Considering that the industry is a highly competitive market, it is of utmost importance that Colgate make some changes in its strategy to effectively rival its competitors. Currently, Colgate has 16 varieties of toothpastes, not counting the different flavors in some of its toothpaste brands. It is recommended that product duplicates be removed. Colgate offers too many types of toothpastes but some of them have almost identical active ingredients and characteristics. Too many products tend to confuse the consumer. An example of this is the Colgate Triple Action which is almost the same as the Colgate Cavity Protection and Colgate Total. Their whitening toothpastes such as the Colgate Sparkling White and Colgate Luminous targets the same market. One thinks that Colgate can just retain their most highly-saleable toothpaste and concentrate on marketing it. It is suggested that Colgate focus their efforts in the marketing of their Colgate Total which is “positioned as the only toothpaste with an antibacterial ingredient that adheres to teeth for 12 hours and does not wash away with food or drink” (Alexander, 2010). In this case, advertising budget for products that command a higher demand can be increased instead of spending on products which do not bring in high sales or profits. Colgate’s use of Triclosan in its toothpastes may need to be downplayed because of the health and environmental concerns that has been currently attached to it. The Food and Drug Administration (FDA) is presently evaluating Triclosan because of its apparent detrimental effect as an endocrine disruptor (Madel, 2011). The EPA on the other hand considers it as an emerging contaminant which is harmful to the environment (Madel, 2011). Another improvement which Colgate can adapt in the case of their product strategy is to design products which go together. This move is very much like what P&G did by designing a regimen of products that go together like the Crest 3D White regimen of strips, toothpaste, rinse and toothbrush (Alexander, 2010). If this strategy is adapted, it will create multiple sales for Colgate’s product lines. With regards to Colgate’s promotional strategy, it is suggested that they emphasize the functionality of their toothpastes more than those that arouse the emotions. It was found out in a research that Colgate’s live demo campaign is a valuable way of increasing usage of a product (Alexander, 2010). It is therefore recommended that this method be used by Colgate especially during the launching of new products or during times when they need to boost the sales of its toothpaste brands. If Colgate intends to use digital marketing advertising with its products, they must have clear objectives; otherwise, it might not be as effective as advertising in television or print media. Research has to be undertaken to see if Colgate’s market is captured by such advertising tools. Another suggestion for Colgate is to look into the possibility of getting a new global agency to handle its marketing. Although Y&R may be doing its job, it might be beneficial for Colgate to hire another agency to put in more life into its marketing. A new agency may inject more zest into an otherwise standard and predictable marketing moves for Colgate. At this point of the product life cycle of Colgate’s toothpastes, it is to the company’s advantage to increase its advertising budget to effectively compete with its rivals P&G and GSK. Since it is already in its mature stage, it is necessary that Colgate’s toothpastes be given a boost through advertising. With regards to pricing, Colgate might want to consider lowering their price as consumers now are becoming more price conscious as a result of the economic downturn globally. If Colgate cannot compete directly with price, it can consider offering two-for-one deals or they may choose to give discount coupons. In terms of Colgate’s distribution strategy, Colgate should continuously educate its distributors, meaning their retailers and wholesalers about the characteristics of their toothpastes and what makes it different and superior to other products. The distributers can then provide Colgate with the needed promotion for their toothpastes. Colgate, in coordination with their distributors and sales people, must study further their market to identify the right assortment of toothpastes per retail outlet. This will ensure that the right type of toothpaste is always available where the consumers want them. Although Colgate is the leading brand of toothpaste, it should not rest on its laurels because of the highly competitive industry. Their marketing strategy should be appropriately adjusted depending on the dictates of the times, if it wants to remain competitive and retain its current position in the market. Brand image may not be enough assurance that they will remain on top. Since toothpaste is already in the mature stage, Colgate should find ways and means to innovate their products and continue to address the changing needs of its consumers. References Alexander, A., 2010. Added benefits, regimen brighten oral care segment. Drug Store News, p. 48. Berger, A., 2011. A Strategic Analysis of Colgate's Toothpaste Product Line: Marketing Strategy. s.l.:GRIN Verlag. Business Strategy Online, 2009. Strategic unique selling proposition. [Online] Available at: http://bussinessstrategyonline.blogspot.com/2009/12/strategy-unique-selling-proposition.html [Accessed 18 July 2012]. Byron, E., n.d.. Whitens, brightens and confuses. 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Global Industry Analysts, Inc., 2010. Global toothpaste market to reach US$12.6 billion by 2015. [Online] Available at: http://www.prweb.com/releases/toothpaste_oral_care/whitening_regular/prweb4661914.htm [Accessed 17 July 2012]. Kohli, T., 2011. Colgate company performance and risk analysis. [Online] Available at: http://moneymatters.blog.com/colgate-company-perfomace/ [Accessed 18 July 2012]. Madel, R., 2011. Triclosan: What the EPA and FDA think you should know. [Online] Available at: http://www.ecocentricblog.org/2011/11/02/triclosan-what-the-epa-and-fda-think-you-should-know/ [Accessed 22 July 2012]. McMains, A., 2011. Colgate looks beyond Y&R. Adweek , 52(41), p. 14. Neff, J., 2010. To catch up. Colgate may ratchet up its ad spending. Advertising Age, 81(43), pp. 1-21. Wikinvest.com, 2012. Colgate-Palmolive Company. [Online] Available at: http://www.wikinvest.com/stock/Colgate-Palmolive_Company_(CL) [Accessed 18 July 2012]. Read More