Marketing Mix Strategy Analysis Of Colgate Toothpaste - Research Paper Example

Phase 2: Marketing Mix Strategy Analysis of Colgate Toothpaste in Australia Table of Contents Introduction 3 Market Segmentation 4 Coverage Strategy 5 Segmentation Strategy 6 Product Strategies 8 Three Levels of Product 8 10 11 Product Classification 11 Individual Product Decisions 13 Brand Strategy 14 Pricing Strategy 15 Price/Quality Strategy 15 Product-Mix Pricing Strategy 16 Price Adjustment Strategy 17 Place/Distribution Elements 18 Marketing Channel 18 Distribution Coverage Strategy 19 Promotional Strategies 19 Major Communication Elements 19 Classifications of the Available Media, Tools and Technologies 20 21 Conclusion 22 References 23 Introduction Colgate-Palmolive Company is considered as an American international consumer product corporation. The company is primarily focused on production, distribution as well as availability of household, healthcare and personal care products which comprise detergents, soap and oral hygienic-care goods. Under the ‘Hill’s’ brand, the company also manufactures products especially for veterinary purposes. It’s headquarter is on Park Avenue, Midtown Manhattan at New York City. Moreover, the company is also considered as a leading global manufacturer as well as marketer of soap, toothpaste and a wide range of hygiene care products. Most of the oral care products of the company are under the Colgate brand name, which comprise toothpaste; toothbrush and mouth wash among others (Hoovers Inc, Inc., 2012). In the year 1806, Colgate was founded by William Colgate when he commenced soap and candle factory in the New York City. In the year 1857, William Colgate passed away and subsequently the company was reorganised as Colgate & Company. At present, Colgate offers a wide variety of products range such as Colgate dental cream, Colgate total, Colgate sensitive, Colgate visible white and Colgate 2 in 1 among others. It sells more than 30 brands all over the world and is considered as a globally leading company within the oral care sector. All of the toothpastes under the name of Colgate brand are US Food and Drug Administration (FDA) approved and recommend by American Dental Association. In the financial year of 2011, the company attained a market share of 44.7% and its net sales of about US$16,734 million. Colgate’s branded products are circulated in more than 200 countries and are quite well-known in the toothpaste segment all over the world (Hoovers Inc, Inc., 2012). The paper intends to provide a discussion on the marketing mix strategy analysis of Colgate toothpaste in Australia based on certain criteria such as pricing strategies, market segmentation, product strategies, place strategies and promotional strategies among others. Market Segmentation Market segmentation is considered as a widely adopted notion within the field of marketing. Its basic objectives are to attain competitive advantage and also to ensure excellence in terms of financial performance through enhanced generated earnings from appropriate segment of customers. In order to ascertain that these two pertinent aspects are addressed by a company, it is required to recognize demand segment, demands of the specific target markets and create specific marketing ‘mixes’ regarding individually targeted market segment. In the periphery of marketing, most of the managers have identified that target consumers needs and preferences alter regarding certain products. Therefore, Colgate-Palmolive differentiates their target markets in terms of: Needs Demographics Location Social associations Segmentation within consumers and target specific markets facilitate the marketers to deliver the products according to social needs, wants and preferences. As it can be evidently ascertained that the need for products offered by Colgate especially toothpaste products is ever-present in every region of a country such as Australia therefore location has been a key variable in the market segmentation strategy of Colgate. Similarly, the needs of the consumers have also dictated the strategic decisions of Colgate in terms of providing products for their target customers (Allenby, 2012). Coverage Strategy Market coverage strategy is one of the significant decisions, which needs to be taken while operating the business throughout the world. With the help of this strategy, it is quite convenient for the organizations to decide whether they should focus on one or a few markets or should expand throughout the entire market. If a company takes decision to spread in entire markets then it is necessary to prepare individual marketing mixes for dissimilar markets with unique sets of requirements (Osman & Westgerd, 2012). There are three different market coverage strategies which are as follows: ‘concentrated marketing strategy’, ‘differentiated marketing strategy’ ‘Undifferentiated marketing strategy’ At present, Australia is considered as a significant business location for the toothpaste market which has grown effectively from the last few years. In Australia, toothpaste market faces tough competition due to the availability of wide variety of products. Within this competitive environment, Colgate effectively has adopted its market coverage strategy by which it has spread its wide range of business network and has covered almost all the geographical locations in Australia. Colgate has adopted differentiated marketing strategy owing to the fact that it enables it to efficiently target its toothpaste based products for more than two segments of the market. It can be evidently recognised that the company has marketed products for varied group of its target markets such as kids, adults and individuals with tooth or gum related problems. Thus, this coverage strategy lends an appropriate scope for Colgate to reach a wider section of its target market. In Australia, Colgate’s distribution network is very strong by which it sells its products through various grocery retail outlets, shopping malls and pharmacies. Marketing department of the company has prudently identified that there are ample business opportunities in Australia where the company has earned profit in terms of sales volume of AUS$ 11,396 million in 2006, AUS$ 12,000 million in 2007 and AUS$ 15,000 million in 2010. This drastic increase of profit implies that the company possesses strong distribution network with the help of which its market coverage strategy is implemented (Colgate-Palmolive Company, 2012; Online Shopping Australia, 2012). Segmentation Strategy Colgate comprises a wide variety of products and it is effectively focused on strategies in order to segment its target market. On the basis of demographic segmentation, the company has categorized its target market as “younger bustling family”. In Australia, Colgate Palmolive markets its products brand by taking into consideration age, gender and social class, where the company sells its products both for adults as well as kids. Regarding adults, the company offers wide variety of toothpaste products particularly on the basis of consumers’ needs, preferences and age groups such as 18-30, 30-45 and 50 and above For instance, the company sells toothpaste for the people who have tooth sensitivity problem, gum care problem and also sells whitening toothpaste for regular use. Moreover, for kids, Colgate specifies its products on the basis of age groups of 2-5, 5-8, 8-12 and 12-17, where the company offers fluoride-free toothpaste which is new to the healthcare segment and also provides transitional toothpaste for the age group of 8-12 and above In Australia, the company has considered region, population factor and location in terms of geographic segmentation. The basic strategy of the segmentation is that it sells several kinds of product in different geographical locations where the company earns 75% of sales primarily from the global market. Colgate does not promote the same product in every nation where the company sells sixteen different types of brands in Australia while in the United Kingdom it sells twenty diverse types of brands. Colgate-Palmolive is quite committed regarding its toothpaste brand in Australia where it offers different kinds of products in various regions (Colgate-Palmolive Company, 2012; SlideShare Inc., 2012). As it is recognised that Colgate toothpaste products are available in varied categories thus consumer preferences regarding the products is always apparent. Thus, preparing and making available products based on demographic needs and geographic reach are the two most apparent aspects for Colgate to ensure its success in obtaining greater market share in the competitive market Product Strategies Three Levels of Product In order to analyse the features and the benefits of a product, it is necessary for a company to consider three different levels of product. This facilitates marketing managers with regard to segmentation, positioning and targeting its product brands. Three levels of product are: core product actual product augmented product Through these three levels of products company identify its product features in an efficient manner. The core product is considered as an intangible physical product which includes benefits and attributes of the product that provide value to the company. The actual product is regarded as tangible physical product which consumers can buy in terms of money. The augmented product is considered as a non-physical part of the product such as value added and guaranteed benefit of the product. For instance, Colgate offers sensitive toothpaste which provides guarantee to the consumers that by using this product they can cure their tooth sensitivity problem (SlideShare Inc., 2012). Three Levels of Product Source: (Staffordshire University, 2012) In terms of core and actual products, Colgate offers different benefits with its several kinds of product such as Colgate Total which provides the benefit of 12 hour germ fighting protection. It has been observed that in Australia, company offers wide variety of products by focusing on the several oral care problems of the customers. A few of the products and their benefits are given below: Colgate Optic White offers the benefit of whitening teeth through regular use Colgate Sensitive Pro Relief provides the features that it penetrates into the teeth nerves and ensures long-lasting relief by regular use Colgate Cavity Protection is the product which helps to strengthen the teeth with active fluoride Likewise, the company offers wide range of products with different types of benefits and features (Colgate-Palmolive Company, 2012). Colgate Optic White Product Source: (Colgate-Palmolive Company, 2012) Colgate Sensitive Pro Relief Product Source: (iOffer, 2013) Most of the varied Colgate toothpaste products have been able to ensure an amalgamation of benefits required to be derived from three key levels of product i.e. core product, actual product and augmented product. In terms of core benefits the invaluable toothpastes have addressed diverse needs of the targeted customer segment efficiently. Moreover, product packaging, quality and features (i.e. actual product) have provided added advantages to Colgate’s offerings. Product Classification Product can be characterized into four classes’ of consumer goods which are as follows: Convenience goods, Shopping goods, Unsought goods Speciality goods Convenience goods refer to those items which consumers can easily buy without giving significant purchasing efforts. Moreover, these refer to those goods which are required for the regular usage of the consumers. These types of good are purchased frequently but not in large quantity due to it being non-durable in nature. The example of these goods is biscuit, toilet soap, toothpaste and other hygienic care products. Shopping goods refer to those items which are completely based on quality, price, style and suitability. All products that comprise shopping judgement before purchasing are considered in this category. Speciality goods are considered to be those goods for which consumers are consistently willing to make a purchasing effort. These goods comprise high degree of brand identification such as cars, electronic and photographic equipments among others. Unsought goods refer to such types of goods regarding which consumers do not have enough information and are not willing to buy, for instance, insurance as well as cemetery plots among others (Scribd Inc., 2012). Product Classification Source: (Adeoti, 2008) The products of Colgate-Palmolive Company fall into convenience goods category due to its non-durable characteristic. Consumers generally give less purchasing effort or thought for choosing the toothpaste brand because they are well aware about the product information and quality. People usually buy toothpaste in small quantities for their regular use. The consumers of this product are well informed because they know regarding the brand features which facilitate them to maintain their oral care (Adeoti, 2008). In terms of convenience goods, Colgate products are also widely available in different retail stores, grocery stores, pharmacy and dental surgery centres in Australia where people can easily purchase their own products with providing less searching effort. Individual Product Decisions The decision regarding the product purchasing of the consumers in one of the critical aspects by which future profitability of the company is determined. Regarding this aspect, Colgate takes the decision with respect to what types of product should be offered in the marketplace. Individual product purchasing decisions are based on product quality, physical features, packaging styles and design, branding and brand equity. According to individual product decisions, people of Australia choose Colgate toothpaste products in terms of product branding, attributes, labelling, packaging and product support related services. Moreover, it has been observed that Colgate is considered as a well-recognized brand not only in Australia but also all over the world. It has been observed that in Australia, Colgate offers wide variety of products along with providing different attributes in the products which facilitate it to satisfy the needs of diverse customers. Individual consumers of this market always choose toothpaste brands on the basis of product features because they are well informed before taking the purchasing decision. It is quite beneficial for the company because it already provides wide range of product categories along with different packaging styles and designs. In terms of quality and branding, the company has already attained effective goodwill throughout the world as a leading toothpaste brand. Therefore, it is quite convenient for the individual consumers to choose the toothpastes offered by Colgate in terms of quality and features (SAGE Publications, 2012). Brand Strategy Colgate-Palmolive always implements push strategy for increasing its sales force and other brand promotional activities. Through this strategy, the company pursues intermediaries in order to carry, promote and sell the products to the customers. When the company’s market share as well as brand recognition falls down due to increased competition then it prefers to implement push strategy in order to increase its brand awareness. In this similar context, the branding strategy of Colgate-Palmolive is generally focused to fulfil the customers’ needs and preferences by providing wide variety of products. Moreover, in Australia, Colgate-Palmolive also implemented brand extension strategy by which the company extended its existing brand products into the new forms of size, flavour and packaging. Moreover, the company also utilizes pull strategy for brand promotion and advertisement by which it influences the customers so that they ask for the Colgate branded products from the intermediaries at the time of purchasing. Before implementing these two strategies, the company always recognizes its intermediaries who are responsible for the distribution of the products to the customers. When it brings new variety of toothpastes such as sensitive, gum care and whitening among others then the company always determines its distribution channel by which they effectively fulfils the consumers’ demands (Colgate-Palmolive Company, 2012). Pricing Strategy Price/Quality Strategy Colgate-Palmolive offers sixteen different types of brand in a variety of price ranges in Australia. Due to the large variety of products, the company is able to impose a bit high price especially in its quality sensitive and gum care products. The company follows the strategy of providing various types of prices in its products according to its brand products by which they can capture easily every class of customers. Moreover, in Australia, Colgate-Palmolive always implements and focuses upon the product line pricing strategy where the company sets it prices according to the wide variety of products. In Australian toothpaste market, the company also implements premium pricing strategy for it certain products which are generally focused on oral care problems. The premium priced products are: Colgate Sensitive Pro Relief Colgate Toothpaste Total Plus Whitening Gel Colgate Gel-Kam Stannuos Fluoride Treatment Gel With the help of low cost pricing strategy, the company offers a price which is suitable for every customer for its toothpaste products. Moreover, through this strategy, it is able to set its price range which is quite competitive for the Australian toothpaste market. In addition, the company’s pricing strategy is very unique due to its price ranges according to product variation. Colgate offers considerable product alternatives with different price ranges by which they easily attains huge market share along with large number of target consumers. Dissimilar pricing strategies i.e. premium and low cost strategies have enabled Colgate not loose upon any significant level of revenue earnings as at times low pricing strategy can deter a company from attaining desired revenue from a targeted market. However, premium pricing enables Colgate to balance out its revenue earning as considerable demand is present for its premium priced products (Online Shopping Australia, 2012; Colgate-Palmolive Company, 2012). Product-Mix Pricing Strategy Pricing is considered as a critical aspect of marketing mix, where a company should specifically determine the strategic choices regarding how to set prices of their products in order to attain business objectives. Product mix refers to a collection of products and services under a single brand name that a company offers to its target market. Penetration pricing is a kind of product mix pricing strategy which is designed to attain huge market share through introducing innovative products with low cost in order to influence customers to purchase that particular product. It has been observed that Colgate-Palmolive offers varied products in Australia in different price ranges (Online Shopping Australia, 2012; Colgate-Palmolive Company, 2012). The available products and their price ranges are given below: Total Advanced Clean is AUD$ 4.95 Colgate Sensitive Pro Relief is AUD$ 9.95 Colgate Toothpaste Sensitive Whitening is AUD$ 6.95 Colgate Advanced Whitening Toothpaste is AUD$ 8.40 Source: (Online Shopping Australia, 2012) Price Adjustment Strategy According to present business scenario, most of the companies adjust their products on the basis of customer preferences and alterations in business situation. There are six types of price adjustment strategy which are as follows Segmented pricing Geographical pricing Psychological pricing Discount & allowance pricing International pricing Promotional pricing It has been observed that Colgate-Palmolive always follows segmented pricing strategy in order to set the prices of its products. In terms of segmented pricing, the company sets the prices on the basis of product segmentation because the company offers wide variety of products for children, adults on the basis of their age group and for persons who have tooth decay and sensitivity problem where it sets different price levels for these kinds of segmented product. In Australia, the company has launched thirteen different kinds of brands where the company has set individual prices for all these products (Colgate-Palmolive Company, 2012). It has enabled Colgate to ascertain greater market dominance in certain particular segments of target market. Place/Distribution Elements Marketing Channel Marketing channel helps to develop a connection which directly connects with the producers as well as consumers. It acts as intermediary between an individual consumer and a company in order to initiate right products for the right customers along with the right price. In Australia, Colgate Palmolive utilizes all the available intermediaries such as wholesalers, retailers and stockist. In this nation, the company primarily distributes its products to the dental pharmacies, grocery stores, departmental stores and large retail outlets with the help of these available intermediaries. Moreover, in Australia, the company’s marketing channel is wholesalers and retailers through which they distribute the products in various geographical regions (The University of Texas at Dallas, 2012; Colgate-Palmolive Company, 2012). Distribution Coverage Strategy In present business scenario, it is necessary for the marketers to choose specific level of distribution coverage stagey. This strategy develops the value of an organization in terms of product. There are three levels of distribution coverage strategy such as selective coverage, mass coverage and exclusive coverage. In Australia, Colgate-Palmolive Company distributes its products in order to attain mass coverage because in every geographical region the company widely spreads its products according to the types of product sold. With the assistance of distribution coverage strategy, Colgate-Palmolive is able to distribute and cover almost all the regions of Australia by which the company also improves the efficiency of flow of goods from the manufacturer to the customers. Moreover, through this strategy, the company provides superior information about the products in terms of attributes, quality, variety and price to the customers’ of Australia. This distribution level is only possible if the product cost is low, where the company effectively sets its price according to the product segmentation by which it can easily fulfil the demands of the target customers (Bharadwaj, 2012; Colgate-Palmolive Company, 2012). Promotional Strategies Major Communication Elements ‘Integrated marketing Communication (IMC)’ is developed in order to deliver the message of the products through various advertisement tools. Through IMC, Colgate creates an effective brand image in the minds of the target consumers by which the company has attained goodwill as a world famous toothpaste brand. Moreover, through IMC, the company also promotes its products through a unique set of advertisements in Australia. Through these advertisements, the company grabs the attention of its target segmented customers such as children, people who have gum and sensitivity problem and the customers who purchase toothpastes for their regular use. In addition, with the help of IMC, the company uses specific set of promotional tools in order to attract target market segment. With the help of promotional strategy, the company creates an effective brand image in the minds of the consumers by which it has been able to increase its sales in almost all the regions of Australia. In Australia, Colgate offers bonus packs, family packs and coupons which are used for ‘free dental check ups’ at any oral care pharmacy (Gedenk & et. al., 2012; Buch & Chambers, 2009). Classifications of the Available Media, Tools and Technologies In Australia, Colgate Palmolive plays a major role in order to set the right strategic direction, execution and development of digital communication media for the promotion of its products brand. VML Inc. is a renowned digital marketing agency; by which Colgate promotes its digital advertisement campaigns along with the collaboration of the VML Sydney team. In terms of social media, the company organizes ‘bright future program’ where they distribute oral health educational kits to the children whose age is 3 years or above through which the company has been able to reach 5 million children all over Australia (VML, Inc., 2012). These strategies facilitate the company to not only grab the attention of a wider section of the society but it has also been able to fulfil its social responsibility based commitments successfully. Thus, brand recognition, consumer preference and greater consumer awareness have been the resulting beneficial outcomes for the company through such pertinent initiatives. Advertisement of Colgate in Australia Source: (VML, 2012) Advertisement of Colgate in Australia Source: (VML, 2012) Conclusion The strategic idea that emerges from the overall discussion is that Colgate-Palmolive Company is considered as a world’s leading company for promoting its toothpaste product in a right strategic direction. In Australia, the company uses unique marketing mix strategies in terms of product, place, price and promotion. Moreover, it offers wide variety of products in varied price levels by which it is able to widely reach out to almost every level of customers. In terms of promotion, the company utilizes very unique tools in order to create a brand image not only in Australia but also all over the world. Therefore, it is quite feasible for the company if it utilizes more strategic tools in terms of marketing mix by which it can expand its business network in other geographical locations as well. References Adeoti, J. O., 2008. Product Classification Strategy. Department of Business Administration University of Ilorin. [Online] Available at: http://www.unilorin.edu.ng/publications/adeotijo/PRODUCT%20CLASSIFICATION%20STRATEGY.pdf [Accessed December 21, 2012]. Allenby, G., 2012. Market Definition, Market Segmentation and Brand Positioning. Ohio State University. 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