Colgate's Marketing and Business Strategies - Essay Example

Branding Report Branding Report INTRODUCTION This report aims to evaluate Colgate’s marketing and business strategies that help the company to successfully operate in the global environment. Colgate-Palmolive was founded in 1806 in New York by William Colgate, who believed in bringing forth innovation through the making and selling of soap (Colgate, 2014). Since the beginning of the business operation Mr. Colgate wanted to boost customer health and provide products that could enhance the quality of their lives (Sekar, 2008). For almost two decades, the Colgate-Palmolive persisted with the same objectives to help and innovate and expanded its product lines, which greatly helped the company to expand overseas as people everywhere had the same needs and wants. Presently, Colgate is listed as one of the best-selling brands and operates in over 200 countries with an annual turnover in excess of $9 billion (Kantar, 2014). Colgate’s success shows how important it is for global enterprises to support their values, for example; Colgate’s global values are: caring, continuous improvement, and global teamwork, which enable the company to improve and adapt to the changing customer needs, as well as, global market challenges (Colgate, 2013). The company’s stable global growth also is because of the company’s ability to focus on its four strategic initiatives, such as: engaging to build the brand, innovate for business growth, effectiveness and efficiency, and leading to win (Colgate, 2013). LITERATURE REVIEW 2.1 Marketing Environment Colgate always carries out environmental scanning that helps the company to identify the external factors that will influence organisational performance (Wood, 2010). Factors that are political, legal or technological may pose different threats to Colgate’s business when entering a new country, or even, when the company has already successfully established its operations. Therefore, the external audits carried out are always considered to be a major focus for any organisation that wants prosperity (Baines, 2011). Furthermore, Colgate-Palmolive concentrates on creating personal care products in areas where the competition in this sector is relatively high. This means that; Colgate has to monitor the situation around its business in order to take the lead among its rivals (Schultz et al., 2006). The first and most important external audit that Colgate needs to constantly monitor is the governmental regulations. This is especially as Colgate is a multinational corporation each political atmosphere in every country that Colgate-Palmolive operates has the same value and importance (Lee et al., 2012). Colgate always follows the changes in governmental regulations, for instance, if government poses a new rule to having a specific level of product quality, Colgate will always have above-standard quality for their products that will not harm any of its consumers in any of their operational countries (Strategic Direction, 2004). Since the world has become more integrated and trade barriers are disappearing almost every day, people of different cultures are beginning to show the similarities in their consumer needs (Menon, 2014). Case in point: A small population in India still preferred to clean their teeth with traditional products such as salt or ash. However, it is clear that a shift in the region’s behaviour began to change as more individuals decided to use Colgate’s toothpastes and mouthwash (Vani, 2010). People around the world are becoming health-oriented and are changing their traditional methods of cleaning teeth and washing clothes to more modern methods (Mintel, 2014). Therefore; it is clear that the current social trends work in favour of Colgate’s business, as the company can enter a new market knowing that customers use the same methods of brushing teeth as other regions do. However, it can be argued that a certain level of adaptation is needed since the cultural differences still exist, and Colgate needs to carry out a marketing research before entering any new market (Lee et al., 2012). Technological changes play one of the key roles in Colgate’s performance. This is because technological evolutions lead to product innovations (Baines & Fill, 2011). For instance, Colgate-Palmolive became one of the first companies to introduce the “3X Bacterial Removal Action” or Colgate’s unique “Colgate Pro-ArginTM” toothbrushes, which were technologically advanced as compared to what the competitors offer. These new innovations caused an instant buzz among the loyal customers of Colgate’s products (Colgate, 2012). This shows that technology can enhance a product’s features, and can be used in all levels of a business from its products’ selection process to distribution of the products (Kapferer, 2004). 2.2 Brand structure In order to thrive in the global marketplace, Colgate-Palmolive decided to apply the hybrid approach (Samiee, 2006). The main advantage of this approach is that it is possible to be a global brand with standardised global products, but with localised product preferences (Jocz et al., 2012). Colgate-Palmolive is rather consistent when it comes to using the same corporate identity, such as, not changing the product names and logos (Colgate, 2012). Furthermore it uses its standardised positioning such as a good quality, caring brand in all of its operating markets (Jones, 2006). Also, the adaptation of local flavours has also been employed in order to fulfil some necessary host country requirements (Hie & Truong, 2010). For example, as the Indian market still has a preference for using the natural methods to clean teeth, Colgate has decided to sell the powder instead of the toothpaste (Quelch & Jocz, 2012). Moreover, marketing tools, such as advertising, have also been implemented to reach the local audience (Baines, 2011). Colgate-Palmolive made it a point to appoint actors such as Kareena Kapoor Khan and Shriya Saran as brand ambassadors for the company’s products. They are seen as exceptional role models and are well respected and noticeable in the Indian market (Colgate-Palmolive, 2011). It has been argued that even after globalisation, which caused the world to be more open and integrated, companies are still required to better satisfy the needs and wants of the culturally diverse customers (Khan, 2013). Another reason for Colgates appliance of the adaptation approach to match the local market is because of the legal systems that shape the institutional environment, which have direct pressure on Colgate to adopt certain structures (Csaba, 2006). Colgate became the first multinational company to obtain halal certification in Malaysia, as some of its products may contain alcohol. This means that they may not be permissible in Muslim-based markets due to halal guidelines with respect to religious guidelines and laws (Gooch, 2010). This shows that Colgate-Palmolive has applied the correct position and uses the “think global but act local” tactic, and has created a balance between standardization and adaptation (Lee et al, 2012). Even an already established brand like Colgate-Palmolive knows what it can offer to the world, and yet, it is careful and respectful to the international differences that exist (Samiee, 2006).  Colgate-Palmolive recognizes the brand portfolio approach as a powerful technique for future prosperity as it provides the discipline needed to sustain a business strategy (Aaker and Joachimstalther, 2000). The company is known to apply the "hybrid brand" architectural strategy by combining two different architectural approaches (Colgate, 2013). This strategy offers the greatest flexibility of all portfolio structures since it allows the firm to selectively leverage different brand entities to address emergent or conflicting strategy needs (Franzen, 2009). For instance, the company is known for its use of sub-branding strategies, which are sub-brands that are connected to the master brand and have major associations with it (Aaker and Joachimstalther, 2000). For instance, Colgate-Palmolive plays a key role in the business profits, and its customers are highly familiar with the Colgate-Palmolive master brand (Colgate, 2013) (Appendix 1). Therefore the sub-brands will have the same success because, first; Colgate-Palmolive has already established loyal customers that respect the brand, and secondly, the sub-brands will co-drive the profits as the ingredients will be enhanced (Kim, 2014). Colgate, and its oral care products, has launched a number of sub-brands such as Colgate Gel or Colgate Herbal that contain the same name, but introduce different tastes and functional benefits for numerous market preferences (Colgate, 2013). According to Kuila (2014) the sub-branding strategy have majorly helped the company and increased the share growth to 54.5% in 2012. The following strategy is also effective when trying to win over the competitor, for example; when Sensodyne introduced its toothpaste for sensitive teeth, Colgate also followed the idea and introduced "Colgate Sensitive" to the market, which addressed the same needs (Schultz & Csaba, 2006). This has helped the company to stay as the top brand, and as the company did not change the brand name, the company’s loyal customers can easily recognise their products. This is in addition to the new customers that the company gained with the added value product (Aaker,  & Joachimsthaler, 2000). The second aspect of the hybrid brand architecture that Colgate applies is the house of brand strategy (Muzellec & Lambkin, 2009). This approach lets each brand to stand alone, not connected, and the sum of performance of the independent brands is greater than they would be if under a master brand (Million, 2002). One of the main advantages of the house of brands strategy is the avoidance of brand associations (Aaker & Joachimsthaler, 2000). If one of Colgate’s products has experienced a negative reputation, the company’s other product’s success could be effected if the brands were linked (Bowie, 2005). However, as all brands under this architecture are independent, they all operate on their own merits and are capable of dominating different targeted niche markets (Kapferer, 2012). Colgate-Palmolive has now created pet nutrition products “Hill’s”. However, if the sub-brand would have been named Colgate, the customers would not be attracted to the product as much due to the toothpaste associations (Colgate-Palmolive, 2013). This provides the new brand with the ability to create its own associations, and a chance to become the world’s leading seller in its own field (Million, 2002). However, the support of the master brand, which has the knowledge on how to add value to the new subsidiaries, can help target a chosen niche market and help bring some new experiences to the customer (Muzellec & Lambkin, 2009). “Shadow Endorser” is the second type sub-group of the house of brands strategy. It provides an invisible link to the other supported brands (Aaker & Joachimsthaler, 2000). Colgate-Palmolive possesses brands such as “Ajax Hill’s” or “Oil Soap”, which the company effectively manages to hide the links to their master “Colgate-Palmolive” brand (Colgate-Palmolive, 2013). The following combinations of approaches have given Colgate-Palmolive the opportunity to target more broadly and effectively focusing on each target market (Dooley & Bowie, 2005). Also, with the Colgate-Palmolive high revenues, it is easy to conclude that brands that offer the specific attributes that are aimed on a niche market are more successful (Kapferer, 2012). 2.3 Brand Equity According to Sekar (2008), Colgate-Palmolive enjoys rather well-built brand equity, which is an intangible asset that intends the company to flourish in the long term. The company highly concentrates on creating positive brand attitudes by clearly defining what their products provide to its customers (Schultz, 2006). As Colgate-Palmolive is a seller of personal goods, the company highly focuses on enhancing customer lifestyle and health through all of its product lines (Colgate-Palmolive, 2013). Colgate-Palmolive’s success comes from the correct use of the messages in all of its marketing communications with the customers (Keller, 1993). For example, the company always tries to insert the benefit-based message in advertising campaigns such as “healthy smiles” for those who use their products (Colgate-Palmolive, 2013). Also, a rational appeal can also be seen in Colgate’s marketing communications, such as “convincing proof” appeal, and also “expert recommended”. This aids in bringing in trust from the customer and acts to attract any potential customers (Aaker, 2013). Moreover, the company’s competence lies in its ability to be consistent not only in its marketing communications, but also, in product quality. The brand would not be as successful as it is if it did not provide physical and mental satisfaction to the customers during the “moments of truth” (Grönroos, 1990). This shows that the company can only succeed when it sells helpful products when they are tried, not because their marketing campaigns say so (Sekar, 2008). Another capability brought by the brand is its history. The company has been around for a long time, as such, it has gained a number of loyal customers and have become “part of the family” (Colgate-Palmolive, 2012). Therefore, the brand awareness is high due to its long existence and aggressive marketing communications (Kapferer, 2012).For Colgate-Palmolive to attain elevated brand recognition; it should endeavour to stay in the public domain and should become more creative so as to grab the customer’s interest. By trying to set itself aside from its competition, Colgate-Palmolive decided to go for PR campaigns that would allow their product consumers to participate. It did this by trying to set a new world record for most mouthwash using people in the state of New York in the year 2013 (World Record Academy, 2013). Customers are now in a position to reminisce on the brilliance that is Colgate-Palmolive, and are aware of the brand’s powerful personality, because the event was aimed at supporting charity. This blends well with the company’s image as they always try to show that they are caring and focused in developing people’s lives (Babu, 2010). The company also showed its creative capabilities through the use celebrity endorsements. These often act as a valuable technique that influences customer purchase behavior (Malik, & Guptha, 2014). Opinions from celebrities are exceedingly important in modern time as fans often try to follow and lean on their every word. It was vital for the company to use celebrities to endorse their products to increase customer buying and purchasing decisions. Additionally, the company is capable of having a different celebrity spokesperson for their brand in different regions around the world. This is in order to appeal to the various cultures that exist. Brooke Shields is one such spokesperson, well-known to promote the company’s products in the United States, while, Deepika Padukone is a representation of the India market (PR Newswire, 2012). Such techniques and strategies have assisted the company in becoming one of the world’s most identifiable brands, and the company becomes second best in favorite brand ranking (Kantar World Panel, 2014). 2.4 Challenges The structure of the brand portfolio can be a challenge for the brands, for instance; the structure portfolio needs to be continuously monitored and modified in order to balance all product lines and make sure that every brand has a precise meaning with a strong identity (Kuila, 2014). Also, once the company decides to stretch its business operations and create an extra brand in different sectors without planning, the company will soon discover the logistic nightmares that come with rapid brand expansions. A brand is usually managed in a consistent fashion across multiple countries (Bowie, 2005). As Colgate-Palmolive’s brands are scattered across four product categories such as, oral care, personal care, home care, and pet care, the company should not expand itself to food products as the customers are likely to associate the Colgate-Palmolive brand with soap and washing powder products instead of nutrition (Colgate, 2013). Therefore, Colgate-Palmolive needs to concentrate on enhancing its present product lines instead of focusing on moving into the new and risky business sectors, such as the frozen meals (Dooley, 2005). Consequently, when Colgate tried to launch the meal selections, they experienced a major disappointment because starting from the Colgate logo can only bring to mind toothpastes and its taste, instead of an association with healthy vegetables (Haden, 2013). Customers, whether knowingly or not, often associate their brand products with the company’s care attitude. This is another challenge for the company. The company needs to manage its external and internal relationships so as to sustain exceptional reputation with both the consumers and stakeholders (Schultz & Csaba, 2006). When misunderstanding arises that may negatively affect the company’s image, this may end up bringing disaster to the company, which may be in the form of losing loyal customers. Colgate-Palmolive is often extremely keen on corporate culture. It treats its employees exceptionally well, and this goes to show that the company naturally cares from within. Customers often associate with that as this association is also not only aimed at the products, but at the existing relationships as well (Colgate-Palmolive, 2012). Then there is the matter of an ever-changing market environment, which requires constant sustainability on the part of the company (Fernandez, 2003). Colgate-Palmolive chooses to remain a neutral party in any and all political conditions. It declines to make contributions to political parties’ agendas as a rule, and it also does not exploit a fraction of finances paid by Colgate for political contributions (Colgate-Palmolive, 2014). This assists the company to stay appreciated in all its different markets, and respectful to the various cultural laws present. In addition to all the above, Colgate-Palmolive must monitor the current unemployment rates. This is both home and abroad, since this may highly influence the purchasing power of its target market, and consumer preference (Wood, 2010). Low income basically means that consumers can or are forced to switch to less expensive dental or care products. It is, therefore; particularly important to track the economic conditions, and the ability of consumers to purchase (Fernandez, 2003). Such factors more often than not influence the company’s overall revenues, and it is crucial for Colgate-Palmolive to look at the present and future shape of the industry. This is in order to plan for prosperity in the long term (Truong, 2010). 3. Conclusions and Recommendations A distinctive brand personality is what Colgate-Palmolive has created, and this has assisted the company in creating the much-needed competitive edge over its rivals/competition. The company’s involvement in community projects has led to the creation of a non-typical corporate image, associated with being a caring company, which instantly attracts and helps retain customer interest and attention. The company’s brand image is as a result of its corporation’s values. These values echo through every aspect of the company’s efforts and works. These values range from; being caring to both internal and external customer desires, to continuously advance, and committing to working together with its global partners (Colgate-Palmolive, 2012). That being said, Colgate should strive to uphold its virtuous culture in all the markets it operates from, and must make every effort to produce a shared mindset among its customers and employees (Schultz, 2006). The company is the perfect example of the use of techniques such as the hybrid architecture approach. The varied products that are constantly and consistently operating autonomously and are working to acquire the desired customer groups bring in higher revenue, which in turn helps Colgate-Palmolive to produce more products. The company, however, needs to watch out for its biggest obstacle. The ever-changing market environment that needs to be continuously monitored is the company’s biggest challenge. The company needs to adapt and respond to changes in their external environment. Read More