Cottle Taylor SWOT - Case Study Example

Cottle-Taylor: Expanding the Oral Care Group in India of Expanding the Oral Care Group in India Cottle Taylor SWOT Strengths: Cottle Taylor has got international workforce employed and heavy investment in overseas communities. The company has gained 8% growth in sales annually between the years 2004 and 2009, raised net income by 12% and per share earnings by 14%. The company has worked with the International Dental Association for brand awareness and oral health care programs. The Indian market considers Cottle has the authority on oral care. The company has a total share of 38% in the market of oral care in India by the year 2009. The company has an ability to regulate its product mix to meet the customer’s demand. It has extensive variety in the designs of toothbrushes. Cottle sold its 46% toothbrush of total toothbrushes in India in the year 2009. The Company has secured its early market share, which will increase by time in low and mid-range products. The company expects to achieve sales of $482.8 million. The company believes on the quality and reliability of its distribution network is its competitive advantage. Weaknesses: Gross margin dropped from 31% to 25% because of lowering prices of basic toothpowder and toothpastes. Distributors do not always understand the unique selling point of Cottle’s toothbrushes. Communication with the distributors is difficult because of their regional language barrier. Holidays for regional and cultural practices bring hurdles for the staffing of distributors and delivery of retails. Opportunities: The number of potential customer is very high as half of the population does not brush their teeth yet. The industry has grown by 47% in the period from 2004 to 2009 and its value in 2009 was $895.6 million. A large portion of Indian population likely to upgrade from dental home remedies to low-cost oral health care products. The company has access to four fifty thousand retail stores all over in the country. The exposure of Indian population is increasing to the western influence. Threats: Per day spending of 80% of Indians is less than $2. People in rural areas did not believe on the causes of dental problem is due to the improper oral care. Ratio of tooth brushers who change their brushes after three months is comparatively low than the ones who do not change after three months. Competitors encouraged investing in the oral health care market. Problem statement: How can Cottle Taylor gain up to 30% per unit sales in toothbrush business? What plan should they develop to allocate the advertising budget and marketing strategy for oral care to gain the attention of potential market? Identification of Strategic Issues: In the case, the company is looking to expand in the Indian market but some strategic issues are coming in its way. The factors include Awareness, Accessibility, and Acceptance. 50% of the population is not concerned for oral hygiene. Those parts of the potential customers need awareness first of all about the oral health. Secondly, they are not in a reach of oral health care products as the disposable incomes of people living in rural areas have $2 per day, in comparison of urban population who are wealthy and they have great purchasing power. There is a shortage of dental care personnel in rural areas specially, single personnel handles thousands of dental patients. In addition, people with only high income consult dental professionals as they cost very high (Bruce, Moore, & Birtwistle, 2004). That defines the problem of affordability to the consumers. The table below gives a picture of Indian Household Disposable Income: 2005 & 2009 Indian Household Disposable Income: 2005 & 2009 Disposable Income per Day 2005 Households ($ millions) 2009 Households ($millions) Above US$500/year 1.37 202.5 46.70% 219 42.70% Above US$1,000/year 2.74 186.7 43.00% 208.7 40.70% Above US$5,000/year 13.7 33.6 7.80% 64.2 12.50% Above US$10,000/year 27.4 7.3 1.70% 15.2 3.00% Above US$25,000/year 68.49 2.1 0.50% 3.3 0.60% Above US$45,000/year 123.29 1 0.20% 1.6 0.30% Above US$75,000/year 205.48 0.5 0.10% 0.8 0.20% Above US$150,000/year 410.96 0.2 0.10% 0.4 0.10% Total Households 433.9 513.2 Growth Rates 05–09 Less than 1K/year 9.90% More than 5K/year 90.6% And the third is Accessibility, in which the director of the company, Brinda Patel want her manager to make a new market plan and she want to increase the unit sales nearly up to 30% of toothbrushes in India by spending 3% more in advertising budget, as her previous project in Thailand went successful. Whereas, manager Michael Lang is concerned if the strategy of increasing advertising budget more than Thailand’s budget will affect the sales positively as there are many cultural barriers in each region of India. The projections could go wrong, whether they can access the products and accept the change in oral health as they are using Neem twigs and tobacco and ashes since ages. Identification of Strategic Alternatives: Alternative 1: Brinda believes that rural area need more hygiene protection messages and has a strategy to market its premium products and convince customers to switch to high range of oral care products, that might help the company to reach up to 30% per unit sales(Rudolf R. Sinkovics, 2009). Alternative 2: On the other hand, Michael suggested not increasing the advertising budget and applying strategies in urban market to focus and persuade first time users of tooth brush and later spend on when they become habitual. Alternatives can be applied while considering the following issues i. Awareness for oral health care ii. Amount of Income iii. Product Price iv. Frequency of using the product v. Market distribution Discussion and Analysis of Strategic Alternatives: Alternative 1: Applying marketing strategies suggested by Brinda over rural areas includes some benefits like the 78% of the population belongs to rural areas and they are accounted for around 64% of Indian expenditures on whole, the exposure towards global news and information was increasing. 77% people do not have the habit of brushing their teeth twice every day, and 80% of the population negates the process of changing their toothbrush after three months. At the same time, Brinda’s strategy has some cons attached to apply in the market such as; people living in rural areas were more ignorant towards using modern oral health care products. Consumers in rural areas rely on irregular daily basis or weekly basis wages and around 80% of the population lives on two dollar per day income. And they have less access to credit and rural distributors cannot keep the surplus inventory stock. Alternative 2: Whereas Michael Lang’s alternative strategies include the advantages like, targeting urban consumer will be less risky as they are less price conscious, and the Indian economy is growing, people with high income are more likely to shop from supermarkets so company can make good relationships with large product distributors and with supermarkets, battery brushes will be more adaptive towards urban audience as battery brushes than manual ones as battery brushes are more effective and easy to use. At the same time, the alternative suggested by Lang has also few disadvantages like the urban population comprises on only 22% which will be targeted. By this only a small set of people who are wealthy can buy the brushes operated with battery and lastly increased cost on advertising will be against the company’s nature as the company is cost conscious. According to the projection of Brinda Patel and Michael Lang in India in comparison of Thailand: Product Category Brindas Projection Unit sales projection Thailand Michael Projection Unit Sales Projection Low end manual 87% 356.5 70% 78.20% 347.4 Mid-range 12.5% 53.8 25% 21.30% 94.62 Battery Operated 0.50% 1.9 5% 0.50% 2.12 Revenues 100.95 121% 117.59% Table is showing the company can earn more revenues by applying Michael Lang’s projection due to the per unit sale of Mid-range product. Lang’s projected revenues are closer to the Thailand’s percentage. Implementation Plan: Oral care health is a sensitive issue, because most of internal diseases start by keeping teeth unhygienic. Brand awareness with respect to oral health awareness can benefit the company in term of sales and benefit the people in terms of their health. Despite the fact, my recommendation is to advertise the brand in rural areas as the audience is large in numbers and has more tendencies to absorb a unique idea of having a low price ranged toothbrush, tooth paste, and tooth powder. Allocation of advertising budget has to be divided on advertising of total product mix messages. The Company should use both push and pull strategies for marketing its whole range of products. The company should arrange oral health awareness programs in educational institutes and give samples of tooth brushes and tooth pastes and teach them how to use the products, target mass media and raise awareness of oral health care via different distribution channels of advertising. That includes TV advertisements, Radio advertisements, and billboards. Same advertisement should be run on each distribution channel but according to their regional languages. Build campaign for the product distributors, bonus and reward campaigns on selling a specific amount of stocks. Design family packets with multiple numbers of tooth brushes and tooth paste with discounts, display the products on retailers’ main counter so that customer can easily sight Cottle’s product. Conclusion: Concluding the whole it could be stated that hunting business opportunities for investing in an emerging market and determining growth opportunities in foreign nations and going towards the global expansion benefits the company’s image and build more sales with its name (Zou & Fu, 2011). Moreover, Cottle Taylor is a big company in operations with many market shares; it must identify the growth opportunities on international level. This case provides the understanding of different cultural product needs and helps to find out the potential market growth as well as the prospects of applying marketing techniques and strategies with in the same country but different regional differences. The case also defines the risks in entering the new market globally. In addition, the case also helps in developing the strategies to meet the market demands and opens many doors of unique advertising ways. Reference List Bruce, M., Moore, C., & Birtwistle, G. (2004). International Retail Marketing: A Case Study Approach. New York: Routledge. Czinkota, M., & Ronkainen, I. (2012). International Marketing. New York: Cengage Learning. Rudolf R. Sinkovics, P. N. (2009). New Challenges to International Marketing. New York: marald Group Publishing. Zou, S., & Fu, H. (2011). International Marketing: Emerging Markets. New York: Emarald Group Publishing. Read More