Marketing Strategy: Colgate 360 Toothbrush - Case Study Example

Marketing Strategy: Colgate 360 Toothbrush Executive Summary Aiming to tap Colgate’s target market in high- and low-level income earners, Colgate-Palmolive decided to sub-categorize its toothbrushes as Colgate Classic and Colgate Plus. Aiming to capture the company’s target consumers who are fashion- and brand-conscious male and female between the age group of 18 to 35 years old, the company decided to manufacture and sell Colgate 360 as one of its best and most expensive toothbrushes in the global markets. To deliver a good marketing message to its target consumers, the company should first conduct market segmentation study and develop product positioning strategy. As part of analyzing the business’ external environment, the company should make use of SWOT and PESTLE framework. It is equally important for the company to conduct a qualitative research study such as a one-on-one interview with its target consumers. The gathered information will be useful in terms of enabling the company determine the specific needs and wants of its target consumers. Introduction Colgate is one of the world’s leading brands when it comes to oral hygiene products. Serving around 200 countries worldwide, Colgate-Palmolive is marketing a wide-range of oral care products which includes toothpaste, manual and battery-operated toothbrushes, dental floss, mouth rinses, and whitening products (Mark, 2010; Colgate, 2010b). Considering the success of Colgate-Palmolive in marketing Colgate brand in the global markets, this study aims to investigate and evaluate the contemporary marketing tools and strategies used by the company when selling Colgate 360 in the global market. Since there are many types of oral care product manufactured and sold by Colgate-Palmolive, this study will focus on analyzing the market strategies used in selling Colgate 360 toothbrushes. Past and Current Situational Analysis The manufacturing of toothbrush started back in 3000 B.C. The company was focused on manufacturing soaps, candles, and perfumes. It was in 1873 when the company started to introduce publicly the use of oral hygiene products with its “toothpaste in jars” (Colgate-Palmolive, 2010c). Since then, technology used in manufacturing toothbrushes has improved over the years. In line with this changes in technology, Colgate-Palmolive managed to improve the design and structure of toothbrushes including the shape of the head, size and flexibility of the toothbrush handles, colour, type and bristle texture among others. In 1991, the company managed to become the world’s leader in the production and sales of oral health care products worldwide. William Colgate established Colgate-Palmolive back in 1806 (Colgate-Palmolive, 2010c). Because of the constantly increasing demand for oral care products, other companies like Oral-B1, Proctor and Gamble, Smithkline Beecham, Lever, Pfizer, and Sunstar has entered the oral care manufacturing industry to compete with Colgate-Palmolive. Despite the tight market competition for toothbrushes, Colgate-Palmolive managed to grab a total of 33.6% of the market shares for manual toothbrushes in North America and 78.3% market share in Latin America during the first quarter of 2010. The company is also experiencing significant profit increase in Europe / South Pacific, Greater Asia / Africa, and Hills (Thompson & Spiller, 2010d) (See Appendix I – Percentage of Colgate’s Worldwide Sales during the 1st Quarter of 2010 on page 16). SWOT Strength Over the years, Colgate-Palmolive managed to establish a strong brand name, brand position, and brand image with regards to oral care products. The brand name of Colgate is one of the main factors that convince millions of people to patronize the company’s product. Aside from having good and loyal customers in the global market, the fact that the company’s decision to continuously upgrade its technology and improve its global distribution network makes the company able to maximize the company’s sales and potential market growth. As a result of establishing a good market network in 200 countries worldwide, the company is able to easily distribute its oral care products across the world. This strengthens the company’s ability to increase its annual sales and profitability. Part of Colgate-Palmolive’s strength is the company’s ability to educate and inform its target consumers concerning the health benefits like maintaining healthy gums and fighting oral cavities from developing whenever the target consumers uses Colgate’s oral care products. As a way of being able to deliver the best oral care products for Colgate-Palmolive’s target consumers, the company continuously upgrades its existing technology in order to innovate new oral care products that can increase the willingness of its target consumers to purchase Colgate 360 toothbrushes. In line with this, the company immediately registers its newly innovated products and brand name under patent and trademark. This strategy legally protects Colgate from having its competitors copy its existing and future technology used in the manufacturing of oral care products. Since 2003, Colgate-Palmolive has been ranked as No. 1 and the most trusted brand for oral care products. As a positive result of pioneering in the manufacturing of oral care products, the company was able to better understand the specific needs and demands of its target consumers with regards to the purchase of a new toothbrush. Since not all people are capable of purchasing expensive toothbrush designs and innovation like Colgate 360, the company’s decision to sub-categorize its toothbrushes as Colgate Classic and Colgate Plus makes the company able to reach out to a larger portion of the lower class market that are not capable of purchasing expensive toothbrushes. Other than addressing its target consumers’ concern with the market prices of toothbrush, the company also came up with different set of toothbrushes to satisfy the oral care needs of different age groups. Weaknesses Since toothbrush is considered as a generic item, Colgate-Palmolive finds it difficult to keep its valued consumers loyal with the brand. There are practically too many brands of toothbrush available in the global market. In line with this, the inability of the company to satisfy the specific needs and wants of its target consumers could make the company easily lose their customers to its competitors. One of the top management’s weaknesses of Colgate-Palmolive is that the company produced and positioned a large portion of its oral care products as a premium product. Since the prices of premium oral care products are too expensive for low-income earners, the company is losing a large portion of its potential market. Despite having a strong brand name, part of the company’s weaknesses is its failure to produce less expensive toothbrushes which can be marketed in rural areas and a large group of price conscious public consumers. Since people in rural areas could not afford expensive Colgate 360 toothbrush, Colgate-Palmolive should invest more money on how its research and development (R&D) and design a more simplified version of toothbrush to make Colgate-Palmolive tap the market in rural areas. In relation to global expansion projects, Colgate-Palmolive has a high level of debts despite the increase in the company’s annual profits. Since the levels of debt are high, the company is obliged to pay more to its creditors because of the interests added on top of the actual amount of loan. Opportunities The continuously increasing population throughout the 200 countries where Colgate-Palmolive had successfully positioned its toothbrushes in the global markets increases the company’s future business opportunities. In relation to the need to increase the global demand for Colgate toothbrushes, the continuously emerging growth in the global markets of toothbrushes opens new business opportunity for the company. Because of the tight competition in the global markets, Colgate-Palmolive should continuously deploy and invest on the development of new toothbrush designs and advance technology to enable its target consumers to choose Colgate toothbrush brand over other equally well-known brands. Likewise, the company’s decision to expand and make its market network more efficient could also provide new business opportunities for the company. By doing so, Colgate-Palmolive will be able to develop and establish a strong connection with people who lives in the untapped domestic and international markets. Threats Because of the presence of Colgate-Palmolive’s global competitors like Oral-B, Proctor and Gamble, Smithkline Beecham, Lever, Pfizer, and Sunstar, increasing the market prices of Colgate toothbrushes could easily make the company’s existing customers shift to other toothbrush brands. Improperly managing the cost and prices of Colgate toothbrushes will make the levels of consumers’ confidence fall. As a product, most people consider toothbrush as a generic item. In case Oral-B, Proctor and Gamble, Smithkline Beecham, Lever, Pfizer, and Sunstar is able to establish and strengthen its brand name in the global market, Colgate-Palmolive is at risk of losing a portion of its existing and loyal customers to its competitors. For instance: Macleans under GlaxoSmithKline manufactured and released its ‘tooth and tongue’ toothbrush to compete with Colgate’s 360 toothbrush with tongue cleaner (Glaxo Smith Kline, 2010). Likewise, Aquafresh also manufactured its flex tooth and tongue toothbrush with tongue cleaner (Amazon, 2010). Other than the tight market competition in the global markets, significant changes in the foreign currency are also a major threat on the part of the company’s global business operations. PESTLE Political and Legal Factors Since Colgate-Palmolive is operating in 200 countries worldwide, political and legal factors in each of the 200 countries significantly affect the business operation of the company. In line with this, the company should pay close attention to each government’s policies and legal issues related to foreign-based companies that are legally operating in their country. China is imposing strict regulation when it comes to foreign-owned companies. To avoid future legal problems with regards to establishing a marketing network or production company in another country, Colgate-Palmolive should carefully access the advantages and disadvantages when choosing another country to expand its global market opportunities. Since taxation policy in each country varies, the company should carefully take into consideration the amount of taxes being imposed on foreign-owned companies before making a serious decision of whether or not to invest in a particular country. Economic Factors Since a large portion of Colgate-Palmolive’s business is operating in global markets, changes in the interest rates, exchange rates, national income, inflation, and unemployment rate could significantly affect the overall business performance of the company. In line with this, high inflation and unemployment rate in a given country could negatively affect the ability of Colgate’s target consumers’ ability to purchase Colgate 360 toothbrushes. Changes in the interest rates could also affect the company’s cost of capital whenever the top management decides to expand the business in another country whereas changes in the exchange rates affect the company’s ability to import and export Colgate 360 toothbrushes in order to make the product readily available in a foreign market. Social Factors Given the continuous changes in the buyers’ preferences with regards to toothbrushes, social factors like the personal beliefs, values, attitudes, lifestyle, and personal opinions of Colgate-Palmolive’s target consumers significantly affect the ability of the company to sell Colgate 360 toothbrushes in the global markets. Since the success of Colgate in selling 360 toothbrushes highly depends on its target consumers’ preferences, the company should carefully take into consideration the specific needs and wants of its target consumers. Technological Factors Technological factors such as changes in technology used in manufacturing toothbrushes, transportation and communications could lead to the need for the company to implement necessary organizational changes particularly with regards to the use of new technology or the internet as a means of internal and external communication method and improvement its overall operational system. Other than effectively managing resistance-to-change through the use of good leadership skills, the company is also expected to continuously invest on new technology and upgrade its existing machineries to enable the company to meet the product preferences of its target consumers. Environmental Factors Colgate-Palmolive’s ability to manufacture and sell toothbrushes is not sensitive to environmental factors like changes in climate. However, the company should still take into consideration the possibility of natural calamity like typhoon and hurricane which could lead to a serious business loss related to product and transportation equipment damages. Differential Advantage / Competitive Edge (USP) Colgate-Palmolive has one of the best technologies when it comes to innovating new designs and fun toothbrushes suitable for the needs and wants of its target consumers. Since the company has long time been manufacturing and innovating oral care products, the company managed to successfully establish a strong brand name in the global markets. This gives the company competitive advantages over some of its competitors. Establishing competitive edge over Colgate-Palmolive’s competitors is important in terms of convincing its target consumers to patronize Colgate toothbrushes. In line with this, the company’s unique selling proposition (USP) lies behind its ability to identify its target consumers and determine exactly the product preferences of its target consumers. In the process of identifying the customers’ preferences with regards to the product design and oral health benefits of using Colgate toothbrush, the company carefully studied the price, product quality and oral health benefits, and demand for the said products in order to manufacture Colgate toothbrushes depending on the demand for product. Likewise, the company also focuses on designing and implementing ways on how they can easily deliver the products on time. Future Recommendations Market Objectives and Goals (SMART) The market objectives and goal of this study is to enable Colgate-Palmolive reach a large portion of its target consumers in the global markets. To enable the company to meet its goal, there is a strong need for the company to develop strong brand recognition among its target consumers. To maximize the benefits of using the television, internet, or magazine advertisement and market promotional activities, Colgate-Palmolive needs to study the market segmentation, target consumers, and product positioning to ensure that the company will be able to communicate information in accordance to the business goal of the company. Market Segmentation, Targeting, & Positioning (STP) Demographic segmentation actually examine variables related to the target consumers’ age, size of family, family life cycle, gender, income, occupation, educational attainment, religion, race, generation, nationality, and social class (Kotler 2000, pp. 263 – 266; Rogers 2005, p. 19). Specifically the socio-economic factors such as the family income, educational attainment, and occupational status determines the capability of Colgate-Palmolive’s target consumers to purchase Colgate toothbrushes (Rogers 2005, p. 22). Under the psychographics segmentation, the company should focus on examining its target buyers’ lifestyle, personality and values (Kotler 2000, pp. 266 – 267). Upon analyzing the case of Colgate-Palmolive, the lifestyle of its target buyers are socially active and outgoing young male and female between the age group of 18 to 35 years old. With regards to geographic segmentation, the company will divide its target market based on geographic units such as the nations, states, regions, countries, cities, local government areas, or community area (Kotler 2000, p. 263; Rogers 2005, p. 24). Regardless of the metro size, will seek to make Colgate 360 available in local supermarket and convenient store outlets and/or grocery stores in order to easily reach its target consumers. In other words, the target consumers of Colgate-Palmolive’s 360 toothbrushes are male and female between the age group of 18 – 35 years old regardless of size of family, family life cycle, gender, income, occupation, educational attainment, religion, race, generation, nationality, social class and sexual orientation. Specifically for Colgate 360 and other more trendy and expensive toothbrushes, the company’s target consumers are fashion- and brand-conscious male and female between the age group of 15 to 35 years old who strongly believes in the importance of oral hygiene and enjoys socializing with large group of people and looking forward to have trendy things. In line with the company’s target consumers, marketing a trendier toothbrush to family members and career-oriented individuals is one way to encourage busy people to take time brushing teeth despite their busy lifestyle. Through the use of advertisement and promotional activities, Colgate-Palmolive position its toothbrushes in the global market as a brand that will provide its target consumers to have a whole mouth clean after using Colgate toothbrush with cheek cleaner incorporated at the back of the toothbrush. In line with this, the use of Colgate toothbrush provides its users with a whole mouth clean by removing more bacteria as compared to other toothbrushes. In relation to values and personality, Colgate-Palmolive is positioning its toothbrushes as a quality product that offers advanced technology in providing its consumers with fun and fresh brand. This makes the habit of brushing teeth more enjoyable as compared with the use of ordinary toothbrush. (See Appendix II – Brand Pyramid on page 16) Marketing Strategies and Programmes (4P’s) As part of the company’s marketing strategy, Colgate-Palmolive will make use of Colgate’s red-and-white logo to increase the public’s brand recognition. Although a lot of companies that manufacture and sell consumer products are investing more on television advertisements, it is not advisable for Colgate-Palmolive to spend a lot of money on television advertisement since the use of this type of advertising tool is not effective in terms of making its target consumers remember what it being communicated by a television advertisement. Since the target consumers of Colgate-Palmolive are fashion- and brand-conscious individuals between the age brackets of 18 to 35 years old, it is strongly advisable for the company to consider the use of internet advertisements particularly on social networks like Face book or MySpace. This type of marketing communication tool is way much cheaper than the use of television advertisements. Likewise, individuals between the ages of 18 to 35 years old have direct access to the internet. Other than the use of Internet advertisements, investment on the use of large-scale Billboards and attractive posters posted near train stations or bus stop is equally effective in terms of capturing the attention of its target audiences while waiting for public transportation or dental offices. As effective promotional tools for Colgate toothbrushes, Colgate-Palmolive should provide free dental check-up in rural areas using mobile vans with advertising prints. With the use of SMS and e-mail, the company can easily spread the schedule of free dental check-ups in different geographic areas directly to its target consumers. The company can also make use of scholarship promotional activity. For every single purchase of Colgate toothbrush, the buyer will be able to send the pin code printed at the back of each toothbrush packaging via SMS to **** number. With the use of Colgate toothbrush, the randomly selected texter(s) could have the opportunity to win Colgate’s scholarship grant. (See Appendix III – Mobile Vans on page 17; Appendix IV - Summary of Marketing Programme for Colgate 360 Toothbrush on page 18) Conclusion With regards to selling of Colgate 360 toothbrushes, Colgate-Palmolive can maximize its business profit opportunity by carefully identifying its target consumers and conducting market segmentation in order to determine the specific needs and wants of its target consumers. On the other hand, product positioning enables the company to have a clear vision on whom to sell Colgate 360 toothbrushes. Using the gathered information concerning the company’s target consumers, the company could easily decide on specific marketing communication tools to enable them to get hold onto their target consumers. In general, the target consumers of Colgate-Palmolive’s 360 toothbrushes are male and female between the age group of 18 – 35 years old regardless of size of family, family life cycle, gender, income, occupation, educational attainment, religion, race, generation, nationality, social class and sexual orientation. Since Colgate 360 is more trendy and expensive as compared to ordinary toothbrushes, the company’s target consumers are fashion- and brand-conscious male and female between the age group of 15 to 35 years old who strongly believes in the importance of oral hygiene and enjoys socializing with large group of people and looking forward to have trendy things. Because of these criteria, the company should make use of internet advertisement on Face book or MySpace combined with large-scale billboards and poster near public transportation and within dental clinics. *** End *** Appendix I – Percentage of Colgate’s Worldwide Sales during the 1st Quarter of 2010 Geographic Market Percentage of Company’s Sales during 1st Quarter of 2010 North America 20% Latin America 26% Europe / South Pacific 22% Greater Asia / Africa 19% Hills 13% Source: Thompson & Spiller, 2010d Appendix II – Brand Pyramid Appendix III – Mobile Vans Appendix IV - Summary of Marketing Programme for Colgate 360 Toothbrush Marketing Mix Description Product Colgate 360 toothbrush Price Between US$1.85 – US$2.13 per piece Place Global markets Promotion / Advertisement Advertisements: Internet (Face book, Myspace), Billboards & posters near public transportation and dental offices, advertising vans. Promotional activities like free dental check-up or scholarship grant. 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(2005). Learner's Resource: Certificate IV in Business (Marketing) Profile the Market. Melbourne: Australian Training Products Ltd. Thompson, B., & Spiller, H. (2010d). Colgate-Palmolive. Retrieved June 22, 2010, from Colgate Announces Strong 1st Quarter - Excellent Worldwide Sales and Unit Volume Growth: http://investor.colgate.com/releasedetail.cfm?ReleaseID=464870&ReleaseType=Earnings. Read More