Marketing Plan

Kim Pauszek

Colgate-Palmolive Case-Marketing Plan

I. Executive Summary

A. Summary of situation analysis

The Colgate-Palmolive case involves the Precision toothbrush, which was

entered into the market in 1993 by Colgate-Palmolive. This marketing plan

summarizes the company’s situation at the time the Precision toothbrush was

introduced, and the different marketing strategies that we believe would be

best for Colgate-Palmolive and their new toothbrush.

B. Summary of marketing strategies

The marketing strategies include proposed strategies involving product,

price, place, and promotion.

C. Budget summary

Included in the marketing plan are pro-forma income statements for

Colgate Palmolive if they were to launch the product, and also if they were to

choose not the launch the product. Also included is an advertising budget.

II. Situation Analysis

A. The Industry

1. Definition of industry

The purpose and main focus of the oral health care industry is to prevent

teeth and gum diseases and to deliver cosmetic benefits. Examples of

products in this industry include toothbrushes, toothpaste, dental floss, and

mouth rinses.

2. History of Industry

Toothbrushes first evolved in 3000 B.C., and advancements have

continued ever since. Such advancements include the head shape, size,

flexibility, bristle texture and type, color, and angled handles. Companies,

other than Colgate-Palmolive, that have entered into the toothbrush market

include Oral-B, owned by Gillete, Johnson and Johnson, Procter and Gamble,

Smithkline Beecham, Lever, Pfizer, and Sunstar.

3. Growth Patterns

Consumers first purchased toothbrushes without much knowledge or

information concerning the product’s benefits. As new product development

increased, and consumers became better informed about the benefits of

toothbrushes, they began to focus their interest not only on cavity prevention,

but also on the health of their gums, their oral hygiene, and their cosmetic

appearance. Because consumer interest and toothbrush purchases began to

increase, advertising and promotion also began to increase, which lead to the

development and addition of the super-premium product class. The super-

premium product class was a “sub-category of toothbrushes partly offset by

downward pressure on average retail prices in mass-merchandiser channels,”

(Harvard). Consumers began to purchase toothbrushes based on the specific

benefits each toothbrush and company had to offer.

B. The Company

1. Brief History

The Colgate-Palmolive Company was founded in 1806 by William

Colgate. The company first began by centering their production around soaps,

perfumes, and candles. They began introducing oral health care products to

the market in 1873, by producing “its first toothpaste, an aromatic dental

cream sold in jars” (Colgate-Palmolive, 1 of 3). By 1991, Colgate-Palmolive

had become the leader in not only household products but also in oral health.

2. Size, growth, profitability

By the early 1990’s there were many different companies that focused on

oral care products, with the leader being Colgate-Palmolive. By 1991,

Colgate-Palmolive held the number one position in the world for the sale of

oral care products, accounting for 19% of the worlds toothbrush market. The

company’s sales and profits were increasing each year, and by 1991 sales

totaled “1.03 billion dollars, while profits totaled 9.8 million dollars,”

(Harvard). At this point in time Colgate had introduced two different types of

toothbrushes to the market, the Colgate Classic and the Colgate Plus.

C. The Product

1. Development and history

The product in which this marketing plan focuses around is the Precision

toothbrush. Production began in 1989 when the company put together a

research team whose purpose was aimed at testing the design of the

toothbrush, how the company would market the product, and how the

company would gain a competitive advantage over others. Colgate-

Palmolive’s mission was to “develop a superior, technical, plaque-removing

device” (Harvard).

Colgate-Palmolive referred to the toothbrush as a “technical innovation,

[because] researchers used infrared motion analysis to track consumers’

brushing movements and consequent levels of plaque removal” (Harvard). By

studying consumers brushing techniques, and focusing on areas of the mouth

that had developed excessive amounts of plaque build-up, such as in between

the teeth and on the gum line, researchers were able construct a newly

designed toothbrush. The research team tested and experimented with the

toothbrush for eighteen months by the usage of “dental professional focus

groups and product usage tests.” This led to the introduction stage of the

product life cycle, with the “launching” of the Precision toothbrush to the oral

health care market in 1993 (Harvard).

2. Design/quality

The main design of the product concentrated on the bristles of the

toothbrush. The head of the Precision toothbrush included three different

lengths of bristles, each length having its own responsibility. “The longer

outer bristles cleaned around the gum line, the long inner bristles cleaned

between the teeth, and the shorter bristles cleaned the teeth surface,”

(Harvard). Because of the newly innovated bristles, the removal of plaque

increased by 35% when compared to other leading producers of toothbrushes.

3. Goods classification

The Precision toothbrush can be classified as either a homogeneous or

heterogeneous shopping product. Some consumers may see it as a

homogenous product because they see all toothbrushes as the same, and place

their attention on the lowest prices. Others may see the toothbrush as a

heterogeneous product because they see the need to “inspect for quality and

suitability” (McCarthy).

4. Price

Under a niche-positioning strategy Colgate-Palmolive would price the

toothbrush at $2.13 a unit. Under a mainstream-positioning strategy, the

company would price the toothbrush at $1.85 a unit. If the toothbrush was

sold to dental professionals “eighty percent of sales […] would be priced at

$.79 per unit; the remainder would be sold at $.95” (Harvard).

5. Branding

Colgate-Palmolive considered many different names, which included,

“Colgate System III, Colgate Advantage, Colgate 1.2.3, Colgate Contour,

Colgate Sensation, and Colgate Probe” (Harvard). Colgate-Palmolive decided

upon the name Precision, because they did not want a name that could lead

customers to associate the new toothbrush with their already existing

toothbrush, Colgate Plus. This is called cannibalization.

6. Promotion

The price budget for promotion was set at 14.4 million dollars. The

company’s promotion plan was to “induce trial” (Harvard). Colgate-

Palmolive planned to promote the Precision toothbrush one, by offering a free

five-ounce tube of toothpaste or a fifty percent off coupon that could be put

towards any other size of toothpaste to every consumer who purchased a

Precision toothbrush, and two by offering $.50 off coupons.

7. Positioning

The position of the Precision toothbrush could be niche or mainstream. If

the position were to be niche, concentration would be placed on the

prevention of gum disease, and “retail sales would represent 3% volume share

of the toothbrush market in year 1 and 5% in year 2.” If the position were to

be mainstream, concentration would be placed on “being the most effective

brush on the market, [and] volume shares would be 10% in year 1 and 14.7 in

year 2,” (Harvard).

The decision on where to place the new toothbrush on retail shelves is

another important aspect of positioning. Colgate-Palmolive chose to place the

toothbrush in between one of their existing products and a competitor’s

product.

D. The Market

1. Location

The oral health care market is spread worldwide mainly targeting grocery,

drug, convenience, and large retail stores. The toothbrush market in the past

had few types of toothbrushes, while today’s market carries many various

types of toothbrushes. This may have been due to lack of consumer concerns

with what type of toothbrush they desired.

2. Purchasing characteristics

Many toothbrush purchases are unanticipated, “with consumers

purchasing toothbrushes once every 11.6 month. Forty-eight percent of

consumers claimed to change their brushes at least every three months; the

trigger to purchase a new brush for 70% of them when their toothbrush

bristles became visibly worn. Eleven percent decided to switch to a new

brush after seeing their dentists, and only 3% admitted to purchasing on

impulse,” (Harvard).

4. Market needs

In most cases consumers only need two to three toothbrushes a year.

“Sixty-five percent of consumers had more than one toothbrush, 24% kept a

toothbrush at work, and 54% had a special toothbrush for traveling,”

(Harvard).

5. Buying behavior patterns

Many consumers base a lot of their purchase decisions on how

comfortable a toothbrush feels in their mouths, whether the bristles are soft

enough, whether the head shape suits their mouth size, or whether the

toothbrush is flexible enough. They also base their purchases around the

ability of the toothbrush to “remove food particles; plaque removal and gum

stimulation,” (Harvard).

When it comes time to purchase a toothbrush, there are three different

consumer groups. These groups include therapeutic, cosmetic, and

uninvolved brushers. Therapeutic brushers are concerned with oral care

problems. They brush to prevent disease or other oral health risks, and

“search out functionally effective products.” Cosmetic brushers are concerned

with bad breath and their appearance, and “search for products that effectively

deliver cosmetic benefits.” Uninvolved brushers “view all products the same

and lack interest in this product category,” (Harvard).

E. The Competition

1. Identification of competitors

• Oral-b: Indicator • Johnson & Johnson: Reach • Proctor & Gamble: Crest Complete • Smithkline Beecham: Aquafresh Flex

2. Weaknesses of Competition

Many competitors striving to succeed in the oral care market such as

Oral-B and Johnson & Johnson know that in order “to be a leader in the oral

care category, companies have to be able to compete in all areas of the oral

care,” besides toothbrushes and toothpaste (Harvard). Because there are many

primary competitors in the oral care market, product innovation is a key factor

to a company’s success. Colgate-Palmolive not only had to worry about

cannibalizing their own products, they also had to worry about the new line of

products that were being introduced by such companies as Oral-B, Johnson &

Johnson, and Procter and Gamble.

In 1991, it was estimated that Oral-B held 23.1% of the market share and

Johnson & Johnson held 19.4% of the market share. With companies holding

such large shares of the market, Colgate-Palmolive had to worry about the

innovation of new products that could compete with the Precision toothbrush.

Companies that hold large market shares can afford to pay for more

advertising for a newly developed product. It was to Colgate-Palmolive’s

advantage that they had their share of 16% of the toothbrush market

(Harvard).

F. Distribution

1. Types of Distribution

Aside from convenience stores and large retail stores, many food stores

played a key role in the distribution of oral health care products. “Mass

merchandisers gained share due to increased in-store promotional support”

(Harvard). Because of the increase in the demand for oral care products,

stores began shelving more oral care products. This was a big advantage for

Colgate-Palmolive because there would be more room in the stores for them

to market the new Precision toothbrush. Dentists also played a big role in the

distribution of oral care products.

1. Strengths/Weaknesses of Distribution

Since many of the food stores began to open more shelf space for oral care

products, this would allow for Colgate-Palmolive to situate the Precision

where they thought it would gain attention from consumers. The only

drawback about distribution for Colgate-Palmolive was dentists. Colgate-

Palmolive did not hold the market share for the distribution of toothbrushes in

dentists’ offices. “With a dedicated sales force, Oral-B dominated this market”

(Harvard). Without dominating the dentist market for toothbrushes, Colgate-

Palmolive would have to focus more strongly on other retail locations,

considering in 1992, “22% of all toothbrushes were expected to be distributed

to consumers by dentists” (Harvard).

G. Communication Strategies

1. Promotion pricing

It has been proven that increasing promotion has lead to an increase in

consumer demand. Both Colgate-Palmolive and their competitors spent a lot

of money on the promotion of their new products. “Johnson & Johnson spent

$8 million in medias support to introduce its new Reach brush; Oral-B spent

$10 million to launch its new Indicator brush; and Proctor & Gamble was

expected to support its Crest Complete brush with $15 million in media

expenditures,” (Harvard). These figures are also summarized in Attachment

1-Advertising Budget.

Because competition was increasing, these companies saw it necessary to

increase their spending on promotion. Companies began to offer purchase

deals, such as buy one get one free, special percent off coupons, and mail in

rebates.

2. Advertising programs

“Total media spending for the category, primarily on television

advertising, was estimated to total $55 million in 1992 and $70 million in

1993,” (Harvard). Between the years 1985 and 1992, Colgate-Palmolive ran

four different commercials. Each commercial had its own marketing

situation, platform, execution plan, and tag line. The marketing situation that

the last commercial dealt with before the introduction of the Precision

toothbrush was “Increased competitive activity and consequent need for

harder-hitting copy.” Colgate’s copy platform for this commercial stated,

“Plaque focus, Efficiency message.” Colgate’s execution plan was, “Armed

to the Teeth, execution where the bristles were soldiers.” And Colgate’s tag

line was, “In the fight against plaque, it’s a Plus,” (Harvard).

III. Marketing Strategy

A. General marketing strategy

1. Niche/mainstream positioning strategy

The main focus of niche positioning would be placed on consumers

who are concerned about the prevention of gum diseases. There would be

many positive benefits to the company if Colgate-Palmolive were to position

the Precision toothbrush as a niche product. These benefits would include

one, by targeting the segment of consumers who are worried about gum

disease; Colgate-Palmolive would be able to charge premium prices. Two,

Colgate-Palmolive would be able to differentiate the Precision toothbrush

from other toothbrushes, because of Precision’s technological superiority over

the other toothbrushes already on the market. Three, it is safe to say that

SKU’s would not decrease if Colgate-Palmolive were to position the Precision

as a niche product. And four, if costs were to decrease then it enables Colgate

to reduce the losses of Precision if it were not successful. Niche positioning

not only offers positive benefits, but it also offers negative ones as well.

The negative benefits if Colgate-Palmolive were to position the Precision

toothbrush as a niche product would include one, sales in mass merchandisers

would decrease, and two, retail sales would be less if niche positioning were

used.

Mainstream positioning would place emphasis on the Precision toothbrush

as being the most appealing and effective toothbrush available on the market.

The advantages of using mainstream positioning for the Precision toothbrush

would be one, most retail stores are under a mainstream position rather than a

niche position. Two, in the super-premium category, the Precision toothbrush

would be the most superior product. And three, by positioning the toothbrush

as a mainstream product, it would in return increase name recognition for

Colgate. Negative advantages of using mainstream positioning for the

Precision toothbrush are one, although the toothbrush would be superior to the

other super-premium toothbrushes, the prices for the Precision and other

brushes would be equal. Equal prices would then lead to increased

competition, which in return could cause prices to go up. A second

disadvantage could also lead to the cannibalization of Colgate-Palmolive’s

other super-premium toothbrush, the Colgate Plus. And three, a mainstream

position would probably lead to the reduction and removal of one or more

SKU’s.

By looking at Attachment 2-Pro-forma Income Statement For Launch

of Precision, which compares the profits if Colgate-Palmolive were to use

niche or mainstream positioning, one would be able to see that if mainstream

positioning were to be used for the Precision toothbrush, it would generate

more profits to Colgate-Palmolive. We believe that maximizing your profits

is the most important thing, and that positioning the Precision toothbrush as a

mainstream product, rather than a niche, it would create higher profits.

2. Product differentiation strategy

By differentiating a product, it creates a difference that sets certain

products apart from other products, and also targets certain market segments.

Colgate-Palmolive will need a product differentiation strategy that will make

the Precision toothbrush unique from all other toothbrushes already

available on the market. The company will also need a strategy that will

appease to certain consumer segments. By coming up with this strategy, it in

return will cause Colgate-Palmolive to increase profits and market share.

The main area of this strategy’s focus should be placed on the design and

packaging of the toothbrush. For example, we suggest Colgate make

sure the consumers know that the bristles are of different lengths for a reason,

for the reduction of plaque build-up in places such as the gum line and in

between the teeth, and that no other toothbrush on the market is designed this

way. We suggest that a picture is placed on the toothbrush package showing

the different lengths of bristles, and an explanation of what each length is

responsible for doing. Also we suggest that the bristles be different colors

representing the different lengths. This way the consumer will be able to

differentiate the Precision from all other toothbrushes.

We suggest that Colgate-Palmolive package the Precision toothbrush

differently than the other toothbrush companies. We think that the

toothbrushes’ packaging should be very colorful in order to draw customer

attention away from other brushes. The name Precision should also be placed

on the packaging in a distinct font.

3. Price/quality differentiation strategy

Our main focus here is on the customers. We want them to be able to get

the most for their money. By producing a superior toothbrush, that offers

more qualities than the other toothbrushes available on the market, at or

around the same price as the competition, consumers will hopefully want to

purchase the Precision toothbrush over the others. There will be more

qualities offered at no extra charge.

The price of the toothbrush if positioned as a mainstream product will

have to be equal to the prices of the other toothbrushes already available on

the market. If the Precision toothbrush is profitable and there is a high

percentage of consumer demand, then Colgate-Palmolive might want to

consider increasing the price of the toothbrush by a small margin.

4. Mission marketing strategy

Colgate-Palmolive’s mission strategy is to be successful in the toothbrush

market, and hope the Precision toothbrush is not a failure. They will strive to

gain a competitive advantage over other companies, while producing a profit,

and satisfying the wants and needs of buyers. A goal of Colgate-Palmolive is

for the Precision toothbrush to add utility or value to its consumer’s lives.

B. Target markets

1. Target market A and proposed strategies

The first segment market that the Precision toothbrush will target will be

consumers who are concerned about oral health issues, such as fighting

plaque and gum disease. These consumers are known as “therapeutic

consumers,” because they purchase products, toothbrushes, that will be the

most effective when it comes to oral health care. These consumers “buy and

use products for themselves,” (Harvard). Consumers in this target market

usually do not care about the price, as long as they are getting the highest

quality products. Most consumers in this segment are adults, especially ones

who have oral health problems.

When distributing the Precision toothbrush to this market segment, we

suggest they place emphasis of distribution on dentists, drug stores, grocery

stores, and large retail stores. Dentists would be a good when distributing

the new toothbrush because many dentists act as “opinion leaders”, meaning

they have a big impact on what others think. Although Oral-B is the main

distributor when it comes to dentists, this would be a good opportunity for

Colgate to gain competitive advantage over Oral-B, by getting dentists to

distribute the new toothbrush while selling the benefits to patients.

Advertising and promotion should be done through commercials,

magazines, radio, and ads put up in places such as dentists offices. These

advertising and promotion mediums should target this segment’s consumers,

and should focus on the benefits the Precision toothbrush has to offer in

connection with oral healthcare. Commercials made for this market segment

should also show the benefits of the toothbrush, possibly through

demonstration. Commercials should air at night during “prime-time”, the

time in which most people watch television, and during the day, especially

during soap operas. These are the time periods in which more adults watch

television. Also when it comes to advertising, Colgate-Palmolive should

institutional advertise, meaning they should not only promote their new

Precision toothbrush, but they should also promote the company’s image.

This in return will remind consumers of Colgate’s other products that are

available on the market.

Colgate could direct market the toothbrush by sending special coupons

in the mail to consumers, or by offering rebates to consumers who purchase

other Colgate-Palmolive oral care products. These rebates and coupons would

act as an incentive to consumers when it comes to purchasing or trying the

new toothbrush. These coupons and rebates could also be dispersed through

hard to eat food products, such as popcorn. Also in-store displays could be set

up through out stores. These in-store displays could also include

demonstrations.

2. Target market B and proposed strategies

The second segment market that we would target the new Precision

toothbrush would be consumers concerned with their oral hygiene, such as

bad breath, and personal appearance. Many, but not all, consumers in this

group are female adults who worry about what they look like. These

consumers purchase products that will “effectively deliver cosmetic benefits,”

(Harvard). Target B consumers feel the same way as Target A consumers

when it comes to pricing. Most are willing to pay more if the product offers

more advantages than competing products, although because the toothbrush

will be positioned as a mainstream product, price will vary in accordance to

the prices of other toothbrushes.

When it comes to the distribution of this product, the toothbrush should be

distributed through the same locations as Target A, with the addition of plastic

surgeon practices and make-up departments of large retail department stores,

such as Von Maur, and Bloomingdales. The toothbrushes should be

distributed through plastic surgeons because many people who visit a plastic

surgeon are concerned about their appearance, and would likely consider the

different options available to them that will enhance their appearance, such as

their teeth. The toothbrush should be distributed through make-up

departments because most people who shop for make up at large department

stores are also concerned with looking their best.

Advertising and promotion should be done in a similar manner as Target

A, through commercials, magazine ads, the radio, with the addition of

placing advertisements on billboards, and buses. The commercials and other

advertisements should focus on the cosmetic benefits of the toothbrush. We

suggest the adds show well made up men and women, who one can tell place

great emphasis on their looks, demonstrating the strengths of the new

toothbrush. The placement of ads on billboards and buses throughout the

larger cities will hopefully increase consumer demand because many people

who live in large cities have important jobs that require them to look nice.

Special promotions that Colgate can offer can be through other Colgate

products that many consumers also associate with appearance and oral

hygiene. Such products can include dental floss and mouth rinses. As with

Target A, special rebates and coupons can be offered through these products.

Also, the use of in-store displays could be useful when promoting the

toothbrush.

By placing the new toothbrush on the shelf between an existing Colgate

product and a competitor’s profits, this may or may not be a good idea. By

placing the product next to an existing company’s product, consumers may

not see the benefits of switching, and could continue to prefer using the

existing product rather than even considering trying the new one. But by

placing the new product next to a competitor’s product, it may lead to the

consumer questioning which product is better, hopefully causing the consumer

to try the new product, over its competing product.

C. Summary of tactics

1. Product

The product, the Precision toothbrush, is a product that should add value

to a buyer’s life. It should also add utility, and meet the wants and needs of

targeted consumers. The product should be unique and different from all

similar products that are already available on the market. The strategy is to

differentiate the product’s design and packaging, which in return will cause

the toothbrush to stand out.

2. Price

The price of a product says something about the quality. Even though the

quality of the Precision toothbrush will be significantly higher than other

leading toothbrushes, the price of the toothbrush will be determined by the

prices of the other toothbrushes already in the market. This pricing strategy is

a result of positioning the toothbrush as a mainstream product rather than a

niche product.

3. Place

The most important part of marketing is how a product will get from the

seller to the buyer. Many products go through a channel of distribution,

which involves, manufactures, wholesalers, retailers, and consumers. The

distribution strategy proposed for the Precision toothbrush is through dentists,

plastic surgeons, drug stores, grocery stores, large retail stores, and

department stores.

4. Promotion

Product promotion is communication spread through advertising,

publicity, and sales promotion. We suggest that Colgate-Palmolive

advertise their products by using commercial, magazine ads, the radio,

ads that are to be placed in dentist offices, billboards, and the sides of

buses. Advertising is done to promote new products, remind consumers of

existing products, and also promote the image of the company at hand. We

also suggested that Colgate offer special coupons and rebates through their

other products, and also food products. Also, Colgate could benefit from the

usage of in-store displays.

C. Attachments

1. Attachment 3-Pro-forma Income Statements Without Precision

Launch 1989-1993

Works Cited Laidler, Nathalie. “Colgate-Palmolive Company: The Precision Toothbrush.” Harvard

Business School. 1993 McCarthy, Jerome E. and William D. Perreault. Basic Marketing: A Global-Managerial

Approach. New York: McGraw-Hill Companies, 2002. 276-277. Younger, Vicki. “Colgate Palmolive.” Redgum Soaps. 8 Sept. 2002.

http://www.redgumsoaps.com.au/soaphistory/colgate.htm.