TOPIC: STP & MARKETING MIX OF “COLGATE TOOTHPASTE”

CLASS: PGPBM 2009 – 11SECTION: BGROUP MEMBERS: Ankit Dugar Alolika Dutta Kamalika Mandal Soumali Banerjee

INTRODUCTION

Colgate-Palmolive Company is an American diversified multinational corporation focused on the production, distribution and provision of household, health care and personal products, such as soaps, detergents, and oral hygiene products (including toothpaste and toothbrushes). Under its "Hill's" brand, it is also a manufacturer of veterinary products. The company's corporate offices are on Park Avenue in New York City, across from the Waldorf Astoria. In India, it operates under the name as Colgate-Palmolive (India) Limited and its head office is at Mumbai.

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1806, William Colgate, himself a soap and candle maker, opened up a starch, soap, and candle factory on Dutch Street in New York City under the name of "William Colgate & Company". After his death, the company was renamed as “Colgate & Company”. In 1928, Palmolive - Peet bought the Colgate Company to create the Colgate – Palmolive - Peet Company. In 1953 "Peet" was dropped from the title, leaving only "Colgate - Palmolive Company", the current name.

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Colgate-Palmolive has long been in fierce competition with Procter & Gamble, the world's largest soap and detergent maker. In 2005, Colgate sold the underperforming brands Fab, Dynamo, Arctic Power, ABC, Cold Power and Fresh Start, as well as the license of the Ajax brand for laundry detergents in the U.S, Canada and Puerto Rico, to Phoenix Brands, LLC as part of their plan to focus on their higher margin oral, personal, and pet care products. In 2006, Colgate-Palmolive announced the intended acquisition of Tom's of Maine, a leading maker of natural toothpaste, for US $100M. Tom's of Maine was founded by Tom Chappell in 1970.

SEGMENTATIONColgate toothpaste products can be divided into segments catering to the needs of the consumers. The following is the basic way of segmenting the toothpaste products:   COLGATE DENTAL CREAM: It helps cleaning breath and guards teeth from tooth decay. This is for the general people and for family use.  COLGATE TOTAL 12: This product of Colgate has decay preventing dentifrice, prevents gingivitis, reduce formation of plaque and tartar above gum line. This is especially helpful for protecting teeth enamel and all round protection of teeth. Focus of this product is upon the hygiene conscious consumers and patients who are suffering from gum problems.  COLGATE SENSITIVE: This product prevents nerve ends; provide effective relief from pain of sensitive teeth and gently whitens the gums. This product targets the hygiene conscious customers and also the patients who are suffering from serious teeth and gum problems.

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COLGATE MAX FRESH: The gel properties of this product of Colgate gives freshness along with protection. This product specially targets the young generation who avoids bad breath and inculcate the word “freshness”. COLGATE KIDS TOOTHPASTE: This product helps to prevent tooth decay of the kids. This product is specially designed for the kids.

COLGATE FRESH ENERGY GEL: This product of Colgate has the freshness which gives freshness and energy to the user and helps to avoid bad breath. This product targets the young generation who prefers freshness.

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COLGATE HERBAL: This product contains herbal ingredients for white teeth and freshness which removes bad breath and removes plaque. This product is designed for the people who believe in ayurvedic products and avoid using strong chemicals. COLGATE CIBACA FAMILY: This product is designed as a complete family dental cream. The product targets all age groups and all types of consumers, basically, the rural and township areas with low per capita income as well as urban areas. COLGATE ACTIVE SALT: This product is popularly known as everyday family toothpaste, combined with minty taste with a dash of salt for a unique brushing experience. The product is designed for individuals who trust natural element like salt as a tooth care ingredient.

TARGET MARKETS

Colgate has the whole toothpaste market as its target market. Being one of the oldest varieties of toothpaste, the Colgate Dental Cream has been marketed as a synonym for toothpaste. Colgate Total 12 claims to provide a 12-hour protection from germs. Hence, this variety of Colgate toothpaste is targeted at the educated, urban people who brush their teeth twice. Colgate Max Fresh, with its multiple flavours, seems to target the youth. It also associate brands like iPod and sports like Kayaking with it through the means of gifts / prizes which further enforces the belief that Colgate Max Fresh is for the youth. Colgate Kids toothpaste is clearly, as even the name suggests, targeted at kids. The advertisements and packing of the toothpaste further suggests that it is meant specifically for the smaller kids.

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Colgate Fresh Energy Gel is clearly aimed at the youth. Its sleek toothpaste cover and the picture of a young couple on it unambiguously emphasize this point. Colgate Herbal targets the traditional and the naturalist market which is pretty apparent from the name as well as the tagline “Strong teeth, healthy gums, naturally” and the use of squirrel as the central character in its advertisements. Colgate Advanced Whitening specifically targets people with plague problems as the toothpaste claims to provide whiter teeth within 14 days. Colgate Active Salt toothpaste targets customers with orthodox thinking who believe that salt is good for teeth. Colgate Cibaca is a product for the economy segment. The target market is basically the rural and township areas with low per capita income as well as urban areas.

POSITIONINGColgate Dental Cream positions itself as toothpaste that has the necessary calcium and minerals to provide decay protection, strong teeth, germ protection and fresher breath. Lately, with competition from indigenous “vegetarian” toothpastes, Colgate Dental Cream has also positioned itself as an “always 100% vegetarian” toothpaste. The tagline of is advertisements, “Trusted by generations to make teeth stronger”, clearly aims to position the Dental Cream as a toothpaste that has been used over generations and hence creating a kind of emotional attachment with the toothpaste. Colgate Total 12 have been projected as the “most advanced toothpaste” that provides 12 hour germ protection even after eating and drinking by building a protective shield around the teeth. It also tries to position itself higher in terms of reliability of its claims by telling the consumers that its formula is a patented one and the toothpaste is the most recommended one by the dentists. Colgate Max Fresh positions itself on the basis of “freshness”. The tagline “A new dimension of freshness” brings home this very point. Colgate Kids Toothpaste tries to position itself based on emotions which is apparent in its tagline “Makes fighting cavities fun”.

…contd.It also provides the names of familiar cartoon characters like Tweety and Bugs Bunny to the various flavors that it markets and hence associating the tastes with the feelings of kids towards these cartoon characters. Colgate Fresh Energy Gel, as the name itself suggests, basis its marketing strategy on the toothpaste providing “freshness”. It positions itself as a “gel” (note that here it tries to differentiate itself from a toothpaste) for fresh breath and strong / white teeth. The emotional positioning of Colgate Fresh Energy Gel is implicit by the way of the photo of the couple on the toothpaste pack and in the advertisements. It obviously wants to strike a chord with the young, and also the budding, couples of the country. Colgate Herbal positions itself based on basically only one attribute, i.e. being herbal. The Colgate Cibaca Family Protection toothpaste positions itself in a very standard way by claiming to provide strong teeth and fresh breath. Colgate Advanced Whitening toothpaste has a very unique positioning as it is very focused on specific attributes like restoring natural whiteness, preventing stains from adhering and fighting plague. The Colgate Active Salt toothpaste positions itself alongside the other toothpastes that claim to fight gums and result in healthy gums and teeth.

THE PRODUCT

Various Brands of Colgate toothpaste are as follows: Colgate Dental CreamColgate Total 12Colgate SensitiveColgate Max FreshColgate Kids ToothpasteColgate Fresh Energy GelColgate HerbalColgate Cibaca Family ProtectionColgate Active Salt

VARIOUS TYPES COLGATE TOOTHPASTE

PRICE

Sl. No.

PRODUCT PRICE

1. Colgate Dental Cream20 gram–Rs. 5/-, 40 gram–Rs. 10/-, 50 gram–Rs. 14/-, 100 gram–Rs. 30/- and 200 gram–Rs. 50/-

2. Colgate 12 150 gram–Rs. 62/-

3. Colgate Sensitive 100 gram–Rs. 58/-

4. Colgate Max Fresh150 gram–Rs. 50/- (Both Blue and Green Flavours)

5. Colgate Kids Toothpaste 150 gram–Rs. 48/-

6. Colgate Fresh Energy Gel50 gram–Rs. 15/-, 100 gram–Rs. 32/- and 200 gram–Rs. 58/-

7. Colgate Herbal 100 gram–Rs. 29/- and 200 gram–Rs. 54/-

8. Colgate Cibaca Family Protection50 gram–Rs. 10/-, 100 gram–Rs. 17/- and 200 gram–Rs. 27/-

9. Colgate Active Salt 100 gram–Rs. 29/- and 200 gram–Rs. 54/-

PLACE

Colgate is sold over almost all the retail outlets of India viz., Kirana stores, supermarkets, medical shops, co-operative stores, etc. It is well-distributed through the supply chain of company distributors to wholesalers to retailers to final consumers. All the products are available in the all-India market, including semi-urban and rural markets which are their primary focus areas.  But the various varieties of Colgate are not so easily available other than in the oral care outlets or super markets. The small tubes of Colgate are also available in small road-side shops and from the vendors.

PROMOTION

Colgate normally gives out small product samples at annual events like “Oral Health month” to remind target consumers, especially kids to take better care of their teeth after eating sweets. This method does not drive strong results as most consumers tend to forget the message, even if they have collected the samples. Now, instead of giving away product samples, Ice cream and cotton candy were given out. The stick carrying the ice cream and cotton candy carries a hidden message. Once consumers are done the message printed on the tip of the stick shaped like a toothbrush reveals “Don’t forget” with the Colgate logo. This simple message effectively reminded consumers to brush their teeth.

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Advertising of Colgate products is basically done through television commercials. Famous personalities like Sunny Deol, Viveik Oberoi, Virendar Sehwag, etc. had been associated with this brand in past for a quite a long time. Sales promotion is not done at the retailer level, apart from possible recommendation by the shopkeeper.  The company has backed its products with a very strong distribution network. The company’s distribution network covers 940 direct accounts and 3.8 million retail outlets. Colgate is the 2nd most widely distributed product in the country. The company is tying up with initiatives like EChoupal and Disha to further strengthen its distribution network.  Over the years, Colgate has been able to develop strong brand equity. It has been voted the “The Most Trusted Brand” in the country for 3 consecutive years in the AC Nielsen Brand Equity Survey.

CRITICAL ANALYSIS (SWOT ANALYSIS)

The potential As per estimates, 12.2% of the total world population lives in rural India. Currently, only a small portion of region has been tapped. Although, expansion in rural areas requires huge investments, it is a market that cannot be overlooked and has huge potential. In India, urban per capita consumption is 153 gms whereas rural consumption is a mere 38 gms.

Competition The company has been facing immense competition from organised as well as unorganised players. In the late 1980s, Hindustan Lever used the novelty element in gel toothpaste to make steady inroads into Colgate's dominance in the oral care market. Its gel toothpaste, Close-Up helped HLL become the second largest paste brand; posing a stiff challenge to Colgate. However as the novelty of gel toothpastes wore off, HLL renewed focus on its other brand Pepsodent to help it protect its turf. Its attempt at offering a low priced brand Aim was not completed and the brand was subsequently pulled back after launching it in early 2000. Both Close Up and Pepsodent have a combined market share of 30% The current brands offer distinct propositions; Close Up addresses the youth with new benefits and value-driven propositions, whereas Pepsodent is firmly entrenched on the family health platform with variants catering to oral health.

Concerns The company has high reliance on a single category (Oral Care), which accounts for 94% of its sales and 98% of its profits. A large part of the company's product folio consists of premium products, which do not have a large potential market in India. This is evident as new launches by the parent in India have been much lower than other markets. Colgate cut prices of its products. The company has been able to increase its margins by continuously cutting advertising expenses, which cannot go below a certain point, owing to its single product dependence. In conclusion, the company is likely to see continued bottom line expansion over the next one year owing to tax benefits and operating leverage but revenue growth will remain challenging. As of now, Colgate is not among our top picks in the FMCG space.

India is still a nascent country in dental hygiene, with the majority of the population still not having access to modern dental care but relying on substances like coal ash and neem sticks. As the penetration level of the rural segment is at a low of 30 percent, this means that only 200 million of our 740 million rural population use toothpaste. In India, per capita toothpaste consumption stood at 74g in 2005, which is amongst the lowest in the world, compared to 350g and 300g in Malaysia and Vietnam respectively. Toothpaste enjoys a country wide penetration level of 50%. The penetration levels of dentifrice in the country have been on an upward trend over the last few years driven by strong improvements in toothpaste penetration. With the huge consumer base waiting to be tapped and the expected rise in purchasing power as the economy picks up, oral hygiene in India may receive a fresh lease of life.

CONCLUSION

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