Colgate-Palmolive Co.: The Precision Toothbrush – Case Solution

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Colgate-Palmolive Co.: The Precision Toothbrush Case Answers

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Company Background – Colgate-Palmolive Co.:

Colgate-Palmolive Co. (CP) was recognized as the global leader in household and personal care in 1991 by earning $6 billion in sales and $2.76 billion in profit. CP’s products included oral hygiene items like toothpaste and toothbrushes.

It captured 43% of the world’s toothpaste market and 16% of the world’s toothbrush market. It also held the number one position in the U.S. retail toothbrush market with a 23.3% volume share. In 1992, Colgate-Palmolive was planning to launch its most advanced toothbrush, the Colgate Precision toothbrush.

U.S. Oral Care Market:

In 1991, the U.S. Oral Care market was a $2.9 billion industry. Consumers were becoming more concerned about their dental health, and each year, there was an increase in the purchase of dental care products.

Toothpaste captured 46% of this market, mouth rinses 24%, toothbrushes 15.5%, and dental floss and other products made up the remainder.

Toothbrush manufacturers, including Colgate-Palmolive, were investing millions of dollars in research and development to innovate better toothbrushes. Companies were also forming alliances with dental professionals, increasing advertisement budgets, and offering promotions to grab the attention of potential consumers.

Customer Behaviour:

Until the 1970s, consumers viewed toothbrushes as a commodity and would buy their toothbrushes based on price. In the late 1980s, consumers purchased toothbrushes depending on how aesthetically pleasing the toothbrush looked rather than its functionality.

For instance, toothbrushes with popular cartoons and glow-in-the-dark handles sold more than regular-looking ones. However, the trend changed in the 1990s when customers placed more importance on the technical performance of the toothbrush.

Consumers were willing to pay a higher price for the higher quality. Companies like Colgate-Palmolive that manufactured toothbrushes were coming up with constant functional changes.

Oral care consumers can be classified into three groups: therapeutic brushers, cosmetic brushers, and uninvolved customers. Therapeutic brushers look for the effective functions of toothbrushes.

Cosmetic brushers look for toothbrushes that have the ability to remove plaque. Uninvolved consumers are not interested in oral hygiene, and their purchases are based on price factors.

For toothpaste, some families share the same product, which causes the fast renewal of toothpaste. The frequency of changing a new toothbrush is relatively slower than toothpaste, even though it is recommended to change a toothbrush every three months.

Therefore, Oral B launched a toothbrush that reminds a consumer when to change the toothbrush. It is difficult to increase the primary demand in the toothpaste market. The only way to get more customers is by shifting the sales from existing products.

Product Segmentation – Colgate-Palmolive Co:

Colgate-Palmolive had two distinct product lines: Colgate Classic (the value brand) and Colgate Plus (the professional brand). This allowed consumers to have options when deciding which quality of toothbrush to purchase. Due to technological advances in the oral hygiene division, a superpremium segment was created.

According to Exhibit 6, Colgate Classic had a declining volume sales and dollar share percentage, whereas Colgate Plus showed a rise in both volume and dollar sales from 1989 to 1992. Colgate-Palmolive did not have any products in the super-premium segment.

Colgate was considering positioning its new launch of Colgate Precision as a super-premium toothbrush to get hold of all segments in the toothbrush market. Precision was…