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Case Study – Study – Colgate Precision Toothbrush
Section C – Gro
Colgate Precision Toothbrush Section - C Group – 11 Name Aman Srivastava Deepak Sudhakar Krishna Bajaj Prasanna Patange Richa Singh Master your semester with Scribd Saikiran Pollamarasetty & The New York Times Special offer for students: Only $4.99/month. Vivek Gupta
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Case Study – Study – Colgate Precision Toothbrush
Section C – Gro
SWOT analysis for Colgate-Palmolive Precision: Strengths: Colgate-Palmolive is a global leader in personal care and household products
43% of the world’s world ’s toothpaste market and 16% of the world ’s toothbrush market. international sales, which account for 64% and 67% of profit (by volume and do respectively), showcase their brand brand image worldwide. Precision launched by CP is a tec innovation, which has a triple-action brushing effect that increases plaque removal by more, as compared to other brands. brands. Concept tests revealed that that 77% found precision precision m more effective than their current toothbrush.
Weakness : Since 33% of adults were uninvolved oral health consumers it will be difficu
educate them about the importance of Precision as a toothbrush that prevents gum diseas is not yet into the super-premium toothbrush category while CP’s main competitor Oral professional endorsements as dentist’s toothbrush.
Opportunities: CP’s consumer research revealed that 46% of adult consumers are conce
about the health of their gums and are willing to pay premium for new products addressin issue. Also consumers are willing to experiment with new toothbrushes. t oothbrushes.
Threats: Competitors are offering incentives such as buy-one-get-one-free, mail in re
coupon deals and toothbrush on pack with toothpaste. Moreover, competitors are plannin launch their products with added features. Johnson & Johnson is coming up with r between features like angled neck and rippled bristles. Procter & Gamble are preparin launch Crest Complete with features like long, rippled bristles. Smith Kline Beecham expanding Aquafresh Flex line to include two adult compact heads and one child brush. Read Free Foron 30this Days Sign up to vote title Changes in the Toothbrush Category Useful Not useful
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Traditionally, toothbrush was largely perceived to be a commodity and was purchased prim
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Section C – Gro
hand placed in high price niche segment offering aesthetic, therapeutic and cosmetic v while others were placed in the mainstream segment for the masses. Competitive Analysis
There is considerable fragmentation in the market and hence, there is severe compet amongst the players. In order to get an edge, competitors, Johnson & Johnson, Oral-B, Pro & Gamble, and Smithkline Beecham, are offering promotions in the form of coupons, m refunds and discounts. The company’s competition may be analyses on the basis of s keeping units (SKUs) and on the basis of the price segments. The company faces to competition in super premium segment from companies such as Oral-B, Reach Adva Design, Crest and Aquafresh Flex. In addition, all companies spend a sizeable share of revenues on advertisement, which adds up to the competition. Also, the players have fairly lenient in allowing other players to enter into the market, fostering competition. Pla have exhibited some slackness on their parts, by remaining ignorant to some of technological advancements and shift in consumer behavior. As an instance, in 1988, Johns Johnson introduced “new brush technology” only to phase it out by 1992. Hence there healthy competitions in the market. Product Segmentation:
On basis of Price: Toothbrush industry is divided into mainly three segments on the ba price: Value, Professional and Super Premium.
Value brushes priced average at $1.29 accounted for 24% of unit volume and 12% of d sales on the other hand Professional brushes, priced between $1.59 and $2.09, accoun corresponding 41% and 42%. Super Premium brushes category emerged in late 1980s an Read Free Foron 30this Days Sign up to vote title 1992, its retail prices were between $2.29 and $ 2.89 and it accounted for 35% of unit vol Useful Not useful and 46% of dollar sales. Cancel anytime.
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On the basis of attributes: In this, toothbrush differed by bristle type( firm, medium, s
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Case Study – Study – Colgate Precision Toothbrush
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Psychographic is the science of using psychology and demographics to better unders consumers. In this buyers are divided into different groups on the basis psychological/personality psychological/personality traits, lifestyle, or values. In toothbrush industry, buyers are divided in mainly three categories: Therapeutic, Cosm and Uninvolved. Therapeutic Brushers Cosmetic Brushers Uninvolved Consumers (46% of adults)
Differentiate
(21% of adults)
among Search for products that
products and search out functionally
(33% of adults)
View products as the sam
effectively deliver cosmetic Lack of interest in produ
effective benefits
category
products 85% - brush at least twice a
85% - brush at least twice a
20% - brush once a day o
day
day
less
62% - use professional brush
81%- use mouth wash
28%-use
54%- floss regularly
54%- use breadth fresheners
toothbrush
69%- floss
66%- use mouth wash
54% - use professional brush
54%- floss
only
regula
Arguments for launching precision as (a) a niche product and (b) a mainstream brand
CP had the option of either launching Colgate Precision as a niche product or as a mainstr product. Both these options had advantages and disadvantages and hence, this made it diff for the management to decide which route to choose.
Niche Product: Master your semester with Scribd Read Free For 30this Days Sign up toatvote on titleconcerned a Precision could be positioned as a niche product to be targeted consumers & The New Yorkand Times Not useful gum diseases thus could be charged at a super-premium price. It would be command a Useful Cancel anytime.
premium over Oral-B, its nearest competitor, and would be expected to capture 3% o Special offer forprice students: Only $4.99/month. US market at the end of the first year following its launch. Moreover, the retails sales
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Case Study – Study – Colgate Precision Toothbrush
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cost of $8.58 million. The total expenditure for advertisement, consumer and trade promo would be $11.2 million, thus putting the total cost to the company at $19.78 million. Assu capital expenditure of $3.25 million and depreciation costs of $316,667, the net cost at y end would be $23.35 million. According to Steinberg if Precision were positioned as a n product, about 8 million brushes would be sold through the retail channel in the first year thus accounting for an income of $16.16 million, considering manufacturer’s price of $2.02 piece. In the second year, expenditure would come out to be approximately $26.65 million considering sales of 15 million brushes through retail channels, income would stand at $ million. Considering no more capital expenditure from the third year, stagnant demand similar promotional expenditure as that in the 2 nd year breakeven would occur in the month, followed by yearly profits of $4.95 million. At the end of 5 years, the net profit w stand at $11.14.
The manufacture ring cost per unit for Precision as a mainstream product is $0.64 per piec total of 42 million brushes would be manufactured, resulting in a total manufacturing co $26.88 million. The total expenditure for advertisement, consumer and trade promo would be $32.8 million, thus putting the total cost to the company at $59.68 million. Assu capital expenditure of $9.1 million and depreciation costs of $886,667, the net cost at year would be about $69.68 million. According to Steinberg if Precision were positioned mainstream product, about 26.8 million brushes would be sold through the retail channel in first year and thus accounting for an income of $47.17 million, considering manufacturer’s of $1.76 per piece. In the second year, expenditure would come out to be approximately $7 million and considering sales of 44.1 million brushes through retail channels, income w stand at $77.62 million. Considering no more capital expenditure from the third year, stag demand and similar promotional expenditure as that in the 2 nd year breakeven would occ the 46th month, followed by yearly profits of $9.59 million. At the end of 5 years, the net p would stand at $ 11.18 million.
Master your semester with Scribd Read Free For 30this Days Sign up to vote on title As it can be seen, both the strategies give an almost equal total profit at the end of 5 y From the 6 year onwards, positioning the toothbrush in the mainstream category would & The New York Times Useful Not useful th
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profits in the niche category. However, the assumption made is that the demand Special offer formore students: Onlythan $4.99/month. nd th remain constant in both the categories from the 2
to the 5
year. It must be rememb
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