colgate palmolive company: precision toothbrush

Colgate-Palmolive Company:

The Precision Toothbrush

HARVARD BUSINESS SCHOOL CASE

What is Colgate

Precision?

•A new product, toothbrush launched by CP in August 1992

•Developed over a period of 3 years

Who is Susan

Steinberg?

• Precision Product Manager• The person who managed the entire product development process• Responsible for recommending the POSITIONING , BRANDING and COMMUNICATION strategies

The U.S. Toothbrush Market

Product Segments

•Value•Professional•Super-Premium

Consumer Behaviour

• CP’s Consumer Research indicated that the Baby Boom Generation were now becoming more CONCERNED about the HEALTH OF THEIR GUMS AS OPPOSED TO CAVITY PREVENTION and,

• were WILLING TO PAY A PREMIUM FOR NEW PRODUCTS ADRESSING THIS ISSUE.

Consumer Segmentation of Toothbrush Users

Brand Decision Factors for Consumers

Competition

Principal Toothbrush Brand Product Lines :

August 1992

Advertising and Promotion

Media Expenditures

TELEVISION & ADVERTISING COPY STRATEGIES & EXECUTIONS

CP TELEVISION ADVERTISING

ADVERTISING EXPENDITURE FOR CP TOOTHBRUSHES:

Distribution• In 1992, 22% of all toothbrushes

were expected to be distributed to consumers by dentists.

• Manufacturer margins on toothbrush sales through dentists were less than half those achieved through normal retail distribution

The Precision Marketing Mix

Product Design and Testing

In 1989, CP had established a task force comprising executives from:• R&D and Marketing•Dental professionals, and •Outside consultants

s:

•Understanding the varying techniques consumers used when brushing their teeth.

• Testing the between-teeth access of different toothbrush designs.

• Establishing an index to score clinical plaque-removal efficacy at the gum line and between teeth.

• Creating a bristle configuration and handle design offering maximum plaque- removing efficacy.

•Determining, through clinical and consumer research, the efficacy and acceptance of the new toothbrush design.

Positioning • Precision was developed with the

objective of creating the best brush possible and as such, becoming a top-of-the range, super-premium product.

• It could be positioned as a niche product to be targeted at consumers concerned about gum disease.

Volumes• With a niche positioning Precision retail

sales would represent 3% volume share of the toothbrush market in year 1 and 5% in year 2.

• With a mainstream positioning, these volume shares would be 10% in year 1 and 14.7% in year 2.

• Total category unit volumes were estimated at 268 million in 1993 and 300 million in 1994.

Capacity and Investment Costs

Three types of equipment were required to manufacture the Precision brush:

1.Tufters2. handle molds3. packaging machinery

Production Costs and Pricing

Production costs included:

•warehousing costs • Transport costs

Breakeven Analysis

• Total Manufacturing Costs + Total Advertising Costs = Input Cost( Variable + Fixed costs)

• Total Profit = Retail Price * number of brushes – Input Cost

• For Breakeven , Input Cost = Total revenue generated by selling the Precision brushes

Two tests carried out:

• CONSUMER CONCEPT TESTS

• NAME TESTS

Outcome Under the mainstream and niche

positioning scenarios –

• 1. Cannibalization figures for Colgate Plus would increase by 20% if the Colgate brand name was stressed.

• 2. Remain unchanged if the Precision brand name was stressed.

Communication and Promotion

Four Tests

Including in-home usage tests revealed

• 55% of test consumers found Precision to be very different from their current toothbrushes.

• 77% claimed that Precision was much more effective than their current toothbrush.

Conclusion Steinberg believed that Precision was

more than a niche product line extension and that the proven benefits to consumers represented a technological breakthrough. Precision was positioned , branded, and communicated to consumers after proper analysis. Market mix was developed that enabled Precision to reach its full potential.

DisclaimerCreated by Nikhil Chaudhary, NIT Goa, during a marketing internship by Prof. Sameer

Mathur, IIM Lucknow.: