COLGATE MAX FRESH: GLOBAL BRAND ROLL-OUT

CASE STUDY GROUP 6

MEGHA SINHAPRATEEK JAIN

PRIYANKA KANWARRADHIKA SETHI

NISHANT NEGI

Company Background• 10.6$ billion revenue (2005)• Operating in 200 countries• 70% of sales outside USA• Two core product segments: Oral personal & home care; pet

nutrition segments

Organization structure• Regional presidents with P&L responsibility• Global business development groups organized by category

Year 2004• Reported +6.5% unit volume growth• +7% sales dollar growth• +0.1% point growth in gross profit margin to 55.1%

COLGATE PALMOLIVE

EVOLUTION OF TOOTHPASTE MARKET

Colgate launched world’s first commercial toothpaste in 1873.

In 1955, P&G launched first fluoride toothpaste – Crest

By 1990, virtually all toothpaste in U.S. offered fluoride protection and consumers evolved to additional oral care concerns.

In 1997, CP launched Colgate Total promising 12 hours protection against full range of oral health problems.

Global toothpaste market value share

2000 2001 2002 2003 2004

Colgate Palmolive39.70

%40.60

%39.80

%38.80

%39.70

%

Procter & Gamble12.20

%12.50

%13.80

%13.90

%14.70

%

COLGATE MAX FRESH PRODUCT DEVELOPMENT

Global research and development works with CIC’s to develop new products

CMF utilized patented technology of dissolvable mini breath strips as a point of differentiation

Product consisted of small pieces of “Tape”, packaged in a convenient carrying case which dissolves on the tongue releasing a flavor designed for fresh breath

INITIATIVES & CANNIBALIZATION

• Four factors involving franchise growth:

1. Consumer substitution 2. Market Spending 3. Distribution Penetration 4. Transaction Size

UNITED STATES OF AMERICA

Value Shares of Leading U.S. Toothpaste Manufacturers

Manufacturer Brands

2004 value share of toothpaste Market

Colgate-Palmolive Colgate 34.80%Procter&Gamble Crest 31.60%GlaxoSmithKline Aqua fresh, Sensodyne 14.50%Church&Dwight

Close-up, Mentadent, Aim, Pepsodent 10.20%

All Other 8.90%

TOOTHPASTE MARKET

• Cavity/fluoride protection was the key benefit sought ,followed by reduction in plaque build-up , breath freshening and tartar control.

• In 2004, U.S. toothpaste market was evenly split between toothpastes that emphasized therapeutic(cavity/fluoride protection/ sensitivity relief)benefits and those that stressed cosmetic benefits(freshening/whitening).

MARKET SEGMENTS

• Positioning 1. As a premium brand along with CWE 2. Promises freshness with a whitening reassurance 3. Uses mini breath strips

• Advertising 1. Media advertising to generate awareness accounted for 73% of the year 1 marketing budget. 2. Targeted at adults 18-34 age group, with female skew.

• Marketing Support 1. Launch was supported by a website which incorporated creative promotions and leveraged package visuals and program sponsorships on MTV,AOL music, AOL first look and yahoo launch.

2. For offline customers, plans included in-store sampling, merchandising, display offering money back rebates and various special packs such as “buy one get one free” and two pack trial pack

COLGATE MAX FRESH

CHINA

Value Shares in The China Toothpaste Market

2000200

1 2002 2003 2004

Colgate Equity 19.20%24.70

% 24.20% 23.90% 23.60%

Total Colgate-Palmolive 25.20%

31.60% 32.70% 32.60% 32.10%

Crest 11.80%12.90

% 14.80% 18.00% 21.20%

• In 2004, toothpaste market was an $868 million retail business.

• 38% growth since 2000.• Market skewed towards therapeutic

segment and low priced local brands.

TOOTHPASTE MARKET

• Communication Challenge• Colgate Max Fresh did not test as well as

others name in China which led to the name being changed to “Icy Fresh”.

• “cooling Crystals” was identified as the most relevant and meaningful phrase to describe breath strips to Chinese consumers.

• Celebrity advertising was developed using Jay Chou, leading rock star in china, who embodied ”extreme living”.

COLGATE MAX FRESH:QUALIFYING THE PRODUCT FOR MARKET

• Colgate dominated in Mexico with an 82% value share of the $348 million retail toothpaste market in 2004.

• Market heavily skewed towards the therapeutic segment(87% of value share) but growth was slow.

• Majority of consumers focused on basic oral care(cavity prevention)

• Price sensitivity and sales promotion activity were both high In Mexico.

MEXICO

• Concept and product results 1. Net acceptance was slightly below par in terms of benchmarks for comparable new personal care products tested in Mexico. 2. Consumer Viability Index(CVI) of 62% suggested that the initiative had an “average” chance of in-market success, defined as maintaining stable distribution for at least two years after launch .

• Sources of Volume 1. CMF volume sourced from Colgate would be slightly below fair share whereas crest would lose more than fair share. 2. CMF volume was expected to come from CP brands notably Colgate Big Red and 21% from Crest. 3. “Shelf Is Not Elastic”. Understanding which Colgate SKU’s might be at risk of delisting was important.

COLGATE MAX FRESH LAUNCH

• Pricing 1. Pricing objective was to achieve parity with Crest’s cool explosions. 2. Price/Value perception was above average for CMF. 3. Tested at a retail price of 15.99 Pesos 4. Estimated that CMF could increase volume by +25% if the price was decreased from 15.99 to 14.99 Pesos.

• Advertising 1. Proposed advertising idea , “a joy for your mouth". Depicted in an advertisement entitled “Snow surfer”. 2. Incremental Production and talent costs combined were $500,000.

THANK

YOU!!!