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Toothpastes

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Product Features

Toothpaste is a low involvement product Grinds away the leftover food and plaque on your

teeth, with the help of your toothbrush Abrasive paste The abrasive in toothpaste is called dicalcium

phosphate dihydrate The other main part of toothpaste is the paste which is

made up of water and things to help it spread through your mouth easily

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The Toothpaste Market Industry size: Rs 25 billion Toothpaste can be considered as a solution to the

need of oral care Types of toothpastes:

• Whites

• Gels

• Herbals

Players: MNC dominated market (Colgate, HLL) Market growth: 7-8% CAGR Per capita consumption: 82 gms

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Porter’s Five Forces Analysis Competition in the sector

• Dominated by large multinational companies such as CP, HLL

• A few Indian companies such as Dabur, Anchor and Babool Threat from substitute products

• Traditional products like twigs of the neem tree, salt, ash, and other herbal items

• Toothpowders with 23% market share can act as a threat to the toothpaste markets

Threat of new entrants: • Sector is not capital intensive

Bargaining power of suppliers• Most of the companies in the industry are integrated backwards

• Manufacturing is largely outsourced Bargaining power of customers

• Very low

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Players

Company Types of toothpaste

Colgate Palmolive Whites, Gels

HLL Gels

Balsara Hygiene Ltd (now Dabur) Herbal

Dabur India Ltd Toothpowders, Gels

Smithkline Beecham Gels

Anchor White

Vicco Labs Herbal

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Market Share

39%

17%

16%

13%

5%

4%3% 2% 1%

Colgate Dental Cream PepsodentClose-up Others Cibaca Top Colgate GelPrudent Colgate herbalColgate Total

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Analyzing Market Opportunities

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Consumer Needs

Clean teeth

Prevention of tooth decay

Fresh breath

Prevention of plaque, tartar and other diseases

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Customer Segments

Customersegments

Habit driven

Value-driven(price conscious)

Variety seeking

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Competitors

MNC dominated markets

Two largest players constituting 84% of the market share

Brand-wise share:

• Colgate 51%

• HLL 33%

• Dabur 9%

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Colgate

51% market share Flagship brand is largest selling toothpaste brand

Product Share

Colgate Dental Cream 39%

Cibaca Top 5%

Colgate Gel 4%

Colgate Herbal 2%

Colgate Total 1%

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HLL

India’s leading FMCG company

Late entrant

33% market share

• Pepsodent 17.6%

• Closeup 15.3%

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Dabur

Acquired Balsara Presence in all segments 30% share in toothpowders 9% share in toothpastes

• Babool 5%

• Promise + Meswak 4%

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Developing Marketing Strategy

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Positioning Colgate

• Diversified portfolio• Market leader• Quality products, catering to all needs of customers• Colgate gel positioned as lifestyle product• Colgate Total for tartar control• Cibaca Top for low income groups

HLL• Closeup: Targeted towards youth. Fresh breath, confidence

inducing• Pepsodent: Providing extended protection from germs and tooth

decay Dabur

• Herbal oral care for all segments

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Product-Service Innovations Colgate

• Continuous line extention and upgradation

• Increased R&D spending

• 40% sales (2004) came from new product launches

• Variants like Colgate Total, Fresh Energy Gel, Colgate Herbal to fill all gaps

HLL• 3-way convergence of product availability, brand communication and

brand experience

• Creating new touch points

• Using the HLL distribution network

• Aggressively entering the out-of-home consumption category Dabur

• New campaign (Subah babool ki to din tumhara)

• New packaging

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Delivering Marketing Programs

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Promotional Strategies

Low involvement products

Mostly habitual purchases, low brand loyalty

Differentiation through marketing communications required

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Colgate Freebies galore

• One of the first to introduce BOGOF

• ‘Below-the-line’ promotion strategy

• Large discounts on offer (upto 25%) Coverage by higher realizations

• Sustained promotional offers possible because of high manufacturer margins

• 30-35% price hike during 2000-03 on almost all brands Ad-spend/Sales ratio 18.2% (2001) 19.9% (2002) Operating profit margins 8.2% 9.2%

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HLL (Closeup and Pepsodent) Rural:Urban mix = 30:70 Target is to achieve a 50:50 mix Removing weak brands and strengthening strong brands

• Aim, green variant of Closeup, Closeup oxyfresh withdrawn from the market

• Strong brands like Pepsodent Germicheck flanked by brands like 2-in-1 and Pepsodent G

Looking at brand extentions with a ‘whitening’ proposition

Free dental insurance (Rs 10,000) scheme launched in 2002 for Pepsodent

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HLL

Strategic advertising

• Tie-up with the movie ‘Kyon, Ho Gaya Na’ (2004)

• ‘Kya aap closeup karte hain’ jingle, designed by Lintas

• Pepsodent-Shaktiman contest (2005)

• ‘Dhishoom-dhishoom’ campaign for Pepsodent

Market expansion by using the tagline ‘twice-a-day brushing’ for Pepsodent

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Dabur

New packaging with logo and celebrity endorsement

Harping on natural strength of teeth by strengthening the roots

‘Live life big bite’ campaign

Media spend: Rs 5 crore in 2005-06

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Gearing Up for the Future

Huge opportunities because of low per-capita consumption

Reaching rural consumers key to growth

Consumer education also necessary to increase toothpaste use

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Gearing Up for the Future (Cont.) Colgate

• Competencies in analysis, microbiology, packaging and consumer research

• Target Faster project implementation Better supply chain management

HLL• Segmentation of general trade• Self-service stores and supermarkets• Project Shakti

Dabur• Plans to restructure its sales and distribution structure in line with

the recommendations of Accenture Increase direct coverage to gap outlets and gap towns where Dabur is

not present

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Launching P&G’s Crest in India History

• First-ever toothpaste to use clinically proven fluoride to prevent tooth decay

• Endorsed by the American Dental Association Current status

• Colgate knocked Crest off its throne as the No. 1 toothpaste in 1997 with the launch of Colgate Total

• In late 2000, after five years of research and development Crest Whitestrips was introduced

Rationale for entering the Indian market• Penetration of modern oral care products and average per capita

consumption of toothpaste very low • Industry sources expect penetration of oral care products to increase

around 65-70% from current levels of around 49% in the next three to four years time