COLGATE-PALMOLIVE COMPANY:
THE PRECISION TOOTHBRUSH
In August 1992, Colgate-Palmolive (CP) was poised to
launch a new toothbrush in the United States, tentatively
named Colgate Precision. CP’s Oral Care Division had
been developing this technologically superior tooth-
brush for over three years but now faced a highly com-
petitive market with substantial new product activity.
Susan Steinberg, Precision product manager, had
managed the entire new product development process
and now had to recommend positioning, branding, and
communication strategies to division general manager
‘Nigel Burton.
Company Background
With 1991 sales of $6.06 billion and a gross profit of
$2.76 billion, CP was a global leader in household and
personal care products, Total worldwide research and,
development expenditures for 1991 were $114 milion,
and media advertising expenditures totaied $428 million,
CP's five-year plan for 1991 to 1995 emphasized new
product launches and entry into new geographic mar-
kets, along with improved efficiencies in manufacturing
and distribution and a continuing focus on core con-
sumer products. In 1991, $243 million was spent (0
upgrade 25 of CP’s 91 manufacturing plants; 275 new
products were introduced worldwide; several strategic
acquisitions (e.g., of the Mennen men’s toiletries com-
pany) were completed; and manufacturing began in
China and Eastern Europe. Reuben Mark, CP’s C.E.O,
since 1984, had been widely praised for his leadership in
Rescarch Ascaiate Nathalie Laidler prepared this case under the supervi-
sion of Profesor John Quelch as the basis for class discussion rather than
to ilustrate rhe effective or ineffective handling ofan administrative stu-
ation, Proprietary data has been disguised.
transforming a “sleepy and inefficient” company into a
lean and profitable one. Since 1985, gross margins had
climbed from 399% to 45% while annual volume growth
since 1986 had averaged 5%. Although international
sales remained CP’s strong suit, accounting for 64% of,
sales and 67% of profits in 1991, the company faced
tough competition in international markets from Proc-
ter & Gamble, Unilever, Nestle’s L'Oreal Division, Henkel
of Germany, and Kao of Japan.
Colgate-Palmolive’s Oral Care Business
In 199), CP held 43% of the world toothpaste market
and 16% of the world toothbrush market, Other oral
care products included dental floss and mouth rinses. A
team of 170 CP researchers worked on new technologies
for oral care products, and in 1991, new products
launched in the US. market included Colgate Baking
Soda toothpaste and the Colgate Angle and Wild Ones
toothbrushes.
In 1991, worldwide sales of CP's oral care products
increased 12% to $1.3 billion, accounting for 22% of
CP's total sales. CP's U.S. toothbrush sales in 1991
reached $77 million, with operating profits of $9.8 mil-
lion. Toothbrushes represented 19% of CP's U.S. Oral
Care Division sales and profits, and CP held the number,
one position in the U.S. retail toothbrush market with a
23.3% volume share.
Exhibit | presents operating statements for CP's US.
toothbrush business since 1989. CP offered two lines of
toothbrushes in 1991—the Colgate Classic and the Col-
gate Plus. Colgate Classic was positioned in the “value”
segment and was CP’s original entry in the toothbrush
sarket, while Colgate Plus was positioned as a higher-
quality product in the “professional” segment.
The U.S. Toothbrush Market
As early as 3000 B.C., ancient Egyptians used tooth-
brushes fashioned from twigs. In the twentieth century, a
major design advance occurred in 1938 with the launch
Ierted Marketing Commuicatins Y3N7of Dr. West’s Miracle Tuft Toothbrush, the first nylon-
bristle brush. In the late 1940s, Oral-B began selling a
soft-bristle brush which was better for the gums, and in
1961 Broxodent launched the first electric toothbrush.!
Until the late 1970s, toothbrushes were widely viewed by
consumers as a commodity and were purchased primar-
ily on price. More recently, new product launches had
increased and performance benefits had become increas-
ingly important purchase criteria. (Exhibit 2 surnmarizes
new product introductions in the category since 1980.)
In 1991, the U.S. Oral Care market was $2.9
retail sales and had grown at an annual rate of 6.1% since
1986. Toothpaste accounted for 46% of this market,
mouth rinses 24%, toothbrushes 15.5% ($453 million in
retail sales), with dental floss and other products making,
up the remainder. Dollar sales of toothbrushes had
grown at an average rate of 9.3% per annum since 1987,
but, in 1992 they increased by 21% in value and 18% in
volume, due to the introduction of 47 new products and
line extensions during 1991-1992. In the same period,
media support increased by 49% and consumer coupon
circulation by 48%. Consumers took more interest in the
category and increased their purchase frequency. The
trade, for whom toothbrushes represented a profitable,
high-margin business, responded by increasing in-store
promotional support and advertising features. Dollar
growth exceeded volume growth due to the emergence of
a “super-premium” sub-category of toothbrushes partly
offset by downward pressure on average retail prices in,
mass-merchandiser channels and because of growth in
the sales of private label toothbrushes. Unit sales growth
in 1993, however, was projected to be slower due to a
buildup in household inventories of toothbrushes in
1992 as a result of increased sampling of free brushes
through dentists and an abnormally high number of
“two-for-one” consumer promotions
ion in
Product Segments
In the 1980s, industry executives divided the toothbrush
category into two segments: value and professional.
Many consumers traded up to professional, higher-
priced toothbrushes with a resulting erosion of the value
segment despite growth in private-label sales. The late
1980s saw the emergence of super-premium brushes
(priced above $2.00). By 1992, super-premium brushes,
"As of 1991, electric toothbrushes were used by only 6% of US.
households.
BY Paty
with retail prices between $2.29 and $2.89, accounted for
35% of unit volume and 46% of dollar sales. Professional
brushes, priced between $1.59 and $2.09, accounted fora
corresponding 41% and 42%, and value brushes, priced
on average at $1.29, accounted for 24% and 12%.
In 1992, three players dominated the U.S. toothbrush
market overall: Colgate-Palmolive and Johnson & John-
son, whose brushes were positioned in the professional
segment; and Oral-B, whose brushes were positioned in
the super-premium segment. New entrants in the early
1990s included Procter & Gamble and Smithkline
Beecham; both had positioned their new product
launches in the super-premium segment. Table A pro-
files the principal new products offered in the super-
premium toothbrush segment in 1992.
Toothbrushes differed by bristle type (firm, medium,
soft, and extra soft) and by head size (full/adult, com-
pact, and child/youth). Firm-bristle brushes accounted
for 8% of toothbrushes sold but were declining at 13% a
year. Medium-bristle brushes accounted for 39% and
were declining at 4% a year, Soft-bristle brushes held a
48% market share and were growing at 7% per year.
Extra-soft-bristle brushes held only a 5% share but were
growing even more rapidly. Sixty-nine percent of tooth-
brushes were sold with adult, full-sized heads, 17% had
compact heads, and 13% had child/youth-sized heads.
In the late 1980s, many new toothbrushes were intro-
duced on the basis of aesthetic rather than functional
features. The children’s segment in particular had seen a
‘variety of new products. For example, in 1988 and 1989
new toothbrushes targeting children featured sparkling
handles, Bugs Bunny and other characters, and glow-in-
the-dark handles, By 1991, however, new product intro-
ductions were again focused on technical performance
improvements, such as greater plaque removal and ease
of use.
Consumer Behavior
CP’s consumer research indicated that consumers of the
baby boom generation (adults born in the 1940s, 1950s
and early 1960s) were becoming more concerned about
the health of their gums as opposed to cavity prevention
and were willing to pay a premium for new products
addressing this issue. CP estimated that 82% of tooth-
brush purchases were unplanned, and research showed
that consumers were relatively unfamiliar with tooth
brush prices. Although consumers were willing to expet~
iment with new toothbrushes, they replaced their
brushes on average only once every 7.5 months in 1991TableA Major New Products in the Super-Premium Toothbrush Segment
Produc | |
Manufacturer Feature Benefit Reason Tag-line Launch date 8 5KUs
Oral-B indicator | Indicator Tellsyouwhen | Blue band fades | The wand more 781 4aautt
ORAL-8 Bristes tochange halfway, Dental | dentistsuse
(oiuerte) toothbrush | hertage
Reach Advanced Angled neck; | Cleans ineven | Stimmed down, | Feel the 8/1 | 3aiult
Design raisedruter | thenardest- | taperedhead | cifference |
108NSON ridges on fanale | to-reach places |
0HNSON
Crest Complete | Ripplew bristle | Reaches Ripped end= | Oniyrestcoulé | 8/91 (test) roadult
PROCTER design. Handle | between rounded bristles | make abrush | 9/92 (national)
GAMBLE with ubber grip | teethiike a this complete
dental tool
Aguaftesh Flex | Pressure Prevents gum | flexes as you For gentle 8/91 (Flex) | Gadult child
SMITHKLINE | sensitive, intation brush demalcare | g/a2
BEECHAM flexible neck (ine extension)
linking brush
and handle |
(versus 8.6 months in 1990), while dental professionals
recommended replacement every three months. Due to
the prevalence of “two-for-one” offers, purchase fre-
quency lagged replacement frequency, with consumers
purchasing toothbrushes once every 11.6 months in
1991 (compared to 12.4 months in 1990 and an expected
9.7 months for 1992).? Unlike toothpaste, toothbrushes
‘were not typically shared by members of the same
household,
Most consumers agreed that toothbrushes were as
important as toothpaste to effective oral hygiene and
that the primary role of @ toothbrush was to remove food
Particles; plaque removal and gum stimulation were
considered secondary. Proper brushing was seen as key
to the prevention of most dental problems. According to
CP research, 45% of consumers brushed before break-
fast, 57% after breakfast, 28% after lunch, 24% after din-
ner and 71% before bed. Forty-eight percent of con-
Sumers claimed to change their brushes at least every
three months; the trigger to purchase a new brush for
7096 of them was when their 1oothbrush-bristles became
Visibly worn, Eleven percent decided to switch to a new
brush after seeing their dentists, and only 39 admitted
tn
\992, consumers purchased toothbrushes more frequently than in
by purchased toothbrush: frequently thar
to purchasing on impulse.» Sixty-five percent of con-
sumers had more than one toothbrush, 24% kept 2
toothbrush at work, and 549 had a special toothbrush
for traveling.
Brand choice was based on features, comfort and pro-
fessional recommendations. Exhibit 3 summarizes the
aia reasons why consumers used specific brands. Con-
sumers chose a brush to fit their individual needs: size
and shape of the mouth, sensitivity of gums, and per-
sonal brushing style. The handle, bristles, and head
shape were perceived to be the most important physical
features of a toothbrush.
Consumers differed in the intensity of their involve-
ment in oral hygiene. Table B summarizes the buying
behavior of the three groups. Therapeutic brushers
aimed to avoid oral care problems, while cosmetic
brushers emphasized preventing bad breath and/or
ensuring white teeth. Uninvolved consumers were
not motivated by oral care benefits and adjusted
their behavior only when confronted by oral hygiene
probfems.
Dentists played a significant role, both asa source of information on
proper brushing techniques and as a distributor of toothbrushes. At
any time, one in four consumers was using a toothbrush given to them
bya dentist
Intecrated Marketing Communications Y 349Table B Consumer Segmentation of Toothbrush Users
Involved Oral Wealth
Consumers - Therapeutic
Brushers (46% of adults)
Involved Oral Health
Consumers - Cosmetic
Brushers (21% of adults)
Uninvalved Oral Health
Consumers (33% of adults)
Differentiate among products
Search out functionally effective products
Search for products that effectively deliver
cosmetic benefits
‘View products as the same. Lack of
interest in product category
Buy and use products for themselves
Buy and use products for themselves
‘uy and use products forall family
members
85% brush at least twice aday,
62% use a professional brusn and
54% floss regulary
85% brush twice a day,
81% use mouthwash,
54% use breath fresheners,
69% floss,
54% use a professional brush
20% brush once a day or less,
28% use only regular toothbrushes
54% floss
‘56% use mouthwash
Major toothbrush brands used are Oral-B
Angle and Oral-B Regular followed by
Colgate Plus and Reach,
Major toothbrush brands used are Colgate
Classic and Oral-B Regular followed by
Colgate lus and Oral-B Angle
‘aja tnathorush brands used are Colgate
Classic and Oral-8 Regular followed by
Colgate Plus and Reach
Competition
Exhibit 4 lists the major brands and product prices for
each of the three toothbrush product segments. Exhibit 5
shows the number and type of stockkeeping units
(SKUs) for each major brand, and Exhibits 6 and 7 sum-
marize market shares over time and by class of trade.
Major competitor brands in the super-premium seg-
ment included Oral-B, Reach Advanced Design, Crest
Complete, and Aquafresh Flex.
Oral-B (owned by Gillette) had been the market
leader since the 1960s. in 1991, it held a 23.1% volume
market share and a 30.7% value share of U.S retail sales,
with 27 SKUs, Oral-B relied heavily on professional
endorsements and was known as “the dentist's tooth-
brush.” In July 1991, Oral-B launched the Indicator
brush, priced at a 15% premium to its ather brushes, The
Indicator brush had a patch of blue bristles that faded to
-white when it was time for replacement (usually after
two to three months). In 1992, consumer promotions
were expected to cost $4.5 million (5% of sales) and
include $1.00-off coupons, “buy-one-get-one-free”
offers and $2,00 mail-in refunds, Media expenditures for
1992 were estimated at $11.2 million (12.796 of sales).
Television commercials would continue to feature “Rob
the dentist” using the Oral-B Indicator product. In 1991,
Oral-B's operating margin on toothbrushes, after adver-
tising and promotion costs, was estimated to be approxi-
mately 20% of factory sales.
BOF ltd
In 1992, Oral-B announced that it would restage its
dental floss, roll out a new mouthwash, and possibly
introduce a specialty toothpaste. Oral-B management
stated that “to be a leader in the oral care category, we
must compete in all areas af oral care.”
Johnson & Johnson (J&) entered the U.S. toothbrush
‘market in the 1970s with the Reach brand, which, in
1991, comprised 18 SKUs. In 1988, J&) introduced a sec
ond product line under the brand name Prevent, a brush
with a beveled handle ta help consumers brush at 2 45%
angle—the recommended brushing technique. This
product however, was being phased out by 1992. In 1991,
J&J ranked third in the U.S. retail toothbrush market
with a 19.4% volume share and a 21.8% value share, The
Reach line was positioned as the toothbrush that enabled
consumers to brush in even the hardest-to-reach places,
thereby increasing the efficiency of brushing, New prod-
ucts included Glow Reach (1990) and Advanced Design
Reach (1991), which offered tapered heads, angled necks,
and unique non-slip handles, Reach Between, scheduled
for launch in September of 1992, had an angled neck and
rippled bristles that targeted the areas between the teeth.
Consumer promotions in 1992 were estimated at $46
million (8.6% of sales) and included 604 coupons, $1.00
refunds by sail, and “buy-two-get-one-free” offers.
“Brandweek, October 12,1992,‘Media expenditures were expected to reach $17.1 million
(31.7% of sales) with a heavy reliance on television com-
mercials. Johnson & Johnson's expected 1992 operating
margin on toothbrushes, after advertising and promo-
tion costs, was 8.4% of factory sales.
Procter & Gamble (P&G) was the most recent entrant
in the toothbrush market with Crest Complete, an exten-
sion of the company's toothpaste brand name, Crest.
Based on successful test markets in Houston and San
Antonio from August 1991 to August 1992, P&G was
expected to launch Crest Complete nationally in Sep-
tember 1992. The brush had captured a 13% value share
in test markets and was expected to reach similar total
market share levels in its first year after full launch. The
product had long, rippled bristles of different lengths,
designed to reach between the teeth. Crest Complete
claimed to have “the ability to reach between the teeth up
to 37% farther than leading flat brushes.” It was expected
tobe introduced at a manufacturer’ list price to retailers
of $1.67 and capture a 2.0% volume share and a 2.6%
value share of the U.S. retail market by the end of 1992.
Consumer promotions already announced included 55
cent coupons and $1.99 refunds on toothbrushes pur-
chased from floor stands. Media expenditures for the last
quarter of 1992 were estimated at $6.4 million; television
commercials would carry the theme “Teeth aren't flat, so
why is your brush.”
Smithkline Beecham entered the U.S. toothbrush mar-
ket in August 1991 with Aquafresh Flex, an extension of
the company’s toothpaste brand. Aquafresh Flex tooth-
brushes had flexible handles that allowed for gentle
brushing, By the end of 1991, Aquafresh Flex held a 0.5%
share by volume and 1.1% by value of the U.S. retail
market with six SKUs. In September 1992, the line was
expected to expand to include two adult compact heads
and one child brush. The 1992 promotion plan, esti-
mated at $4.6 million (25% of sales), included $1.99 mail
tefunds, “buy-two-get-one-free” offers, toothbrush on-
pack with toothpaste, and a self-liquidating premium
offer of towels. Media expenditures at $10 million
{almost 50% of sales) included television commercials
that showed the product brushing a tomato without
damaging it, to demonstrate the “flexibility and gentle-
ness” of the brush, Smithkline Beecham was expected to
‘make an operating loss on toothbrushes in 1992.
Other competitors included Lever, Pfizer, and Sunstar,
In 1991, Lever offered three lines of toothbrushes: Aim;
Pepsodent Professional with 5 SKUs; and Pepsodent
Regular with 4 SKUs. Combined, Lever held a 7.2% vol-
uume and 6.6% value share of the U.S. retail market in
1991. Lever’s products were sold primarily in the value
segment and the company did not have a track record of
innovation in the category. Pfizer entered the market in
June 1991 with its Plax brush, which had a special groove
for the thumb; it had captured 1.8% of the retail market
by year end, Sunstar, with its Butler brand, held 2% of
the retail market in 1992 and 19% of the $45 million in
toothbrushes distributed through dentists.
Advertising and Promo
In the toothpaste category, it was hard to increase pri-
mary demand, so new products tended to steal sales,
from existing products. In the case of toothbrushes,
however, increased advertising and promotion enhanced
the category's visibility which, in turn, seemed to fuel
consumer demand.
As the pace of new product introductions quickened
in the late 1980s, the advertising media expenditures
needed to launch a new toothbrush rose: Johnson &
Johnson spent $8 million in media support to introduce
its new Reach brush; Oral-B spent $10 million to launch
its Indicator brush; and Procter & Gamble was expected
to support its Crest Complete brush with $15 million in
media expenditures. Total media spending for the cate-
gory, primarily on television advertising, was estimated
to total $55 million in 1992 and $70 million in 1993.
Exhibit 8 shows media expenditures and shares of voice
for the main toothbrush brands. Exhibit 9 summarizes
the main message in each brand’s commercials, and
Exhibit 10 summarizes the copy strategy of Colgate
Plus's television commercials over time. Advertising and
promotion expenditures for Colgate toothbrushes are
given in Exhibit 11.
Growing competition also increased the frequency
and value of consumer promotion events. In 1992, 8% of
all brushes reached consumers either free with tooth-
paste (as on-pack or mail-in premiums) or free with
another toothbrush (buy-one-get-one-free offers). The
number of coupon events for toothbrushes increased
from 10 in 1990 to 33 in 1992. In the same period, the
average toothbrush coupon value increased from $0.25
t0 $0.75.
Retail advertising features and in-store displays
increased toothbrush sales. A typical CP toothbrush dis-
play increased sales by 90% over a normal shelf facing.
‘When Colgate toothbrushes were combined with Col-
gate toothpaste in a single display, toothbrush sales
increased by 170%. The importance of point-of- purchase
n
Integrated Marketing Communications =¥ 351displays and the variety of items, bristle qualities, and
handle colors in each manufacturer's line led each to
develop a variety of racks and display units for different
classes of trade. CP for example, had four display sys-
tems: Counter Tops, containing 24 to 36 brushes; Floor
Stands, 72 brushes; Sidekicks (used by mass merchandis-
ers), 144 to 288 brushes; and Waterfall displays, 288 to
576 brushes. Exhibit 12 illustrates these display racks. In
1991, the percentages of special Colgate displays
accounted for by each type were 10%, 50%, 25%, and
154% respectively.
The CP toothbrush line held 25% 10 40% of the cate~
gory shelf space in most stores. To maximize retail sales,
CP salespeople tried to locate the Colgate line in the
middle of the category shelf space, between the Reach
and the Oral-B product lines.
Distribution
tn 1987, traditional food stores sold 75% of oral care
products, but by 1992 they accounted for only 43% of
toothbrush sales and 47% of toothpaste sales. Mass mer-
chandisers gained share due to increased in-store pro-
motional support, Partly in response and partly because
of the increasing number of SKUs, food stores began to
expand shelf space devoted to oral care products, Exhibit
13 summatizes toothbrush retail distribution trends by
volume and value.
Though purchased too infrequently to be used as a
traffic builder, toothbrushes provided retailers with an
average margin between 25% and 35%, twice that for
toothpaste. As a result, many retailers were more recep-
tive to adding new toothbrush products than new vari-
eties of toothpaste. in considering which brands to stock
and feature, trade buyers evaluated advertising and pro-
motion support and each manufacturer's rack record in
the category. Between October 1991 and February 1992,
the average number of toothbrush SKUs had increased
from 31 to 35 for mass merchandisers, ftom 27 to 34 for
drug stores and from 30 to 35 for food outlets, In Sep-
tember 1992, the average number of brands carried by
these three classes of trade were 10, 12, and 8 respec-
tively. Shelf space devoted to toothbrushes had also
increased. Kmart, for example, had increased per-stose
shelf space for toothbrushes from 2 to 7.5 feet in two
‘years. Retail sales cemained fragmented, with 60% of
sales derived from 40% of the SKUs.
In 1992, 22% of all toothbrushes were expected to be
distributed to consumers by dentists. With a dedicated
sales force, Oral-B dominated this market segment.
352 -V Part
‘Manufacturer margins on toothbrush sales through den.
tists were less than half those achieved through normal
retail distribution, Exhibit 14 summarizes competitory:
shares in this segment of the market
The Precision Marketing Mix
Product Design and Testing
The Precision toothbrush was a technical innovation, In
laboratory experiments, researchers used infrared
motion analysis 10 track consumers’ brushing move-
ments and consequent levels of plaque removal. With
this knowledge and through computer aided design, CP
developed a unique brush with bristles of three different
lengths and orientations (see Exhibit 15). The longer
outer bristles cleaned around the gum line, the long
inner bristles cleaned between teeth, and the shorter
bristles cleaned the teeth surface. The result was a triple-
action brushing effect. 'n initial clinical tests, the brush
achieved an average 35% increase in plaque removal,
compared with other leading toothbrushes, specifically
Reach and Oral-B. At the gum line and between the
teeth, the brush was even more effective, achieving dou-
ble the plaque eemoval scores of competitor brushes.
In 1989, CP had established a task force comprising
executives from R&D and Marketing, dental profession-
als, and outside consultants. Its mission was to “develop a
superior, technical, plaque-removing device.” The entire
research and development process was managed from
start to finish by Steinberg. The task force had five goals:
* Understanding the varying techniques consumers
used when brushing their teeth, Researchers later
concluded that brushing usually did a good job of
removing plaque from teeth surfaces but was often
ineffective at removing plaque from the gum line
and between the teeth.
+ Testing the between-teeth access of different tooth-
brush designs. The tests revealed that CP’s new
design was superior to both Oral-B and Reach in
accessing front and back teeth, using either hori-
zontal at vertical brushing.
Establishing an index to score clinical plaque-
removal efficacy at the gum Tine and between teeth.
In tests, a disclosing solution was used to reveal the
otherwise colorless plaque, and each tooth was
divided into nine specific areas. Presence of plaquewas measured on each tooth areas the percentages
of tooth areas affected by plaque pre- and post-
usage of different brushes were then calculated
* Creating a bristle configuration and handle design
offering maximum plaque-removing efficacy. Three
similar designs evolved from the above research, all
incorporating bristles of different lengths that
would allow freer movement of each individual tuft
of bristles and thereby enable different bristle tufts
to target different areas of the mouth. Clinical trials
established that the new product removed an aver-
age 35% more plague than other leading brushes
and therefore helped to reduce the probability of
gum disease.
Determining, through clinical and consumer
research, the efficacy and acceptance of the new
toothbrush design. Extensive consumer research
was carried out over a period of 18 months to test
product design and characteristics, marketing con-
cept, and competitive strengths. In addition, dental
professional focus groups and product usage tests
were conducted to determine the overall acceptance
of Precision.
In July 1992, CP senior management decided to
launch Precision early in 1993. It was decided that Preci-
sion would be priced within the super-premium seg-
ment and distributed through the same channels as Col-
gate Plus. However, the decision on how to position the
product and the corresponding branding and communi-
cations strategies remained to be finalized.
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 posi-
Table C How Unit Volumes Reach Consumer
tioned as a niche product to be targeted at consumers
concerned about gum disease. As such, it could com-
‘mand a 15% price premium over Oral-B and would be
expected to capture 3% of the U.S. toothbrush market by
the end of the first year following its launch. Alterna-
tively, Precision could be positioned as a mainstream
brush, with the broader appeal of being the most effec-
tive brush available on the market. It was estimated that,
as a mainstream product, Precision could capture 10%
of the market by the end of the first year. Steinberg devel-
oped a marketing mix and financial projections for both
scenarios, and this information is suramarized in Table
C. Her assumptions and calculations for the niche and
‘mainstream positioning scenarios were as follows:
Uolumes. Steinberg believed that with a niche position-
ing, 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 I and 14.7% in year 2. Total cate-
gory unit volumes were estimated at 268 million in 1993
and 300 million in 1994. Table C outlines how these unit
volumes would reach the consumer.
Capacity and Investment Costs. ‘Three types of equipment
were required to manufacture the Precision brush:
tufters; handle molds; and packaging machinery. Table D
gives the cost, depreciation period, and annual capacity
for each class of equipment.
Production Costs and Pricing, Production was subcon-
tracted to Anchor Brush who also manufactured CP's
Plus line of toothbrushes. Production costs included
warehousing and transport costs. Under a niche posi-
tioning strategy, Steinberg decided that CP would estab-
lish a factory list price to the trade of $2.13, a premium
over Oral-B regular and at parity with Oral-B Indicator.
‘The mainstream strategy price would be $1.85, at parity.
Promotion Sampling
Niche Positioning Mainstream Positioning
Strategy Strategy
# Units Retail Year = BM, Year2 = 15 MM. Year = 27MM, Year 2 = 44 MM.
# Units Consumer Year! 62 = 2.MM, Year 62=7 MM.
# Units Through
Professionals
Year1 62 = 3MM,
Year162= @MM,
Itogte retngCmuications Y 363Table D
Investment Cost ‘Annual Capacity Depreciation Time
Tufters $500,000 MM units 15 years
Handle Molds $300,000 TMM units S years
Packaging $150,000 40 MM units Syears
with Oral-B regular. [n practice however, almost all sales
to the trade were made at a discount of approximately
5%. Eighty percent of sales through dental professionals
would be priced at $0.79 per unit; the remainder would
be sold at $0.95.
Positioning Precision as a mainstream toothbrush
raised concerns about the possible cannibalization of
Colgate Plus and about pressure on production sched-
ules that had been developed for a niche positioning,
Production capacity increases required 10 months’ lead
time, and switching to a mainstream positioning could
result in inadequate supply of product. Some executives
argued that unsatisfied demand could create the percep-
tion of a “hot” product but others felt that the problems
associated with allocating limited supplies among trade
customers should be avoided if possible. They argued for
an initial niche positioning, which could later be broad-
ened to a mainstream positioning as additional capacity
came on line.
‘The positioning decision had important implications
for the appropriate shelf location of Precision. Steinberg,
believed that the best location for Precision on the retail
shelves would be between the Colgate Plus and Oral-B
product lines, with the Colgate Classic product line on
the other side of Colgate Plus. She wondered, however, if
‘mainstream Precision could be located separately from,
the other Colgate lines, close to competitive super-
premium toothbrushes such as Aquafresh Flex and Crest,
Complete. If Precision was positioned as a niche prod-
uct, with 4 SKUs, it was unlikely that any existing SKUs
would be dropped. However, positioning Precision as a
mainstream product, with 7 SKUs, would probably
require dropping one or more existing SKUs such as a
slow-moving children’s brush from the Plus line.
Steinberg also believed that the positioning decision
would impact distribution and percentage of sales by
class of trade. Specifically, she reasoned that Precision,
positioned as a niche product, would be carried primar-
ily by food and drug stores. Under a mainstream launch
scenario, a relatively greater proportion of sales would
3d Y Part
occur through mass merchandisers and club stores,
Steinberg consolidated her best estimate of the cost and
price data (see Table E). When combined with the unit
volume estimates in Table C, she hoped to develop a pro
forma income statement to compare the profit implica-
tions of the niche versus mainstream positioning strate-
gies. She remained uncertain, however, about
cannibalization; anywhere from 35% to 60% of the vol-
umes indicated in Table C could come from Colgate
Classic and Colgate Plus.
Branding
At the time consumer concept tests were carried out
by the task force, name tests were also conducted
among those consumers positively disposed towards
the concept. Alternative names tested included Col-
gate Precision, Colgate System III, Colgate Advantage,
Colgate 1.2.3, Colgate Contour, Colgate Sensation,
and Colgate Probe. The Colgate Precision name was
consistently viewed more favorably—it was deemed
appropriate by 49% of concept acceptors and appeal-
ing by 31%.
CP executives had not yet decided the relative promi-
nence of the Precision and Colgate names on the pack-
age and in advertising. They debated whether the brush
should be known as “Colgate Precision” or as “Precision
by Colgate” Executives who believed that the product
represented “big news” in the category argued that the
product could stand alone and that the Precision brand
name should be emphasized. Stressing Precision as
opposed to Colgate would, it was argued, limit the extent
of cannibalization of Colgate Plus. It was estimated, both
under the mainstream and niche positioning scenarios,
that cannibalization figures for Colgate Plus would
increase by 20% if the Colgate brand name was stres
but remain unchanged if the Precision brand name was
stressed. On the other hand, CP's stated corporate strat-
egy was to build on the Colgate brand equity.Table E Alternative Positioning Scenarios for Precision
Precision as a Niche Product Precision as a Mainstream Product
Planned capacity unit volume Year = 42MM units
Year 2
Investment in capacity, where year 2 Year
figures are for additional capacity fear
L
Depreciation costs Year 1 = $886,667
(Derived from Table 0) Year: Year 2
‘Manufacturer per unit cost: Year 1 and 2 $0.66 $0.64
Monufecturer price $2.02 $1.76
Suggested retail price $2.89 82.49
Advertising Year $5 Million $15 Million
Year 2 $5 Million $12 Million
Consumer Promotions- Year 1 $4.6 Milton $13 million
Year2 $4 Million S10 Million
Trade Promotions Year 1 51.6 Millon $4.8 Million
Year 2 52.7 Million $2Miion
| #5kus
Brushes ‘adult 6 adut/t child
Colors colors 6 colors
Communication and Prometion
Once the basic product design was established, four con-
cept tests, conducted among 400 adult professional
brush users (Colgate Plus, Reach, and Oral-B users) 18 to
54 years of age, were run during 1990-1991. Consumers
were exposed to various product claims in prototype
print advertisements and then asked about the likeli-
hood that they would purchase the product (see Exhibit
16 for copies of the advertisements). The results of these
tests are summarized in Exhibit 17 and indicate that a
claim that the toothbrush would prevent gum disease
motivated the greatest purchase intent among test con-
sumets, Additional consumer research, including in-
home usage tests, revealed that 55% of test consumers
found Precision to be very different from their current
toothbrushes, and 77% claimed that Precision was much
mote effective than their current toothbrush.
Precision’s unique design could remove more plaque
from teeth than the other leading toothbrushes on the
market, However, the brush looked unusual and test par-
ticipants sometimes had mixed first impressions. A fur-
ther problem was that the benefit of reduced gum dis-
ease from extra plaque removal was difficult to translate
into a message with broad consumer appeal, since few
consumers acknowledged that they might have gum dis-
ease, Steinberg believed that Precision was the best brush
for people who cared about what they put in their
mouths but was still searching for the right superiority
claim.
Consumer research revealed that the more test con-
sumers were told about Precision and how it worked, the
eater their enthusiasm for the product. Precision cre-
ated such a unique feel in the mouth when used that,
consumers often said, “You can really feel it working”
Once tried, consumer intent to purchase rose dramati-
cally, and Steinberg therefore concluded that sampling,
would be critical to Precision’s success.
‘There was considerable debate over the CP toothbrush
advertising and promotion budget, which amounted to
$24.1 million in 1992, with $9.6 million in advertising,
and $144 million in consumer and trade promotion.
‘Some executives thought the budget should remain level,
a a percentage of sales in 1993 and be allocated among
Classic, Plus, and Precision. Others believed it should be
increased substantially to support the Precision launch
with no reduction in planned support for Classic and
Plus. One proposal consistent with a niche positioning
for Precision was to increase total CP category spending
by $11.2 million and to allocate this to the Precision
Itegted MketngCommuicatons Y 358launch. However, Steinberg believed that this was not
enough to permit Precision to reach its full sales poten-
tial. She argued for an 80% increase in CP category
spending in 1993, with fully 75% of all advertising dollars
assigned to Precision and 25% to Plus. However, the Col-
gate Plus product manager, John Phillips, argued that
Plus was the bread-and-butter of CP’s toothbrush line
and claimed that his mainstream brand should receive
more rather than less support if Precision was launched.
He argued that continued support of Plus was essential to
defend its market position against competition.
Consumer promotions were planned to induce trial.
Steinberg was considering several consumer promotions
to back the launch: a free 5 oz. tube of Colgate toothpaste
(retail value of $1.89) with the purchase of a Precision
brush in strong competitive markets; and a 30%-off offer
on any size of Colgate toothpaste (up to a value of $1.00)
in conjunction with a 50¢ coupon on the Precision brush
in strong Colgate markets. The cost of this promotion
was estimated at $4 million and Steinberg believed it
should be used as part of the launch program for a main-
stream positioning strategy. The Colgate Plus product
manager pressed for trade deals to load the trade in
advance of the Precision launch. He believed that the
trade would be unlikely to support two Colgate brushes,
at any one time. However, Steinberg believed that the
356 Part
launch of Precision would enable CP to increase its over-
all share of trade advertising features and special displays
in the toothpaste category.
Another important tactic was to use dentists to sam-
ple consumers since professional endorsements were
believed important to establishing the credibility of a
new toothbrush. Steinberg believed that, under the niche
scenario, 3 million Precision bcushes could be channeled
through dental professionals in the first year after the
launch, versus 8 million under the mainstream scenario,
Conclusion
Steinberg believed that Precision was more than a niche
product or simple line extension and that the proven
benefits to consumers represented a technological break-
through. She wondered how Precision should be posi-
tioned, branded, and communicated to consumers, as
well as what the advertising and promotion budget
should be and how it should be broken down. Steinberg
had to develop a marketing mix and profit-and-loss pro
forma that would enable Precision to reach its full poten-
tial, yet also be acceptable to Burton and her colleagues,
particularly the Colgate Plus product manager.Exhibit 1. Income Statements for Colgate-Palmolive Toothbrushes: 1989-1992
1989 1990 1991 1g92E
‘Unit sales (‘000s) $5,296 63,576 76,560 76,336
Net sales ($0005) 43,854 (100%) 57,248 (100%) 7001 ~—(raa%) ~—91,611_—_—((100%)
Cost of sales 23,988 (55%) 26,190 (49%) —36,827_—(48%) — 44,846 (49%)
Total fixed overhead 442g (1%) 6,304 (4%) 10,007 (19%) 4423— (12%)
Total advertising
Media 3,667 (8%) 6,988 (12%) 8761 (1%) 62311)
Consumer promotions 454 (10%) 5,893 (10%) 5,286 (7%) 6,788)
Trade promotions 3,458 (8%) 4,134 (7%) 6,287 (8%) 7.45? (8%)
Operating profit 34 (9%) 539 (10%) 9,833 (3%) 11,284 (12%)
Source: Company records
Exhibit 2. Chronology of Toothbrush Innovations in the U.S.
Date New Product Introductions Main Feature
19505 Oral-B Classic Traditional square head
1977 Johnson Johnson Reach First angled handle
1985 Colgate Pus First diamond-shaped head
1986 ever Bos. kim Sightly longer handle
1988 Johnson & Johnson Prevent Aids brushing at 45 angle
Colgate Plus Sensitive Gums Softer bristes
1989 Pepsodent "Commodity" brush
Oral-B Ura Improved handle
1990 46) Neon Reach Neon-cofored handle
Oral-B Are Series Cosmetic feature
1991 Colgate Plus Angle Handle Diamond-shaped & angled handle
Colgate Plus Wild Ones Cosmetic feanure
46) Advanced Reath Design fubber-ridged, non-slip handle
Oral-B indicator Bristes change color
Aquatresh Flex Flexible handle neck
Prizer Plax Groove for thumb
1992 Grest Complete Rigpled bristles
Colgate Precision Triple action bristles
Source: Company retorts
‘Integrated Marketing Communications Y 357Exhibit3. Brand Decision Factors for Consumers
Percent of
Main Reasons for Using a Brand Consumers
Fits most comfortably in my mouth
Best for getting at hard-to-reach places
oe
The bristles are the right softness
| The bristles ar the right firmness
Toothbrush my dentist recommends
important part of my ora care regimen
Source: Company records
Note: Respondents could check multigle items,
Exhibit 4 Toothbrush Brand Prices: 1992
‘Average Retail
Manufacturer Manufacturer Setting Price
List Price Net Price (Food channel)
= Super-premisine
= Oral-B Indicator $2.13 $1.92 $2.65
~ Oral-B Regular $1.85 $1.78 $2.51
- Crest Complete $1.67 $1.67 $2.40
~ Reach Advanced 5175 51.66 52.38
= Aquatest Flex $1.85 $1.61 52.32
~ Professional
= Colgate Plus $1.42 $1.35 $2.00
~ Reach Regular 3.30 $1.30 $2.01
~ Pepsodent Prof. $1.20 $1.08 $1.88
~ Value
~ Colgate Classic $0.69 $0.69 $1.2
~ Pepsodent Regular 50.91 $0.48 suas
Source: Company records
Note: Net price was the effective manufacturer's price to retailers after a variety of discount.
388 Y PatyExhibit § Principal Toothbrush Brand Product Lines : August 1992
Number of Stockkeeping Units
Brand Adult Child/Teen
Colgate 2B 8
Oral-B 16 5
Reach uM 4
Crest Complete 10 0
Aquatresh Flex 6 1
Lever 7 2
Plax 2 1
Total 83 a }
Source: Company records
Exhibit 6 Principal Toothbrush Brand Unit and Dollar Market Shares: 1989-1992E
T 1989 1990 1991 1g92t
Brand Vol(%) | $(%) | Wol(%) | $(%) Vol(%) | $(%) Vol (%4) $h)
~ Colgate
} = Plus 120 126 7 | 352 wo | 185 | 173 185
~ Gassic 85 66 a1 62 64 49 49 29
= Total 205 2 as | a4 aa | 34 | 22 2d
~ Oral-B
~ Oral-B indicatey 0.0 0.0 00 0.0 10 3 37 49
~ Total 24.0 37 ms | 326 mi | 37 | 98 262
~ 16
~ Reach 181 205 w2 | 200 78 | 200 | 152 158
~ Reach Advanced Design | 0.0 00 00 00 07 09 40 52
= Prevent 25 27 16 19 07 LM 02 a1
m6 | 32 198 | a9 2 | 20 | 194 2a
: 105 10.4 98 90 22 6.6 5.0 40
= Crest 0.0 0.9 0.0 00 0.0 0.0 20 26
~ Aqua-Fresh 0.0 0.0 0.0 0.0 09 La 46 87
~ Butler N/A N/A wa] Na 20 24 20 22
| = Private Labet Ni NA N/A N/A 112 5.9 15 61
Source: Company records
Note: N/A = not availabe,
‘ntegrated Marketing Communications = Y 389Exhibit? Principal Toothbrush Brand Unit and Dollar Market Shares by Class of Trade: 1991
food Drug Mass
Vol (%) $(%) Vo! (%) $(%) Vol (%) $(%)
~ Colgate
= Plus 189 13 96 a4 293 34
~ Classic 2.0 48 4.5 37 39 32
~ Total 25.9 26.1 141 15.1. 33.2, 4.6
~ Oral-B
~ Qral-8 Indicator 09 Li 10 15 07 09
~ Total 20.5, 28.2 25.1 34.1 22.4 22.6
~ JBL
~ Reach 23 238 43 166 183 20.2
~ Reach Advanced Design 12 NA 3 o4 03 04
~ Prevent, 08 12 0.8 og 05, 06
~ Total 23.2 25.0 15.1 125 18.8 24
~ Lever gt 89 5.8 5.6 63 74
~ Crest (TX test market) 5.1 65 0.0 00 00 N/A
~ Aqua-Fresh 49 N/A 04 Os 0.3 Os
~ Butler 13 2.0 35 6.6 0S 0.9
~ Private Label 10.7 55 4 10.6 44 24
Source: Company records
Exhibit 8 Principal Toothbrush Media Advertising Expenditures and Shares of Voice: 1991-1992E
1991 1992
Media SK Share Voice(%s) Media $MM Share Voice(%)
Colgate Plus 20 19 8 15
Reach 155 2 m2 v
Oral-B m2 27 uz 20
Crest Complete 4 1 6.4 R
Aquafresh Flex 04 1 10 8
Pfizer Plax 23 6 22 4 35
Source: Company records
360 FY PatExhibit 9 Television and Advertising Copy Strategies and Executions for Competitor Toothbrush Brands: 1991
Product Message Jag-line Execution
Crest Complete Has rippled bristles toreach | “Only Crest could make a brush | Visual comparison af Crest
between teeth (37% further than | this complete” Complete versus a dental tot
a flat bristled brush).
‘Aquafresh Flex Has flexible neck that is gentle | "For gentle dental care” Spokesperson / demonstration
onthe gums.
‘Advanced Design Reach | Features a new head/handle “advanced Design Reach’ Visual demonstration of product
design design with cartoon character.
Oral-B Indicator ‘Win tell you when to change “The brand more dentists use” | Testimonial with demonstration
Your toothbrush,
Plax Isespecialy designed toremove | "The new Plax, taque removing | Computer graphic display of
plaque. toothbrush” product design,
Source: Company records
Exhibit 10 Colgate Plus Television Advertising; Copy Strategies and Execution: 1985-1992
Date Marketing Situation | Colgate Copy Platform Execution Tag-line
1985-1986 First toothbrush with Unique head Product depicted as a “Shaped to keep your
diamond-shaped head. Scientific/technical tone hero, ‘whole mouth in shape"
First professional Comfort and efficacy
toothbrush from a leading
oraf care company.
1987-1990 | Aimentersmarket, spurring | Diamond-shaped head "Odd looking” “Od looking,
increased competition. Evolution of comfort/ettcacy | toothbrush character | super-cteaning, comfy
| Colgate Plus market share Lighter contemporary tone | introduced in bathroom | feeling toothbrush”
suffers, Implied superiority setting,
Emphasizes visual differences
1991 Need to re-energize Colgate | Diamond shape fits mouth} The "Odd looking” "Because your smile
advertising copy given ong | and removes plaque from Character ina dental | was meant tolasta
‘duration of "Odd Looking” | hard-to-reach places. chair Implied dental | lifetime”
campaign, recommendation
1992 increased competitive activity | Plague forus “armed tothe Teeth" | “Inthe fight against
ang consequent need for Efficacy message execution where the | plaque, i's a Plus”
harder- hitting copy, bristles are soldiers
Source: Company records.
Integrated Marketing Communications =Y 361Exhibit 11 Advertising and Promotion Expenditures for Colgate-Palmolive Toothbrushes: 1989-1992E
(Sin thousands)
1989 1990 1991 1g92e
Media? $3,667 (3%) | $6,988 (ae) 38,761 (43%) $9,623, (40%)
Consumer Promotions 4,541 (39%) 5,893 (35%) 5,286 (25%) 6,978 (29%)
Trade Promotions 3,485 (30%) 4,134 (24%) 6,287 (31%) 2.457 (31%)
Total Advertising and | $11,693 (100%) | Sin.015 (400%) | $20,334 (400%) | $24,058 (400%)
Promotion
Source: Company records
“Includes: working media expenditures; production and operating cost; and dental professional advertising
Exhibit 22 Colgate Toothbrush Point-of Sales Display Racks
ea =) 4 Top Shit
S
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A Counter Unit
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Integrated rketng Communications 363Exhibit 15 Reproductions of the Colgate Precision Toothbrush
UNCONVENTIONAL DESIGN.
SUPERIOR CLEANING.
TT Part——————____-_—
Exhibit 16 Copies of the Advertisements used in the Consumer Concept Tests
vrnonveine gem 2.
(EcRouE REMOVER) DESIEOR PREVENTING GUM DISEASE
BELALSETT REMOVES MOE PLAQUE
rich No Tah ton oe SRMOHE THAN REACHOR ORAL |
This New Toothbrush Removes More
Plaque Than The Leading Toothbrus
LSS oe)
Tote etme tt
Zim meme croeee
78 men nines
Your curent ootbrush may nat be remeving enough sky
Dacteral plague that la harm to your tet. This new
‘oomoruh is inicaly proven to remove more plague fan
the leaging tootnbruthes because Irs decgned to clean
page from those hareo-reach youble sot,
Irs the unique brush design that alows me wothruch to
Temove s0 much plagus.. "Shon. tignty packed Dietes
‘eoep away plaque fom the autaces of Your wet. tthe
Stmme sme, ong angled bristles vearen out and remove
‘nave between tet, in reves, and ate gum Soe. NO
‘ther toatbrush designed remove plague kot.
So you can remove more plague than ever before. —
Brush with
rae paaely Soria hoormanus. PRECISION
A Better Way to Avoid
Gum Disease... Because it
‘oa
| RSEEEIy PRECISION
‘ntegrated Marketing Communications ¥ 365Exhibit 17 Summary of Consumer Concept Test Results
CONCEPTTEST 1.
Plaque Remover Meatthier Gums Trouble Spots
Probably Would Buy 0% 68% 66%
[ Definitely Woue Buy 15% | 15% 10%
CONCEPTTEST 2.
35% More Plaque
Removal Prevent 35% More Plaque Prevent Gum
Gum Disease Remaval Disease Feel the Difference
Probably Would Buy 80% | 71% ue | 8
Definitely Would Buy 19% 4 19% 18% a
CONCEPTTEST 3.
Gum Disease/ Replacement — |
Replacement Gum Disease Only Message | Trouble Spots
Probably Would Buy 63% 7h 62% | 66%
Definitely Would Buy 13% 16% 1% [ i
CONCEPTTEST 4.
20% Price Premium to Oral-B
No Price Given Prevent Gum Disease Prevent Gum Disease
Probably Would Buy oh 1%
Definitely Would Buy 20% 19%
Source: Company records
Note: "Definitely would buy" isa subset of "probably would buy”
366 Y Part