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    Group 9 - Colgate Palmolive-The Precision Toothbrush

    Uploaded by

    Rakhee Palsania
    The document discusses Colgate Palmolive's position in the toothbrush market and strategies for market segmentation. It analyzes the toothbrush category which divided into super premium, professional, and value segments. Colgate Palmolive has no presence in the super premium segment, and lower shares in the professional and value segments compared to competitors. Financial calculations compare a niche versus mainstream product positioning strategy, recommending an initial niche approach followed by expanding to mainstream.

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    Attribution Non-Commercial (BY-NC)
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    Group 9 - Colgate Palmolive-The Precision Toothbrush

    Uploaded by

    Rakhee Palsania
    382 views3 pages
    The document discusses Colgate Palmolive's position in the toothbrush market and strategies for market segmentation. It analyzes the toothbrush category which divided into super premium, professional, and value segments. Colgate Palmolive has no presence in the super premium segment, and lower shares in the professional and value segments compared to competitors. Financial calculations compare a niche versus mainstream product positioning strategy, recommending an initial niche approach followed by expanding to mainstream.

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    Group 9_Colgate Palmolive-The Precision Toothbrush

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    The document discusses Colgate Palmolive's position in the toothbrush market and strategies for market segmentation. It analyzes the toothbrush category which divided into super premium, professional, and value segments. Colgate Palmolive has no presence in the super premium segment, and lower shares in the professional and value segments compared to competitors. Financial calculations compare a niche versus mainstream product positioning strategy, recommending an initial niche approach followed by expanding to mainstream.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    382 views3 pages

    Group 9 - Colgate Palmolive-The Precision Toothbrush

    Uploaded by

    Rakhee Palsania
    The document discusses Colgate Palmolive's position in the toothbrush market and strategies for market segmentation. It analyzes the toothbrush category which divided into super premium, professional, and value segments. Colgate Palmolive has no presence in the super premium segment, and lower shares in the professional and value segments compared to competitors. Financial calculations compare a niche versus mainstream product positioning strategy, recommending an initial niche approach followed by expanding to mainstream.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Colgate Palmolive Company: The precision toothbrush

    Group 9

    Major Changes in the toothbrush category:


    y y y y The U.S oral care market comprises mainly of Toothpaste, Toothbrush, Mouthwash and Dental floss. Since 1987 dollar sales have shown an average growth rate of 9.3% p.a. The category which was divided solely into two segments in the 1980 s, i.e., Value & Professional, saw further divisions into super premium brushes by the late 1980 s. Retailers expanded shelf space due to margins of 25%-35%, doubles that of toothpastes, also resulting in an increase in the SKU s of stores.

    Colgate Palmolive s competitive position:


    In 1991 CP held 43% of the world toothpaste market share & 16% of toothbrush share. y y In 1991 toothbrush sales reached $77 million with operating profits of $9.8 million. CP stood as number 1 in the toothbrush market with a 23.3% market share.

    Based on the three segments it s position is as follows: Super premium segment: No presence Professional Segment: 16.9% by volume & 18.5% by value Value Segment: 6.4% by volume & 4.9% by value

    Toothbrush market segmentation


    Product segments
    y y y Super premium brushes (priced above $2) 35% sales unit volume & 46% dollar sales Profession brushes ($1.59 to $2.09) 41 % sales unit volume & 42% dollar sales Value brushes ( avg $1.29) - 24% sales unit volume & 12% dollar sales

    By bristle type
    y y y y Firm bristle 8% sales declining @ 13% pa Medium bristle 39% sales declining @ 4% pa Soft bristle 48% share growing @ 7% pa Extra soft bristles 5% share growing rapidly

    Consumer behaviour
    y y y Consumers becoming more concerned about the health of their gums and willing to pay a premium for that. 82% of the toothbrush purchases were unplanned. Consumers replaced their toothbrush only once in 7.5 months.

    Page 1

    Colgate Palmolive Company: The precision toothbrush

    Group 9

    Consumer segmentation
    y y y Therapeutic brushers 46% - Search for functionally effective products. Cosmetic brushers 21% - search for cosmetically effective products Uninvolved consumers 33% - Indifferent towards products.

    Financial Calculations analysing the two positioning strategies:


    Niche Product Y1 Y2 8MM 15MM $3.05 $3.05 24.4 45.75 8.58 13.2 11.2 11.7 4.62 20.85 Mainstream product Y1 Y2 26.8MM 44.1MM $2.75 $2.75 73.7 121.28 26.88 37.76 32.8 29 14.02 54.52 6.97 7.05 11.46 43.06

    Units Retail(projected) Unit Price($) Net Sales($Mn) Cost Of Sales($Mn) Advertisement($Mn) Operating Profit Cannibalization Loss (35%) Net Profit ($Mn)

    Recommendations: Based on the financial calculations, it seems the right approach to follow would be to initially go with niche strategy of positioning for the short term as clearly this is the more financially viable option. Also there is the fear of cannibalization of the products falling in the value & professional segment. In the next financial year, however, even after accounting for cannibalization losses we see that the net profit is greater for mainstream products. We thus suggest a strategy of initially going for the niche market in the first and year and then onto the mainstream market in the next year.

    Page 2

    Colgate Palmolive Company: The precision toothbrush

    Group 9

    Page 3

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