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Colgate precision product launch brand metrics deck
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@PsyOpValkyrie on Twitter Personal information redacted for privacy
WHAT IS HAPPENING IN THE TOOTHBRUSH MARKET? THE TOOTHBRUSH MARKET IS GROWING DUE TO RISE IN CONSUMER DEMAND AS WELL AS NEW ENTRANTS INTO THE MARKET. The toothbrush market accounts for 15.5% of the total oral care market and accounted for $453 million in retail sales. Toothbrushes saw an increase of 21% in value and 18% in volume due to an influx of new products and line extensions between 1991 and 1992. Media support for toothbrushes witnessed an increase by 49% while coupon circulations surged by 48%. This was due to an increase in in-store promotions as well as advertisement features. Household inventories of toothbrushes saw an increase due to increases in sampling of free brushes through dentists as well as bundled consumer promotions. This resulted in an increase in the replacement frequency of toothbrushes. In 1990, toothbrushes were replaced once every 8.6 months. In 1991, toothbrushes were replaced once every 7.5 months.
HOW DOES THIS SHAPE CONSUMER TRENDS? CONSUMERS ARE SHIFTING TOWARDS TOOTHBRUSHES THAT PROVIDE BETTER ORAL CARE AND DISEASE PREVENTION DUE TO AN INCREASE IN ORAL CARE AWARENESS AMONG THE ADULT POPULATION. • Consumers are not purchasing toothbrushes as frequently as they used to. Moreover, they have also become more aware of their oral healthcare and have shifted their purchase behavior accordingly. • Consumers can be divided into 2 segments. Involved and Uninvolved consumers. • These classifications are made on the basis of intensity of involvement in oral hygiene. • Therapeutic Brushers aim to avoid oral care problems • Cosmetic Brushers aim at preventing bad breath and/or ensuring white teeth. • Uninvolved customers ignore all other motivations for purchase unless they are faced with a oral hygiene problem. The average consumer now makes informed purchases based on features, comfort and professional recommendations. Consumers consider the handle, bristles and the head shape to be most important physical features of a toothbrush.
WHAT DOES IT MEAN FOR THE ENTIRE TOOTHBRUSH MARKET? THE SUPER-PREMIUM SEGMENT SHARE INCREASES SIGNIFICANTLY DUE TO CONSUMER MIGRATION FROM PROFESSIONAL AND VALUE WHICH INCREASES THE SUBSEQUENT BRAND SHARES. Value Segmentis losing market share heavily as consumers trends are moving towards a healthier outlook with regards to oral health. Professionalis losing market share from ‘92 as new competition entered the market and consumers are moving upwards in their spend for toothbrush. Super-Premium market shares increase substantially from ’93 making super premium the largest segment in the market by ‘94
HOW DOES THIS TREND SHAPE EXISTING BRANDS IN THE FUTURE? MARKET SHARE FLUCTUATES ACCORDING TO PAST TRENDS. SOME BRANDS GAIN MARKET SHARE AT RAPID PACE MAKING THEM STRONG CONTENDERS FOR MARKET LEADERS. Oral-B Oral-B Indicator – Launched in July 1991 and gained 1% market share in 6 months due to aggressive ad spend. Oral-B Regular – Competing within the super premium category loses market share partially due to cannibalization by Oral-B Indicator. Johnson & Johnson Reach – Losing market share due to consumer migration towards super premium. Reach Advanced Design – Gaining market share consistently due to being a new entrant with advertisement backing. Prevent – Phase out process initiated since ’92 leading to total loss of market share by ‘94 Proctor & Gamble Crest – Launched in Sep 1992. They Gained 2% MS in 4 months.Possible continuation of aggressive market share takeover until ’94 due to high ad spend. SmithKline Beecham Aquafresh - Launched in Aug ’91 – gained 0.9% MS in 5 months. The rate of market share acquisition reduces throughout the years. Butler Market share is growing but at a slow pace. Private Label Very small increase in MS due to Colgate Classic losing market share. Other Brands Losing market share at different paces [unable to track accurately due to insufficient data]
HOW DOES THIS MARKET SHARE TREND ADVERSELY AFFECT COLGATE? LACK OF INNOVATION SINCE INTRODUCTION OF COLGATE PLUS HAS CAUSED CONSUMERS TO MIGRATE TO DIFFERENT PRODUCT SEGMENTS IN SEARCH OF BETTER TOOTHBRUSHES AND WITH A LACK OF A SUPER-PREMIUM CATEGORY TOOTHBRUSH IN COLGATE, CONSUMERS ARE FORCED TO SWITCH BRANDS IN ORDER TO UPGRADE. • Loss of market share as professional toothbrush segment is dipping in overall toothbrush industry. • Colgate Classic is heavily losing market share as most customers are upgrading themselves to the professional segment. • Colgate Classic could eventually lose complete market share with this trend. • Colgate Plus is losing market share gradually since Colgate does not have a Super premium category for customers to migrate to. • Overall Colgate market share dips by 3% with possibility of further decline.
WHAT CAN COLGATE DO TO ENSURE POSITION AS MARKET LEADER? COLGATE NEEDS TO INTRODUCE A NEW PRODUCT THAT CAN BE PLACED IN THE SUPER-PREMIUM SEGMENT IN ORDER TO CAPITALIZE ON THE GROWING TREND IN CONSUMER MIGRATION. • Launch Colgate Precision • The name was chosen over other alternatives due to: • Ensures Colgate’s top-of-mind recall as consumers are still aware of the brand name. • Possible cannibalization of Colgate Plus and Classic due to the brand name association. • Cannibalization of Colgate Plus is favorable due to Colgate being able to ensure to a certain extent that the consumers who leave Colgate Plus for a super-premium toothbrush still have an option within the Colgate brand. • Colgate Classic is rapidly losing market share due to erosion and Colgate Precision can capitalize on that by migrating Classic consumers to Plus or Precision. CONCEPT LOGO – 1992 (SUBJECT TO CHANGE)
WHO WILL COLGATE TARGET IN ORDER TO MAXIMIZE CAPITALIZATION? COLGATE PRECISION WILL TARGET THERAPEUTIC BRUSHERS WHO COMPRISE 46% OF TOTAL CONSUMERS. The physical attributes of the Colgate Precision toothbrush will bode well with potential consumers who are looking to improve their oral health care and the effective functionality of Colgate Precision can entice them further.
WHAT WILL BE COLGATE PRECISION’S POSITIONING AND CUSTOMER PROFILE? THE KEY BENEFIT OF COLGATE PRECISION IS 35% PLAQUE REMOVAL AND THE AVERAGE CUSTOMER IS AN INVOLVED BRUSHER CONCERNED ABOUT THEIR IMAGE. Positioning Statement For the involved, therapeutic brusher; Colgate Precision is the best toothbrush that delivers exceptional levels of teeth cleaning and preservation of gum health because Colgate Precision, with its triple-action bristles, delivers on the promise of 35% plaque removal. Colgate Precision customer profile The Colgate Precision customer is concerned about their oral health, and holds teeth cleansing in a high regard. They want fresh breath, and healthy gums in order to have an appealing smile and be more likeable to their friends, family and colleagues. They prefer not going to the dentist and regard proper brushing and healthy teeth to be an alternative. The Colgate Precision customer is constantly working on their physical image and need a superior toothbrush in order to meet their oral care expectations. Positioning Strategy Product Differentiation – Colgate Precision aims to differentiate itself from the competition. While other industry leaders offer toothbrushes that focus on one aspect of the experience, Colgate Precision toothbrushes offers 35% plaque removal while simultaneously preventing gum diseases. Innovation – Colgate Precision will be the first toothbrush in the market to offer triple-action bristles that reaches the hard-to-get spots in your teeth.
HOW WILL THE SELECTED TARGET CONSUMER BASE BE DRAWN TOWARDS COLGATE PRECISION? COLGATE PRECISION WILL TARGET THERAPEUTIC BRUSHERS WHO COMPRISE 46% OF TOTAL CONSUMERS. Consumers make decisions on the brand of toothbrush they purchase based on a number of factors. Colgate Precision with its triple action bristles are able to round up 4 segments of consumers.
HOW DOES COLGATE PRECISION COMPARE TO OTHER SUPER PREMIUM TOOTHBRUSHES IN THE MARKET? COLGATE PRECISION, IN COMPARISON TO THE COMPETITION FALLS IN THE HIGHER-END SEGMENT IN TERMS OF PRICE POINTS AND CLOSE TO MIDDLE IN TERMS OF ERGONOMICS. • Colgate Precision is priced at the higher end since it is set to launch as a super-premium product. • The pricing strategy to position Colgate Precision below Oral-B Regular is motivated by the possibility of gaining market share as consumers from Oral-B bleed into other super-premium categories. • Colgate precision with its longer handles is able to compete in the ergonomics segment but falls short in comparison to other brands who have focused more on it.
HOW DOES COLGATE PRECISION COMPARE TO OTHER SUPER PREMIUM TOOTHBRUSHES IN THE MARKET? COLGATE PRECISION, IN COMPARISON TO THE COMPETITION FALLS INTO THE HIGHER-INNOVATIVE SEGMENT AND LOWER IN THE DENTAL HEALTH BENEFITS SEGMENT IN COMPARISON TO THE COMPETITION. • Colgate Precision, although does offer dental health benefits to the consumers, the competition (J&J Reach Advanced Design, Oral-B Indicator and Oral-B Regular) dominate the segment through constant dentist approvals in all their communications. • In terms of innovations in design, Colgate Precision will be the first in the market to introduce the concept of triple-action bristles.
WHAT WOULD LAUNCHING COLGATE PRECISION AS A SUPER-PREMIUM TOOTHBRUSH MEAN TO THE TOOTHBRUSH INDUSTRY? THERE WILL BE A SURGE IN THE SUPER-PREMIUM CATEGORY RESULTING IN UPWARDS OF 50% SHARE BY 1994 The super-premium segment will grow at a substantial rate due to the introduction of a new player in the market. Consumers now have a wider range of choice for the segment that they are migrating towards leading to a decline in the market share for the professional segment. Value segment declines as well due to consumers migrating upwards.
WHAT WOULD LAUNCHING COLGATE PRECISION AS A SUPER-PREMIUM TOOTHBRUSH MEAN FOR COLGATE? COLGATE PRECISION CAN GAIN UPWARDS OF 9% MARKET SHARE IN THE FIRST YEAR WHICH PLACES COLGATE AS THE INDUSTRY LEADER IN 1993. Colgate Plus and Colgate Classic will face cannibalization and subsequent loss of market share to Colgate Precision. The Colgate Classic phase out process can initiate upon launch with total erosion by 1994. Oral-B toothbrushes will face considerate reduction in market share due to Colgate Precision stealing from the super-premium segment and Oral-B Regular being cannibalized by Oral-B Indicator. J&J faces minimal change in market share due to the success of Reach Advanced Design offsetting the loss of market share by Reach Regular. Crest’s aggressive market share takeover is suppressed due to the reduction in their share of voice in advertising. Aquafresh and Butler faces organic loss of market share due to new entrant (Precision).
WHAT WILL BE THE ADVERTISING AND PROMOTION STARTEGY FOR COLGATE PRECISION? COLGATE PRECISION WILL ENTER THE MARKET THROUGH AGGRESSIVE ADVERTISING INVESTMENTS IN ORDER TO GAIN MAXIMUM MARKET SHARE AS QUICK AS POSSIBLE. Ads and promo budget for entire CP will be $30M in ‘93 and $35.5M in’94 The budget will be allocated accordingly in order to strategically promote Colgate Precision.
HOW WILL THE ADVERTISING BUDGET BE SPREAD AMONG DIFFERENT CHANNELS OF PROMOTION AND WHAT WILL BE THE RESULT? COLGATE PRECISION ADVERTISING AND PROMOTION STRATEGY WILL FOCUS MAINLY ON MEDIA AND THEN CONSUMER PROMOTIONS TO MAXIMIZE SALES AND SoV. Within the toothbrush category, increased advertising and promotions enhances the category’s visibility which in turn can fuel consumer demand. Colgate Precision can hold 14.9% SoV upon launch through aggressive ad spend and can steal SoV away from competition. Colgate Classic can position themselves as the brand with the highest SoV through strategic advertisement expenditure.
WHAT WILL BE THE MARKET SIZE FOR COLGATE PRECISION? COLGATE PRECISION WILL HAVE A MARKET SIZE OF 39M UPON LAUNCH AND IT WILL INCREASE TO 61M IN A YEAR. • The market size for Colgate Precision sees an increase from 1993 to 1994 by 22.5M • The percentage of toothbrush purchasers excludes 6% electric-toothbrush users and 2% outliers. • The consumption rate of toothbrushes have been on a steady increase due to a surge in bundled offers within the industry. • The Colgate Precision market share ensures that the demand for the number of units will be high. The total units produced will be split into 3 different markets of distribution.
WHAT WILL BE THE INVESTMENT COSTS FOR LAUNCHING COLGATE PRECISION? THE LAUNCH OF COLGATE PRECISION WILL REQUIRE AN INVESTMENT OF $14.45M FOR THE MANUFACTURING OF TOOTHBRUSHES FOR THE YEARS 1993 AND 1994.
WHAT IS THE RECOMMENDATION? COLGATE-PALMOLIVE SHOULD LAUNCH COLGATE PRECISION. • Upon launch, Colgate precision will have: • 1993 net cash flow of $2.78m and $15.44m in 1994. • 1993 market share of 9.6% and 14.5% in 1994. • 1993 share of voice of 14.9% and 29.5% in 1994. Colgate-Palmolive will have a net cash flow of $6.79M in 1993 and $15.44M in 1994 The difference in cash flow between launching and not launching is $4M in 1993 and $11.34 The Internal rate of return in launching Colgate precision outweighs the hurdle rate and there is a positive NPV of $4.48M
WHAT IS THE CONTINGENCY PLAN FOR THE LAUNCH OF COLGATE? THE CALCULATED BUDGET ALLOWS US TO SET ASIDE $1.56m FOR 1993 AND $2.46m FOR 1994 TO BE USED FOR CONTINGENCIES OR INCREASE IN ADVERTISING BUDGET. Colgate-Palmolive makes a profit without considering the contribution margin that is made through the dentist market. This allows us to set aside a sizeable amount and allocate it for contingencies or increases in advertisement expenditures in case the forecasted market shares are not attained.
