Colgate Palmolive Case: The Precision Toohbrush

Situation Analysis

External Environment

Opportunities

• The toothbrush segments with higher growth are professional and super-premium

• Consumers are now more interested in toothbrushes and purchase them more frequently This trend plus the fact that 82% of toothbrush purchases are unplanned give the industry the opportunity to trigger purchases through advertising and appealing store displays

• 46% consumers want functionally effective toothbrushes. Since there is not an emotional attachment to a specific brand, Precision could easily enter the super-premium segment

• Consumers are becoming more concerned about the health of their gums and less worried about cavity prevention. This means that consumers are willing to pay more money for toothbrushes with “super-premium” features that addressed their new health concerns

Threats

• Toothbrush competitors offer promotional incentives that end up decreasing volume sales of toothbrush products and increasing buying cycles

• Aesthetics features are also important to consumers. Consumers would not buy an odd looking toothbrush unless they perceive it as technologically superior

• It is hard to increase primary demand, so new products tended to cannibalize sales from existing toothbrushes

• 54% of consumers are not concern about oral healthcare. 21% of those consumers are cosmetics brushers, this segment comprises the younger population and it is likely to grow. White teeth are more important than healthy gums for this segment

Internal Analysis

Strengths

• Colgate-Palmolive is the market leader in oral care industry with 43% of the world toothpaste market and 16% of the global toothbrush market

• The company has solid a relationship with Anchor Brush, the subcontractor that would manufacture Colgate Precision. This might result in a more effective production system and operational cost savings

• Colgate is able to place its products between Oral-B and Reach. This gives the company a competitive advantage in merchandising. Colgate also have the ability to boost toothbrush sales by 170%, when combining toothbrushes and toothpaste in a single display

• Colgate has the technological means to prove that Precision is an advanced product able to remove up to 35% more plaque when compared with other leading products

• Thanks to the solid economic performance in the latest years, Colgate has the economic resources for investing in advertising to position Precision in the super-premium segment

Weaknesses

• Colgate