P&g Vs Colgate

PRINCIPAL ISSUE:

Losing of market share and facing with significant new competition in the market for at-home, P&G needs to decide how to counter Colgate’s recent advance to become the dominant player in the market.

APPROACH FOLLOWED TO RESOLVE THESE ISSUES:

In August 2000, P&G created an entire new category in oral care market with its revolutionary product Crest Whitestrips. P&G had the first mover advantage in the ‘at-home-tooth-whitening market’ which was non-existent before Whitestrips entered the market. Its main competitor in the oral care market, Colgate-Palmolive Co. could not match steps with P&G as they could not copy the invention because of patent protection. However, in September 2002, Colgate came up with a cheaper and user-friendly product ‘Simply White’ to compete with Whitestrips. The unperturbed success of P&G of two years started witnessing a decline with its market share decreasing from 80% to 37% and Simply White gaining almost 50% of the share.

Now, in order to stay the dominant player, P&G had few options at hand to counter Colgate’s moves. Both P&G and Colgate were into a competitive rivalry and P&G’s moves would attract Colgate’s countermoves. Hence, here we analyze each of the options at hand and study the possible impact. We shall be using game theory concepts of dominant strategy to analyze the same.

Option-1- Attempts to block Colgate’s advertising or force the company to change the message. To achieve this P&G could approach the television networks and demand the withdrawal of the advertisements it believed to be false. Alternatively it could file a complaint with the NAD or even sue Colgate for false advertisement under section 43(a) of the Lanham Act.

Moves and Countermoves: This move would not be very effective. There may be two possible scenarios:

1. P&G wins the case and Colgate modifies its positioning and advertisement according to NAD’s guidelines. In this case, the change would hardly have any effect on consumer behaviour as the brand perception is already very strong for Colgate. Also, since the pricing is significantly low as compared to Crest, Colgate would remain the first preference. Thus, this option would be of little help in improving the market share for P&G.

2. The other possibility is that P&G loses the case against Colgate. In this case, the effects would be counter-productive as it would enhance Colgate’s brand image in the eyes of the consumers and would give them an extra advantage, which would lead to further increase in Colgate’s market share.

Thus, P&G needs to come up with a more effective and practically feasible way to take on Colgate’s false advertising campaign.

Option-2: Increasing in