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Colgate-Palmolive Company:
The Precision Toothbrush
HARVARD BUSINESS SCHOOL CASE
What is Colgate
Precision?
•A new product, toothbrush launched by CP in August 1992
•Developed over a period of 3 years
Who is Susan
Steinberg?
• Precision Product Manager• The person who managed the entire product development process• Responsible for recommending the POSITIONING , BRANDING and COMMUNICATION strategies
The U.S. Toothbrush Market
Product Segments
•Value•Professional•Super-Premium
Consumer Behaviour
• CP’s Consumer Research indicated that the Baby Boom Generation were now becoming more CONCERNED about the HEALTH OF THEIR GUMS AS OPPOSED TO CAVITY PREVENTION and,
• were WILLING TO PAY A PREMIUM FOR NEW PRODUCTS ADRESSING THIS ISSUE.
Consumer Segmentation of Toothbrush Users
Brand Decision Factors for Consumers
Competition
Principal Toothbrush Brand Product Lines :
August 1992
Advertising and Promotion
Media Expenditures
TELEVISION & ADVERTISING COPY STRATEGIES & EXECUTIONS
CP TELEVISION ADVERTISING
ADVERTISING EXPENDITURE FOR CP TOOTHBRUSHES:
Distribution• In 1992, 22% of all toothbrushes
were expected to be distributed to consumers by dentists.
• Manufacturer margins on toothbrush sales through dentists were less than half those achieved through normal retail distribution
The Precision Marketing Mix
Product Design and Testing
In 1989, CP had established a task force comprising executives from:• R&D and Marketing•Dental professionals, and •Outside consultants
s:
•Understanding the varying techniques consumers used when brushing their teeth.
• Testing the between-teeth access of different toothbrush designs.
• Establishing an index to score clinical plaque-removal efficacy at the gum line and between teeth.
• Creating a bristle configuration and handle design offering maximum plaque- removing efficacy.
•Determining, through clinical and consumer research, the efficacy and acceptance of the new toothbrush design.
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 positioned as a niche product to be targeted at consumers concerned about gum disease.
Volumes• With a niche positioning 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 1 and 14.7% in year 2.
• Total category unit volumes were estimated at 268 million in 1993 and 300 million in 1994.
Capacity and Investment Costs
Three types of equipment were required to manufacture the Precision brush:
1.Tufters2. handle molds3. packaging machinery
Production Costs and Pricing
Production costs included:
•warehousing costs • Transport costs
Breakeven Analysis
• Total Manufacturing Costs + Total Advertising Costs = Input Cost( Variable + Fixed costs)
• Total Profit = Retail Price * number of brushes – Input Cost
• For Breakeven , Input Cost = Total revenue generated by selling the Precision brushes
Two tests carried out:
• CONSUMER CONCEPT TESTS
• NAME TESTS
Outcome Under the mainstream and niche
positioning scenarios –
• 1. Cannibalization figures for Colgate Plus would increase by 20% if the Colgate brand name was stressed.
• 2. Remain unchanged if the Precision brand name was stressed.
Communication and Promotion
Four Tests
Including in-home usage tests revealed
• 55% of test consumers found Precision to be very different from their current toothbrushes.
• 77% claimed that Precision was much more effective than their current toothbrush.
Conclusion Steinberg believed that Precision was
more than a niche product line extension and that the proven benefits to consumers represented a technological breakthrough. Precision was positioned , branded, and communicated to consumers after proper analysis. Market mix was developed that enabled Precision to reach its full potential.
DisclaimerCreated by Nikhil Chaudhary, NIT Goa, during a marketing internship by Prof. Sameer
Mathur, IIM Lucknow.: