Colgate Palmolive

Colgate Palmolive Company ÐŽV The Precision Toothbrush

1. The toothbrush market was divided into three segments: super-premium, professional, and value brushes. The retail prices for each segment by 1992 were as follows:

„X Super-premium ÐŽV between $2.29 and $2.89

„X Professional ÐŽV between $1.59 and $2.09

„X Value ÐŽV averaged at $1.29

By 1992, super-premium brushes accounted for 35% of unit volume and 46% of dollar sales. Professional brushes accounted for 41% and 42%, and value brushes accounted for 24% and 12% respectively. Three companies dominated the U.S. toothbrush market: Colgate-Palmolive, Johnson & Johnson, and Oral-B.

2. Mainstream Positioning

The objective of positioning Precision as a mainstream brush was to broaden the appeal of being the most effective brush available on the market. PrecisionÐŽ¦s price would be at parity with Oral-B regular and Aquafresh Flex at $1.85 (Exhibit 4). This raised concerns about possible cannibalization of Colgate Plus and inadequate supply of the product. Inadequate supply could create the perception of a ÐŽ§hotЎЁ product but some executives thought shortage should be avoided if possible. CP would plan for an 80% increase in 1993 for advertising and promotion, with 75% of all advertising dollars assigned to Precision and 25% to Plus. This could be costly for profits and may increase cannibalization. Mainly mass merchandisers and club stores would carry the brush (24% retail toothbrush sales). Positioning Precision as a mainstream product with an existing 7 SKUs may result in dropping one or more existing SKUs, such as childrenÐŽ¦s brush from the Plus line.

Niche Positioning

Precision was developed with the objective of creating the best brush possible ÐŽV becoming a superior, super-premium product. Precision would be targeted at consumers concerned about gum disease. Precision would be priced at $2.13, a premium over Oral-B regular and at parity with Oral-B Indicator. It would have 4 SKUs and it was unlikely that any existing SKUs would be dropped. Precision would be carried primarily by food and drug stores (74% of retail toothbrush sales). CP would increase total advertising and promotion spending by $11.2 million and allocate this to the Precision launch. However, this was not enough for Precision to reach its full sales potential.

Recommendation

CP should position the Precision brush in the super-premium product category as a niche product. Involved oral health consumers will recognize the PrecisionÐŽ¦s superiority in technical innovation, giving CP a strong position against its competitors on the basis of product attributes. CP should emphasize the brushÐŽ¦s 35% increase in plaque removal and its ability to prevent gum disease better than the leading competition. Positioning Precision as a niche product would not jeopardize ColgateÐŽ¦s existing SKUs. Furthermore, unlike the mainstream positioning strategy, the niche strategy would result in an adequate supply of the product. As a new entrant into the segment, Colgate