The PRECISION toothbrush

Define positioning, branding and communication strategies for the new Toothbrush-Colgate Precision.

OBJECTIVE:-

Nature Of Demand

Shift in demanded benefits: • Cavity prevention • Healthier gums • Ready to pay for superior toothbrush

Market is emerging from value and premium to Super premium-Enhanced Oral Care

US Oral care market: -$2.9 billion in retail sales -growing at a rate of 6.1% annually

Toothbrush Market growth: average 9.3% per annum since 1987

CP’s toothbrush sales in 1991 - $77 million

Number one in US retail toothbrush market with 23.3% volume share

Consumer perception map High effective bristles

Low effective bristles

Less comfort

High comfort

Crest complete

Colgate Precision

Oral-B Indicator

J & J Reach Advance

Aquafresh flex

Consumer facts Purchase frequency

Year Duration

1990 Every 12.4 months

1991 Every 11.6 months

1992 Every 9.7 months

Brushing Habits

Customer % Habits

45 Before Breakfast

57 After Breakfast

28 After lunch

24 After Dinner

71 Before Bed

Change in toothbrush

Customer % Habits

48 Every 3 months

70 Bristles visibly worn

11 After seeing dentist

3 Purchase on impulse

Brand decision factors

Reasons for using brand Customer %

Fits comfortably in mouth 63

Best for getting hard to reach places 52

Bristles are of right softness 46

Bristles are of right firmness 36

Dentist recommends 35

Part of oral care regime 30

Consumer choices based on:

• Features

• Comfort

• Professional Recommendation

• Concerns about health of gums more than cavity prevention

As a consequence:

• Relatively unfamiliar with toothbrush prices.

• Willing to pay premium for addressing these concerns

• 82% of purchases are unplanned.

Consumer segmentation

Type of consumer % of adults

Habits Major brands

Therapeutic brushers 46 Brush twice a day-85% Use professional brush-85% Floss regularly-54%

Oral-B regular Oral-B Angle Colgate Plus

Cosmetic brushers 21 Brush twice a day-85% Use mouth wash-81% Use professional brush-54% Use breath fresheners-54% Floss regularly-69%

Colgate classic Oral-B regular Colgate Plus

Uninvolved Consumers

33 Brush once a day or less-20% Use mouthwash-66% Use regular brush-28% Floss regualrly-54%

Colgate classic Oral-B regular Colgate Plus

Competitors

CP appears to have a considerate share of the market

Number of Stock keeping Units

Brand Adult Children

Colgate 28 8

Oral-B 16 5

Reach 14 4

Crest complete 10 0

Aquafresh flex 6 1

Lever 7 2

Plax 2 1

Total 83 21

Channels Principal brand unit market shares-

FOOD

j&j

Oral-B

Colgate

others

aquafresh

P&G

Principal brand unit market shares-MASS

oral-B

J&J

colgate

Lever

Aquafresh

colgate

J&J

Oral-B

Others

P&G

Aquafresh

Lever

CP must increase its focus in drug store channel

Principal toothbrush brand unit market share-DRUG

Product

Precision is a technological innovation

CP developed brush with 3 different lengths and orientations

35% more plaque removing efficiency

More effective in reducing gum diseases than leading brushes

Pricing:

Manufacturer cost per unit $0.66 $0.64

Manu. Listed price $2.02 $1.76

Pre-forma Income statement-cannibalization analysis

Promotion

• Under the niche market -Aggressive advertising campaign -Demonstrate technical superiority of the toothbrush • Under mainstream position -through financial incentives - Coupon, buy one get one free • Through professional channels- Dentists

• Consumer promotions in CP market -a free 5 oz. tube of Colgate toothpaste with a Precision brush -a 50% off offer on Colgate toothpaste -a 50 cent coupon

Branding

Stressing “Precision” would limit the extent of Cannibalization of Colgate Plus.

Emphasizing “Colgate” would build Brand Equity

Colgate Precision

Communication and promotion

Special Coupons-Strong Colgate market

60 cents discount on Precision provided when purchased Colgate toothpaste and Other oral products

Maximizes benefit from being dominant player in toothpaste market

Buy 1 Get 1 Bundling- Competitive market

A free 5 oz tube of Colgate toothpaste or travel size dental floss with a purchase of a precision toothbrush.

Have less undesired effect on repeat purchase frequency than “two-for-one” toothbrush offer

Sampling

6 months campaign providing free samples for dental professional offices in order to establish and strengthen our position as a professional’s choice

Satisfaction Guarantee

If an unsatisfactory check up has occurred, the consumer can send in the certificate for a full refund of the cost of the toothbrush

Pros and cons of positioning

Niche Market Strategy

Pros

1. Entry into new superior toothbrush market which CP currently holds no position. 2. CP would face less competition. 3. Niche could later be broadened to a mainstream position as additional capacity came on line. This would be an easy transition in product life cycle. 4. Less erosion of Colgate Plus. The products are more isolated.

Cons

1. Less contribution to net profit in future years.

Mainstream Market Strategy

Pros

1. Unsatisfied demand could create the perception of a hot product, which may increase sale. 2. Possible increase in sales.

Cons

1. Greater erosion of Colgate Plus. 2. May require dropping one of the slow moving children’s brush from the Plus line. 3. Possible pressure on production schedules resulting in inadequate supply of product. 4. More competition

Recommendations Launching Strategy:

• Target therapeutic and cosmetic brushers • Enter the Super-premium niche market • Move to Mainstream market • Distribute to Dentists and Drug stores

Advertising campaign:

• 1993 Budget: Increase overall toothbrush Ads & Promotion Budget by $19.2M • Devote $32.5 to Precision, $10.8 to Plus • Ads focused on Prevention of gum diseases, toothbrush effectiveness(need to develop superiority claim)

Positioning

Short term—Niche , Long term—Mainstream

Why?

• 10 month lead time for mainstream Cost of shortage of inventory • Niche strategy cannot hold long Potential competitors with similar product/technology • Relatively easier to move from high end to low end Market of Precision will be broader • Profit numbers from cannibalization calculation When total sales are higher enough, profit from Precision will exceed cannibalization