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COLGATE MAX FRESH – GLOBAL ROLL OUT

FROM

ADNAN AYUBI BUTT – 19705MUHAMMAD KHAQAN – 22405SAIQA YASIN – 11303HASHIM KHAN – 22023ASAD ULLAH – 22378

TO

SIR UMER KHALID

DEPARTMENT OF MANAGEMENT AND BUSINESS

ADMINISTRATION

IQRA UNIVERSITY ISLAMABAD

PAKISTAN

2016

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Table of Contents

Contents Page

Number

1.1 General…..……………………………………………........... 6

1.2 CMF Launch in US …………..………………………........... 6

1.3 CP China's changes to CMF Marketing launch program ….... 9

1.4 Did CP Mexico manage its CMF launch better CP China?..... 10

1.5 Evaluation of Global Roll Out of CMF – Recommendations.. 11

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List of Exhibits

Exhibit

NumberTitle of Exhibits Page No.

Exhibit 1.1 Market share for CP and PnG from 2000-04 4

Exhibit 1.2 2004 Tooth paste market share in Mexico and

China 6

Exhibit 1.3 CMF Adaptation Matrix for China 8

Exhibit 1.4 CMF Launch Pro-Forma Profit-and-Loss 2005 &

2006

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INTRODUCTION

1.1General

Throughout history, society has evolved with a numerous set of consumer

products that have over a period of time become essentials and have

morphed into the daily lives of people without even having them notice it.

Personal hygiene is a market that is reflective of this trend as generations

have evolved by incorporating new trends and behaviors that the previous

generation considered a luxury. Colgate-Palmolive symbolizes the

personal hygiene industry in the US, and as an international corporation

has established itself as a leading household name in many foreign

countries. Colgate-Palmolive’s Global Market Share remained almost

constant for 5 years, upsetting Crest’s dominance in therapeutic segment.

Below is the market growth of both CP and PnG from 2000 to 2004.

Exhibit 1.1: Market share for CP and PnG from 2000-04

1.2 CMF Launch in US

CP’s most popular brand, Colgate Max Fresh was a roaring success

owing to its innovative identity and value that it created for consumers.

By incorporating a new breath-strip and a variety of therapeutic

techniques Colgate Max Fresh achieved phenomenal success accounting

for over 40% of their revenues along with products released after 2000.

Colgate Max Fresh is one of the revolutionary products of Colgate. As

part of the initial launch CP focused on the specific target group in US

based on the market research. CMF was launched in the United States in

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August, 2004. It had recorded to contribute 34.8% to Colgate’s share.

During this time US toothpaste market was spilt between therapeutic and

cosmetic benefit Toothpastes. It was the ideal time for CMF to enter the

US market. However at this time the market share of Crest’s value share

was increasing the premium segment of toothpaste. Therefore, in order to

counter that Colgate had to launch Colgate Max Fresh to regain the

market share.

Colgate Max Fresh was positioned as a high quality premium brand

similar to CWE, which provided whiteness with mini breath strips. CP

offered the US market with 2 variants of the product namely Blue Cool

Mint and Green Clear Mint, which also had a different and distinct flavor.

The packaging of the product was also quite attractive owing to the clear

plastic cover that showcased the containing mini breath strips.

Advertising was also a major challenge as proper positioning was

required to convince the target segment. It spent about 73 % of the

marketing budget of Colgate. It was positioned to infuse freshness to the

users and mainly targeted at fresh breath experimentalists whose primary

objective was to have clean mouth at all times with fresh breath. It used

Emily Proctor in its visual ads and this campaign was a huge success in

the US market and it increased the sales considerably and about 40% of

the target group provided positive intent to buy the product. Moreover,

the sales increased as US market is highly concerned getting Fresh Breath

all the time and Colgate Max Fresh provided the US market with the

same with a brand new packaging style. This also increased Colgate -

Palmolive’s market share in US in the Premium Toothpaste segment.

Moreover, the sales boosted in US owing to the increase in the consumers

who preferred Premium Multi Benefit Toothpaste.

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With a successful product in the US, Colgate-Palmolive decided to target

its global audience by marketing to various geographies namely China

and Mexico as the case Colgate Max Fresh: Global Brand Roll-out points

out. Their global strategy posed immense challenges in terms of

overcoming cultural barriers, but the “must-have” toothpaste market

refined CP’s marketing strategy with fewer players to compete with.

The 2004 Tooth paste market share in Mexico and China is as under.

Exhibit 1.2: 2004 Tooth paste market share in Mexico and China

The Colgate-Palmolive Company's (CP) ambitions did not just include

plans to maximize business potential in local markets such as Mexico and

China, but they also aspired to wipe out Crest as competition and

dominate the market share in Mexico. Seeing as how Colgate already

had 82% value share in Mexico, it was particularly difficult to launch a

new product without compromising some sales on the parent brand,

particularly because there was relatively flat toothpaste demand—which

meant that it was hard to "secure incremental shelf space" and that

Mexicans were probably less likely to try new products. CP decided to

brand CMF as a product with "extreme freshness benefit" and the use of

"cooling crystals as a unique ingredient." In terms of pricing strategy, CP

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found that price/value perceptions were above average for CMF, but

CMF found that if the price of the product was decreased from $15.99 to

$14.99, the volume of sales would increase by 25%. As for

advertisements, they finally proposed the idea of "a joy ride for your

mouth," titling the advertisement as "Snowsurfer", which effectively

positioned the market in this competitive product space. With these

marketing and branding strategies, CP hoped to increase sales of CMF

similar to the levels of success it had achieved in US and China.

1.3 CP China's changes to the CMF marketing launch program

Colgate dominated the Mexican market in terms of the Value Share. The

toothpaste market was heavily skewed towards the therapeutic

toothpastes. The Brand Group also made incremental production and

talent costs worth US $ 500,000 for its initial launch. But for China, the

Launching plan for Colgate Max Fresh had to be changed in China as

people in China would not have connected to Emily Procter’s character,

and it required a local celebrity for the advertisements.

Connecting to the youth on the emotional level was a justified decision

taken by the marketing team and the leading of China, Jay Chow was

used in the ad campaigns. Also as part of the differential marketing plan,

using new flavor, graphics and aesthetics was also essential as Chinese

market was gaining popularity in new flavors. However, there was huge

investments involved in changing the Ad Campaign and the Packaging.

In spite of these there was a steady growth in net sales for the Colgate

Max Fresh in China from 20, 303 ($000) to 23,773 ($000). Therefore,

thought the marketing strategies were in line with the Chinese market

however, the sales did not boost up owing to the large volume of

investment made in achieving so. So after the final evaluation, we

propose that some strategies must be put in Must Have category and

some strategies must be put in Nice to have category.

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Exhibit 1.3: CMF Adaptation Matrix for China

1.4 Did CP Mexico manage its CMF Launch Better than CP

China?

Yes Mexico managed its launch of Colgate Max Fresh better than in

China as they were almost in line with the US marketing strategies and no

new advertisement expenses were made like in China which resulted in

negative sales revenues. Since the advertisement costs were minimal

owing to the fact that there was no much psychographic difference in the

target audience of US and Mexico, therefore there is a substantially good

Operating Profit in Mexico. Moreover, Mexico also altered its Price in

order to gain sales volume. Moreover, Colgate had a Value share of 82%

in Mexico which is far more than that of China, and had resulted in its

acceptance in the country and increased sales.

Following are the expected Proforma for Profit and Loss for the CMF in

both the China and Mexica for 2005-2006. The following proformas

clearly shows that expenses are very much less in Mexico as compared to

China. Also the operating profit is in +ve in case of Mexico as compared

to China.

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Exh ibi t:

Exhibit 1.4: CMF Launch Pro-Forma Profit-and-Loss 2005 & 2006

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1.5 Evaluation of Global Roll out of CMF – Recommendations

As part of the Global Expansion strategy, Colgate Max Fresh should look

for countries in which the similar advertisement strategies could be used

based on the countries in which it is launched, like China’s ad campaign

could be used in South Eastern countries including Malaysia, Indonesia,

Singapore, Thailand, etc. US marketing Plans could be used in Canada

and Mexico’s marketing plan could be used in countries from South

America including Brazil, Argentina, Chile, etc.

As part of the Short Term Plan, CP should aim in targeting the countries

which have a mixed culture and close to the 3 countries discussed earlier.

It can also look for those countries in which it already has a greater Value

Share as this would ensure in easy penetration in the market. Moreover, it

should also do a research before deciding on the launch plans for these

countries as this would ensure product success of Colgate Mouth Fresh in

these countries. As short term plans it can also look at price alterations

before launching the Colgate Mouth Fresh in Price sensitive countries.

The main focus basically should be in the developed and matured markets

which have greater knowledge of the Product and the benefits it provides.

Moreover as part of the future launches it should prioritize the countries

based on the level of Value Share existing and this would ensure better

adaptability of Colgate Mouth Fresh in these mew markets. Also it can

look out for several promotional schemes in form of Bundled products or

discounts in countries which have greater penetration on CP and its

products. This would ensure greater sales and would also provide the

consumers with an option to try out the new product before its actual

launch and this might also reduce burden on the Marketing research team

in detailing the plans for the launch. CP should also look for International

Celebrities that might fit in the advertisements for Colgate Mouth Fresh

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and might create a global impact and save operational expenses to a

greater extent.

The End