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Case Analysis- Colgate Max Fresh: Global Brand Rollout Essay

Q1. Did China and Mexico each do a good job of adapting the launch to meet local consumer needs? What is the likely profit impact of each plan? Which of the proposed adaptations were “must haves” versus “nice to haves”?

China

Though freshness accounted for 28% of consumer reason for a toothpaste purchase was a new concept Responses of the customer were above the norms for new toothpaste products in terms of buying behavior, perceived quality, value for money, and uniqueness Sales in first year of 3882 tons, COGS as 50 % of sales and marketing expenses of 78% Sales in second year of 4370 tons, COGS as 41 % of sales and marketing expenses of 42% Given this trend the expected contribution margin will go up to nearly 70% and if marketing expenses comes down to 35% we have an operating profit of 985,000$ in 3rd year. This adaptation is “a must have” as it clearly describes the need of the consumer that can be satisficed profitably.

Mexico

The main reason for purchase was cavity protection and freshness was an appealing concept. Responses of the customer were below norms for new toothpaste products in terms of intention to buy, buying behavior, perceived quality, and uniqueness. Sales in first year of 1600 tons, COGS as 47 % of sales and marketing expenses of 15% Sales in second year of 1850 tons, COGS as 40 % of sales and marketing expenses of 10% Given this trend the expected contribution margin will go up to nearly 70% and if marketing expenses comes down to 8% we have an operating profit of 700,000$ in year 3 This adaptation is “a nice to have” as it has acceptance that is slightly below par while at the same time preventing crest to gain acceptance in the market.

Q2. From a global CMF perspective, what is the short- and long-term impact of the complexity born out of these local adaptations? Is this added complexity good or bad for the global CMF business?

China

Globally, the short-term affects of the complexity born out of these adaptations is rather expensive. Though it was expensive to adapt the Chinese advertisements, but in the long-term it will profitable since fressness is a important factor in china while making the purchase and the sales are increasing.

Mexico

In Mexico, the cost of adaptation is about a third of that in China, but they havent reached the market as well as they would have liked. It may have just held off Crest in the short-term for value share, but in they should meet the expectation of the customers while adapting marketing plan for Mexico.

Global Implication

Added complexity is crucial to Colgate Max Fresh’s global business as it shows that they have put lot of emphasis in meeting the customers needs and demand and positive reponse will be delivered. Had they not spent this time in studying customer needs the demand for the product would have dropped. Burton and Colgate-Palmolive need to make sure that they adapt all the aspect of their product to meet the consumers need and demand in local as well as global markets .It may be expensive in the short-run, but it will pay off in the long-run.

Q3. What guidelines could Burton propose going forward to optimize new product introductions for CP worldwide, for the regions, and for the country subsidiaries?

Global marketing strategy involves:

Keeping the Balance in the global brand and appeal to distinct regions. Successful global marketing campaigns, leveraging similarities to deliver same message and limit costs while also modifiying advertising to align with regional cultural preferences.

Forces to drive the globalization of marketing and demands:

Market Drivers:

Global customers, basic customer needs, Cooling crystals
Cost Drivers:
Economies of scale potential of campaigns, different icon as per the different regions or countries, importance of Trade-off between icons and opportunistic locations.
Competitive drivers:
Realisation of global competitors, first mover advantage,threats from competitors innovation
Government drivers:
Consideration of regulation and censorship, unique promotion strategy when there is inability to mention competitors name, understanding the market potential while entering new territory, Identify the antecedents of brand value, objective seting for brand development, allocation of resources across products.


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