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Colgate Max Fresh Essay

Gross world product up 2.5% in 2005, following two years of < 1% growth. Overall emerging market economies exploding; + 10% GDP growth in China and + 6% growth in Latin America. Political values in emerging markets may make it difficult for foreign competition to enter market without domestic partner and / or; foreign investment & market diversification less attractive
(import / export tariffs). Situational Analysis Situational Analysis Industry Purpose of the Oral Personal Care industry is to prevent teeth and gum diseases and deliver cosmetic benefits. Scope of the industry includes toothpaste, floss, mouth rinses and toothbrushes. Industry Definition Competition

Colgate has dominant market value share in China (32%) and Mexico (82%). China market fragmented with Colgate & P&G representing 53% of share. Situational Analysis Industry Product Development growth strategy with launches of premium tier brand extensions Crest Whitening Expressions (US) Crest With Scope (US), Colgate Icy Fresh (China), Crest Cool Expressions (MX).

Brand Position: Competition Strategy (P&G)
C+S = toothpaste + mouthwash + whitening
CWE / CCE = flavor + toothpaste + whitening

Entering Emerging Markets under its Crest brand without JV partners. Leveraging x-brand scale with Crest + Scope.
Built its brand around therapeutic benefits, while cosmetic benefits market growing fastest in Emerging Markets. Innovating in cosmetic segment; a historic Colgate stronghold. Heavily invests in advertising behind new product launches. Situational Analysis Growth Market Strategies Porter Five Forces Analysis Global Oral Personal Care Colgate Palmolive Oral Care SWOT Analysis Situational Analysis Marketing Strategy Pricing: Positioned as a super-premium brand, price parity to Crest Cool Expressions (14.99 – 15.99 pesos). Marketing Budget: $2MM marketing budget aimed to drive trial through in-store merchandising, sampling, and public relations. Corporate Marketing Strategy Objectives

Colgate Max Fresh (CMF) Mexico Marketing Plan
Strategic
Growth driven by high margin core business.
Advertising focused on high margin products and high potential markets. Innovation driven: 40% of sales from products launched in past 5 years. Tactical
Growth Strategy: Product Development; Super Premium segment
Growth Targets: China 2% YR1, 2.8% YR2; MX 5% YR1, 6% YR2 value share. Will require trading up consumers. Value Proposition: CMF would drive new dimension of freshness Target Market: Geared towards 18-34 yr. old adults (female oriented); augment Colgate’s strong competitive position in Value & Mid-Tier. Situational Analysis Marketing Strategy

Will US developed media plans translate?
Can Colgate effectively trade-up consumers?
What impact will cannibalization have on profitability?
Is market large enough in Mexico for premium segments?
Will benefits of CMF convey to Mexico consumers?

BASES testing and Consumer Viability Index showed marginal promise.. CMF Marketing Concerns for Mexico
Symptoms of Colgate Palmolive’s Primary Problem Emerging Market consumers are price sensitive Crest attacking cosmetic segment
Consumers experiment through trial vs. large initial purchase Despite Growth in key areas Colgate-Palmolive operating profits and net income are down. +6.5% unit volume growth
+7% sales dollar growth
+0.1% growth in gross profit margin
-2% Operational Profit
-7% Net Income
To drive growth Colgate-Palmolive is looking to focus on higher margin core businesses. Core Elements of the Strategic Problem In the US toothpaste market CP is seeing a 3.1% increase in volume of sales attributable to the Super Premium Toothpaste Category.

Global Strategic Opportunity exists in the Premium Toothpaste market. Represents $75 M sales dollar increase and total market cap of $409.5 M dollars Only the Premium Toothpaste Category is growing at a substantial rate.

In 2004 CP captured ~60% of that Sales Dollar Increase in the US largely dues to the introduction of Colgate Max Fresh.

In order to continue to grow CP must find a way to develop their Premium Toothpaste product CMF in emerging countries. Colgate Palmolive’s Primary Problem
Would the costs of adopting CMF in each new country provide sufficient incremental sales and profits to justify the added complexity of localized marketing and rollout plans associated with those new markets. Colgate-Palmolive must continue to globalize its Premium Toothpaste Strategy. Any solution must balance they cost of localization with the expected sales and profit increase for each new market. Also it is in Colgate-Palmolive’s best interest to develop reusable guidelines as it approaches other new markets similar to China and Mexico. Colgate Palmolive’s Secondary Problems

Type 1: Establish a tactical marketing plan for the CMF rollout in an emerging market where Colgate-Palmolive has little previously established presence(China)

Type 2: Establish a tactical marketing plan for the CMF rollout in an established market that has high competitor activity(Mexico). In order to establish an effective global strategy two types of secondary problems must be solved in the Colgate Max Fresh Case Study: Any solution must balance they cost of localization with the expected sales and profit increase for each new market. Secondary Problem Detail Need to introduce a product to push Colgate-Palmolive profitability Colgate has worldwide share, the only way to expand is to drive high margin business. China(new markets) have strongly entrenched local brands.

Colgate Max fresh will need to compete with its own joint venture brand Darlie(High End). Due to new product introduction at the Super Premium Toothpaste Market competitor Crest has 3% growth year to year, Colgate Equity Brands have been stagnant for 3 years. CP is not only loosing out on possible profits but also slowly loosing market share to its #1 competitor. Market is unfamiliar with CMF “breath strips”

US Marketing Video will be ineffective due to the US Star involved. Is it worth creating new celebrity backed marketing content? Will the Go Big or Go Home strategy work in China and other similar markets? How can Colgate-Palmolive best enter the Chinese Market with CMF. China

Secondary Problem Detail Colgate-Palmolive knows P&G will be introducing Crest Cool Expressions(CWE) in Mexico in the near future. CO must develop the best marketing plan to stunt P&G Crest Cool Expressions while protecting their overwhelming market share. 82% Value share for Colgate-Palmolive

CP needs to create a marketing plan to introduce CMF with limited budget and maximize regional utility. Due to CP’s large inherent market share, the goal of the Mexican campaign will be to maximize the product funnel. There is a large opportunity present to upsell customers from the Big Red Brand toothpaste to the new CMF toothpaste. Mexico See Exhibit 17 –

Will waiting to introduce CMF until after the CWE product introduction change the company estimates of profitability? Can the Mexico Snowsurfer commercial be better standardized for global marketing plans? Going forward how will CP utilize this marketing plan for future markets? Colgate-Palmolive Company Alternatives Locally make the clear bottle Works for China, not Mexico China

Allows for ease of expansion of the Colgate Max Fresh brand in clear bottle to other regional locales Also, provides future capabilities for use in other new products Problems:
This does add 20% variable cost to COGS
Initiates a 6 month delay on production
$1.5 M sunk cost before production
Alternatives Colgate-Palmolive Company Alternatives
Regional Market Alternatives
Mexico
China
Colgate-Palmolive Company Alternatives Provide more trial availability with the smaller packages to sway more to give CMF a try CMF has the breath
strips or “cooling crystals” within the toothpaste, therefore bundle the breath strips package with CMF to build awareness. Stop utilizing celebrities to promote CMF

Provide regional flavors
Keeps product as a premium product
Cost of $200,000 per flavor
Has shown promising outcomes in other regions
In China, Crest utilized a tea flavor and Colgate a salt flavor In Russia, after releasing a local flavor, the toothpaste market share rose from 11.8% in 2002 to 24.9% in 2005. Colgate-Palmolive Company Alternatives Allows for greater differentiation between the CWE toothpaste In Mexico, drop the price from 15.99 pesos to 14.99 pesos to protect a greater share of CP market share. In Mexico and other markets CP is highly entrenched in, utilize clear bottle In Mexico, Keep the price at 15.99 pesos

Implementation Strategic Vs. Tactical Plans The strategic plan moving forward for emerging markets will be to use an easily customizable commercial and adapt it to multiple countries Colgate is the dominant toothpaste brand world wide, so our primary goal will be to prevent Crest from gaining market share and also to upsell our existing customers to the super premium segment We agree with the decision to use a celebrity commercial in China due to the size of the market share the Crest is cultivating Each region and culture has a different set of values and preferences Each region will have a unique tactical plan to maximize effectiveness Jay Chou Colgate Max Fresh Commercial Implementation in China Dispensing the toothpaste in clear bottles to build brand awareness Colgate-Palmolive has invested a large amount of capitol in the Max Fresh marketing campaign Maximize the return on investment by:

Transition to less expensive packaging once consumers are familiar with product Include breath strip samples with Max Fresh tooth paste in selected markets Snowsurfer Commercial (English Dub) Implementation in Mexico Our strategies in Mexico will be very similar to our plan in other emerging markets Focus will be on preserving our market share instead of new growth
Use clear bottle and breath strip samples in select markets to increase brand awareness Colgate accounts for 82% of total market share compared to 10.2% of Crest’s total market share Crest + Scope only accounts for 3%of total market share

Set price at 14.99 pesos per 100 ml
We will re-evaluate our Colgate Total (19.36 pesos per 100 ml) marketing campaign to focus on the affluent 40+ age group to minimize cannibalization Implementation in Brazil Characteristics of the Brazilian Market 71% of Brazilians agree that “music is an important part of my life” 33% have participated in trips to the beach in the last 30 days 76% agree that “it is important to be attractive to the opposite sex” 65% agree that “it is important to keep young looking”

32% express the desire for plastic surgery in order to improve their appearance

Statistics from Geoff Wicken, KMR Group
Tactical Strategy Brazil Vollyball is the 2nd most popular sport in Brazil To become a sponsor on the FIVB circuit, we must apply by July 31, 2006 Update packaging to include “Made in Brazil”
The busy season in Rio De Janeiro December to March, so we recommend kicking off a medial marketing campaign in October 2006 This will give Colgate-Palmolive a chance to evaluate the success of the BreathStrip samples in China and Mexico If we do not see the return on investment we will not include the promotional packaging in Brazil Brazilians place a high emphasis on being attractive to the opposite sex, which means there could a tremendous opportunity to market Colgate Max Fresh as a product that will whiten teeth and make you more “kissable” Adapt the SnowSurfer commercial to the Brazilian market

Sponsor a national beach vollyball tournament
Conclusion Colgate-Palmolive is actively seeking ways to increase their operating profit and net income Introducing new high margin products to emerging markets will be critical to their success Marketing Colgate Max
Fresh as efficiently and effectively as possible will be necessary in helping us achieve our financial goals

UNILEVER


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