Colgate Case Study
Consumer behaviours are never stagnant as their preferences always change requiring business organizations that offer goods and services to come up with strategic plans that will not only enable them to keep at par with these changes so that they are able to meet and satisfy consumer needs but also to beat their competitors hence maintain a high competitive advantage in the market. This success can only be achieved through effective marketing by product providers which should take a market based approach in which the targeted market is studied so as to identify the consumer preferences and designing the products so that these needs and preferences are. The marketing strategies should also emphasize on consumer preferences.
Companies that operate internationally face several challenges when deciding on marketing strategies to adopt when launching of new products in different countries. This is based on the fact that different countries have different cultures hence different preferences in products. This implies that marketing strategies vary from one country to another with some countries requiring significantly large amounts of capital to be channelled towards marketing of products in their markets. Several considerations need to be made before any marketing strategy that is locally adapted for a certain country’s market can be implemented. The organizations’ management need to ensure that the impact of the proposed marketing strategies on profit margins is considered and that they address consumer needs. The short and long term impacts of marketing strategies that are locally adapted on the global image of the organization should also be considered so that they are not negative. A company hence needs to adopt a market based approach its marketing strategies irrespective of the location of the business as consumer needs vary and always change. Market based implies that it does its productions based on what the consumers want and not what it perceives to be right for the consumers.
Colgate-Palmolive though a producer of many oral, personal and home care, and pet nutrition products was in 2005 and over several years ranked as the world’s leading toothpaste and toothbrush brand. In order to meet its international consumer’s needs, CP is structured along geographic lines so that each region has a management that is responsible for the profits and loses that made in that particular region. In order to meet the consumer needs in the different regions, CP has Consumer Innovation centres (CICs) that are made up of product developers, marketers and insighters. This group is responsible for coming up with innovations that satisfy the particular region consumers’ needs and marketing the products. CICs do study the local markets too identify the needs and mesh this local knowledge with global protocols that guide the company.
Action standards which is an assessment tool that measures the proposed initiative or strategy ability to meet product quality, pre-determined financial margins, consumer acceptance and its timing ability was by the CIC’s in their operations. This tool made it possible for the company to identify the key customer needs in toothpaste which were classified as therapeutic and cosmetic. Therapeutic needs included protection against cavity and sensitivity relief while cosmetic needs included fresh breath and whitening of the teeth. Therapeutic needs were initially more preferred amongst consumers making them buy more of the toothpaste that had fluoride which was only manufactured by CP’s nearest competitor Procter & Gamble (P&G) as it had patented the use of fluoride in toothpaste. CP could therefore only offer the cosmetic needs to customer until the time when other tooth paste producers were allowed to offer toothpaste that had fluoride as one of its ingredients. By then CP had established itself internationally and when it launched its first therapeutic toothpaste (Colgate Total), it threatened the market share that had been enjoyed by Crest, a product from P&G.
The CIC’s worked with the Research and Development (R&D) department using the available technology to come up with new products that met consumer needs that had been identified. This led to the development of Colgate Max Fresh, toothpaste that met both therapeutic and cosmetic needs. . The preferences in the two needs from toothpastes however differed amongst market segments, in the United states market, market studies showed that both therapeutic and cosmetic needs were even amongst consumers while consumers in China and Mexico were however more inclined towards the therapeutic need. This caused significant challenge to CP in introducing Colgate Max Fresh, its new product in the Chinese and Mexican markets.
Customers especially those who are more concerned with their appearance hence need toothpaste to be able to whiten teeth and give a fresh breath perceive the newly launched Colgate Max Fresh to be a brand that meets this need especially since the it has been packed in such a way that the “breath strips” are visible through the clear plastic containers. The concept of breath strips has convinced customers especially in the United States that the Colgate Max Fresh has the cosmetic value that is absent in other brands. CP has been able to establish itself internationally and has gained the trust of many of its customers. This is evident from the high sales and high profit margins. Customers hence perceive its products to be ones that can be trusted and effective.
Customer needs in a product is what influences them in decision making. These needs include functionality of the product. Customers want a brand that serves the purpose they need it to. CP for example not able to do as well as it is doing now before in the United States because it could not provide toothpaste that was therapeutic. Because customers needed this in toothpaste, they chose to buy Crest from P&G. The increasing desire for good physical appearance has caused most customers to search for tooth paste that can provide both therapeutic and cosmetic needs hence the innovation of Colgate Max Fresh. Customers are also influenced by prices when making decisions. Most customers will go for brands that are offered at lower prices for example in china. The reputation of the company also matters to customers. Customers prefer buying products from companies that are known and well established. In Mexico fore example, CP is more established than any other toothpaste manufacturing company implying that in the event it is competing with another company to launch a new product, its products will be more preferred as it is more trusted.
In marketing Colgate Max Fresh as a new product, promotional efforts should be directed towards emphasizing the fact that it meets both therapeutic and cosmetic needs. This will attract both cases of consumers as they understand that they understand that using it has both benefits. Marketing in the new product requires a pull strategy in all the markets. In the United States this is attributed to the fact that P&Q also is well established and has a similar product. CP will have to literally take the product to customers and convince them that it is better than the one offered by P&Q. In Mexico and China, therapeutic need is more and the Chinese are aspect of fresh breath in toothpaste. CP will hence have to adopt a push strategy in the marketing of Colgate Max Fresh so that is they literally show its power to the customers. The customers in these countries need to see it in order to understand and trust it. In china, the pull strategy would not be effective as there even is difficulty in communication. It would be more effective to take the product to them (Johnson, Scholes, & Whittington, 2008).
The company’s internal strengths and weaknesses
Colgate-Palmolive has several product lines implying that it manufactures different types of toothpastes plus other personal, oral and home care products such as shops and the pet nutrition. This is strength as it increases the company’s sales as gives it opportunity to penetrate other markets and draw sales from there. In the event one market is negatively affected, the company can rely on the others as it has not put all its eggs in a single basket. CP also has large market coverage as it operates in 200 hundred countries worldwide. This has given it an advantage over it main competitors who are not as well established globally. This increases its sales and has in fact given it monopoly in some countries where its rivals are yet to penetrate.
The Global Research and Development also is strength for the company. This is because it enables the company to research in new products and come up with formulas of producing them that meet that meet the required standards. The company also has good leadership through the CIC’s presidents who oversee the innovation and marketing of new products increasing the company’s sales. Employing modern technology also is strength to the company as it enables the company to effectively produce the invented new products within adequate time. Colgate-Palmolive is a brand name that is known all over the world and has established a good reputation. This is a strength as it enables the company to easily make sales in the event it launches a new product as the brand name is established (Montana, & Charnov, 2008).. This gives it a competitive advantage over its rivals whose brand names are not well established and have not yet earned a reputation. Colgate-Palmolive company has a well organized cooperate structure that ensures good coordination of its international operations.
Most of these strengths are unique to Colgate and can not be easily copied by its competitors as it would take them a long time to be at this level. The company’s internal organization structures and management processes have been set up to take advantages of core competences for customer segments. This is through the CIC’s which consist of product developers, marketers and insighters. The company’s structure also encourages innovation and creativity which is essential for its growth and increasing its competitive edge in the market.
The high cost of manufacturing especially of the new product that CP launched is a weaknesses as it could negatively affect the profit margins in the event the cost can not be passed to the consumer as it is now because of competition. The fact that the global group leaders were only charged with responsibility and accountability is a weakness as it could result to misappropriate of the company’s revenues.
The company’s external environment
The toothpaste industry does not have much competition to CP. Its closest competitors are only three in number. The closest competitor is Procter & Gamble (P&G) which is not as well established as CP. The market share enjoyed by CP is more than double that one of B&Q this provides more opportunity for CP to make more sales hence increase its profit margins as the competition in the industry is weak. CP’s competitors do not have as much resources as it has creating more opportunity for it to grow. The step taken by CP to invest in other countries that the other companies have not dared to creates an opportunity for the company to grow. The step to widen and exploit new market segments by developing products such as the new Colgate Max Fresh which serves the purposes of both the consumers who need toothpaste to increase their physical appearance by whitening their teeth and giving them a fresh breath as well as those who need it to be therapeutic creates an opportunity for the company to increase its sales as it is able to sell to both groups of consumers the same product.
The expansion to foreign markets creates opportunities for the company to grow as it widens the market hence creating opportunity for an increase in sales (Montana, & Charnov, 2008). The application research and development in new areas provides an opportunity for CP to come up with new products that increases its competitive advantage as well as sales. CP has also diversified its production such that apart from toothpaste and mouthwash, it also produces soaps and pet nutrition. Barrier to entry in this industry also is high as it requires a lot of capital and resources for a player to be successful. This reduces increase in threats.
CP suffers a considerable amount of competition from its competitors both internationally and at home in the United States. This could cost it its competitive advantage and growth if not well managed. Change in consumer taste especially in flavour is a threat to CP. In the event consumers change their preference from mint to something else like menthol, CP’s new product will have no market.
Evaluation of the SWOT analysis
It can be observed from the already done analysis that the company’s strengths and opportunities out weigh the weaknesses and threats. This implies that Colgate-Palmolive Company is in an overall strong competitive position and can continue to pursue its current business profitably. In order to turn its weaknesses into strengths, the company should come up with a mechanism that will ensure that the global leaders are more accountable for any profits or loses made. The company could employ lean operation methods that ensure less wastage hence reduce cost of production. There is nothing much the company can do regarding customer change in test, the company can however step up its competitive edge by offering its products at lower prices. This is achievable through outsourcing of some of its productions to low wages countries which reduces cost of production. The money saved can be used to fill up the gap left by lowering prices of the products.
Colgate-Palmolive, an international company that deals with the production of personal, oral and home care, and pet nutrition in spite of being well known and commanding a large share of the market in the industry, is facing challenges in launching and marketing of one of its new products (Colgate Max Fresh) in China and Mexico. The fact that the proposed marketing strategies for the new product in the two countries were different from the one used in the united states which had been successful raised doubts in the company’s president as he wondered whether they would deliver better results that were above what would have been achieved with the united states marketing strategy. Apart from being more costly, the overall president of the company wondered if they met the requirements of a good marketing strategy and what their impact would be to the company. There is need for the company to come up with marketing strategies that would enable it to introduce new products in its foreign markets effectively in such a way that consumers’ needs were met and the impact on the company’s reputation and its profit margins was not negative.
This problem arises from a changing environment as the cultures in china and Mexico are different from those of the United States implying that the marketing strategy used in the United States can not be employed in the other countries as consumer needs also differ. An case fort the problem is the new opportunity that arose with investment of the company in these two countries. Colgate enjoys a large share of the market in the two countries which provides it with the opportunity to increase its sales by introducing the new product.
The problem specified in this case study is that the marketing strategies proposed to launch the new product in China and Mexico seem to be very expensive. The overall president of CP is not sure if they meet consumer needs and how they will impact the company’s profit margin and its global reputation. He is not sure of the guidelines to offer that will guide future locally adapted marketing of new products in foreign countries.
Since the company is not sure if the proposed plans meet consumer needs, it could adopt a market based approach in marketing such that the market segments are studied again and their needs identified so that the plans are redesigned to meet these needs. This is done using focus groups (Schutta, 2005). This method though effective is not representative of the entire population and can be expensive; however, like everything else that has strengths and weaknesses, it is worth trying.
The proposed marketing plans in the two countries is pull strategy. The company could try the push strategy where the new product is literally taken to the customers (Yeshin, 2006). This could be effective considering the fact that cosmetic need in toothpaste is not popular in these countries. This method can however be very expensive as it involves literally getting to the individuals who could be very far. It requires transport to be organized and recruitment of people who will do it. It however has an advantage in that the customers’ response is easily observed and noted. The company gets to know if the product is liked or not hence can decide on whether to continue supplying the product to that particular region/country or not.
The company seeks to have marketing plans that would be as successful as the one used in the United States. The president in fact wants the foreign countries to adopt this plan as it addressed the needs of the customers and was much cheaper. He wants the adopted marketing strategies to not to have a negative impact on the company’s profits and its global image. The objectives are not consistent with each other as what pleases individuals in one country might not please others in another country because of diversity in culture. This is the same reason as to why the United States plan can not work n other countries. The company however has resources to adapt a strategy that meets the needs of the consumers.
Are the locally adapted marketing strategic measures proposed to market and launch the new Colgate Max Fresh product of China and Mexico safe enough to enable the company to maintain the current constant growth it is enjoying and sustain the market advantage it has been able to build over the years globally in spite of the competition?
The company can overcome the marketing challenge it currently is facing by adapting a market/consumer based approach. This involves identifying consumer needs and offering and expressing them in the new products. The company can also reduce competition and meet consumer cost needs by offering their new product at lower prices than those of their competitors.
Employing a market based approach ensures that the company understands what the consumers need in the toothpaste. This enables them to tailor their marketing plans so that the identified needs are emphasized. Offering products at lower prices enables the company to increase its sales as it attracts more customers.
Implementation, functional and operational plans.
In order to implement the recommended strategies, the company must ensure that it does a through search of the market to identify what the needs of the customers are. This is possible through use of focus groups that represent the population and give feed back on what the needs of the consumers are. This strategy focuses on the needs of consumers that need to be addressed and which affect their decision making when buying toothpaste. Outsourcing some the company’s productions would enable the company to reduce on its cost of production. The money saved is then used to fill the gap left in profit margins by lowering product prices.
The recommendations seek to ensure that the strategies employed in marketing of new products in foreign countries are market based, have a positive impact on the company’s global reputation and do not cause a downward pressure on the profit margins. The recommendations are to help the company continue growing in terms of sales and maintain the competitive advantage it has in the market over its competitors. The short-term objectives is to have marketing strategies that are consumer based while long-tern strategies are those that will reduce the company’s cost of production enabling it to offer its products at a lower price. Also read about Ashbury Guitar case study
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Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring Corporate Strategy. (8th ed.). New York, NY: Financial Times Prentice Hall.
Montana, J.P. & Charnov, B.H. (2008). Management. (4th ed.). New York, NY: Barron’s Educational Series.
Schutta, J.T. (2005). Business performance through lean six sigma: linking the knowledge worker, the twelve pillars, and Baldrige. Washington, DC: American Society for Quality.
Yeshin, T. (2006). Sales promotion. London: Cengage Learning EMEA.