Colgate Max Fresh Global Brand Roll Out China

Colgate Max Fresh – Global Brand Roll Out China - Mexico

Introduction. .

Colgate – Palmolive Company. .

Products Manufactured. . • Oral care and personal care (soaps, toothpaste, toothbrushes, speed sticks) • Veterinary products, under Hill’s brand

Timeline… § In 1806, William Colgate started a starch, soap and candle factory named William Colgate & Company § In 1840, the company started selling individual soaps having uniform weights. § In 1857, William died and the company was renamed to “ Colgate & Company”

Timeline. . § In 1872, Cashmere Bouquet (a perfumed soap) was launched § In 1873, the company started selling toothpastes in jars

Timeline. . § In 1896, Colgate Ribbon Dental Cream was launched § In 1908, the mass selling of the toothpaste started

B. J Johnson Company. . • In 1898, B. J Johnson was making soaps entirely out of Palm and Olive oil • The company was renamed to “Palmolive” • Peet brothers merged with Palmolive to form “Palmolive-Peet” • In 1928, the company bought Colgate-Palmolive and was renamed to “Colgate Palmolive-Peet Company” • In 1953, it was renamed to “Colgate-Palmolive Company

Change in the Therapeutic Segment. . § In 1950, Crest’s field research on fluoride toothpaste found a 50% reduction in cavities § In 1955, Crest launched a Fluoride-toothpaste § The patent restricted other companies to launch fluoride-based toothpastes.

CP - focus on International Business and other segments. . • Colgate Company has been present in Singapore since 1920 • “Cold Power” laundry detergent was sold in the U. S in 1960’s and early 70’s. • “Elmex” is a medical toothpaste sold since 1962 • “Fresh Start” was a detergent launched in 1970.

Colgate - Palmolive’s focus on International Business and on other segments… • “Irish Spring”, a deodorant soap was launched in 1972 • “Hill’s Pet Nutrition ” was acquired by C-P in 1976 • “Softsoap”, a Minnesota based company was bought in 1987 • “Mennen” was a leader in leader among deodorants and antiperspirants for men. It was sold to Colgate-Palmolive in 1992

CP - focus on International Business and on other segments. . • Colgate bought Cibaca in 1994, which is an oral hygiene brand in India. It is more popular in rural India • In 2006, 84% stake of Tom’s of Maine were bought by Colgate. Palmolive. Tom’s of Maine manufactures natural ingredients for personal care products

Return to the Therapeutic Segment. . § In 1997, Colgate came out with a premium product named Colgate Total, that promised 12 hour protection against gum diseases, gingivitis and plaque. § Colgate-Palmolive’s Global Market Share remained almost constant for 5 years, upsetting Crest’s dominance in therapeutic segment. 2000 2001 2002 2003 2004 Colgate. Palmolive 39. 7% 40. 6% 39. 8% 38. 8% 39. 7% Procter & Gamble 12. 2% 12. 5% 13. 8% 13. 9% 14. 7%

Cosmetic Segment Product. . • In 2002, R&D and CIC (Customer Innovation Centers) worked on a new toothpaste formula. As a point of differentiation, “Mini Breath Strips” were added to the toothpaste. This promised fresh breath to the consumers.

Weakness Strengths Ø Global Brand Recognition. (World first toothpaste). Ø A leading market share of 39. 7%, compared to Crest, which is the 2 nd leading market leader with 14. 7%. Ø The Organizational Structure set up results in effective local management. Ø CP put together Consumer Innovation Centers (CICs) to develop short-term innovations for each region. Ø Global business development groups. Ø Categorical leadership in China and Mexico making them leaders in the emerging markets hence flexibility. Opportunity Ø Organizational Structure - “all responsibility, no accountability” system – Hinder Growth. Ø Research and development is too focused on data that is not only costly, but also time consuming. Ø Global platform is a weakness in itself as CP needs to localize their marketing efforts and present a marketing plan that is suited for the particular market. Ø communication challenges proved to be a problem for CP as they are forced to rebrand their product to suit the different markets. SWOT Ø The Chinese market is not familiar with the “freshness” concept. This is an opportunity for Colgate to establish presence within this particular niche. Ø With the introduction of the CMF, Colgate will tap into a market with a population of 1. 35 billion. Ø Emerging markets are not familiar with the cosmetic benefits of toothpastes, and this is an opportunity for CP to convert customers who value therapeutic benefits to cosmetic benefits. Threats Ø The greatest threat for CP is Crest, and it is shown that Crest has been gaining market share through the cosmetic segment. Ø CP’s high market share creates an avenue for competition given the relatively low barrier of entry. Ø Cannibalization – (Marketing Dollars)

MEXICO Mexico Toothpaste Market Ø $348 million retail toothpaste market in 2004. Ø Colgate owned 82% value share. Ø Crest owned 10% market share. Ø Flat toothpaste demand > Difficulty in securing incremental shelf space. Ø Majority of consumers focused on basic oral care (cavity prevention) Ø Price sensitivity and sale promotion activity were high.

Colgate Max Fresh Launch Strategies - Mexico Ø A test Plan was executed to: Assess consumer appeal pre and post product use Expected Sale volume Sources of Volume Optimal Pricing Ø Net acceptance was slightly below par in terms of benchmarks for comparable new personal care products tested in Mexico. Ø Consumer Viability Index of 62% suggested that the initiative had an “average” chance of in market success, defined as maintaining stable distribution for at least two years after launch.

Colgate Max Fresh Launch Strategies - Mexico (Total Consumers) Ø A test Plan was executed to: • Assess consumer appeal -before and post product use. • Expected Sale volume • Sources of Volume • Optimal Pricing Ø Net acceptance was slightly below par in terms of benchmarks for comparable new personal care products tested in Mexico. Ø Consumer Viability Index of 62% suggested that the initiative had an “average” chance of in market success, defined as maintaining stable distribution for at least two years after launch. Max Fresh Total Sample (282) BASES Success Benchmarks Definitely would buy 65 71 Definitely or probably would buy 95 95 Mean Liking Rating (6 -point scale) 4. 8 4. 9 Mean Value rating (5 -point scale) 4. 0 Better than expected 59 71 Worse than expected 6 3 Purchase Intent (%) Product Expectation (%)

Colgate Max Fresh Launch Strategies - Mexico Pricing: § Pricing objective was to achieve parity with Crest’s Cool explosions. § Price / Value perception was above average for CMF. § Analysis revealed that volume was maximized at 14. 50 -15. 00 pesos. § Tested at a retail price of 15. 99 Pesos. § Estimated that CMF could increase volume by +25% if the price was decreased from 15. 99 to 14. 99 pesos. Advertising: § Proposed advertising idea, “ A joy for your mouth”. Depicted in an advertisement entitled “Snow Surfer”. § Incremental Production and talent costs combined were $500, 000.

Colgate Max Fresh Launch Strategies - Mexico https: //www. youtube. com/watch? v=05 R 7 t. L 3 z. C_I

Brand Recommendation Strategies - Mexico Product: § Three Flavors – Clear Mint, Cinnamint and Cool Mint. § Two Packaging formats – Bottles and tubes § Two sizes 75 ml @ 14. 93 Pesos (Limited Distribution) § 100 ml @ 15. 30 Pesos Media Investments of almost two million dollars in the first eight months after the CMF launch was expected to delier a 14. 7% share of voice.

Colgate Max Fresh Launch Strategies - Mexico North America President Profit & Loss responsibility Consumer Innovation Centers & Marketers insighters & product developers Go to Market Team Global Business Development Groups Latin America President Profit & Loss responsibility Europe President Profit & Loss responsibility Consumer Innovation Centers & Marketers insighters & product developers Go to Market Team Asia / Africa President Profit & Loss responsibility Consumer Innovation Centers & Marketers insighters & product developers Go to Market Team Chief Operating Officer

Organizational Structure. . §Regional presidents with P&L Responsibility. §Global Business Development Groups organized by Category. §Global research works with CIC’s to develop new products. §Go To Market team initiates the planning and execution of new products.

Restructuring of Colgate. . § Rising Raw materials cost and intense competetition from rivals. § Saved $300 Million a year § Streamlining its global supply chain and thereby, encouraging growth and expansion. § Company closed one-third of it’s manufacturing facilities. § Concentrated mainly on Latin America, Russia, China, Eastern Europe, Asia/Africa

U. S Toothpaste Market. . In the year 2004 U. S the retail toothpaste market value share had appreciated by 8% which was $2438 Million by four major players who were Colgate, Procter & Gamble, Glaxo. Smith. Kline, Church and Dwight and other small manufacturers.

Market Value Share in 2004. . Manufacturer Brand Value share in 2004 Colgate Palmolive Colgate 34. 8% Procter and Gamble Crest 31. 6% Glaxo. Smith. Kline Aquafresh, Sensodyne 14. 5% Church and Dwight Close-up, Mentadent, Aim 10. 2% Other 8. 9%

Market Segment. . § The toothpaste category is segmented in four pricing options, super premium($3. 49+), Premium(2. 49 -$2. 99), Mid($1. 99 -$2. 49) and Value (1. 99). § Product segments are Oral, Personal and Home care. § Segmented in to Customer need which was cavity and fluoride protection.