The Toothbrush Business in the United States

Executive Summary

Overview. The toothbrush business in the United States experienced a dramatic increase in growth in 1992, moving from an annual rate of 9.3% to 21%. This surge in growth is due primarily to the expression of greater interest by aging baby boomers, which has led to the introduction of a new category called super-premium brushes. Super-premium brushes sell at retail for an average price that is 41% higher than that of brushes in the professional category and, yet, they account for 35% of unit and 46% of dollar share in a market expected to reach 305 million in unit and $548 million in dollar sales in 1992. Colgate-Palmolive, the leader in U.S. unit volume, has not yet introduced a super-premium category offering. Thus, our dollar share results lag our impressive unit share performance. We begin to change that in 1993 with the introduction of our first super-premium brush, Precision. This plan details the approach that we will take to retaining our leadership position in unit share and capturing the lead in dollar share in the U.S. toothbrush market.

CP holds the number one unit share position in two of the three segments of toothbrush customers, the Cosmetic and Uninvolved segments. We are a distant number two in the Therapeutic segment, which currently favors the Oral-B brand. The Therapeutic segment is the only growth segment of the market, increasing in relative size (by units) from 38% of the market in 1983 to 46% in 1991, while the Cosmetic segment has gone from 26% to 21% and the Uninvolved from 36% to 33%. Moreover, Therapeutic brushers pay, on average, more per brush than do the members of the other segments. It is, thus, clear that our goal of market leadership demands that we either devote our efforts to domination of the other segments or that we seek to increase our share of the Therapeutic segment. The technology of our Precision offering enables us to pursue the latter route. We, therefore, focus our attention on maintaining share in the Cosmetic and Uninvolved segments while increasing it in the Therapeutic segment.

Extensive laboratory research reveals that Precision is the best toothbrush in the world for brushers seeking the benefits of cleansing at the gum line, between the teeth, and overall plaque removal efficacy. Moreover, consumer tests show that a unique aspect of its appeal is that its bristle design works in such a way that the brusher actually perceives its efficacy as (s)he uses it. As such, Precision, to the extent that they are made aware of the benefits of its efficacy, is expected to be the brush favored by the Therapeutic segment. Its efficacy is also expected to appeal to a substantial number of Cosmetic brushers.

The primary advantage of the current favorite of Therapeutic brushers, Oral-B, is the strong endorsement it receives from dentists. To the extent that dentists can be expected to respond positively to a superior brush, Precision presents CP the opportunity to deprive Oral-B of that advantage, which greatly supports our attempts to gain share in the Therapeutic segment. As Therapeutic brushers are Oral-B’s current bread and butter, we expect that they will aggressively respond to our attacks. A new player, P&G, will make a national roll out of a super-premium offering in 1993. With respect to efficacy, their brush is arguably better than any offering currently on the market. Further, they are prepared to support its roll out with aggressive advertising and other promotional efforts. Their efforts are directed at the same segment as are ours. We, however, have the advantage of being well informed of the benefits of their offering and of their efforts and results in test markets. They have no such information regarding our offering or our likely behaviors or results.

Strategy and Tactics. Our overall goal is leadership of the U.S. toothbrush market. We seek unit and dollar shares of 25% in 1993 and 28% in 1994 by maintaining our share among Cosmetic and Uninvolved brushers while increasing it in the Therapeutic segment. These objectives have led us to choose a mainstream rather than niche positioning for the Precision offering. We will continue to serve every type of toothbrush customer and to distribute our offerings through all channels through which they buy oral care offerings. The superior efficacy of Precision and our ability to communicate its superiority serve as the bases upon which we base our expectation of increased share among Therapeutic brushers. The cleaning efficacy of Precision is also expected to appeal to Cosmetic brushers. The intensity of our distribution and the relatively low prices of our Classic and Plus offerings are the bases upon which we expect to maintain our impressive share among Uninvolved brushers.

In 1993 we expect the retail prices of Classic and Plus to