Colgate Case Study

II. Situation Analysis

A. The Industry

1. Definition of industry

The purpose and main focus of the oral health care industry is to prevent

teeth and gum diseases and to deliver cosmetic benefits. Examples of

products in this industry include toothbrushes, toothpaste, dental floss, and

mouth rinses.

2. History of Industry

Toothbrushes first evolved in 3000 B.C., and advancements have

continued ever since. Such advancements include the head shape, size,

flexibility, bristle texture and type, color, and angled handles. Companies,

other than Colgate-Palmolive, that have entered into the toothbrush market

include Oral-B, owned by Gillete, Johnson and Johnson, Procter and Gamble,

Smithkline Beecham, Lever, Pfizer, and Sunstar.

3. Growth Patterns

Consumers first purchased toothbrushes without much knowledge or

information concerning the product’s benefits. As new product development

increased, and consumers became better informed about the benefits of

toothbrushes, they began to focus their interest not only on cavity prevention,

but also on the health of their gums, their oral hygiene, and their cosmetic

appearance. Because consumer interest and toothbrush purchases began to

increase, advertising and promotion also began to increase, which lead to the

development and addition of the super-premium product class. The superpremium

product class was a “sub-category of toothbrushes partly offset by

downward pressure on average retail prices in mass-merchandiser channels,”

(Harvard). Consumers began to purchase toothbrushes based on the specific

benefits each toothbrush and company had to offer.

B. The Company

1. Brief History

The Colgate-Palmolive Company was founded in 1806 by William

Colgate. The company first began by centering their production around soaps,

perfumes, and candles. They began introducing oral health care products to

the market in 1873, by producing “its first toothpaste, an aromatic dental

cream sold in jars” (Colgate-Palmolive, 1 of 3). By 1991, Colgate-Palmolive

had become the leader in not only household products but also in oral health.

2. Size, growth, profitability

By the early 1990’s there were many different companies that focused on

oral care products, with the leader being Colgate-Palmolive. By 1991,

Colgate-Palmolive held the number one position in the world for the sale of

oral care products, accounting for 19% of the worlds toothbrush market. The

company’s sales and profits were increasing each year, and by 1991 sales

totaled “1.03 billion dollars, while profits totaled 9.8 million dollars,”

(Harvard). At this point in time Colgate had introduced two different types of

toothbrushes to the market, the Colgate Classic and the Colgate Plus.

C. The Product

1. Development and history

The product in which this marketing plan focuses around is the Precision

toothbrush. Production began in 1989 when the company put together a

research team whose purpose was aimed at testing the design of the

toothbrush, how the company would market the product, and how the

company would gain a competitive advantage over