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Colgate Case Essay

913 words - 4 pages

Colgate-Palmolive (CP) operates in a highly competitive market with substantial new product activity. After three years of development, CP has a new toothbrush that is ready to be delivered to consumers. Their main challenge is deciding how to position this product, which they have tentatively named Colgate Precision. One major business issue is that CP developed this product before identifying the target consumer segment it will benefit. According to CP’s research, consumers fall into one of three segments: Therapeutic Brushers, Cosmetic Brushers and Uninvolved Oral Health Consumers. CP needs to decide which segment will value the product benefits most while maximizing profits before they ...view middle of the document...

This limited rollout has the potential to be expanded once there is a solid base of informed consumers and dentists able to act as influencers on the segment concerned with their oral health, but not particularly well-informed about what good oral health means.
Initially positioning CP’s Precision toothbrush within the super-premium niche market will allow for a smoother and more effective marketing approach. Therapeutic brushers are classified as users who “avoid oral care problems,” and therefore are more interested in a functionally effective product, as demonstrated by the results of CP’s clinical trials and customer focus groups. A niche marketing approach would efficiently use marketing budgets to leverage these benefits in order to reach its target demographic. In contrast, a mainstream approach would target all consumers (therapeutic, cosmetic, uninvolved), many of whom would not comprehend nor appreciate the superiority of the Precision. The mainstream method would therefore inefficiently allocate a portion of CP’s marketing budget towards consumers that will not be immediately receptive to the Precision.
                Launching the Precision on a smaller niche scale versus a larger mainstream scale would enable CP to efficiently use their production facilities to meet potential demand, also satisfying CP executives concerned with limited production capacity. This would also preserve the number of SKU’s that CP currently holds in the toothbrush segment. Importantly, using a niche marketing approach would not cannibalize the sales of other CP’s products, especially the Colgate Plus. 
Furthermore, based on calculations in Appendix 1, a niche approach will sell fewer brushes but will return a slightly larger profit. Additionally, Appendix 1 does not take into account cannibalization of the Plus and Classic brushes, which will likely further erode CP’s total profits under a...

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