Colgate-Palmolive: Evaluating New Product Potential
Colgate-Palmolive, a leading dental product company, must compete in an expanding market to design the next best product in a fast developing dental field. New products, such as the Colgate Precision must not only be designed efficiently but must also be compared to similar products on the market to see if it will outsell their opponent’s newest products. Positioning, branding, and communication strategies must be considered when evaluating the potential of a new product.
CP’s main strength is being a global leader in household and personal care products. The Colgate-Palmolive company also holds number one position in U.S. retail ...view middle of the document...
CP’s main threat was the highly competitive market and the increasing number of competitors. Major competitor brands included Oral-B, Johnson & Johnson, Procter & Gamble, and Smithkline Beecham. There was also a growth in the sales of the private label toothbrushes. When the company launches the new product they may also find a slower unit sales growth, cannibalization of other products, pressure on production schedules, and inadequate supply of product.
STRENGTHS- strong financials- global leader in household and personal care products- focus on core customer products- Focus on innovation and new product launches- #1 position in U.S. retail toothbrush market with a 23.3% volume share | WEAKNESSES - due to promotions purchase frequency was lagging replacement frequency - increased frequency of promotion by competition |
OPPORTUNITIES- market expansion- Growing global oral hygiene market- increasing consumer interest and purchase frequency- consumers becoming more concerned about the health of their gums- increased advertising and promotion can fuel consumer demand - in-store displays can increase sales- increased shelf space- introducing highly innovative product in the super-premium segment | THREATS- highly competitive market- increasing number of competitors- growth in the sales of private label toothbrushes - slower unit sales growth- cannibalization of other products- pressure on production schedules- inadequate supply of product |
In order to take a deeper look into the structure of the company it is helpful to look at the I-PEST factors: International, Political, Economic, Socio-cultural, and Technology. The product is being launched in the U.S and for the U.S market therefore there is not an international dimension to be discussed. But, as mentioned in the study case Colgate-Palmolive five-year plan for 1991-1995 emphasized new product launches and entry into new geographic markets, along with improved efficiencies in manufacturing and distribution and a continuing focus on core consumer products. In 1991, the company faced tough competition in international markets from Procter and Gamble, Unilever, Nestlé’s L’ Oreal Division, Henkel of Germany, and Kao of Japan. Because Colgate it’s launching its product domestically there is not a political side involved in this case.
In the U.S toothbrush market, new product launches had increased and performance had become increasingly important purchase criteria creating an economic boom. In 1991, the U.S oral care market was $2.9 billion in retail sales and had grown at an annual rate of 6.1% since 1986. Toothbrushes accounted for 15.5% of the market, which is equivalent to $453 million in retail sales.
Consumer purchase power grew, because consumers took more interest in the category and increased their purchase frequency. The trade, for whom toothbrushes represented a profitable, high-margin business, responded by increasing...