Research Paper (undergraduate), 2010
32 Pages, Grade: 73 %
1. Executive Summary
3. Situational analysis
3.1 Company analysis
3.1.1 Company profile
3.1.2 Growth and profitability
3.1.8 Swot-analysis of the company
3.2 Product line analysis
3.2.1 Swot-analysis of the product line
3.3 Competitive advantage
4.1 Segmentation Targeting & Positioning
4.3 Marketing Mix
List of References
The Colgate-Palmolive company is acknowledged as the world’s leader in personal care. This report analyse the Colgate’s current situation in order to give recommendations on their actual toothpaste product line.
The report is divided into two parts. The first parts will analysis the current situation of Colgate. On the basis of a Swot analyse the strengths, weaknesses, opportunities, and threats of the company as well as of Colgate’s toothpaste product line will be analysed. Furthermore additional information on the company’s current market share, profitability, sales and the external environment of Colgate within the scope of the PEST analysis will be presented. At the end of the first part the competitive advantage of Colgate will be mentioned.
The second part includes a suggested marketing strategy of the author using marketing tools such as segmentation targeting & positioning, SMART objectives as well as the marketing mix. To better recommend improvements, the actual state of Colgate referring to their products, objectives, etc. is in some parts shortly mentioned. At the end a conclusion is drawn concerning the current situation of Colgate and suggested improvements for the future.
Colgate is the world market leader in oral hygiene products. The toothpaste product line consists of strong brands. This is due to a very successful marketing strategy of the company in the past. But especially in a competitive environment like the personal care industry it is essential for Colgate that it upgrades its organisational as well as marketing strategies in order to meet the customer’s needs and strengthening the leadership. Furthermore nowadays a wide range of different toothpaste products is offered to the customers. This in particular means for Colgate that they must differentiate their products from the competitor’s products by being innovative and unique. Moreover the toothpaste market is growing constantly which means that more different needs and expectations of the customer will arise. Therefore Colgate must make use of marketing tools such as market segmentation to better identify their needs in order to supply them with the right products.
The situational analysis attempts to address the question ‘where is the organization now?’ The situational analysis contains a vast amount of information and, as the term indicates, is an analysis of the situation that you are facing with the proposed product or service (Hollensen, S. (2003) Marketing Management: a relationship approach, p.652).
Colgate, founded in 1806 by William Colgate, is acknowledged as the world’s leader in personal care sales including oral hygiene products such as toothbrushes and toothpastes. Colgate has many subsidiary organisation located in more than 200 countries, but it is publicly in only two, the United States and India.
Global sales as reported were $15,327 million during the financial year ended December 2009 ($15,330 million in 2008). The operating profit was $3,615 million during 2009, an increase of 16.6% over 2008. At present, Colgate has a market share of 44, 4% in the world’s toothpaste market operating in more than 200 countries and territories. In the United States, one of the world largest consumer markets, Colgate is the market leader in toothpaste sales with a market share at 36.2 % (Colgate-Palmolive Annual Report 2009, p.2-4). Operating in more than 200 countries the company is not depending on one single market. Significantly for the global presence is that over 82% of the company's 2009 revenues came from outside the United States. The markets in industrialised countries are largely saturated. Because of the strong presence especially in emerging countries such as India and Brazil Colgate takes advantage of the positive consumer trends in these countries and can compensate the sluggish economic growth in industrialised countries. Please see appendix to find further financial information on Colgate.
Colgate’s success is linked to its culture, which encourages all Colgate people to demonstrate personal leadership every day. Personal leadership also include three fundamental global values of the company: Caring, Continuous Improvement and Global Teamwork (ColgatePalmolive Annual Report 2009, p.19).
The main goals of Colgate are to better understand consumers behaviour, launching new products through innovation, increasing effectiveness and efficiency as well as strengthening the leadership worldwide (Colgate-Palmolive Annual Report 2009, p.4).
Colgate is working closely with thousands of small shop owners and local wholesalers to ensure greater availability to their products as well as to provide the right assortment of products with best visibility in each store. To built credibility among the consumers Colgate cooperates also with dental professionals.
The selling of Colgate’s products depends on chain reactions. If there is a growing population rate worldwide or in local markets, the need for oral hygiene products increases. Today the world population is approximately 6.85 Billion, predicting a world with 9.2 people by mid- century. Because of the globally presence of Colgate, there will be 2.35 billion new potential customers until 2050 (United Nations world population prospects 2008). Here is to point out that the average age of the population is not essential because all people have a need for oral hygiene products. Furthermore Colgate offers premium products which mean the consumer is willing to pay a high price for the product in order to receive high quality products.
The main competitors are Unilever, Procter & Gamble and the Clorox Company. The personal care industry is mostly controlled by these companies. On the one hand in order to gain more market share within this industry, the only way is to take it away from one of these competitors. On the other hand Colgate must also be aware of losing market shares to their competitors. Please see Appendix to find a financial comparison of Colgate-Palmolive’s competitors.
A Swot analysis is a technique specially designed to help identify suitable marketing strategies for a company to follow. It encompasses both the internal and external environments of the firm (Hollensen, S. (2003) Marketing Management: a relationship approach, p.265).
Please see appendix for further explanation.
A company exists within an external environment consisting of the actions of other players such as the government and competitors who are outside the business. A PEST analysis is a useful tool for understanding the ‘big picture’ of the environment in which an organization is operating. Colgate is affected by all external environment factors listed in the following table.
Please see appendix to find a detailed description of the Pest analysis.
The Colgate has a fairly wide product mix, consisting of dozens of brands that you can ´trust to care for yourself, your home, and the ones you love`. This mix is organised into five major product lines: oral care, personal care, household care, fabric care and pet nutrition (Amstrong, G. (2009) Marketing: an introduction, p.243). The most recognizable product line is oral care, including 31 different toothpaste products. Please see appendix to find all toothpaste products of Colgate.
In the following graphic the strengths and weaknesses as well as opportunities and threats of the product line toothpaste is presented.
The main competitive advantage is that Colgate toothpaste product line consist of the well known and trusted brands worldwide. The very strong brand image is attributed to the simplicity of the products, by giving the consumers an all-in-one solution as well as by setting tooth care trends through innovation (Haig, M. (2004) Brand royalty: how the world's top 100 brands thrive and survive, p.37). Furthermore Colgate has built up trust with the cooperation with dental profession and this has contributed to Colgate toothpaste being the brand recommended and used most often by dentists worldwide (Colgate-Palmolive Annual Report 2009, p.11). The global sales figures and market shares of toothpaste mentioned in 3.1.2 underline the very strong brand image.
In 1873 Colgate introduced its first toothpaste (Haig, M. (2004) Brand royalty: how the world's top 100 brands thrive and survive, p.37). Up to the present the company could acquire first-class technological know-how. With 127 year of experience in the business of personal care the company gained a distinct competitive advantage and became a world market leader. Nowadays Colgate also holds patents on special ingredients such as Tricolsan and Copolymer which guarantee an anti-bacterial effect and differentiate their products from competitor products.
Colgate’s long time presence in emerging countries is also a distinct competitive advantage. Local management has the know-how and experience needed to reach consumers in these vast markets with a wide range of quality products (Colgate-Palmolive Annual Report 2009, p.4). To optimize purchasing, logistics and sourcing processes Colgate has integrated SAP technology. This leads to cost reduction and can be seen as a significant advantage. With the slogan “Clean your breath while cleaning his teeth" created by Rosser Reeves, who invented the term unique selling proposition, Colgate could differentiate their toothpaste from others and gained a competitive advantage (Batra, B. (2006) Advertising Management, p.462). Consumers associate the slogan with Colgate’s product as a unique product to receive healthy teeth and a healthy breath. This has been a milestone for Colgate consequently becoming a market leader for toothpaste products. Another competitive advantage is the close cooperation with thousands of small shop owners and local wholesalers. This cooperation ensures greater availability to their products as well as to provide the right assortment of products with best visibility in each store.
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