Segmentation of toothpaste market in india

Table Of Contents

Executive Overview 3 Situation Analysis 4 Market Summary 5 Trends, growth, market share winners & losers 5 Segmentation & target market(s) 5 Environmental Scan 6 Social/Cultural Factors and Trends 6 Economic Factors 7 Technological Factors 8 Competition 8 Other factors 9 SWOT Analysis – key factors discovered 10

MKT 291 Industry Analysis Outline

1. Table of Contents (include page numbers)

2. Executive Overview (10 points)

Executive Overview
The Colgate-Palmolive Company is a worldwide leading consumer products company committed to the care and cleanliness of families and-or their homes. It started in the early 19th century as a small soap and candle business founded by William Colgate. Now, more than 200 years later, Colgate-Palmolive serves and is trusted by millions of people worldwide. They sell their products in over 200 countries around the world and identify under brand names such as Colgate, Palmolive, Mennen, Irish Spring, Protex, Ajax, Axion, Soupline, Souavitel and Fab, Sorriso, and Kolynos. Colgate-Palmolive has an enormous market diffusion of 67.7%., which is actually 50% higher than the second leading brand. Colgate-Palmolive’s’ products are arranged as oral health, homecare product or personal product. As their market is evaluated, it is clear to see how the product diversion is segmented based on location and certain demographics. It is important for Colgate to recognize how certain regions act as well as understand their habits and lifestyle choices. This will enable them to promote their product in whatever way seems most fit. The economy, just as the environment, also greatly affects how Colgate must carry out their business. The economy can affect both the consumers and suppliers bargaining power, as well as the the rivalry among competitors, who place nearly identical products on the market. One of Colgate’s key competitors is Procter & Gamble Co. because they specialize in almost identical fields. Colgate obviously produces products that are used by the consumer directly. Consumers are protected by legal and regulatory factors, and the company is ethically responsible for a product that is safe to both the user and the environment.

3. Situation Analysis (60 points)
a. Brief history of your brand and your brand’s parent company

Colgate-Palmolive is an umbrella brand which was introduced in 1873. It principally used to sell oral hygiene products such as toothpastes, toothbrushes, mouthwashes and dental floss worldwide. William Colgate was an English manufacturer who founded the Colgate toothpaste company in 1806. Sixteen years after the death of him, Colgate oral hygiene products were first sold by the company in 1873. In 2015, according to an authoritative report by market research company Kantar Worldpanel, Colgate is the only brand in the world purchased by more than half of households globally. Colgate-Palmolive has a global market penetration of 67.7% which is nearly 50% higher than the second-placed brand Coca-Cola (43.3% penetration) and a global market share of 45%. In 2014, nearly 40 million new households purchased Colgate-branded products. It maintained the highest growth rate of all brands in the survey. Colgate-Palmolive was the first toothpaste in a collapsible tube, introduced in 1896 in New York City. 6 years later, Colgate established its first factory in India to produce toothpaste for the domestic market, and by 1999 became the highest selling brand in the world. After entering the 21st century, Colgate occupied 20% of the market share for toothpastes in China. As of 2015, it also commanded approximately 70% of the oral care market in Brazil. The oral care products were the Colgate company’s largest source of income, making up around $7.5 billion in 2015, or 47% of net sales globally. Today, Colgate-Palmolive has numerous subsidiary organizations spanning 200 countries, but it is publicly listed in only two countries, the United States and India.

b. Market Summary
a. Trends, growth, market share winners & losers
Overall Trend of Colgate is its market in oral care is vastly growing. According to Statista, total sales of Colgate toothpaste ranked the first with 175.5 million among annual sales of the leading toothpaste in the United States in 2014. Its market share in the US is 48% winning Sensodyne and Crest. Colgate is a clear market leader in the Toothpaste category, and this new trend is attributed to India and other emerging markets across the globe. The most increasing market share product in the company, is toothpaste with preferred local flavor. For example, in India, Colgate launched Colgate Active Salt with Neem and a mouthwash named Colgate Plax Bamboo Charcoal. Colgate’s toothpaste and toothbrushes reached record market share 57.4% and 42.0% respectively in 2014 in India. On the other hand, in America, which has a more competitive market share, Colgate Optic White Franchise increased market share of toothpaste from 5.3% to 5.6% in 2014. Worldwide, Colgate Market share winners are toothpaste with diverse flavors. On the other hand, one market share losers are pet nutrition which has declined as a proportion of total revenue due to a weak sale trend in Asia Pacific. However, it remains as the important market segment for the company.

b. Segmentation & target market(s)
Two main product segments: oral, personal, and home care/ Pet nutrition. Among these product segments the oral care is 46%, personal care is 21%, home care is 20%, and pet nutrition is 13%. It targets the market based on demographics(age and gender), psychographics(lifestyle and personality), and behavioral( benefits and usage). Colgate has a variety of products targeting different consumers such as Colgate advanced pro-shield, which kills germs and keep its effectiveness for 12 hours and Colgate The Optic White has a special ingredient giving a whiter smile. The company also has a brand for Colgate Kids which concentrates on an anti-cavity such as Colgate Dora, the Explorer. It also has the brand named My first Colgate for infant or toddlers who are not able to use a toothpaste and the small toothbrush for them.

C. Environmental Scan
a. Social/Cultural Factors and Trends (as they relate to consumer behavior in your market)
From McGinley’s report, Colgate produced its product by different segmentations such as oral, homecare product or personal product. These product segments are further segmented globally and diversely such as North America, Latin America, Asia, Europe and Africa. Moreover, different product of colgate also produced base on consumers’ psychographics and demographics. For example, people in different regions will have different taste and diet. In this way, the oral problems will also be different. Therefore the promotions or products of Colgate will also try to let the problem recognition of consumers in particular regions become easier. For instance, specific population prefer spicy food and they will have a particular smell in their mouth and pains in gums. In this situation, Colgate’s promotion or product could adapt to this particular population.

b. Economic Factors (what impact does the current economy have on the purchase patterns of your type of product)
The overall economy of a country affects how business is carried out. It also affects the business activities that are associated with a particular product. It is the same case for our product Colgate. The economy affects the product in different ways. Inflation in the economy affects the product in different ways. First is that the economy affects the consumers bargaining power. It is becoming much harder for people to change to better modern products such as our product, Colgate. They would otherwise to use the traditional method of dental cleaning like ‘miswak’. This means that the products consumer market will be low. Another effect the economy has on the product is that it will also affect the bargaining power of the suppliers. The exchange rate fluctuations will affect the cost of raw materials. The suppliers therefore would provide the necessary raw materials to make the Colgate product at higher costs. This will mean that the cost of producing the product will be much high and the overall price will be high to the consumers. The economic factors such as exchange rate and inflation will affect the rivalry among competitors. The Colgate product has so many other alternatives and competition from other similar products. Economic factors in the country favor stiff competition, which is a rising issue for this product.

c. Technological Factors (how does technology impact your product line – if it does)
According to technological factors, technology makes the product line of colgate become more various. With better technology in production line, Colgate can make the single base of a toothpaste to develop into many other segmentations of toothpaste or other sub-products and could adapt to the needs of more consumers. For example, one serie of product “Optic White” could have product line which includes toothpaste, mouthwash or toothbrush. Technology make the diversity of product line become much broader. Technology could make a single type of toothpaste of Colgate to have different segmentations by not changing the main ingredients for production. Different segmentations could have “Advanced Whitening” “Advanced Clean” “Advanced Fresh” and so on.

d. Competition (who are your key competitors and who are your competitors in terms of substitutable products)
Procter & Gamble Co., as known as P&G, is an American consumer goods corporation headquartered in downtown Cincinnati, Ohio. P&G was founded in 1837 by William Procter and James Gamble. It primarily specializes in a wide range of cleaning agents, personal care and hygienic products. Both P&G and Colgate each began in the 1800s as small family-run soap and candle businesses. In the 1960s and 1970s, George Henry Lesch, president, CEO, and chairman of the board of Colgate-Palmolive transformed it into a modern company with major restructuring in order to correspond the company lost its number one place in the toothpaste market when P&G added fluoride to its toothpaste. Colgate-Palmolive and Procter & Gamble Co. have been competing for two centuries. In today’s market, the competition in the toothpaste market has been centered around the two biggest brands, Crest (P&G Co. sub-brand) and Colgate. Each brand claims to be the best in whitening teeth and maintaining overall health of the mouth. These two brands are constantly going to create products with unique features such as different taste of the toothpaste, whitening power and sterilization function in order to attract more customers. Because of this fierce competition between them, consumers could buy a variety of toothpastes in the market to meet their different stringent needs nowadays.

e. Other factors (legal issues or regulatory issues ONLY if pertinent to your product).
Other issues not governed by the economy also affect the product. These include the legal and regulatory factors. Colgate is a personal product, directly used by the consumer. Consumer protection laws are in every country regarding the use and the effect of certain products on the consumer. This law if not followed the product is most likely to fail in certain countries. It is the social responsibility of a company that its product is safe for use by the consumer. Recently the Colgate product has had several legal issues. Studies and tests show that the Colgate product contains triclosan, a chemical that has antibacterial properties. This chemical has proved to have harm on both the consumer and the environment. On the consumer the chemical may cause cancer. The Food and Drug Administration, a body that regulates these products has heightened its attention on triclosan. It is teaming up with other regulatory bodies such as Environmental Protection Agency, to sponsor new researches on the chemical. If at all, the chemical has adverse effects on the consumer and on the environment, the company will have to change a core component of the Colgate product, which may affect it in great ways.

4. SWOT Analysis – key factors discovered (15 points)
Here at Colgate, we have many strengths as a company. The first and easiest one to recognize is brand visibility. Colgate has become a household name in the industry and due to great marketing plans in the past, has become very easy for consumers to recognize when they are in a store setting. They are now involved in over 200 countries so this only adds to their brand image and recognition. Colgate got its start in 1806, so over the 200 years it has been in business, it has been able to show it can weather financial hardships, and has built a very strong customer base, who shows copious amounts of brand loyalty. Due to this consistency and brand loyalty, Colgate had the largest market share in 2016, of 43.8% (businesswire.com). This is the largest by far, and Colgate keeps expanding into other spaces of care, such as pet care.

While Colgate does have many strengths, it also does have some weaknesses. The main one is competition. Personal and Oral care has become a very popular segment in the past decade or so. Well over 13 companies had over a million users in 2016 in the toothpaste space alone. Competition usually means products have to be differentiated or bettered, even if it means a price decrease in the short or long term. Another weakness is the high average price of Colgate. Colgate is typically not considered a value brand, and part of its brand image is a nicer, luxury toothpaste. Colgate Total typically costs around $4/tube, and many people can buy a value toothpaste for closer to $1/tube. Using the last financial statement Colgate has available on their website, Colgate’s sales declined 7% from FY2014 to FY2015. While not an indication of collapse, this could be an issue if the trend continues for the years to come.

The next factor we looked at in the SWOT Analysis is opportunities. The first opportunity would be to expand their product line. Whether they enter a new space, or just expand the offerings they currently have, they must increase sales if they are to stay competitive. Another way to expand could be through the merger and acquisition route. They could attempt to acquire some of the smaller brands in this personal and oral care space. This would allow them to sell product types they do not currently offer, or are underdeveloped. This would also most likely increase their sales, and could be worth it if they purchased a company for the right price. Another good way to encourage people to buy more Colgate products would be to try and find other uses for them. Many companies do a great job of this, notably Arm&Hammer. If people found other uses, that might be enough for them to justify paying a higher price for the product.

The last analysis I will give is the threats that Colgate faces. Competition is the main threat that faces Colgate. As aforementioned, there are an extremely large amount of companies in this space, which makes it much harder to increase sales and market share. With this competition, many consumers often switch and change their brand. Every company seems to offer a different benefit, or have a different great reason to purchase their product. This makes it difficult for customers to have brand loyalty and to differentiate between products. Another huge problem are the animal testing issues it is facing. They were contacted by PETA in 2015, they were upset that Colgate was testing animals. They have now fixed this, and are listed on PETA’s website as a cruelty free company. They must minimize these threats if they want to be successful.

5. Citations – use MLA style (5 points)

6. Appearance and mechanics including Table of Contents with page numbers (10 points)

Works Cited

· Bhasin, Hitesh. "Marketing Strategy of Colgate - Colgate Marketing Strategy." Marketing Strategy of Colgate - Colgate Marketing Strategy. N.p., 03 Dec. 2016. Web. 17 Mar. 2017

· Joseoh Solitro. “Procter & Gamble Vs. Colgate-Palmolive: Which Toothpaste Titan Posted the Better Quarter?” Jun 11, 2014

· Larry Myer. "Regulatory and Permitting Issues." 2005.

· Leslie Wines. “Colgate-Palmolive Vs. Procter & Gamble”. October 13 2003

· McGinley, Devin. “Mouthwash Manufacturing in the US.” IBISWorld Database. IBISWorld, October. 2016. Web. 17 Mar. 2017

· Penny Morgan | Jul 27, 2015 11:06 Am EDT. "How Much of the Market Share Do Colgate's Leading Brands Have?" How Much of the Market Share Do Colgate's Leading Brands Have? - Market Realist. N.p., n.d. Web. 19 Mar. 2017.

· Roy, Sumit. "Leading Toothpaste Brands in US :Colgate Is No 1, Sensodyne and Crest Showdown for No 2." Online Marketing Trends. N.p., 01 Jan. 1970. Web. 19 Mar. 2017.

· Simmons. "U.S.: Preferred Brands of Toothpaste 2013-2016 | Statistic." Statista. Statista.Com, 2016. Web. 17 Mar. 2017.

· "Persuasive Products." Advertising: A Cultural Economy, pp. 153-187

· "Colgate Annual Report | Financial." Colgate Annual Report | Financial. Colgate-Palmolive, Dec. 2015. Web. 17 Mar. 2017.

· "Company Stories." Ethical Consumer: The Alternative Consumer Organisation. Ethical Consumer, Jan. 2013. Web. 17 Mar. 2017.

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