What are the key characteristics of the competitive context in which the decision regarding Precision need to be made? What are Colgate’s strengths and weaknesses in the toothbrush category?
Competition:
o Oral B , J&J , Private Labels and Lever –4 major competition.
o Oral B Sales at 90MM, Ops Margin 18MM (20%) , 17MM in adv expenses.
o J&J 21.7MM expected expense on promotion and advertisement , operating margin 8.4% , sales of 54MM
o P&G most recent entry. Media expense 6.4MM
o Simthkline Beecham – 10MM media expense, 4.6MM promotion.
Basically, highly competitive market with low margin with expected growth around 9%. Huge money being spent on advertisement both voice and media and tough competition for shelf space. 82% purchases are not planned for by the consumer. Re-assuring to consumers on the value and price aspect of the toothbrush and pretty much everyone has a claim about doing something good for the health conscious consumers.
Strength/Weakness:
o Well positioned in the toothbrush market, coming second to Oral B on dollar sales but number one with unit volume sales.
o CP holds large market share and strong brand name
o Weakness may be too many models ( SKUs) as compared to other competitors. Possible issue with managing the product portfolio, might consider removing few SKU’s- possibly teen.
How would you segment the toothbrush market overall? (10 points)
Answer:
The overall toothbrush market in the U.S in 1991 is $453MM out of total $2.9BB Oral care market in U.S. In order to segment the toothbrush ...