1. CP company should launch Precision as a niche product for the below 2 reasons. 1) Not all of the customers are willing to pay high price for the best toothbrush for their oral hygiene, which is the main objective of the Precision (refer to Exhibit 1). 2) CP is already no. 1 volume in the tooth brush market so the Precision should avoid the cannibalization for their existing main-stream products in both the value segment and the professional segment and should compete with Oral-B for their weakest segment, super-premium (high profit margin) to be also no.
1 revenue in the market (refer to Exhibit 2). 2. I would recommend the following marketing recommendations for the Precision. 1) Positioning: The Precision should be positioned as a niche product to target the utilitarian people who search out functionally effective products for their oral hygiene because it meets the best for this category of customers’ requiremnts and it is more profitable than positioning as a main-stream product (refer to Exhibit 3).
2) Branding: CP should use brand extension strategy rather than line extension strategy for the Precision because the general image of Colgate brand is known as a medium quality product so the change of the customer’s perception about CP product is essential to the success of this high quality product. 3) Communication Strategies: CP should be focused on showing customers testimonial for the superiority of the Precision not only by advertisements but also demonstrations through free consultation events for the customers’ oral hygiene at where the products are sold.
CP also should focus on distributing the products by professional groups such as dentists or pharmacists so many consumers can recognize the Precision as the best functional tooth brushes for them. Exhibit 1 Consumer Segmentation of Toothbrush users Type of Consumers % of each type Major Toothbrush Brands Therapeutic Brushers 46% Oral-B Angle, Oral-B Regular Cosmetic Brushers 21% Colgate Classic, Oral-B Regular The Rest of Brushers 33% Colgate Classic, Oral-B Regular
Exhibit 2 Principal Toothbrush Brand Unit and Dollar Market Shares (1992) Brand Volume (%) $ (%) Main Segment Colgate 17. 3 18. 5 Professional 4. 9 2. 9 Value Total 22. 2 21. 4 Oral-B 19. 8 26. 2 Super-premium Total 19. 8 26. 2 Exhibit 3 Profit-and-Loss Pro forma for positioning the Precision (1993~1994) Type of Position Price Volume Amount Cost Profit Niche $2. 89 33MM 95MM 50MM 45MM Mainstream $2. 49 33MM 82MM 46MM 36MM