In February 2005, Nigel Búrton, in his third year as president of global oral ca
ID: 2720403 • Letter: I
Question
In February 2005, Nigel Búrton, in his third year as president of global oral care at Colgate- Palmolive Company (CP), had every reason to feel optimistic. Worldwide market shares were strong and Colgate Max Fresh (CMF), a new toothpaste that had helped drive Colgate to a record 34,8%) value share in the important US. market, was in the global pipeline for 2005. Burton had on his desk the proposed marketing launch plans for CMF in China and Mexico. Each plan sought to maximize the business potential in the local market. Burton had to assess the plans from a global perspective He wondered if the costs of adapting the CMF marketing programs in each country would generate complexity. Company Background The Business By January 2005, CP was a s106 hillion glóbal company? operating in 200 countries worldwide. The company focused on two core product segments: Oral, Personal, and Home Care; and Pet Nutrition. Some of CP's well-known brands included Colgate, Palmolive, Speed Stick, Ajax, and Hill's Science Diet. Colgate was the world's leading toothpaste and toothbrush brand; Palmolive was the world's third largest soap brand., CP derived 70% of its sales outside of the US CP had enjoyed a strong year in 2004, reporting +65% unit volume growth, +7% sales dollar growth and +0.1% point growth in gross profit margin to 55.1%, Operating profit and net income were negatively affected ( 2% and 7%, respectively, versus 2003) by the combined effect of increased marketing spending and increases in raw material and packing material costs.5 To drnve growth. CP focused on its higher margin core businesses. Advertising spending was Mexico, and Brazil." In 2004, approximately 40% of total company sales were carefully tiryeted at new high margin products and at high potential markets, notably the US china, Russia, India, frons products launched within the past five years. These new products drove market and n arket leadership in key categories? he past five yeirs Thees new products drove market share growthExplanation / Answer
Background CMF - Global brand launch in China.
Mr. Nigel Burton , The President of Colgate Palmolive Company [CP] - Global Oral Care division was ,reviewing the market launch plans for a new brand toothpaste namely 'Colgate Max Fresh ' [CMF] by CP's Chinese and Mexican subsidiaries . Both launch plans involved departures from the CMF marketing program for justified . U.S launch USA launch six months earlier. Burton must have decided whether the costs of marketing program adaptation in China and Mexico can be justified. U.S Launch [ Breath Strip in Toothpaste ] , assessing the US market conditions are necessary at this point . U.S retail toothpaste market - $438 million with a growth rate of 8% since the year 2000 s , CP and P &G are on a head to head competition for the 2004 value share of toothpaste market with 34.8% and 31.6% value share respectively. facts in this case proved that the Us Market toothpaste benefit importance cosmetics benefits such as breath freshening and whitening are at the 3rd and 5th place of preference by consumers. respectively. while therapeutics benefits ' protection against cavity / contains fluorides ' , 'reduce plaque buid-up' and 'controls tarter ' are at the 1st , nnd and 4th places respectively. This shows that in the US market , there is more therapeutic benefits sought from toothpaste. It was also seen that there was a dwindling importance of the therepeutic benefits ' anti cavity' / tarter at (-)22.70% while there is growth in cosmetic benefits : ' 'whitening ' at + 16.4% and the 'Freshening / cleaning ' at =2.90 % . For 2004 , the therapautic benefits total at 53.4% while cosmetic benefits add up to 44.60% .
Further, The CMF was positioned as Brand, priced parity with Crest Whitening Expression used celebrity actress as part of marketing and promotion of CMF Colgate Palmolive Company [CP] established and organized management teams in North America , Latin America . Europe and ASIA /AFRICA with global group headquarters located in New York. CMF was not launched in the US with a global marketing program . at not all aspects were transferable as seen by China and Mexico '$348 million retail toothpaste market , 82% of Colgate in 2004.-
It was observed that fewer adaptation than launch in China promoting , flavors . and cooling crystals "CP Mexico
launched CMF in a less comprehensive and data driven manner than CP china , costing much less 'adaptation'.
different consumer demands and different personalities The End!. CMF didn't test well in China , changed name to 'ICY Fresh' used by Jay Chow instead of Emilly Procter Flavors and packaging must have changed in order to appeal to the consumers . a large number of effort and cost went into to success of CMF in China.
in view of above:
1. The China and Mexico has not shown good adaptation due
- no suffiecient test and pre launch was carried out.
- no evaluation was made in China and Mexico for preference i.e cosmetic purpose or therapeutic purpose of the toothpaste.. the proposed adaptation were nice to haves - slogan of niche product.The profit was much less than expectation from this product.
2. In CMF there should be long term perspective and shall have conducted the customer preference research , and launched in haste - which are commonly found in short term perspective for new product launch. these had made the complexity of the said launch.
Mr Barton ,should have more careful for this pre launch research and brand selection. The huge cost avoidance for pre launch research proved costly to Mr Barton.
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