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The rise of battery-powered toothbrushes.

Extracts from this document...

Introduction

The rise of battery-powered toothbrushes TABLE OF CONTENTS Executive Summary 2 Introduction 3 Industry Analysis 3 Overview of Industry 3 Consumer Analysis 4 Community Analysis 4 Competitive Analysis 5 Price 5 Product Life Cycle 6 Distribution 6 Entering the Battery-Powered Toothbrush Industry 6 Company Analysis: 7 Strengths 7 Competitive Strategies 10 Financial Stability 12 Market Positions 13 Changes in Personnel 14 Product Analysis: Colgate Actibrush 14 Branding Architecture and Strategy 14 Indirect Channel Structure 15 Pricing Strategies 15 Promotional mix used and messages 15 Product Analysis: Crest SpinBrush 16 Branding Architecture and Strategy 16 Indirect Channel Structure 17 Pricing Strategies 17 Promotional mix used and messages 17 What's next for the Crest Spinbrush?: Crest SpinBrush Pro 18 Threat of Competition Ensues 18 Conclusion 19 References 21 EXECUTIVE SUMMARY The oral care category has been witnessing increasing sales over the past few years, especially in the battery-powered toothbrush segment. Between August 2001 and 2002, sales of power dental accessories in U.S. food, drug and mass outlets grew by 21.8% (Neff, 2002). There are many competitors in this industry including Colgate-Palmolive and Procter & Gamble. In May 2000, Colgate-Palmolive introduced the Colgate Actibrush with a retail price of $19.99 (Young, 2002). Procter & Gamble was quick to follow suit and introduced the Crest SpinBrush in mid 2001 and priced it at $5.99 (Young, 2002). With 50% of the market share, the Crest SpinBrush dominates the battery-powered toothbrush industry today (Neff, 2001). More and more companies are introducing their own battery-powered toothbrushes and this increasing competition is driving down price points. Along with lower price points, competition has led to price wars between companies. A major competitor for both Colgate-Palmolive and Procter & Gamble is Gillette. Gillette introduced its new CrossAction Power toothbrush in October 2002 (Neffb, 2002). Priced at $6.99, this toothbrush offers many benefits over the power brushes available to date. Both Colgate-Palmolive and Procter & Gamble must be aware of ensuing competition and strategize a plan to conquer new products that emerge. ...read more.

Middle

When partnering with large retail stores, Colgate benefits from great displays and pricing for their products (Colgate-Palmolive Annual Report, 2001). * Global Growth Strategy Colgate realizes the strength in globalization. Operating on every continent in the world (except Antarctica), Colgate-Palmolive promotes evaluating and fostering individual strengths of overseas employees and implementing ongoing education and training programs. (Woods, 2001). A team of 15 who travel to Colgate's international offices teaches these programs (Woods, 2001). Also, Colgate is very involved in global initiatives to improve oral health. For example, Colgate supports programs such Oral Health Month, a new global initiative focused on communicating the importance of good oral health. In addition, Colgate's Bright Smiles, Bright Futures" program on oral health care, includes free dental screenings and education to 46 million children in cities and rural areas around the world each year (Colgate-Palmolive Annual Report, 2001). * Broadening Each Category While continuing to focus on their five core categories, Colgate-Palmolive has placed a great emphasis on broadening the range of products within each category. For example, Colgate's Actibrush is an example of how the Company came up with a product that broadened their toothbrush segment. Moreover, Colgate-Palmolive is also working to reduce the time between the product being conceived and the product reaching retailer's shelves. For example, Colgate Motion, another power toothbrush introduced by Colgate-Palmolive in late 2001 began distribution just nine months after the product design was completed (Colgate-Palmolive Annual Report, 2001). PROCTER AND GAMBLE * Creating Partnerships P&G places a great deal of emphasis on getting involved with advertising agencies, customers, joint venture partners and technology suppliers (P&G Annual Report, 2002). Lafley, P&G's Chief Executive Officer (C.E.O), believes that "P&G will be the best company in the world at spotting, developing and leveraging partnerships in every area of the business" (P&G Annual Report, 2002). An example of a very recent successful partnership was the partnering with Dr. ...read more.

Conclusion

From this analysis, it can be concluded that Colgate-Palmolive is doing very well financially. Record profit margins and increasing cash flows can attest to this fact (Colgate-Palmolive Annual Report, 2001). P&G has been working to gain back sales that were lost in recent years. P&G's significant increase in their health care segment was mainly led by the oral care category (P&G Annual Report, 2002). This is attributable to the introduction of the Crest SpinBrush and Crest Whitestrips. With 50% of the market share, the Crest SpinBrush has definitely given P&G something to smile about. In order to remain strong in this market, there are several issues that both companies need to consider. Price wars between companies have lead prices to decrease within the battery-powered toothbrush industry dramatically. The Colgate Actibrush, which is priced at a premium, may lose sales to companies that are offering similar products at lower prices. A major competitor for both companies is Gillette. Its new CrossAction Power brings with it many advantages over the leading Crest SpinBrush (Neff, 2002). If this product is successful, it could cause P&G to lose their lead in this industry. While sales of powered toothbrushes are rising, there has been a sharp decline in the sales of manual toothbrushes. Sales of power dental accessories in U.S. food, drug and mass outlets grew by 21.8% while sales of manual toothbrushes declined by 8.1% between August 2001 and 2002 (Neff, 2002). Colgate-Palmolive and P&G are cannibalizing their own products (manual toothbrushes) in the course of promoting another one (battery-powered toothbrushes). This may negatively affect both companies' oral care categories in the upcoming years. Both Colgate-Palmolive and P&G need to keep in mind that the range for prices of their battery-powered toothbrushes need to fall between customers' maximum willingness to pay and their production costs (Messinger, 1995). Understanding their target market and keeping in line with competition will help both of these companies to offer better products and in turn gain from higher profits. 1 All prices in this report are in U.S dollars. The rise of battery-powered toothbrushes 1 ...read more.

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