The rise of battery-powered toothbrushes.

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                The rise of battery-powered toothbrushes

The rise of battery-powered toothbrushes

Table of Contents

Executive Summary        

Introduction        

Industry Analysis        

Overview of Industry        

Consumer Analysis        

Community Analysis        

Competitive Analysis        

Price        

Distribution        

Entering the Battery-Powered Toothbrush Industry        

Company Analysis:        

Strengths        

Competitive Strategies        

Financial Stability        

Market Positions        

Branding Architecture and Strategy        

Indirect Channel Structure        

Pricing Strategies        

Promotional mix used and messages        

Product Analysis: Crest SpinBrush        

Branding Architecture and Strategy        

Indirect Channel Structure        

Pricing Strategies        

Promotional mix used and messages        

What’s next for the Crest Spinbrush?: Crest SpinBrush Pro        

Threat of Competition Ensues        

Conclusion        

References        


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.

In the same time frame that power dental accessories rose 21%, manual toothbrush sales declined by 8% (Neff, 2002).  Manual toothbrushes provide a large amount of profit for Colgate-Palmolive and Procter & Gamble and thus these two companies must be keep in mind that cannibalization of their own line of products could lead to upsetting results in the future.  


Introduction

The sources listed in this report were primarily obtained from the databases provided by

Dalhousie University’s library.  The databases searched most frequently were ABI Inform Global as well as ABI Inform Trade & Industry. A few resources were found under the CBCA Fulltext Business database. Trade journals and magazines that were found to be most useful were Advertising Age, Business Week, Drug Store News and DSN Retailing Today.  

          Besides trade journals and magazines, this report also uses annual and shareholder’s reports for information on the financial position of each company.  Moreover, company websites were extremely helpful for recent company press releases and for product information.  Finally, attempts to gain information from representatives of Colgate-Palmolive and Procter & Gamble (P&G) were unsuccessful and thus personal communication is not included in this report.  

Lastly, Internet sites found by the Google search engine were also used. Key words/phrases searched under Google were: “market share power toothbrush,” “Colgate power toothbrush”, and “Procter and Gamble power toothbrush.” One Internet site that was extremely helpful in researching this topic was AdAge.com.

Industry Analysis

Overview of Industry

Oral care is one of the strongest leaders in personal care products today.  With 3.7 billions dollars in retail sales in the fifty-two weeks ended August 12, 2001, the oral care category grew its sales by 4.5 per cent over the previous year (Zappiera, 2001).  This category can attribute its earnings to new technology and breakthroughs in pricing (Zappiera, 2001).  One such breakthrough is the battery-powered toothbrush, which has become one of the leading segments in the oral care category today (Anonymousa, 2001). According to Colgate-Palmolive, the power brush segment grew 38% in 2000 and this will account for a third of the oral category dollars by the end of 2001 (Anonymousa, 2001).  Battery-powered toothbrushes are effective and convenient for the consumer and, comparing it with its electric counterpart, are much more economical (Zappiera, 2001).

Two companies that have been competing in this industry are Colgate-Palmolive and Procter and Gamble (P&G).  This report will focus on these two companies.  Furthermore, the data and results recorded in this report will be mainly from the United States.

Consumer Analysis

Consumers of the oral care industry as a whole are becoming more conscious of the importance of having healthy teeth (Rosen, 2000).  Moreover, as consumers begin to value the fact that good oral habits mean better looking, healthier teeth, they also are willing to spend more on oral care (Rosen, 2000).  According to suppliers, consumers want to choose from a vast selection of oral care products.  Whether it is choosing from more sizes of brands or more types of the same brand, consumers do prefer to have a broad selection (Rosen, 2000).  

The target markets for this industry are children and adults as these are the purchasers of battery-powered toothbrushes.  The decision-making unit for children would be a parent or guardian. The consumer is one who values the health of his or her teeth and sees the benefit of using products that are slightly more expensive than manual toothbrushes. This target market is growing exponentially each year.  It is important that companies, who can take advantage of this trend, use this as their competitive advantage.

Community Analysis

        As healthy lifestyles become more and more important in today’s society, consumers are becoming more health conscious. As consumers’ values change towards the betterment of health, they are more willing to pay premium prices for oral care products that work (Freeman, 1999).  Freeman (1999) also reports that as the population ages, there is a large number of adults over 40 that are increasingly interested in health and well-being.  

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Competitive Analysis

The battery-powered toothbrush industry has emerged mainly through a value-based strategy by all competitors in the field.  This strategy stems from providing the consumer with a product that is considered to be of higher quality and durability (Messinger, 1995).  Products in this industry by different firms tend to have distinctive differences in their features. Profiles of the major competitors in this industry can be found in Appendix A.

Price

The battery-powered toothbrush industry has made many consumers buy an innovative product for brushing their teeth instead of a manual toothbrush. This has been aided by the fact that ...

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