COLGATE MAX FRESH: GLOBAL BRAND ROLL-OUT

An Analysis

Nachiket Mujumdar

20130120120

Introduction

Colgate Max Freshs (CMF) introduction to the US market drove Colgate-Palmolives (CP) US

markets value share up to 34.8% ahead from Procter & Gamble (P&G) at 2nd place with 31.6% value

share. Nigel Burton, the president of global oral care at Colgate-Palmolive Company (CP), is reviewing

market launch plans for a new toothpaste, Colgate Max Fresh (CMF) by CPs Chinese and Mexican

subsidiaries. Both launch plans involved departures from the CMF marketing program for the USA

launch six months earlier. Burton must decide whether the costs of marketing program adaptation in

China and Mexico can be justified.

US LAUNCH Breath Strip in Toothpaste

Assessing the US market conditions

US retail toothpaste market - $438 million with a growth rate of 8% since 2000

From Table B in the case, 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.

Exhibit 2A shows that in terms of US Market Toothpaste Benefit Importance, cosmetics benefits such as

breath freshening and whitening are at 3rd and 5th places respectively while therapeutic benefits :

protection against cavities/contains fluoride, reduces plaque buildup and controls tartar are at 1st,

2nd and 4th places respectively.

This shows that in the US market there is more therapeutic benefits sought from toothpastes. Exhibit

2B on the other hand qualifies that consumer benefit data. It shows that between 2000 and 2004 data.

There is a dwindling importance of the therapeutic benefit : anti-cavity/tartar at -22.7% while there is a

growth in cosmetic benefits : whitening at +16.4% and freshening/cleaning at +2.9%. For 2004,

therapeutic benefits total at 53.4% while cosmetic benefits add up to 46.6%.

CMFs success in the US market is attributed to the fit in the needs, wants and expectations of the

consumers with the products main benefits: breath freshening and teeth whitening.

Critical analysis of the US launch

1. Positioning: CMF was positioned as a premium brand. It was positioned midway between

offering therapeutic as well as cosmetic benefits.

2. Pricing: It was priced at par with CWE.

3. Product: The transparent bottles created a visual impact when placed on the retail shelf.

4. Promotion: Promotion was through

a. Media: To create awareness

b. Website

c. Program sponsorships

d. Instore sampling, merchandising displays, sales promotions

The reality is that the U.S. Marketing team took little or no account of the global transferability of their

program. They simply sought to develop the best possible marketing program for the U.S. This becomes

apparent once the Mexico launch is introduced. The U.S. advertising was, most obviously, country-

specific because the celebrity, Emily Proctor, was not known outside the U.S. Global marketing

strategy involves understanding and addressing differences across markets, the dilemma arises

when trying to balance the global brand and appeal to distinct regions.

Successful global marketing campaigns leverage similarities to preserve a consistent message

and limit costs while also customizing advertising to align with regional cultural preferences.

CHINA LAUNCH Whole New Dimension of Freshness

Assessing the Chinese market conditions

1. Market size: $868 Million with a growth of 38% since 2000

2. Skewwed towards Theurapatic segment but freshness segment is increasing

3. Major competitiors are Darlie, Crest Tea fresh

4. Market heavlily skewewed towards lower priced local brands

5. Premium market 30%

6. Significatn price difference Premium product 11 12 RMB

Local product 4 RMB

Reason and changes in CP plan in the Chinese market

The CP China changes to the CMF marketing launch were justifiable as per Chinese market situations.

CPs market position in China is more similar to the U.S. than Mexico. CP and Procter & Gamble are in a

battle for market share leadership.

Sr No.

Changes Reason

1 Name change Max Fresh -> Icy Fresh

The biggest challenge was creating the right communication. Max Fresh did not strike the right chord with the consumer.

2 Term change Breath strips -> Cooling crystals

Breath strips was unknown. A meaningful phrase was required

3 Advertising strategy Communicating freshness was a challenge.

4 Emily Procter -> Jay Chow as a celebrity

Need to connect to the youth on an emotional level. CSI and Emily Procter were unknown in China

5 Complete makeover of the brand To create differentiation and appeal

6 Introduction of new flavors Chinese toothpaste market was developing quickly, new flavors were popular, competitors were introducing new flavors

7 Clear bottles -> Clear tubes Cost considerations

8 Clear stand up tube Maximum visual impact at point of sale

The marketing adaption costs for the CMF launch in China are much larger than in Mexico.

As the Asian market was favorable towards freshness, it would be easy to launch the product in China.

The product should have been launched earlier.

The impact of the changes in the Chinese launch were as follows,

1. The media expenditure was very high. 1.5 million(Celeb ads) vs. 0.5 million (Adapting existing

strategy)

2. Flavor change, Packaging change and color change added $1.77M ($200000 + $1.5M + $7000) to

the capital cost and delayed launch.

MEXICO LAUNCH New Dimension of Freshness

Assessing the Mexican market conditions

1. Toothpaste market - $348 Million with a relatively flat demand

2. Difficult to secure incremental shelf space to accommodate new product launches

3. Colgate dominates with 8% market share followed by Crest at 10%.

4. Market heavily skewed towards therapeutic segment

5. Majority of consumers focused on basic oral care

Evaluation of the launch plan in Mexico

The CMF launch was to neutralize the anticipated launch of CWE which threatened the market

domination of CP.

1. The pricing of CMF was at par with Crests Cool Explosions.

2. As Crest would lose more than fair share as compared to Colgate, cannibalization was not a big

issue.

3. In the concept stage, consumer appeal of CMF was strong but the consumers suspected a

corresponding lack of cavity prevention and whitening benefits. The debate was between

positioning the product as all inclusive vs. single minded approach.

4. The media advertising was based on the advertising that combined the explosive power to

freshen with extreme living.

5. Promotion activities included in-store merchandising, sampling and PR to promote the core

benefits.

CMF is not essential to the Mexican portfolio as the toothpaste market is growing at a slow rate. Colgate

already owns the majority of the market and also the environment does not support new launches. The

US launch strategies will also not be applicable in the Mexican market as the conditions are very

different.

But with the launch of Crest Cool Explosions, PnG is threatening the value share of CP. CP can secure its

market share by launching CMF in the Mexican market. CP dominates Crest in Mexico so any new CP

product can probably obtain distribution. The pro-forma PnL for CMF launch predicts net operating

profits in the first year itself (25% of sales) and a steady growth (11% in the second year).