Colgate Pricing Strategy

In a highly competitive oral care market, Colgate holds its’ own, and maintains a category leadership position. The company's strategies to category growth are accomplished by long-term, joint planning with retailers; understanding consumers and how they shop; and employing integrated marketing to demonstrate the benefits of new products. The company has long been on the voyage to establish the best brush possible, and in doing so, has developed a number of impeccable products along the way. The introduction of the Wisp portable mini-brush, which was voted 2010 Product of the Year and marketed through online video and social media, increased Colgate's market share of the U. S. manual toothbrushes to a record 32. 2% last year. In the toothpaste segment, Colgate took the leadership position with 36. 2%. Earlier this year, Colgate introduced Wisp Plus Whitening with over 15 million impressions in the second quarter. Articles in Fitness and InStyle magazines and mentions on â€Å"The View† television program and numerous blogs further promoted awareness of the product, as did sampling at colleges and conducting a Facebook fan drive. In keeping up with consumer trends, Colgate began to focus on features, comfort and professional recommendations. Consumers first purchased toothbrushes without much knowledge or information concerning the product’s benefits. As new product development increased, and consumers became better informed about the benefits of toothbrushes, they began to focus their interest not only on cavity prevention, but also on the health of their gums, their oral hygiene, and their cosmetic appearance. Because consumer interest and toothbrush purchases began to increase, advertising and promotion also began to increase, which lead to the development and addition of the super-premium product class (McCarthy, 2002). Consumers began to purchase toothbrushes based on the specific benefits each toothbrush and company had to offer. One study identified 46% of adults as being therapeutic brushers – that is, brushers acting primarily to avoid cavaties and other problems with oral care (Pauszek, 2009). In reaction, Colgate developed the new Prescision toothbrush. CP tracked consumers brushing movements and how they affected plaque removal, thereby developing a brush with a varation of bristle lengths to thoroughly clean hard to reach areas (Younger, 2002). Production began in 1989 when the company put together a research team whose purpose was aimed at testing the design of the toothbrush, how the company would market the product, and how the company would gain a competitive advantage over others. Colgate-Palmolive’s mission was to â€Å"develop a superior, technical, plaque-removing device† (Laidler, 2003). The research team tested and experimented with the toothbrush for eighteen months by the usage of â€Å"dental professional focus groups and product usage tests. † This led to the introduction stage of the product life cycle, with the â€Å"launching† of the Precision toothbrush to the oral health care market in 1993 (Laidler, 2003). Colgate-Palmolive considered many different names, which included, â€Å"Colgate System III, Colgate Advantage, Colgate 1. 2. 3, Colgate Contour, Colgate Sensation, and Colgate Probe† (Laidler, 2003). Colgate-Palmolive decided upon the name Precision, because they did not want a name that could lead customers to associate the new toothbrush with their already existing toothbrush, Colgate Plus. The price budget for promotion was set at 14. 4 million dollars. The company’s promotion plan was to â€Å"induce trial† (Laidler, 2003). Colgate Palmolive planned to promote the Precision toothbrush by offering a free five-ounce tube of toothpaste or a fifty percent off coupon that could be put towards any other size of toothpaste to every consumer who purchased a Precision toothbrush, and by offering $. 0 off coupons (Younger, 2002). The position of the Precision toothbrush could be niche or mainstream (Colgate Palmolive, 2009). The focus of niche positioning would be placed on consumers who are concerned about the prevention of gum diseases. There would be many positive benefits to the company if Colgate-Palmolive were to position the Precision toothbrush as a niche product. These benefits would include one, by targeting the segment of consumers who are worried about gum disease; Colgate-Palmolive would be able to charge premium prices (Colgate Palmolive, 2009). Two, Colgate-Palmolive would be able to differentiate the Precision toothbrush from other toothbrushes, because of Precision’s technological superiority over the other toothbrushes already on the market. In contrast, mainstream positioning would place emphasis on the Precision toothbrush as being the most appealing and effective toothbrush available on the market. The advantages of using mainstream positioning for the Precision toothbrush would be that most retail stores are under a mainstream position rather than a niche position. In addition, in the super-premium category, the Precision toothbrush would be the most superior product (Younger, 2002). By positioning the toothbrush as a mainstream product, it would in return increase name recognition for Colgate. Negative advantages of using mainstream positioning for the Precision toothbrush are that although the toothbrush would be superior to the other super-premium toothbrushes, the prices for the Precision and other brushes would be equal. Equal prices would then lead to increased competition, which in return could cause prices to go up. A second disadvantage could also lead to the cannibalization of Colgate-Palmolive’s other super-premium toothbrush, the Colgate Plus. By producing a superior toothbrush, that offers more qualities than the other toothbrushes available on the market, at or around the same price as the competition, consumers will hopefully want to purchase the Precision toothbrush over the others. There will be more qualities offered at no extra charge. The price of the toothbrush if positioned as a mainstream product will have to be equal to the prices of the other toothbrushes already available on the market. If the Precision toothbrush is profitable and there is a high percentage of consumer demand, then Colgate-Palmolive might want to consider increasing the price of the toothbrush by a small margin. The price of a product says something about the quality. Even though the quality of the Precision toothbrush will be significantly higher than other leading toothbrushes, the price of the toothbrush will be determined by the prices of the other toothbrushes already in the market (McCarthy, 2002). This pricing strategy is a result of positioning the toothbrush as a mainstream product rather than a niche product.