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MBA Project Report on Colgate Marketing Strategy

Executive Summary

Colgate Palmolive is a well-reputed company with a large series of its well-known products having different varieties in terms of flavour. Colgate Palmolive is the world leader in oral care industry. They cater the need of different segments by offering innovative products. The main objectives of this study is to analyse the existing channel strategies, physical distribution, sales force design and marketing strategies of Colgate Palmolive in India and recommend the improvement if any on these areas.

Furthermore the communication strategies are discussed in detail. The communication strategy includes the study of the message strategy, creative strategy, the positioning of various brands of Colgate as well as the use of the various communication channels.

Colgate Palmolive India

 

  • §         Headquarter in Mumbai with an annual Turnover around 1100 crs
  • §         Market leaders in Oral care
  • §         Colgate consistently won India’s no 1 brand of the year award from last three years
  • §         Colgate Ranked among Best Employer in India

In the oral care product segment following Colgate Palmolive are the toothpaste available in Indian market:

  1. 1.      Colgate Dental Cream
  2. 2.      Colgate Total 12
  3. 3.      Colgate Sensitive
  4. 4.      Colgate Sensitive-Pro-Relief
  5. 5.      Colgate Max Fresh
  6. 6.      Colgate Kids Tooth Paste
  7. 7.      Colgate Fresh Energy Gel
  8. 8.      Colgate Herbal
  9. 9.      Colgate Cibaca Family Protection
  10. 10.  Colgate Active Salt
  11. 11.   Colgate Maxwhite

1.     PART A

1.1            Marketing Channel Strategies:

The company had 1713 direct stores as of may 2010. The oral care distribution network is distribution network is spread across 90 cities in India. The company products are available across 4.3 mn retail outlets. Flag ship Brand – Colgate Dental Cream is the largest distributed product in the Toothpaste market available in 4.1 MM stores. Serviced by Company field force, more than 1800 stockiest & super stockiest & their field force

 

Distribution Channel of Colgate Palmolive

Colgate uses different marketing channel strategies for its different toothpaste product. We have analysed some of the marketing channel strategies used by Colgate Palmolive:

1.1.1 Channel of distribution:

A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. Colgate Palmolive uses all the available intermediaries wholesalers, retailers, and stockist. Distribution strategy for the Colgate Total is Indirect. It is through Dentist, plastic surgeon, drug stores, grocery stores, large retail stores and department stores.

 

1.1.1        Channel level

A layers of intermediaries that perform some work in bringing the product and its ownership closer to the final buyer. Colgate Palmolive uses level 2 channel level containing wholesalers and retailers.

 

1.1.2        Channel conflict

Disagreement among marketing channel members is generated when one channel member’s action prevents another channel from achieving its goal. Colgate Palmolive fallow the traditionally distribution channel not involving overlapping of intermediaries so there is very less amount of channel conflict.

 

1.1.3        Intensity of distribution

As the product is daily useable commodity so the company is using intensive distribution.

 

1.1.4        Multichannel distribution system

As the time changes the companies changed from single channel distribution system to the multichannel distribution system, often called as hybrid marketing channels. Multichannel marketing occurs when a firm sets up two or more marketing channels. With each new channel, the company can expand its sales and market coverage. But those are hard to control, and may create conflicts. Colgate Palmolive uses the Multichannel distribution.

1.1.5     Recommendation

  • §         Dentist’s plays a big role in the distribution of oral care products. Colgate Palmolive should more focus on distribution of toothpaste in dentists’ offices.
  • §         Colgate Palmolive should focus more strongly on other retail locations, even it adapted intensive distribution there is still scope of other retail location where small unknown brand capture the market share.
  • §         Colgate could direct market the toothpaste by sending special coupons in the mail to consumers, or by offering rebates to consumers who purchase other Colgate-Palmolive oral care products.
  • §         The toothpaste could be distributed through plastic surgeons because many people who visit a plastic surgeon are concerned about their appearance, and would likely consider the different options available to them that will enhance their appearance, such as their teeth.
  • §         It could be distributed through make-up departments because most people who shop for make up at large department stores are also concerned with looking their best.
  • §         The company can approach the government to distributing the products in military canteen or other organisation which needs these oral care kind products.
  • §         The company can come up the concept of forming a retail chain of oral care products across all over India as it is follows the marketing strategy of Umbrella branding.

1.2      Distribution Channel

The most important part of marketing is how a product will arrive from the seller to the buyer. Many products go through a channel of distribution, which involves manufacturers, wholesalers, retailers, and consumers. The distribution strategy proposed is through dentists, plastic surgeons, drug stores, grocery stores, large retail stores, and department stores. Therefore, Colgate Total channel system is indirect because its consumers are spread throughout many geographic areas and often prefer to shop for certain products at specific places.

Beside convenience stores and large retail stores, many food stores play a key role in the distribution of oral health care products. “Mass merchandisers gained share due to increased in-store promotional support”. Because of the increase in the demand for oral care products, stores began shelving more oral care products. This is a big advantage for Colgate because there would be more room in the stores for them to market the new Colgate Total. Dentists also play a big role in the distribution of oral care products.

1.2.1        Logistics

 

The steps Colgate took were to redesign its distribution network, improve its transportation management system, update its logistics efficiency program, and develop customer cost-to-serve data.

The use of integrated logistics systems encompasses materials management, material flow systems, and physical distribution aided by information technology. Through this use of ILS, Colgate has been able to shorten the order cycle time, reduce clerical labor, reduce error rate in documents and provide improved control of operations.

It is made possible through the use of following activities by Colgate through ILS

a)      Sales Forecasting on the basis of which company schedules distribution, production and inventory levels.

1.2.2        Customer service level desired by target market

Colgate uses store promotions to provide the customers with a high customer service level. The product will be stocked to provide rapid and dependable delivery to the customer.

Examples:

  • §         Retails: Reliance, Big Bazaar, Hypercity, Food Bazaar, etc.
  • §         Small Retails: Religare Health, Doral pharmacy, Fontainblue Store, etc

Transportation:

  • ·        Truck
  • ·        Rail
  • ·        Water
  • ·        Air

    1. 3 Sales Force Design

    1.3.1 Sales Force Objective and Strategy

    In January, sales teams are apprised of the yearly objectives, which are framed from the Organization goals for the year. Colgate uses ‘360-Degree’ marketing to reach its customers and the Sales force is empowered to understand its Marketing strategy, build relationships with large and small retailers. Colgate continues to make investments in training to improve the skills of its people and expand their capability to deliver strong business results. For example, every Colgate employee attends a program called “Valuing Colgate People” that stresses Colgate’s global values of Caring, Continuous Improvement and Global Teamwork as well as the importance of treating all people with respect. Personal Selling, Customer Relations, in-store monitoring of consumer behaviour etc. are employed depending on the stage a product is in its PLC. It wants to have brand leadership across all its brands. It assigns specific priorities to each product category which is agreed upon by all geographies and functions.

    1.3.2 Sales Force Structure

    Colgate Sales Teams are structured on a functional basis. But since it’s a MNC, they also employ a Matrix structure. Their product categories don’t have dedicated Strategic Business Units but are centrally governed. This enables the sales force to handle a broad portfolio and develop a holistic perspective of the business. In India their Sales & Distribution function operates in branches in the four metropolitans. Each branch comprises a multifunctional sales team and a field force, to plan and implement various trade schemes and drive sales volumes.

    In India, sales teams report to the Function Heads of each function, who in turn report to the Managing Director. Each Function Head also reports to the Divisional Function Head, who in turn reports to the Global Category Head.

    1.3.3 Sales Force Size

     

    Colgate employs Sales force of differing sizes based on their strategy for the product and the estimated workload for the product. For example in oral care, they have expanded the size of the Colgate professional sales force who visit dental offices, and are placing a sharper focus on partnering with academia and key opinion leaders. This is based on Colgate’s strategy to drive growth through relationships with dental professionals. Endorsements by these professionals strengthen customer perception about the product, drive trial, long-term loyalty and in turn market leadership for Colgate.

    1.3.4 Sales Force Compensation

    The appraisal period for Colgate-Palmolive is January-December. Employee achievements are measured against these objectives. Stress is not only on results but also methods behind the results and adherence to the Organization principles.

    There is a half yearly performance appraisal as well. Regular coaching and feedback for the salesperson is emphasized for his development in the organization.

    Colgate offers competitive compensation which depends on the level of responsibility, qualification and experience of the candidate. Compensation levels are driven by:

    • ·        Market Compensation standards
    • ·        Internal compensation structure
    • ·        Performance and Potential of candidate

    2.      Part B

    2.1      Introduction

     

    The Indian advertising market was Rs. 236 billion in 2010 and is expected to grow to Rs. 277 billion by 2011, a growth rate of 17.4%. Currently advertising through television represents the largest segment of the Indian advertising market with a 44.5% share of the overall market, followed by print advertising with a 42.4% share of the overall market. Outdoor advertising comprises about 5.9% of the market, radio advertising about 3.8% and internet about 3.0.

     

    2.2              Marketing Communication Objectives

     

    2.2.1        Introduction

     

    Colgate has a variety of products in its product line- Colgate dental cream, Colgate Activ Salt, Colgate Cibaca, Colgate Total, Colgate Sensitive Pro-relief. Each product has its own communication objectives, and these are widely discussed in detail.

    Colgate has always positioned themselves as the most recommended toothpaste by the dentists and this is always seen in all their communications.

    The various marketing communication objectives for a product are as follows:

    1)      Category Need: To establish a product or service category to remove or satisfy a perceived difference between current motivational state and a desired emotional state.

    2)      Brand Awareness: Ability to identify the brand within the category in sufficient detail to make a purchase.

    3)      Brand Attitude: To evaluate the brand with respect to its perceived ability to meet a currently relevant need.

    4)      Brand Purchase Intention: Self instructions to purchase the brand or to purchase-related action

     2.2.2  Communication Objectives- Product Wise

     

    2.2.2.1 Colgate Sensitive Pro Relief : 

     

    The communication strategy objective is category need and brand attitude. With Sensitive Pro Relief, Colgate has tried to create a new product category in the premium sensitive teeth segment.

    The sensitive segment is a niche category, and its major competitor is Glaxo Smithkline’s Sensodyne.

    According to media reports, around 17% of individuals in India suffer the condition of sensitive teeth. Sensitive teeth are a condition where the individual suffers sharp pain while consuming anything that is hot or cold. Since the awareness about remedy for this condition is low, most consumers avoid consuming foods that causes this pain. Consumers often fear going to dentist because of perceived painful dental measures. Instead they choose to control their intake of chilled food and not address their remedy. This is perhaps the most important challenge that Sensitive Pro-Relief faces in cracking the Indian market.

    Sensitive through its campaign using “chilled-tests’ has able to create a category need i.e sensitive teeth.

    Moreover the communication also shows how the brand is able to provide relief to the people who feel pain in consuming anything cold. This is how they are able to fulfil their objective of changing brand attitude

    2.2.2.2 Colgate Dental Cream

     

    Colgate Dental Cream has been the flagship brand of Colgate. It has been able to maintain its positioning in the germ-fighting segment. It had the famous ‘Suraksha Chakra’ platform from where it built the brand to this level.

    Their communication strategies have always been the focus on “brand attitude” and brand awareness where they tried to showcase their germ-fighting capabilities through its advertisements. CDC has always faced competition from Pepsodent of HUL and many local brands. 

    2.2.2.3 Colgate Total

    Colgate Total showcases the toothpaste as “12-hour protection” that gives protection from 12 problems like cavities, plaque etc.

    The objective is again based on brand attitude.

    2.2.2.4 Colgate Activ Salt

     

    Colgate Activ Salt tries to focus on its gum strengthening quality, and the communication is based on creating brand awareness and brand attitude . The advertisement shows how a person in a flight was asked by a correspondent about whether his toothpaste has salt or not. The strategy is to create awareness among the consumer about the benefits of the brand by showing the advantages of salt in toothpaste.

    2.1.3        Recommendations

    The advertisements should also focus on “Brand Purchase Intention”.  They should drive customers for repeated purchases, and thus help in expanding the market by increase in volume. It can be made through showing a certain quantity of toothpaste needed to have a good teeth cleaning, and thus help in expanding the volume.

    In the sensitive segment, the focus should now shift to “brand awareness”, as the first phase of communications has been able to create the need for the category. Now the consumers must be able to recall the brand i.e. they must identify the brand outside the store and not just inside.

     

     Colgate also follows the industry pattern in selecting the media option. Most of the marketing communication is focussed on the television advertisement. But Colgate also relies heavily on word of mouth communication medium. It takes up initiative to educate people on how to take care of their teeth and help them have stronger teeth and healthier gums. It has recently launched a program to educate people who have sensitive teeth. For this they tie-up with dentists who offer free advice to people in public places like shopping malls. This creates a sense of authenticity in their communication.

     

    In each of the media communication the dentist has been an integral part of the message. But recently Colgate launched a new ad without using dentist for its mouthwash.  This might be an indication of the company moving towards new outlook to advertise its product. At the same time it has utilized its association with dentists to educate people about its new launch Colgate Sensitive.

     

    Recommendation

     

    Colgate as of now is not very aggressive in online advertising. Of all the segments of the advertising market, the internet advertising segment is expected to be the fastest growing segment with an expected growth rate of about 35% between 2010 and 2011. This is expected to grow at approximately the same rate till 2016. High-end products which require high involvement of consumer could be advertised through this medium. This could be a medium to explore.

     

    Radio is generally a stable medium for communication. India with its liberalizing radio regime is likely to experience the world’s fastest growth rate for radio up by 21.9% each year on average through 2016.Radio becomes a generally tactical medium for some advertisers, or a vehicle to bring down costs per contact for others. The percentage of the population using autos for commute is increasing and therefore the time those commuters spend in their cars will increase as well, adding to aggregate levels of radio consumption.  This medium could be used to remain in constant knowledge of consumer.

     

References

 

  1. 1.      Kotler, Philip.; Kevin Lane Keller (2009). Marketing Management, 13th ed. Pearson Prentice Hall.
  2. 2.      (2004). Colgate-palmolive go the purveyance way automating their sales force in to the future. Available: http://www.dedata.com.au/news_purveyance_colgate.pdf. Last accessed 12th November 2011
  3. 3.      Cook, I. (2008). Dear Colgate Shareholder. Available: http://www.colgate.com/app/Colgate/US/Corp/Annual-Reports/2008/Dear-Colgate-Shareholder.cvsp. Last accessed 10th November 2011.
  4. 4.      (2004). Rural Distribution-Wholesale Channel Development. Available: http://www.colgate.co.in/app/Colgate/IN/Corp/Careers/RuralDistributionChannel.cvsp. Last accessed 11th November 2011.
  5. 5.      Colgate logistics delivers smiles Available: http://www.inboundlogistics.com/cms/article/colgate-logistics-delivers-smiles/. Last accessed 12th November 2011
  6. 6.      (2003). Colgate-Palmolive to focus on rural, urban distribution. Available: http://www.thehindubusinessline.in/2003/08/19/stories/2003081901540300.htm. Last accessed 12th November 2011
  7. 7.      (2008). Research and Markets: Valuable Overview of Colgate Palmolive’s History, M&A http://www.reuters.com/article/2008/02/06/idUS163357+06-Feb-2008+BW20080206. Last accessed 12th November 2011.

 

About Mian Aamir

Qualification:- M.Phil ((Business Administration) Designation Senior Manager Planning Research Experience:- Experiences include data collection in qualitative research and quantitative research, data analysis at SPSS and excel sheet,report writing and presentation of findings.

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