Situation Analysis Report

Colgate-Palmolive

This report presents the full

situational analysis, the key
strategic issues and an audit of
the strategy currently used to
market the product line
extension (Colgate Herbal Kids)
of the Colgate Herbal brand. It
also describes the position of
Colgate Herbal Kids in the Oral
Care Industry and proposes a
marketing plan for the product
line extension to generate
revenue by increasing sales
promotion and to provide the
company with a significant
competitive advantage.

Sarah Francis
070910

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Table of Contents
Executive Summary.....................................................................................................................................3
1.0 Introduction.....................................................................................................................................3
1.1 Corporate Mission and Vision...........................................................................................................4
2.0 External Marketing Audit......................................................................................................................4
2.1 Macro-environment...........................................................................................................................4
2.2 Micro-environment............................................................................................................................5
2.2.1 Market Analysis...................................................................................................................5
2.2.2 Competitor Analysis...................................................................................................................5
2.2.3 Consumer Analysis..............................................................................................................6
3.0 Internal Market Audit............................................................................................................................6
3.1 Operating Results.........................................................................................................................6
3.2 Strategic Issues Analysis..............................................................................................................6
3.3 Marketing Mix-Effectiveness......................................................................................................6
4.0 Situation Analysis..................................................................................................................................7
4.1 Internal Analysis - Facts/Factors of the organization.........................................................................7
4.2 External Analysis...............................................................................................................................8
5.0 Marketing Objectives.......................................................................................................................9
5.1 Target Market..............................................................................................................................9
5.2 Product Positioning....................................................................................................................10
6.0 Marketing Strategy........................................................................................................................10
6.1 Product Strategy.........................................................................................................................11
6.2 Pricing Strategy.........................................................................................................................12
6.3 Place strategy:............................................................................................................................13
6.4 Promotion Strategy....................................................................................................................14
7.0 Budgeting......................................................................................................................................15
8.0 Implementation and Control..........................................................................................................15
Question3..................................................................................................................................................17
9.0 Customer Profile..................................................................................................................................17
10.0 Advertisement....................................................................................................................................17
Feedback...................................................................................................................................................19
References.................................................................................................................................................20
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Executive Summary

In today’s world, customers’ needs and expectations are evolving at a fast pace, demanding

constant changes and improvements in products and processes. This report presents the full

situational analysis, the key strategic issues and an audit of the strategy currently used to market

the product line extension (Colgate Herbal Kids) of the Colgate Herbal brand. It also describes

the position of Colgate Herbal Kids in the Oral Care Industry and proposes a marketing plan for

the product line extension to generate revenue by increasing sales promotion and to provide the

company with a significant competitive advantage.

1.0 Introduction

Colgate Palmolive UK is a subsidiary of the Colgate Palmolive Company USA. Colgate is a

$15.3 billion global consumer products company. It divides its operations into different regions;

North and Latin America

Europe/South Pacific

Greater Asia/Africa

With consumer products sales in most countries of the world, the company has been helping to

make lives healthier and more enjoyable. Colgate Palmolive Company (Colgate) is a global

leader in the consumer products industry. It is a top player in the oral care segment of the worlds

market. The company along with its subsidiaries is engaged in the manufacturing and marketing

of a range of oral, personal, home care and pet nutrition products. Colgate sells its products in

over 200 countries and territories around the world under such internationally recognized brand

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names as Colgate, Palmolive, Mennen, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, Elmex,

Tom's of Maine, Ajax, Axion, Soupline, and Suavitel, as well as Hill's Science Diet and Hill's

Prescription Diet etc. ()

1.1 Corporate Mission and Vision

Colgate's success is founded on the Company's core values of Caring, Continuous Improvement

and Global Teamwork. Evident in all aspects of our business, these values are the driving force

behind everything we do. They are the reason for our commitment to providing safe, high quality

products that enhance the lives of consumers around the world. These values fuel our successful

long-term efforts to increase shareholder return, and they guide our efforts to create a workplace

where all Colgate people act with integrity and with respect for one another.

To provide Colgate with a significant competitive advantage by reducing total delivered cost,

extending technology resources and developing excellence in purchasing, and logistics.

2.0 External Marketing Audit

As this marketing plan is developed a preliminary understanding of the opportunities and threats

that exist in the market and their economic relevance will form a sound basis for pursuing the

marketing objective (Jobber 2005).

2.1 Macro-environment
The UK economy abruptly entered a recession in the third quarter of 2008 and consumer

spending weakened significantly as GDP fell by 1.6% in the fourth quarter of 2008. A temporary

reduction in VAT from 17.5% to 15% was introduced which reduced the cost of goods and

services and had a directly impact on purchasing power (). The percentage change in inflation

was 3.6% in 2008 as against 2.3% in 2007(GMID 2009). However, despite the economic

meltdown which affected the overall purchasing power of UK consumers, the decline in the

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economy had relatively less impact on the consumer product industry in 2008, but has gradually

become prominent in 2009 and 2010 (Mintel 2010).

2.2 Micro-environment
These are factors close to or within the company that affects or might affect the company’s

ability to serve customers. They include marketing intermediaries, employees of the company,

suppliers etc.

2.2.1 Market Analysis

Figure 1: Colgate Toothpaste Global Market Share (Citigroup, 2009)

2.2.2 Competitor Analysis

Colgate-Palmolive’s has two major competitors; Procter & Gamble and Unilever. They are

companies that are satisfying similar consumer needs.

Figure 1, shows the position of Colgate Palmolive in the market as compared to competitors.

About a week ago, Colgate-Palmolive Company again announced strong worldwide sales and

unit volume growth for first quarter 2010, with every operating division reporting sales

increases. Worldwide sales were $3,829 million; up 9.5% versus the year ago quarter and unit

volume increased 6.0%.

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 2.2.3 Consumer Analysis
Going by statistics from the last UK census, about 15% of the population of the UK are 12 years

old and under. This leaves a large market for new products to be introduced. Parents (Indirectly)

form part of the consumers of Colgate Herbal Kids as in most situations they will be the ones to

purchase the product for their kids.

Parents are the ones who will also better understand the current and future health benefit of

Colgate Herbal Kids. Children between the ages of 2 and 12 are the direct consumers of Colgate

Herbal Kids.()

3.0 Internal Market Audit

3.1 Operating Results
As stated above results from first quarter of the year 2010 showed that. Colgate has maintained

its position both in the UK and global markets.

3.2 Strategic Issues Analysis

In view of changes in the market, consumers demand varieties. Medical researchers in recent

years have favoured alternative medicine. Many people are beginning to tend towards consuming

products that are as natural as can be, products that are chemical free.

3.3 Marketing Mix-Effectiveness

Colgate-Palmolive invested heavily on promotions over the years. It is obvious that Colgate has

made a name in the oral care industry. Colgate Palmolive does not sell its products directly to

customers. They place a high emphasis on distributors’ relationships as they ensure that the

products get distributed in the market place.

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4.0 Situation Analysis

Situation Analysis
/ \
Internal Analysis External Analysis
/\ /\
Strengths Weaknesses Opportunities Threats
|
SWOT Profile

4.1 Internal Analysis - Facts/Factors of the organization

Strength Weaknesses

1. Colgate has a strong brand and positive 1. Slow reaction to competition

image in the minds of customers world

2. Recall of other new products from same
wide
company

2. Colgate-Palmolive has a Strong global and

3. Major profit of the company is totally
financial presence, this is obvious in the
dependent on one segment-Oral Care
company’s annual reports

3. 100% Herbal toothpaste for kids is a

novelty

4. The organizational and team structure of

the work force promotes efficiency and the

development of the their staff; employees

who feels valued will in turn add value to

the employers

5. The Company is also committed to protect

the global environment Colgate-Palmolive

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 plant in Morristown (America) for instance

was constructed from recycled materials

4.2 External Analysis

These are facts/factors of the environment in which the organization operates

Opportunities Threats

1. Distribution channels 1. Severe competition- increasing number

of competitors
2. Increase in product portfolio

2. Economic recession and Economy

3. Population increase and expanding
change impacts on the cost of raw
demographics
materials
4. Alternative medicine seems to have
3. Political changes and Strict Political
reached every area of healthcare, oral
and regulatory environmental laws are
hygiene is no exception. For instance,
a threat as governments are becoming
Herbs are believed to be more
more intolerant of company wastes and
preventive than curative
emissions due to climate change.
5. Increasing demand for physical and
4. Unstable trade and business policies
environmentally healthy products.
especially in developing countries.
6. Presence of a large market in the
5. Competitors looking to gain market
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 consumer product sector edge could adopt newer, cheaper and

more efficient technologies

7. Rural Penetration

6. New technologies are being adopted

faster today than any other time in

history. This means consistent increase

in production cost.

5.0 Marketing Objectives

To imbibe healthy living in kids by providing them with a toothpaste that only contains natural

ingredients. We will create 50% awareness of our product to the target customers in 6 months

and increase the net profit to more than 25% of the sales by the end of 2010.　

5.1 Target Market

The target markets in terms of demography are children between the ages of 2 and 12. Colgate

Herbal Kids is a proposed product line extension of Colgate Herbal. Colgate Herbal is Colgate-

Palmolive’s first herbal offering, notched up the fastest growth in the herbal toothpaste category

and rapidly gained an overall 2.7% market share within the first year of its launch

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Colgate Palmolive is serving customers through “Differentiated Marketing”. Using different

flavors and alterations, it has focused on people with different age groups and with different

preferences. For example Colgate has extended certain product lines by introducing new flavours

for people who have flavour preference, thereby attracting new customers who have different

attitude towards a product. Colgate Herbal Kids by Colgate Palmolive is now planning to be part

of the besieged customer group (children). It is basically a Herbal sweetened toothpaste gel that

is specifically manufactured for kids between the ages of 2 and 12. Kids within this age range are

usually reluctant to brush their teeth. This flavor is preferred by the majority of kids (as stated in

the market research)

5.2 Product Positioning

In marketing this product, I will need to look at cause and effect, accepting the changes in human

and as a result market behavior, its facts and figures, knowing what to expect from the marketing

investment.

6.0 Marketing Strategy

Personal Selling: This scheme will be applied in the introductory phase. The product will be

available on doorstep for making more and more people customary of this new product and

people would test the product without going to the shops. This technique would also influence

those who did not catch free samples due to some reason.

Public Relations: Public relations undoubtedly play a vital role in the acceptability of any

product by the general public. Its all about setting a perception necessarily positive, in the minds

of people whether they are presently our customers or the other way round. Colgate junior has

decided to trail for a certain amount of revenue in specified time period and has decided to
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donate 9% of the total revenue to charity organizations earned per annum by the team. Sales

Promotion: Sales promotion is made in order to intensify the boost of sales. It can be done in a

variety of ways. We can offer short term incentives in order to break through the market and

making the sales even bigger in size. We can also offer complementary products like tooth brush

with the sale of a 50g pack after achieving the desired sales. Another way can be giving

discounts or providing more of the product in the same price. Sales can also be promoted by

giving free samples of the 30g pack to specific locations like schools etc. Direct Marketing:

Direct marketing can be considered very important in a way because it helps in maintaining good

relations with the customers. Advertisements on the other hand, undoubtedly play a vital role in

creating the awareness or interest of the product but they only convey what a product actually is

in a short span of time. Customers normally want to know more about the specifications and

characteristics of the product and this could be done through providing the customer with the

proper channel that they can use to interact with the company. The medium used for this can be

either through billboards or directly mailing the customers.

6.1 Product Strategy

Many of the herbal toothpastes on the market also boast they are 'fluoride free'. Although

fluoride has been championed for years as the best way of combating tooth decay by increasing

the resistance of enamel to the acid produced by bacteria in the mouth, there has been some

controversy over its use in recent years.

Customers will choose a product based on their perceived value of it. Satisfaction is the degree to

which the actual use of a product matches their perceived value at the time of the purchase.

Colgate Herbal Kids aims to bring satisfaction to customers, we are marketing this product

knowing that a customer is satisfied only if the actual value is the same or exceeds the perceived

value.
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6.2 Pricing Strategy
Price has been a major factor, affecting the buyer’s choice. Price is the only element in the

marketing mix that produces revenues as our required audiences are kids so our price range will

be according to the quantity and size of the tube. We will set prices of our product by taking into

account all internal factors including marketing objectives, marketing mix strategy, costs etc and

external factors including nature of the market and demand, competition and some other

environmental factors like economy and governmental issues. The price varies as we are

launching our product in three sizes occupying our targeted consumers. The product will consist

of a 30g, 50g and 70g tube.()

Parents are very conscious about the quality of the product that their children are suppose to use,

keeping in view the requirements of parents and our besieged age group of the audience we have

to retain the competence of quality meanwhile making the product colorful, flavored and eye

catching for the targeted kids. It will be a symmetric packing range in three sizes making it more

adoptable and affordable for people concerning our focused income level assortment.

Our core product is the Herbal gel with cooling crystals, in the tube. The hub benefits are stated

as follows:

• Natural-Chemical Free

• Prevent Tooth Cavities

• Prevent Exposed Root Cavities

• Fight against Bad Breath

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• Reduce Plaque

• Reduce Gum Problems

• Strengthen Weak Tooth Enamel

• Remove Stains　

6.3 Place strategy:

Placement plays a vital role in the life cycle of product so we will place our product at:

Departmental stores

Shopping malls

Target retailers

As we already have a very strong distribution network of other products of same brand so we

will use the same distribution channel and network that is considered a very strong key factor in

distribution procedures.

Distribution: Marketing Channel or distribution decisions are among the most important

decisions that management faces and directly affects many other marketing decisions.

Channel level: Our product will follow a chain in which from the manufacturers (Colgate

Palmolive), the product goes straight to the ware houses of distributors then to the respective

zones (separations made by Colgate Palmolive for the ease of distribution to multiple cities).

Then after pricing, the product goes to the shops (retailers) and finally to the customers and end

consumers.

Manufacturer Warehouse Retailer Consumer

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Conventional marketing channel: We will have a conventional marketing channel since we have

a distribution channel structure in which Colgate Palmolive places its products in the shops of

retailers or sales them to the wholesalers and they do not work like a single team. Type of

distribution: Colgate Herbal Kids is dealing with most authorized dealers.

6.4 Promotion Strategy

For a marketing strategy to be successful, effective communication needs to be used to reach the

target market (Hollensen 2005). The communication objective is to increase awareness of the

product to the target market.

The promotional strategy which Colgate Herbal Kids, will adopt to cope up with the competitive

market would be firstly to focus on awareness of the new product. This would be done by

placing stalls and counters of Colgate Herbal Kids 30g tube free of charge, outside schools. Then

next step would be promotion through magazines, newspapers, billboards, pamphlets, T.V

channels along with buntings in the shops. Making attractive T.V advertisements would

definitely attract and urge children to try it because of its catchy appearance. We would focus on

increasing the sales with the passage of time to gain control on the besieged chunk of market

share.

More precisely:

• Our first and foremost objective is to provide market awareness to our target customers.

• Power of advertisement while using both media (Print & Television).

• Use of cartoon characters which are favourite in kids like Tom & Jerry, Ben 10, Mickey

Mouse, Snoopy etc (This will be decided upon based on market research in different locations)

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• Also to offer free samples to the target consumers to check the quality of offered product that is

substantially high.

7.0 Budgeting

8.0 Implementation and Control

This is the final stage in the plan, but without sufficient and capable people to carry out the

necessary tasks, or management monitoring control, the strategy would fail (Jobber, 2004).

This plan recognizes a roll-on effect on the sales of this campaign for the next one year.

The campaign would be measured by monitoring the following KPI’s.

• Number of hits on the promotion website per day

• Number of online sales per day

• The most viewed product per demography

• The promotional mix effectiveness

We will use the following steps in our promotional mix:

• Advertising

• Personal Selling

• Public Relations

• Sales Promotion

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• Direct Marketing Advertisement: We will advertise our product through television, billboards,

magazines, newspapers and brochures.

Bill Boards: We will also advertise our product through billboard because the kids who watch

our ads on television when they will watch our value added product on billboards they will

definitely enforce their parents to buy it for them.

Television: We will advertise our product on local area cable network because it is the most

effective way to get the attention of the kids, after that we will switch towards the advertisement

on famous television channels, especially children’s TV stations. We will run our commercial

ads especially during the intervals of cartoons and children concerning serials or in times when

children can almost certainly watch TV. Newspapers & magazines: We will also advertise our

product in newspapers and magazines using interesting and appealing pictures of their favorite

cartoon characters so that more kids can be made aware of our product.

Information based on comparing this data with the advertisements run, would be used for

controlling future sales promotions and advertisements.

All over the world more people are turning to alternative medicine, as this seems to be getting

popular by the day it is reaching every area of healthcare, oral hygiene is no exception. The use

of herbs as medicine is an ancient practice but is becoming more popular in this age. A major

reason being the fact that herbs are more preventive than curative.

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Question3

9.0 Customer Profile

• The Target customers (Children) will be trained to understand the benefits of being health

conscious and taking care of themselves from a young age.

• They will develop strong teeth and healthy gum naturally

• The target market has an added option and as a result more variety in the oral care market

• Herbal ingredients are usually more preventive than curative

• The introduction of a new product sometimes means increase in employment rate

10.0 Advertisement
In the UK strict advertising guidelines are in place to govern adverts that are aimed at children.

Advertising is Educational- children learn a great deal from the media.

Though children might not have much money to spend, they possess a powerful force that can

influence sales significantly. Children can be convinced by powerful advertising messages and

then pester their parents to buy them what appeals to them through the influence of the media

that they’ve seen on TV. As well as influencing the spending of their parents (and making their

own pocket money purchases) children are also valuable to the advertising industry as future

consumers who will remain brand loyal to products if won over when young. That's why -

especially in the UK - strict guidelines are in place to govern the content of adverts aimed at

children placed on television, radio, or in print

As we know that advertisement is a best way to get the attention of the customers. The major

form of advertising on going for Colgate herbal kids is through the TV. As customers are a big

asset of a company, companies need to get loyal customers, if not; the firm will be in a great

loss. So to get the awareness of our product among the customers We have made a media plan
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including TV ads, Newspaper ads Billboards, Pamphlets and we will review that are those

planned activities getting the required costumer response or not.

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Feedback
I personally enjoyed studying marketing. Before I resumed classes for the module I would have

defined marketing simply as ’making your product or services appeal to buyers’. While that

makes layman sense, ‘I know better now’ like they say! I saw marketing as an art only but now I

know that the whole marketing process goes beyond all of that. Marketing involves facts and

figures; it involves constant analysis and research.

The module was a lot more comprehensive than I had anticipated. My class was given case

studies to reflect on and questions to answer every week on most of the topics covered. I

especially took interest in the group discussions and in the assignments we had to submit weekly.

A topic I readily remember taking interest in and carrying out a group assignment on is

Marketing Research.

I did not for instance see a difference between marketing research and market research before the

start of the module.

When I see, read or hear about products /services that have either succeeded or failed I now have

an idea of what must have gone into the marketing process and I appreciate it better.

Sometimes I still wonder though, if some of the strategies on paper are applicable practically to

all spheres of business and to all countries of the world.

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References

Bank of England. (n.d.). Welcome to the Central Bank of the United Kingdom.
Retrieved April 2010, from Bank of England: www.bankofengland.co.uk

Citigroup. (2007). Citigroup Global Markets Analyst Report.

Colgate Palmolive, L. (2010). Colgate world of care. Retrieved May 2010, from
Colgate Palmolive (UK) Ltd: www.colgate.co.uk

Jefferies, J. (2005). The UK population: past, present and future. Retrieved May
2010, from Focus on people and migration:
http://www.statistics.gov.uk/downloads/theme_compendia/fom2005/01_FOPM_Popul
ation.pdf

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