New York Institute Of Technology

14

Components of the

Capstone Project Colgate-Palmolives

Dima Kleanthi 0899721

Haini Huang 0908285

MRKT 760 Customer Relations and Value Management

Dr. Abram Poczter

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Company Profile

Type: Public

Industry: Personal Care

Founded: 1806

Headquarters: 300 Park Avenue, New York City, New York, United States

Key people: Ian M. Cook – CEO (since 2009), Dennis Hickey – CFO (since 2011)

Revenue: US$ 17.42 billion (2013), US$ 17.085 billion (2012)

Operating Income: US$ 3.556 billion (2013), US$ 3.889 billion (2012)

Net Income: US$ 2.241 billion (2013), US$ 2.472 billion (2012)

Market Cap (mil.): $62,275.85

Employees: 37,700 (2012)

Website: www.colgate.com

Company Perspectives:

Their long history of strong performance comes from the absolute focus on their core global

businesses, combined with a successful worldwide financial strategy. This financial strategy is

designed to increase gross profit margin and reduce costs in order to fund growth initiatives and

generate greater profitability.

History of Colgate-Palmolive Company

When the company was founded by 23-year-old William Colgate in 1806, it only focused on

selling starch, soap, and candles from its New York City-based factory and shop. By entering his

second year of business, Colgate collaborated with Francis Smith, and the company became

Smith and Colgate. The name it kept until 1812 when Colgate purchased Smith’s share of the

company and offered a partnership to his brother, Bowles Colgate. With the name William

Colgate and Company, the firm expanded its manufacturing activities to a Jersey City, New

Jersey, factory in 1820. This factory produced Colgate’s two major products, Windsor toilet

soaps and Pearl starch. Colgate-Palmolive Company’s growth is a result of aggressive

acquisition of other companies, strenuous efforts to overcome its major U.S. competition, and an

early emphasis on building a global presence overseas where little competition existed. The

company is organized around four core segments–oral care, personal care, home care, and pet

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nutrition–that market such well-known brands as Colgate toothpaste, Irish Spring soap, Softsoap

liquid soap, Mennen deodorant, Palmolive and Ajax dishwashing liquid, Ajax cleanser,

Murphy’s oil soap, Fab laundry detergent, Soupline and Suavitel fabric softeners, and Hill’s

Science Diet and Hill’s Prescription Diet pet foods. Colgate-Palmolive has operations in more

than 200 countries and generates about 70 percent of its revenue outside the United States.

Colgate Toothpaste Overview:

Colgate Toothpaste has been fighting bad breath and maintaining proper oral health for over 200

years. With an array of 40 different patented toothpastes and 13 classifications of oral care,

Colgate remains competitive in the market place.

Company – Colgate Toothpaste Timeline

1806: William Colgate starts a starch, soap and candle business on Dutch Street in New

York City,

1857: Upon the death of founder William Colgate, the company is reorganized as Colgate

& Company under the management of Samuel Colgate, his son,

1896: Colgate introduces toothpaste in a collapsible tube,

1911: Colgate distributes two million tubes of toothpaste and toothbrushes to schools,

and provides hygienists to demonstrate tooth brushing,

1953: Colgate-Palmolive Company becomes company’s official name,

1956: Colgate opens corporate headquarters at 300 Park Avenue in New York City,

1968: Colgate toothpaste adds MFP Fluoride, clinically proven to reduce cavities,

1996: Bright Smiles, Bright Futures oral health education program expands to 50

countries, and today reaches over 50 million children annually,

1997: Colgate Total toothpaste is introduced in the U.S. and quickly becomes the market

leader. Only Colgate Total, with its 12-hour protection, fights a complete range of oral

health problems,

2000: Colgate creates, Colgate 2in1 Toothpaste,

2004: Colgate acquires the GABA oral care business in Europe, with its strength in the

important European pharmacy channel and its ties with dental community,

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2006: Colgate enters the fast-growing Naturals segment by purchasing Tom’s of Maine, a

leader in that market in the United States

2007: Colgate launches Colgate Max Fresh toothpaste line,

2009: Colgate launches Colgate Luminous.

Colgate-Palmolive Slogan

[A slogan is a short, memorable catch phrase, tagline or motto used to identify a product or company in

advertisements.] The advertising slogan, or business slogan for Colgate-Palmolive, is:

"Colgate World of Care."

Colgate-Palmolive Mission and Vision Statement, Goals and Objective

[Mission Statements and Vision Statements are written for customers and employees of corporations. A

Mission Statement can be defined as a sentence or short paragraph written by a company or business

which reflects its core purpose, identity, values and principle business aims. The definition of a Vision

Statement is a sentence or short paragraph providing a broad, aspirational image of the future.]

Colgate – Palmolive Mission Statement (I):

“Colgate-Palmolive's mission to become the best truly global consumer products company. We

are committed to conducting ourselves in a socially responsible manner and to keeping our

business operations environmentally sound. It is our worldwide policy to manufacture and

market our products and operate our facilities so that we comply with or exceed applicable

environmental rules and regulations. The health and safety of our customers, our employees, and

the communities in which we operate must be paramount in all we do”.

Colgate – Palmolive Mission Statement (II):

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

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

processes”

Colgate – Palmolive Mission / Vision Statement:

"As we plan our strategies to sustain growth for the years to come, our core values of Caring,

Global Teamwork and Continuous Improvement will continue to drive our future initiatives."

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Their three fundamental values are part of everything they do, they are the foundation of their

business strategy and are reflected in every aspect of their work.

Caring: The Company cares about people: Colgate people, customers, shareholders and

business partners. Colgate is committed to act with compassion, integrity, honesty and high

ethics in all situations, to listen with respect to others and to value differences. The Company is

also committed to protect the global environment, to enhance the communities where Colgate

people live and work, and to be compliant with government laws and regulations.

Global Teamwork: All Colgate people are part of a global team, committed to working

together across countries and throughout the world. Only by sharing ideas, technologies and

talents can the Company achieve and sustain profitable growth.

Continuous Improvement: Colgate is committed to getting better every day in all it does,

as individuals and as teams. By better understanding consumers' and customers' expectations and

continuously working to innovate and improve products, services and processes, Colgate will

become the best.

Colgate – Palmolive Goals:

“The main goals of Colgate are to better understand consumers’ behavior, launching new

products through innovation, increasing effectiveness and efficiency as well as strengthening the

leadership worldwide”

Colgate – Palmolive Objective:

“Our objective is to live our Managing with Respect principles by fostering an inclusive

workplace that mirrors the diversity of the global marketplace. Such an environment will provide

all Colgate people with the opportunity to make unique contributions to our overall business

success”

SWOT Analysis

SWOT is an acronym for the internal strength and weakness of a firm and the environmental

opportunities and threats facing the firm,

SWOT analysis is a widely used technique through which managers create a quick overview of a

company’s strategic situation,

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The technique is based on the assumptions that an effective strategy derives from a sound “fit”

between a firm’s internal resources (strengths and weakness) and its external situation

(opportunities and threats)

Internal Factors

Strength

- Colgate Dental Cream offers all-around cavity protection, even where a toothbrush

cannot reach,

- It‘s great mint taste freshens breath,

- It protects against root caries,

- It cleans & makes teeth whiter and repairs early decay spots,

- Extremely popular brand and high brand awareness due to advertising,

- Focus on innovative and new product launches,

- Colgate business planning initiative,

- Diversified business operations,

- Strong financial performance

Weaknesses

- A high dependence of the company on a single category i.e. Oral Care,

- Reduction in advertisement expenditure in order to maintain growth,

- Product research,

- Because of high rates of taxes prices are high.

External Factors

Opportunities

- Leverage on the fact that Colgate has been ranked as the most trusted brand in India

from 2003 – 2007,

- Focus on innovation and new product launches by deploying advanced technologies,

- Growth in emerging markets – rural and semi-urban,

- Implementing new products majorly to attract youth.

Threats

- High competition from competitive brands like Pepsodent from HUL,

- Increasing commodity prices for manufacturing

- Political conditions are not stable.

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[Quick] PEST Analysis

[PEST analysis ('Political, Economic, Social and Technological analysis''') describes a framework of

macro-environmental factors used in the environmental scanning component of strategic management. It

is a part of the external analysis when conducting a strategic analysis or doing market research, and gives

an overview of the different macro-environmental factors that the company has to take into consideration.

It is a useful strategic tool for understanding market growth or decline, business position, potential and

direction for operations.]

Political Environment: Every government is willing to impose more taxes in order to gain more

profit. Moreover, the unstable political conditions disrupt the business to operate the ongoing

activities.

Economic Environment: The overall economic growth has remained stable so far, but at the

time of inflation, the change in the interest rate affects the company.

Social Environment: The massive social interactions via communication channels make a huge

contribution to the company’s productivity. Consumers are now more aware about the market

trends and therefore, Colgate caters each market segment keeping in mind the cultural/societal

trends of the consumers.

Technological Environment: The Research and Development department of the company are

committed to improve oral health through the advanced leading-edge technologies. The

technologies are updated on the prevention and treatment of oral diseases.

Marketing Mix

Product: customer needs and wants,

Price: cost to satisfy,

Place: convenience to buy,

Promotion: communication

Product

Toothpaste works with tooth brushing to clean teeth and fight plaque and bacteria. Specifically:

Toothpaste contains abrasive materials that physically scrub away plaque. In addition,

toothpaste abrasives help remove food stains from teeth and polish tooth surfaces,

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Toothpaste delivers fluoride to the teeth. Fluoride incorporates itself into tooth enamel

weakened by acid attack, making it more resistant to future acid attack from plaque

bacteria and food,

Technological improvements in some toothpaste contain ingredients that chemically

hinder the growth of plaque.

Colgate’s brands consist of a multitude of unique toothpastes lines, specializing in the

preservation and treatment of oral hygiene. Colgate has created an array of 40 different patented

toothpastes keeping Colgate competitive in the market place. There are 13 different

classifications and varieties of Colgate toothpastes. Colgate’s toothpastes feature; cavity

protection, plaque & gingivitis prevention, long lasting fresh breath, tartar control toothpastes,

tooth whitening, baking soda and peroxide, enamel strengthening, sensitivity relief and

toothpaste designed for children.

Various Types of Colgate: Colgate Regular, Colgate Tartar Control Toothpaste, Colgate Total,

Colgate Total Advanced Whitening, Colgate Total Advanced Clean, Colgate Total Advanced

Fresh Gel, Colgate Total Clean Mint Pate, Colgate Total Mint Stripe Gel, Colgate Oxygen

Bubbles Toothpaste, Colgate 2in1 Toothpastes, Colgate Sparkling White Toothpaste, Colgate

Sensitive Multi Protection, Colgate Pro Clinical, Colgate Max White with mini Bright Strips,

Colgate Max Fresh with Mini Breath Strips, Colgate Max Fresh with Mouthwash Beads, Colgate

Dora the Explorer Mild Bubble Fruit, Colgate SpongeBob Mild Bubble Fruit, Colgate My first

Toothpaste, Colgate Pop Stars, Colgate Luminous.

Price

Colgate features products in the oral health isle of almost all stores carrying oral health products.

Colgate usually has a large shelf space that illustrates the wealth of variety Colgate offers. The

subtotal of all of Colgate’s products per ounce is 28.58 equaling $0.81 per ounce, making it the

most expensive brand of many toothpaste category leaders. The most expensive toothpaste per

ounce is the Colgate Pro Clinical while the least expensive toothpaste per ounce is the Colgate

Regular super tube.

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Place

Colgate’s product distribution is immense. Colgate toothpastes are available at every

convenience place to facilitate its customers. So, customer purchases it with a very little

shopping effort. Colgate use different channel (retailers and wholesalers) to search and delivers

the prospective customers. Colgate use the distribution channel which is very efficient, effective

and which is not only meets customer needs but also provide them the valuable services.

Almost all super markets, discount chains and pharmacies such as Wal-Mart, Albertsons, Target,

Walgreens and CVS carry Colgate Toothpaste. Colgate toothpaste is physically located in the

oral health isle of stores and it can sometimes be found in more prominent locations when on

sale or launching new products into the market.

Promotion

Website: Colgate has a dynamic website with the title, “Colgate World of Care,” that

details products, oral care, company history, e-newsletter and special offers. The website

also has a social networking page called Colgate Smile to engage the consumer to get

involved with their oral health and the Colgate-Palmolive Company. Colgate also has

social media pages on Facebook and Twitter.

Coupons: Colgate Toothpastes has printable weekly coupons online in the special offers

section of the website. Colgate coupons can also be found as cutouts in the weekend

coupon sections of 500+ newspapers around the country.

Television: Colgate and its advertising agency produce several television advertisements

a year using humor and pseudo-scientific displays to appeal to consumers.

Magazines/Outdoor: Colgate’s marketing campaigns have been known to use historical,

sexual, cultural and social inferences in their advertisements.

Donations: Colgate donates millions of dollars annually to the ADA’s “Give a Kid A

Smile.” Colgate is a direct partner with this ADA program.

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STP Analysis

Segmentation

Colgate’s market segmentation is very broad because all their products are of need to

most people so those people share a similar interest in product needs.

Colgate uses a segmentation bases by knowing that certain groups of people need Colgate

toothpaste for a specific similar reason like yellow teeth, sensitive teeth or just teeth with

cavities.

Colgate also uses the family life cycle because they make toothpaste that could be used

for grownups and children.

Also, toothpastes are made to attract young children with cartoon characters and different

tastes and are less strong so that it would not damage their gums.

Targeting

Everyone who brushes their teeth are considered a target market for Colgate-Palmolive

Company. However for different sorts of consumers it has developed different toothpastes with

different characteristics. For example:

MAX FRESH: Colgate targets youth with the introduction of this toothpaste, as this helps

in refreshes breath,

ACTIVE SALT: Elder people are targeted in this segment as it makes teeth stronger and

provides protection from cavities,

COLGATE TOTAL: Colgate Total contains the anti- microbial ingredient triclosan,

which reduces the number of bacteria that cause gingivitis, cavities and halitosis

Basically it is for kids but mothers are targeted as they are very concerned about their

kids.

COLGATE SENSITIVE: People who have sensitive teeth are targeted in this segment

who have problem in their gums.

KIDS TOOTHPASTE: Often small children do not like to brush teeth, so for them this

toothpaste was launched. Colgate had focused on taste aspect to encourage kids to brush

teeth.

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COLGATE WHITENNING – A whitening toothpaste that is "Clinically-proven to

whiten in 14 days”. Its whitening ingredient is hydrogen peroxide, which gradually

bleaches the teeth. Focus is given on group of customers in this segment those who are

already suffering from plaque in their teeth.

COLGATE 2in1: People who want both strongest and fresh breath are targeted.

Positioning

Colgate dental cream positions itself as toothpaste that has the necessary calcium and

minerals to provide decay protection, strong teeth, germ protection and fresher breath.

Colgate positioned several toothpaste so that people would like the products more like

adding a different style or taste to the toothpaste.

Colgate repositions their products because with the way they market and promote their

products, consumers know that these products are way better than other brands and

competition that is out there.

Lately with competition from indigenous “vegetarian” toothpastes, Colgate dental cream

has also positioned itself as an “always 100% vegetarian” toothpaste. The tagline of its

advertisements, “trusted by generations to make teeth stronger".

Colgate total12 have been projected as the “most advanced toothpaste” that provide 12 hr

germ protection even after eating and drinking by building a protective shield around the

teeth.

Colgate Max Fresh positions itself on the basis of “freshness”. The tagline “new

dimensions brings” home this very point.

Colgate kids toothpaste tries to position itself based on emotions which is apparent in its

tagline “makes fighting cavities fun”.

Competitive Advantages Broad Scope

In order for a company to compete with success in the toothpaste products market, it must

implement both a cost and differentiation leadership strategy. To begin with, companies within

the personal care industry, in order to effectively and essentially use and promote a cost

leadership strategy, have to emerge as a cost leader. Via economies of scale and control of the

low input costs, companies, in our case Colgate-Palmolive, are able to effectively integrate a cost

leadership strategy. Yet, being a cost leader is not always enough as the industry requires

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differentiation of product, which focuses on product innovations, brand recognition, research and

development. With these strategies firms are able to compete and maintain a competitive

advantage against its competitors. Moreover, implementing these characteristics helps to the

overall objective to maintain a better value chain in comparison to competitors.

Competitive Advantage Analysis for Colgate

“Product quality and innovation, brand recognition, marketing capability and acceptance of new

products largely determine success in the Company’s business segments.” (2013 10-K pg. 2)

Product quality for toothpaste is necessary because of the high competition between companies.

In order to effectively promote products, Colgate Company has to focus on improving the

quality, otherwise it may lose customers and market share. For Colgate, quality plays an

important role in adding value to the firm and has as a result an increase in gross profit margin.

Economies of scale: Colgate-Palmolive promotes what they refer to as a supplier

diversity team. They have this team in order to meet investor’s expectations for quality, speed,

innovations and cost effectiveness. Lower costs would boost company's growth. This would

allow Colgate to lower their prices and claim a larger market share. It would also reduce the

threat of new entrants into the toothpaste industry since new companies will not be able to

compete with low prices. This team also seeks to gain supplier relations with small businesses,

so they can have higher growth in the company and also higher funding for growth. Last but not

least, Colgate tries not only to make the product variety better, but also to make a simpler

product design which would reduce the input cost of the product as well.

Lower input costs: Colgate makes efforts to lower its input costs, in order to have a

competitive advantage over the industry. It tries that by being innovative with their product

designs and by utilizing its assets. Companies in the same industry often have the same suppliers,

thus it would be hard to cut costs in that area. However Colgate tries to find new suppliers that

might not be as big, but offer a lower price.

Product innovation: Product innovation also plays a role to the overall firm’s value and

thus Colgate Company invests a lot of money for research and development. Furthermore,

Colgate’s investments in research and development have increased over the past three years.

According to Colgate’s 2013 10-K, "the Company’s spending related to research and

development activities was $267 million in 2013, $259 million in 2012 and $262 million in

2011." In addition, having always in mind customer's needs and wants, contribute to the overall

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profitability of the firm. Also, Colgate-Palmolive has to focus on developing and funding

technological innovations (Colgate-Palmolive 2013 10-k). This element allows for a competing

strategy towards everyone else in the market and provides additional value to Colgate’s

underlying key success factors.

Brand recognition: With retailer’s strength in bargaining power, Colgate-Palmolive has

to increase brand recognition so they can maintain positive and good relationships with retailers.

The company can do that by applying marketing strategies through effective advertising.

Marketing strategies such as advertising or introducing a new product to regain attention from

the consumers is considered almost as an investment to the Company by helping increase net

sales.

Colgate Toothpaste Key Attributes

Brushing with Colgate toothpaste is one simple step everyone can incorporate into his daily

routine to help keep his mouth healthy, and it can have a positive effect on his overall health. But

what do customers see as key attributes of the Colgate toothpaste? After in depth interviews of

Colgate's management and a small sample of customers below you can find the main stated

attributes of the product:

strengthens enamel fights bad breath

fights cavities prevents tooth decay

reduce plaque prestige of brand

protects against tartar build-up reliable product

helps prevent tender gums good price

reduces gingivitis American Dental Association

recommendation

leaves nice taste in mouth attractive packing

whitens teeth variety of product

remove stains (tobacco use,

consumption of dark-colored liquids,

aging)

Questions and scales based on the findings of the interviews

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Q1. Which is your favorite brand of toothpaste?

o Colgate o Sensodyne o Aqua fresh

o Oral B o Other (specify) __________

Q2. Which factors attract you during a purchase of a toothpaste?

o Quality

o Packing o Flavor

o Price

Q3. What do you prefer to buy in general?

o Paste variety

o Gel variety o Pump variety

Q4. What are preferences toward ingredients present in your toothpaste? o Abrasives

o Fluoride o Anti-bacterial agents o Colors

o Foaming agents o Other (specify) __________

Q5. Which brand of Colgate toothpaste did you most recently purchase?

_____________________________________________________

Q6. Please rate the following sources of information in terms of importance when purchasing Colgate toothpaste

Not important Somewhat important Important

In-store advertising o o o Advertisements seen outside of shops o o o Memories of previous toothpaste purchases o o o Information of packing o o o Staff o o o Friend or family o o o Professional advice i.e. dentist or doctor o o o

Q7. Please rate Colgate on the following attributes on a scale of 1-7 (with being the highest)

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1 2 3 4 5 6 7

strengthens enamel o o o o o o o

fights cavities o o o o o o o

reduce plaque o o o o o o o

protects against tartar

build-up

o o o o o o o

helps prevent tender gums

o o o o o o o

reduces gingivitis o o o o o o o

leaves nice taste in mouth

o o o o o o o

whitens teeth o o o o o o o

remove stains (tobacco use, consumption of dark-colored liquids, aging)

o o o o o o o

Strong teeth o o o o o o o

Fresh breath all day o o o o o o o

Tastes good o o o o o o o

Price o o o o o o o

Familiar brand that you have used before

o o o o o o o

Packing o o o o o o o

Q8. Do you use coupons when you purchase a Colgate toothpaste?

o Yes o Yes, but only sometimes

o Rarely, as the prices are already good

Q9. How satisfied were you in terms of product effectiveness the last time you used Colgate toothpaste?

Very dissatisfied Dissatisfied Not sure Satisfied Very Satisfied

Please select level of satisfaction

o o o o o

Q10. Have you ever had any side-effect using a particular product of Colgate?

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o Yes (specify) __________ o No

Q11. What do you think results in healthier teeth?

o The number of times one brushes his teeth o The manner in which one brushes his teeth

Q12. How often do you use Colgate toothpaste?

o Not at all o Once a day o Twice a day

o More than three times a day

Q13. Does Colgate toothpaste usually meet your expectations?

o Yes

o No o Not always

Q14. Overall, how satisfied are you with Colgate products?

o Not at all satisfied o Somewhat satisfied o Satisfied

o Very satisfied o Delighted

Q15. Have you ever contacted customer service?

o Yes o No

Q16. If you contracted Colgate’s customer service, have all problems been resolved to your

complete satisfaction?

o Yes, by representatives

o No, the problem was not resolved Q17. Based on your awareness of Colgate toothpaste, is it better, the same, or worse than other

brands?

o Much better o Better

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o About the same o Worse

o Much worse

Q17. Based on your experience with Colgate’s products, how likely are you to buy them again?

o Definitely will o Probably will

o Might or might not o Probably will not o Definitely will not

Q18. Based on your experience, would you recommend these products to a friend?

o Definitely will o Probably will

o Might or might not o Probably will not

o Definitely will not Questions and scales based on the finding of loyalty

1. How well do you feel that Colgate Company satisfies your needs?

o Extremely well

o Quite well

o Moderately well

o Slightly well

o Not at all well

2. Compared to our competitors, is Colgate toothpaste and related products quality better,

worse, or about the same?

o A great deal better

o Somewhat better

o About the same

o Somewhat worse

o A great deal worse

o Don’t know

3. Compared to our competitors, such as, Crest, are our prices higher, lower, or about the

same?

o A great deal better

o Somewhat better

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o About the same

o Somewhat worse

o A great deal worse

o Don’t know

4. Do you like Colgate Company?

o Like a great deal

o Like a moderate amount

o Like a little

o Neither like nor dislike

o Dislike a little

o Dislike a moderate amount

o Dislike a great deal

5. How well did our customer service representative answer your question?

o Extremely well

o Quite well

o Moderately well

o Slightly well

o Not at all well

6. How well did you feel our customer representative understand your questions?

o Extremely well

o Quite well

o Moderately well

o Slightly well

o Not at all well

7. Are we responsive to your questions or concerns about our product?

o Extremely responsive

o Quite responsive

o Moderately responsive

o Slightly responsive

o Not at all responsive

8. How knowledgeable do you think of our customer representative?

o Extremely knowledgeable

o Quite knowledgeable

o Moderately knowledgeable

o Slightly knowledgeable

o Not at all knowledgeable

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9. Was your experience with customer service at Colgate Company better than you expected

it to be?

o A great deal better

o Quite a bit better

o Somewhat better

o About what was expected

o Somewhat worse

o Quite a bit worse

10. How likely is it that you would recommend Colgate toothpaste, toothbrush, and other

products to a friend or colleague?

o Very likely

o Somewhat Likely

o Neutral

o Somewhat unlikely

o Very unlikely

Questions and scales based on FRM

1. How often do you purchase from Colgate?

o Often

o Sometimes

o Never

o Do not know

2. How many times in a year do you use Colgate toothpastes or other related products?

o Less than 5 times

o 5-10 times

o More than 10 times

o Never used

3. When was the last time you purchased Colgate products?

o Less than three months ago

o Three months to less than a year ago

o One year ago or longer

o Never

4. If Colgate toothpastes or other related products were available today, how likely would

you be to buy this product?

o Extremely likely

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o Very likely

o Moderately likely

o Slightly likely

o Not at all likely

5. How likely are you to use our Colgate toothpastes or other related products again?

o Extremely likely

o Very likely

o Moderately likely

o Slightly likely

o Not at all likely

6. How competitive do you find the prices at this store?

o Very Competitive

o Somewhat Competitive

o Not Very Competitive

o Not At All Competitive

o Do not know

7. What is your annual income?

o Less than 10,000

o 10,000-30,000

o 30,000-50,000

o 50,000-70,000

o More than 70,000

8. How much money, in U.S. dollars, do you spend on Colgate products in a typical month?

o Less than 10

o 10-20

o 20-30

o More than 30

o None

Survey Analysis and Recommendation:

Sample size:

The survey was carried out through levels of the customers and the sample size was 30.

Tool used:

The analysis is based on the survey results in the simple percentage format.

Customer classification system

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Analysis:

The customers who are mercenaries are those are price conscious, they do not look at the quality,

customer service, and the function of the Colgate products, not to say the brand name; they only

focus on the price, if they notice the low prices of toothpaste or related products from other

companies, and they will immediately switch to that brand. From the above survey results, there

are 20% of respondents are Mercenary, which indicates that these six people purchased Colgate

products because of Colgate’s’ low prices and regardless the Colgate’s toothpaste’s and its

related products’ quality, functions, and other.

The customers who are loyalists are those like Colgate brand, its products, its quality, and

they are likely to recommend Colgate to their friends and relatives. From the above, there are

50% respondents are Colgate’s loyal customers, they are very satisfied with Colgate’s brand,

products, service, quality, and so on. They are the important ones for Colgate Company.

The customers who are hostages are those have limited choices on toothpastes or related

products. There are some possible reasons why they become hostages of the Colgate Company

in the current oral product industry, such as, according to their income, Colgate is the lowest

price in the toothpaste market of their countries, and if they switch to other products, they will

pay more.

The customers who are terrorists are those who dislike Colgate products and they spread

negative comments on Colgate products. From the above chart, there are 29% of total

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respondents dislike Colgate, they might think Colgate ingredients are unsafe, therefore, they do

not like the company because of its irresponsibility to the society; maybe Colgate products have

brought side effects to them, and so on. Every business has terrorists, nobody can stop their

negative emotions toward the products, but themselves, therefore, Colgate just needs to be nice

to them.

Early recovery system

The Early recovery system helps to prevent problems before the problems inevitably occur.

Therefore, the customer service needs to resolve the immediate issue for the customer, and

address the underlying cause of the problem. From the above analysis, Colgate Company is

unable to attract its Terrorist customers; however, Colgate can improve its products, services, or

even make an adjustment in prices to covert its mercenary, hostage customers to its loyal

customers. In order to do so, the company needs to first contact customers who are not satisfied

with Colgate prices, product features, or other, and find out the root of the problems and make

improvements. From the survey, there are 10 out of 30 respondents are not satisfied with

Colgate toothpaste’s features, some thought Colgate toothpaste needs to have more flavor

choices, some thought Colgate needs to add new features. For instance, the Colgate 360 optic

whitening has good whitening attribute, however, sometimes it irritated the gum, therefore, if

Colgate 360 optic whitening add an attribute that can alleviate their discomfort, they will be

100% satisfied, hence, become loyal customers to Colgate.

In other words, customer is the king, if Colgate’s customer service department can keep

good connections with its customers, give immediate attention to those show unsatisfied

emotions, communicate with them to find out their concerns, and improve the future products

and service based on their requirements, the Colgate Company should be more successful.

Development of an appropriate “house of quality”

House of quality is one of the tools of QFD. It is a graphic technique for defining the

relationship between customer’s voice (their needs and wants) and the product. There are six

steps of building a “house of quality.”

Huang & Dima 22

The first step of building a “house of quality” is to identify customers’ wants and needs.

From the survey, customers want to have a toothpaste that has anti-bacterial and whitening

function, has cheaper price, more flavors.

Here, according to customers’ demand, we have determined these important ratings (out of 4)

Antibacterial It is the first that a customer

demands in any toothpaste.

Consequently, the toothpaste

must contain this function.

1

Whitening It is the least important

because some customers are

very health conscious; they do

not like toothpastes because

the whitening function was

made of chemicals.

4

Cheaper price It is the second most important

factor according to the survey.

Toothpaste is the necessity;

customers always tend to

purchase such merchandise

that have low monetary value.

2

More flavor People can get tired of one

flavor easily, it is important to

add more flavors to the

toothpastes to attract

customers, to make their

toothbrush time more

enjoyable.

3

Second step is to identify how the product will satisfy customers’ wants. In this step, we

need to add customers’ expectations. Colgate Company will provide toothpaste that has

strawberry, apple, bubble gum flavors; it has anti-bacterial function that made of herbal

ingredients; it has a whitening function that made of strawberry and lemon. Third step is to

identify relations between “hows”, many attributes are related to each other. Therefore, we use a

black dot to connect two attributes. Forth step is to find out the importance ratings, we

determined the important ratings by multiplying the customers’ wants and “hows.” In the fifth

step, we need to find out the competitors’ ratings; in this case, we use Crest and Sensodye as

Colgate’s competitors. The last step is to determine the technical attributes and checking our

performance with products in the same market.

Huang & Dima 23

Integrating with production, promotion, and cost the improvements

In order to improve the sales of Colgate toothpaste and its related products, first, the company

needs to follow the principle of “Kaizi,” during the production process, to continuously improve

its products’ quality and create more attributes to retain and attract customers. In this procedure,

Colgate needs to hire new engineers and purchase new equipment. Second, the Colgate

company needs to use good promotion approaches to keep customers’ brand awareness and

improve the brand reputation. Good promotion approaches always involve high costs; therefore,

how to avoid the costs is crucial to Colgate’s development.

Since toothpastes are necessity for people’s daily life, from the survey, not too many

respondents are price-sensitive to Colgate toothpastes; hence, the mass production is a good

Huang & Dima 24

choice to increase the company’s supply, and ultimately generate more revenue. The amount

increases in sales can offset the costs that occurred from the advertisement, the product

improves. Hence, Colgate cannot only save cost of product improvements, but also effectively

increases its sales.

Incorporating product/service improvements into value chain

Porter’s value chain consists of five parts; they are inbound logistics, operations, outbound logistics, marketing and sales, and service. They are shown in the following:

Inbound

logistics:

Colgate

receives raw

materials

from its

suppliers and

they deliver

to Colgate

Company as

required

Operations/fin

al products:

The process

of Colgate

transforming

the raw

materials into

finished

toothpastes

that created

by creative

engineers and

advanced

equipment

Outbound logistics:

Once Colgate

finished the

products

production,

they will sell

toothpastes

through

different

selling

distributions.

Marketing and sales:

To attract

more

customers,

Colgate can

add its real

customer’s

testimonials

and offer

coupons.

Service:

Colgate’s

customer

service

must

connect

with

customers

to hear

their

voices, it

can find

out the

merits and

drawbacks

of the

products.

Infrastructure

Human resource management

Technology development

Purchasing

Huang & Dima 25

Extension to new domestic and international market segments

Colgate is a well-known personal care brand, which focus on producing toothpastes. In order to

expand its domestic market and international market, the company first needs to find their target

market segment, such as, toothpaste for children. Second, company needs to know what kinds of

toothpastes or products, customers desire, the company can find out these answers by using

surveys and feedbacks from parents or dentists. Third, create a unique value proposition, in this

case, the company needs to produce a kid’s toothpaste, which should be safe to swallow, good

flavor, and contains organic ingredients, the function of this toothpaste is to prevent children’s

tooth decay. Last, determine the sales and distribution channels. In the domestic market

segment, the company can sell products directly from the factory because the U.S. customers are

familiar with Colgate products. In the international market segment, where customers are not

familiar with Colgate, it is important to use celebrity endorsements and other promotional

approaches that are suitable to the culture and new market and therefore, attract customers.

Conclusion:

In this project, we have discussed and analyzed Colgate- Palmolive Company by giving the

strategic view, the tactical view, and survey analysis. By working on this project, we have

understood that customer is the king and improvement is the key to the company’s prosperity.

Therefore, a successful company should always have high customer involvement, understand

customers’ desires through surveys, research, and direct interviews; based on the information

received from the customers, the company needs to improve its existing products and create new

products, to either attract customers, or to compete with the competitors.

REFERENCES

"COLGATE PALMOLIVE CO 2013 Annual Report Form (10-K)" (XBRL). United States

Securities and Exchange Commission. February 20, 2014,

“Colgate-Palmolive Co (CL) Company Profile” | Reuters.com, http://www.reuters.com/finance/stocks/companyProfile?symbol=CL,

Huang & Dima 26

"COLGATE PALMOLIVE CO 2014 Q1 Quarterly Report Form (10-Q)" (XBRL). United States

Securities and Exchange Commission. April 25, 2014,

"Colgate-Palmolive, Form 10-K, Annual Report, Filing Date Feb 21, 2013" , secdatabase.com. Retrieved Mar 27, 2013,

“Colgate – Palmolive”, Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Colgate-Palmolive,

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http://www.colgatepalmolive.com/app/Colgate/US/CompanyHomePage.cvsp,

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http://www.makingafortune.biz/list-of-companies-c/colgate-palmolive.htm,

“Colgate – Palmolive Company History: Creating Bright Smiles”, http://www.colgate.com/app/Colgate/US/Corp/History/1806.cvsp,

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sp,

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http://colgatesmiles.blogspot.com/2010/12/week-15-segmenting-and-targeting.html