COTTLE-TAYLOR:EXPANDING THE ORAL CARE

GROUP IN INDIA

BY-

JASHON YAMNAM

KANU PRIYA SINGH

KRITIKA JINDAL

KUNAL SURVE

MANAN SETH

MANAS RANJAN TRIPATHY

COTTLE-TAYLOR: AN INTRODUCTION

1815 to 2009

Hand SoapHome Care Products

Personal Care Products

Oral Care Products

Operations in 200 Countries over 4 Geographical Divisions Revenue: $11.5 billion ($5.7 billion from Emerging Markets)

Operating out of Philadelphia

• Company had an international workforce• Invested heavily in foreign Communities• Manufacturing Units in 75 Countries• HQ relies on Local Managers for Strategic Advice and

Research• Secure early Market Share in Emerging Markets

COTTLE-TAYLOR IN INDIA

• CALLED COTTLE INDIA

• FOCUS ONLY ON ORAL CARE

• WIDE DISTRIBUTION NETWORK WITH 4,50,000 RETAIL OUTLETS

• OUTLETS INCLUDED SMALL SHOPS, ROAD SIDE VENDORS, MEDIUM & LARGE

STORES AND EVEN SUPERMARKETS

• MARKET SHARE (2009)- 38%

• 46% MARKET SHARE OF TOOTHBRUSH SOLD IN INDIA

• HINDA-DALTAN AND SARINDIA – MAIN COMPETITORS

21

11

46

22

% Market Share

Hinda-Daltan SarIndia

INDIAN CONDITIONS

• MORE THAN 75% OF INDIANS LIVE ON $2 A DAY

• INDIAN MARKET INCLUDED URBAN, SEMI-URBAN AND RURAL AREAS

• LARGE PORTION OF POPULATION STILL RELIES ON TRADITIONAL

PRODUCTS LIKE NEEM TWIGS, BLACK SALT, TOBACCO, CHARCOAL

AND ASH

• 50% OF INDIANS NOT CONCERNED WITH PREVENTING OR CURING

DENTAL PROBLEMS(2007 STUDY)

• RURAL POPULATION 5 TIMES MORE LIKELY TO REFRAIN FROM USING

DENTAL CARE PRODUCTS OVER URBAN COUNTERPARTS

• ONE DENTISTRY PERSONNEL FOR EVERY 10000 PEOPLE

• MAJORITY OF POPULATION DO NOT VISIT DENTIST

• NO DENTAL INSURANCE IN INDIA

BRUSHING FREQUENCY AND REPLACEMENT

7

9

22

39

23

Brushing Incidence

In India

1 Time/Week 2 Times/Week 3 Times/Week

1 Time/Day 2 Times/Day

8.6

91.4

Replacement Incidence

Replaced in 3 Months

STRATEGY IN INDIA

• PARTNERS INDIAN DENTAL ASSOCIATION FOR PROMOTION OF ORAL

HYGIENE

• LOWERED PRICE FOR BASIC TOOTHPASTE AND TOOTHPOWDER (MARGIN

REDUCED FROM 31% TO 25%)

• AS MARGIN ON TOOTHPASTE AND TOOTH POWDER WENT DOWN, FOCUS

SHIFTED TO LOW AND MID RANGE TOOTHBRUSHES (INCREASE PRICES BY

20% DUE TO INFLATION )

• PLANS TO SLOWLY INTRODUCE HIGH END TOOTHBRUSHES AND ANCILLARY

PRODUCTS LIKE MOUTHWASH AND DENTAL FLOSS

• USE OF DENTISTS TO PUSH SALES

MARKETING TILL 2009• 9% OF TOOTHBRUSH SALES SPENT ON TOOTHBRUSH ADVERTISING

• 3% ON PROMOTION AND MERCHANDISING

• 10% ON OFF INVOICE ALLOWANCES FOR TRADE DEALS

• ADS TARGET MEN AND WOMEN AGED 20-35

• HQ RELIED ON COUNTRY MANAGERS TO ADD LOCAL FLAVOR TO

GLOBAL ADS Ad Expenses

TV Newspapers

Billboards Radio

CURRENT SCENARIO• DECLINING US REVENUES

• SENIOR MANAGEMENT LOOKED TO EMERGING MARKETS TO OFFSET

DOMESTIC LOSES

• MICHAEL LANG, VP OF MARKETING FOR GREATER ASIA AND AFRICA, IS

UNDER PRESSURE TO DELIVER RESULTS

• HE NEEDS HIGHER UNIT SALES AND REVENUE CONTRIBUTION FROM

INDIA

• BRINDA PATEL, DIRECTOR OF ORAL CARE MARKETING FOR INDIA,

PRESENTS SALES FORECAST SUPPORTING 20% INCREASE IN

TOOTHBRUSH SALES

• LANG FINDS FORECAST CONSERVATIVE

• LANG WAS PREVIOUSLY ABLE TO ACCELERATE GROWTH IN THAILAND

AND EXPECTS SAME PLAN TO WORK IN INDIA

• PATEL GIVEN 2 DAYS TO PRODUCE REVISED MARKETING PLAN TO

ACHIEVE GOAL OF 30% SALES GROWTH

PROBLEMS TO BE SOLVED

• DETERMINE WHOSE PLAN (PATEL OR LANG) WOULD CREATE A HIGHER

REVENUE

• INCREASE UNIT SALES BY 30%

• DEVELOP A MARKETING PLAN BY WEIGHING 3 KEY FACTORS:

PERSUADING CONSUMERS TO BRUSH FOR FIRST TIME

INCREASE INCIDENCE OF BRUSHING

PERSUADE CONSUMERS TO UPGRADE TO MID RANGE OR PREMIUM

PRODUCTS

PATELS STRATEGY

• PATEL WANTED TO RETAIN EXPENDITURE AT 9% OF SALES

• THOUGHT THAT COMPANY WOULD NOT LIKE TO SPEND TOO MUCH MONEY AT

THE TIME OF RECESSION

• WANTS TO CREATE NEW CONSUMERS

• WANTS TO INCREASE BRUSH USAGE

• PATEL WANTED TO FOCUS MAINLY ON :

PERSUADING CONSUMERS TO BRUSH FOR FIRST TIME

INCREASE INCIDENCE OF BRUSHING

EFFECTS OF PATELS STRATEGY

• INCREASE IN NO OF RURAL BRUSHERS

• CREATE A LARGER CUSTOMER BASE FOR FUTURE

• DRIVE SALES OF LOW END BRUSHES

• KEEP EXPENSE MINIMUM FOR COMPANY

• SALE OF MID- RANGE AND PREMIUM TOOTHBRUSH UNAFFECTED

• 20% INCREASE IN SALES RESPITE INCREASE IN TOOTHBRUSH PRICES

LANGS STRATEGY

• LANG PROPOSED INCREASE IN AD EXPENSE TO 12%

• BASED ON STRATEGY USED IN THAILAND

• STRATEGY MORE FOCUSED ON :

PERSUADING CONSUMERS TO UPGRADE TO MID RANGE OR PREMIUM

PRODUCTS

EFFECT OF LANGS STRATEGY

• INCREASE IN EXPENSES FOR COMPANY (AD 12%)

• NEW CUSTOMERS CREATED IS COMPARATIVELY LOWER

• HIGH INCREASE IN SWITCHING FROM LOW END TO MID RANGE AND

PREMIUM PRODUCTS

• MORE SALE OF MID RANGE AND PREMIUM PRODUCTS

SALES PROJECTION Toothbrush Products 2009

Inmillions

2010 E Patel

In millions

2010 E Lang

In millions

$ Price/Unit (After

20%Increase)

RevenueIn millions ($)

Patel Lang

Low End Manual

Complete 230.6 276.7 267.5

+16%

0.18 49.81 48.15

Sensitooth 29.9 35.9 34.7 0.216 7.75 7.5

Fresh Gum 15 18 17.4 0.216 3.89 3.76

Surround 9 9.7 10.4 0.228 2.21 2.37

Kidsie 15 16.2 17.4 0.144 2.33 2.51

Total 299.5 356.5 347.4 - 65.99 64.29

Mid Range Manual

Zagger 34.4 43 75.7 + 120 %

0.348 14.96 26.34

Directionflex 8.6 10.8 18.9 0.636 6.87 12.02

Total 43 53.8 94.6 - 21.83 38.36

BatteryOperated

Brushes and Refills

Swirl Brush 1.5 1.7 1.88 +25%

7.68 13.06 14.44

Refills 0.2 0.2 0.3 0.672 0.13 0.2

Total 1.7 1.9 2.18 - 13.19 14.64

Total 344.2 412.2 444.18 - 101.01 117.29

INCOME STATEMENT

Weightage%

Patel Lang

Toothbrush Gross Revenues 100% 101.01 117.29

Less(-): Trade Discounts 10% 10.10 11.73

= Net Revenue 90% 90.9 105.56

Less(-): Variable Manufacturing, Selling and Distribution Costs

46% 46.46 53.95

= Gross Margin 44% 44.44 51.61

Less(-): Advertising 9%(P)/12%(L)

9.09 14.07

Less(-): Consumer Promotions and Merchandising

3% 3.03 3.52

Less(-): Selling, General and Administrative Costs

14% 14.14 16.42

= Profits from Operations - 18.18 17.6

0

20

40

60

80

100

120

Patel Lang

101.01

117.29

18.18 17.6

COMPARISON BETWEEN THE TWO

APPROACHES

Revenue

SUGGESTIONS

5

%

40%55%

Urban Areas

15%

55%

30%

Semi Urban Areas

Message 1 Message 2

70%

25%

5%

Rural Area

STRATEGY IMPLEMENTATION

Urban Areas (Metros and Large Cities)

Semi-Urban (Small Cities, City Outskirts)

Rural Areas (Villages)

• Organise Dental Camps in Schools for Kids

• Give Discount Coupons to School Kids

• Use Celebrities for Premium Products

• Kiosk Marketing of Mid Range and Premium Products outside Malls

• Organise Dental Camps in Schools for Kids and Parents

• Give away free merchandise to kids

• Kiosk Marketing for Low End and Mid Range Products

• Use Local Celebrities for Marketing

• Use “On the Go” Marketing in Rrural Areas

• Organise Dental Camps • Give away free

Merchandise• Distribute pamphlet for

advertise (pictographic)

CONCLUSIONS

• LANGS STRATEGY PROJECTS A REVENUE OF $117.29 MILLION COMPARED TO

$101.01 MILLION FOR PATELS STRATEGY

• BUT GROSS PROFIT FOR PATELS STRATEGY ($18.18 MILLION) IS MORE THAN

LANGS STRATEGY ($17.6 MILLION)

• PATELS STRATEGY GENERATES MORE USERS HENCE CREATING A LARGER

CUSTOMER BASE FOR FUTURE

• PATELS STRATEGY SHOULD BE FOLLOWED FOR 2010 AND LANGS STRATEGY MAY

BE IMPLEMENTED ONCE FIRST TIME USERS ARE INCREASED

• THERE SHOULD BE DIFFERENT WEIGHTAGE GIVEN TO THE 3 KEY MESSAGES FOR

RURAL, URBAN AND SEMI-URBAN AREAS