Colgate: Why It Dominated India | Business Case Study

Summary

This video script explores Colgate's unique business strategies that led to its dominance in the Indian dental hygiene market. Despite being an American company, Colgate capitalized on unplanned toothbrush purchases by positioning products like impulse buys and focusing on in-store displays over billboards. They also tailored their products to consumer preferences, such as introducing a diamond-shaped toothbrush for comfort. The narrative highlights how Colgate adapted to changing consumer needs, from Hollywood's influence on white teeth to health consciousness, and its strategic partnerships with dental associations to maintain its market lead.

Takeaways

• 🏢 Colgate, originally a soap company, pivoted to oral hygiene products in 1873 and has since become a dominant player in the market.
• 📈 Colgate's annual sales are $6 billion, with a profit of $2.76 billion, largely driven by international sales, particularly in India where it leads the market.
• 📊 In India, Colgate holds a 56% market share, capitalizing on the high penetration rate of toothpaste in urban areas.
• 🔍 An insight from the 1990s revealed that 82% of toothbrush purchases are unplanned, similar to impulse buys like chewing gum.
• 🎁 Colgate's strategy included BOGO (Buy One Get One) schemes, which increased sales by 170% by bundling toothbrushes with toothpaste.
• 🏬 They focused on in-store displays rather than billboards, understanding that toothbrush purchases are often made on impulse within the store.
• 📍 Colgate strategically positioned their products in stores between Oral-B and Reach for optimal visibility and sales.
• 💡 They conducted research to understand customer preferences, finding that comfort in the mouth was the top factor influencing toothbrush choice.
• 💎 Colgate introduced a diamond-shaped toothbrush to cater to consumer preferences for comfort, emphasizing differentiation over mere functionality.
• 🌟 In response to Hollywood's influence on white teeth, Colgate introduced products like Colgate Visible White to meet changing consumer demands.
• 🔄 The company has adapted over the decades, reflecting shifts in consumer needs from comfort to whitening and health consciousness.

Q & A

What was the original product line of Colgate before entering the dental hygiene market?

Colgate originally sold soap and only started making toothbrushes and toothpaste after some market research in the US proved there was demand.

When did Colgate first start selling toothpaste?

Colgate's oral hygiene products were first sold in 1873, 16 years after the death of the founder William Colgate.

In what year did Colgate introduce toothpaste in glass jars and when did they switch to tubes?

Colgate toothpaste was sold in glass jars and tubes were only introduced in 1896.

What is the estimated size of the toothpaste market in India and what is Colgate's market share?

The toothpaste market in India is estimated at 6,000 crores and Colgate has a 56% market share.

What were the two lines of toothbrushes that Colgate launched in 1991 and what were their market segments?

In 1991, Colgate launched two lines of toothbrushes: Colgate Classic and Colgate Plus. Colgate Plus was the premium segment, while Classic was the value segment.

What was the key insight that led to a significant increase in toothbrush sales for Colgate?

The key insight was that 82% of toothbrush purchases are unplanned, similar to buying chewing gum in a store.

How did Colgate increase sales by 170% with their toothbrush and toothpaste bundles?

Colgate increased sales by offering buy one get one schemes, mostly buy one toothbrush and get one toothpaste free.

Why did Colgate focus on in-store displays instead of billboards for their advertising?

Colgate understood that toothbrush purchases are unplanned, so they focused on winning the advertising sphere of the entire store with in-store displays.

How did Colgate position their products in the store to maximize sales?

Colgate positioned their product line in between Oral-B and Reach, another toothbrush brand, for maximal sales.

What was the unique feature of the Colgate toothbrush introduced in response to customer preferences?

Colgate introduced the first ever diamond-shaped toothbrush that would fit perfectly in the mouth, with the tagline 'shaped to keep your whole mouth in shape'.

How did Colgate adapt to the changing consumer preference for white teeth influenced by Hollywood?

Colgate introduced a line of products like Colgate Visible White and pivoted their marketing story to focus on white teeth.

What was the impact of the advertising standards authority's ruling on Colgate's marketing claims in the UK?

In 2007, the Advertising Standards Authority in the UK told Colgate it could no longer claim that four out of five dentists recommended Colgate, as the investigation showed similar rates for competitors.