PRICIPLES OF MARKETING

Submitted By: SAMAN AYYUB SAFA SUHAIL FAISAL SHAMIM KHATIJA AGHA Submitted to: MR. UMAIR ZIA DATED: AUGUST, 2007

9TH
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LETTER OF TRANSMITTAL To Mr. Umair Zia Course Instructor Principles Of Marketing College of Business Management Karachi. Respected Sir, We are presenting this Report on Colgate Toothpaste which has been authorized by you for the course Principles of Marketing. In this report we have tried to cover all aspects required by the report. Kindly let us know, if you have any query or suggestions regarding this report. Sincerely, Saman Ayyub Safa Suhail Faisal Shamim Khatija Agha
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LETTER OF ACKNOWLEDGEMENT

Dear Readers: It is indeed an honor for us to prepare this Report on Priciples of Marketing which was assigned to us by Mr. Umair Zia, our course instructor, who gave the class a treasured insight on the subject of Marketing. His untiring support and influencing attitude of bearing with us has surely been a driving force. We would especially like to express our acknowledgements to Mr. Umair Zia for providing us valuable directions about the professional aspects of this report. Thank you. Sincerely, Saman Ayyub Safa Suhail Faisal Shamim Khatija Agha

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Table of Contents
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Mission Statement Business Objective Executive Summary ENVIRONMENTAL ANALYSIS Market Segmentation Market Share Driving Force Market Targeting Market Positioning INTERNAL ANALYSIS SBUs Portfolio Analysis Sales Performance Portfolio Analysi(toothpaste) Product Life-Cycle Analysis

Sales Forecast (2008-2012) SWOT Analysis Marketing Mix Strategies NEW PRODUCT LAUNCH

Colgate is a dental care product that protects teeth and freshens the mouth. It is an FMCG, a convenience good. Currently Colgate is the market leader in the toothpaste market. Colgates market has been consistently growing with the increasing population and growing awareness. Colgates chief competitor is Medicam. However, other competitors include Macleans and English toothpaste. Which are followed by other small players like Dr. Toothpaste, Smokers Toothpaste, Close up, Shield etc. Colgate Palmolives success basically depends on the satisfaction of their consumers and this can only be done by developing a clear understanding of what their customers want from their products for which they have a consumer affairs department which caters to their customers needs. They make continuous innovations in their products and bring new products in the market as well. Colgate had organized a Colgate picture building contest in 2004 which was designed to promote Pakistani art and culture. Children had made different models of famous Pakistani landmarks with Colgate packs. Also the 7th International Dental Congress in Islamabad was held last year, sponsored by Colgate. This promotes their goodwill and brand equity and gains customer loyalty.

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Colgate works hand in hand with the Pakistan Medical Dental Association and this is the main source of many consumption building activities which have been pioneered by Colgate Pakistan.

Colgate people around the world have built a reputation as a successful company with the highest ethical standards. Through living our values of Caring, Global Teamwork, and Continuous Improvement, and adhering to the highest principles of integrity, honor, and concern for the environment and others, we seek to: 1. 2. Provide safe and quality products of value to consumers Increase shareholder value

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3.

Offer opportunities for personal and professional growth to all Colgate

people 4. Fulfill our corporate social responsibilities as a member of the global

community

Mr. Shoaib Iqbal has told us about the business objective for the year 2008. He said that Our long history of strong performance comes from absolute focus on our 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. Our primary goal is to remain the leader in Pakistan toothpaste unit share in 2008 and beyond. We also seek to take the lead in Pakistan share market by 2008. Our target unit share in 2007 is 25%. By 2008, we seek unit shares of 28%. Our offerings will be made available to every type of customer via every type of channel in every part of the Pakistan .We will, however, not distribute Classic or Plus through dentists. Importantly, we will not limit the intensity of distribution or the intensity of promotion of Precision, and Precision will be aggressively promoted under the umbrella of the Colgate brand.

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Dividing a market into smaller groups of buyers with distinct needs characteristics or behaviors who might requires separate product or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. The Colgate Company is currently practicing segment marketing in Pakistan. Colgate has segment the Pakistani customers into many groups and is offering different products cater to their unique needs. Colgate is a market leader. It owns the highest number of shares in the market. The market for ORAL CARE product category has been segmented on the basis of price and benefit

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SEGMENTATION OF THE COLGATE TOOTHPASTE MARKET

BENEFITED SEGMENTS
ECONOMIC (LOW PRICES) MEDICINAL (DECAY PREVENTION) HEAVY USERS 24% HEAVY USERS 39% COLGATE CDC, COLGATE MISWAAK, COLGATE COSMETIC (BRIGHT TEETH) SOCIALIZED , GREGARIOUS 31% HERBAL COLGATE FRESHING GELS, COLGATE TASTE (GOOD TASTING ) SPEAR MINT LOVERS 6% HERBAL WHITE COLGATE MAX FRESH GEL

BEHAVIOR

VOLUME OF PEOPLE IN PERCENTAGE

PRODUCT OF COLGATE
SPARKLE

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Segmentation By Volume in Pakistan

6%

31%
24% 39% Cosmetic Economic Medicinal Taste

percentage of the pe ople buy toothpaste on the basis of following characterstics

Shares in Market 1% 3% 4% 8% 2% 6% 42%

Colgate Palmolive Pepsodent care Close up Medicam dental creams Dentonic Aqua Gel

14%

Soda White English Doctor

20%

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CUSTOMER NEEDS MANAGEMENT:

Colgate organization focus on building long term customer relationships based on fulfilling customers needs Shifts in consumer demographics and concerns, a growing population of aging, health conscious and better educated consumers, for these consumers, Colgate-Palmolive came up with the total a breakout brand that provides a combination of benefits, including cavity prevention, tarter control, fresh breath and long lasting effects.

DISTRIBUTIONAL STRATEGY:
Colgate organization uses Intense Distribution as its distribution strategy. It does the stocking of its product in as many outlets as possible so that the consumers are provided with maximum brand exposure and consumer convenience. The product is available to the consumer wherever and whenever they want it.

COMPETITIVE STRATEGY:
Colgate is a cost leader and differentiated in terms of its competitive strategy, since it possesses cost efficiency and simultaneously has a unique, upscale brand image.

MARKET POSITIONING
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A products position is the way the product is defined by consumers on important attributes. Colgate focuses on providing more for more since it offers premium and the best locally manufactured toothpaste in terms of quality.

MARKET TARGETING
In market targeting a firm decides which market segment to enter. While doing that it must look at three factors: 1. Segment size and growth 2. segment structural attractiveness 3. company objectives After evaluating the three factors, the target market for Colgate is people falling in the following categories: Social class: Colgate is a regular FMCG and welcomed by all levels of social class. Income level: Colgate is affordable by the middle and upper income classes. Age: Colgate is a dental care product and targets all consumers eligible for dental care. Demographic: Colgate has recently started focusing on creating awareness and creating new consumers in various urban areas besides focusing on all rural areas.

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COMPANY DISTRIBUTOR WHOLESALERS RETAILERS Distribution of the markup in the Marketing Channel: Distributors: 3.5 % of the sales. Retailer: 7.9 % of the sales. Whole sellers: 1.5 % of the sales.

Colgate has indirect marketing channels in Pakistan contains many intermediary levels. You can easily find many of Colgates versions or products in any shops. They are easily available at departmental stores, super markets, convenience stores, superstores etc. We plan full and aggressive distribution of all three of our offerings through all of the retail channels. We expect that our offerings will be distributed in roughly the same proportions as in 1992 with a slight increase in the proportion distributed via club stores. There are retailers working on commission. The channels of distribution are highly dominated by the company rather then distribution channel. Company educates its distributors through different training programs like product knowledge training, customer satisfaction training, sales training, and technical training and customer services training. Colgate has over 400 distributors spread all over Pakistan. It has a healthy relationship with them and considers its distributors a part of the company and they share a fair percentage of revenue with Colgate. Since Colgate is an FMCG that is consumed by all levels of social classes and the majority of the population thus it indulges in intensive distribution and focuses on high shelf occupancy. While the retailers and whole sellers do not keep the product on sales basis but invest in them and buy them

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Colgate executive management team is dedicated to continuing their success while upholding their values all around the world. They lead by personal example, encouraging excellence through trust and integrity, respect and responsibility. The company undertook a key employee retention programme. The salaries were equal to other benefits due to accommodation facilities provided to the employees and a one-time expenditure of Rs. 5 crore undertaken by the company.

ORGANIZATION STRUCTURE Director oral Product Secretary

Finance Manager

General Works Manager

Marketing Director

Human Resource Manager

Production Manager

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COMPANYS PRODUCT RANGE

Colgate Palmolive deals with the incredibly wide range of products. The company is really statistical yearning needs of large amount of consumers in there vital way. The company has only few range of products offered in Pakistan. This report will follow and discuss in detail the product of the company which is already launched in Pakistan. It has ample range of products like:

ORAL CARE:
It includes the whole Colgate Family i.e. all kind of toothpaste under the same brand name i.e Colgate Maximum Cavity Protection, Colgate Herbal, Colgate Herbal Whitening, Colgate Miswak, Colgate Max Fresh Gel, toothbrushes under the umbrella of Colgate and Sparkle Tooth Paste.

SKIN CARE:
This category includes soaps like Palmolive and Azadi Bath soap.

DISHWASHING BARS AND SURFACE CLEANERS:

This category comprises Max Lemon Bar, Max Liquid, Max Paste, Max Powder and Ajax Paste.

FABRIC CARE:
Here Colgate Palmolive is the market leader in this category of products. The category includes Brite Total , Express Power, and Bonus etc.

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?
Sparkle Toothbrushes Max liquid New Palmolive Naturals Brite total Bonus Colgate Herbal Colgate Miswak Colgate Total Fresh Stripe Express power Azadi dish bar

Max bar Colgate MCP

Azadi carbolic soap Max Antibacterial Colgate Herbal White Colgate Whitening

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Year 2004 2005 2006

Percentage of increase From Previous year 10 % increase in sales 15% increase in sales 3% decrease in the sales

The company enjoys a good and reputable image in the mind of the consumers. This has helped the company to capture the mind share and heart share of there target market. Colgate Palmolive has a good market share. The company enjoys a leader position in the ORAL CARE. They have market shares of about 42 % Fiscal 2006 was marked by an overall economic slowdown, affecting consumer demand particularly in the rural areas. Despite sluggish market conditions and intense competition, Colgate has done well but they faced 3% decrease in Sales and 21% increase in Net Profit In Fiscal year 2005, given the healthy cash position and accumulated surplus from previous years, Colgate has record the sales of 15% more than the sales in year 2004 Overall the company is performing well but there is a need of improvement. As their sales are going down they have to take some steps to get more on

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their assets. Many strong players are doing well in market. To remain the leader company has to make some quick and smart move into the market

MA R K E T G R OW TH R A T E

STARS
H I G H

QUESTION MARK

COLGATE MISWAAK

CASH COWS
L O W

DOGS

HIGH

RELATIVE MARKET SHARE

LOW

The Colgate Company has two stars (Colgate Herbal and Colgate Miswaak),one question marks (Colgate Energy Gel ), two cash cows (Colgate MCP and Sparkle) and one dog (Colgate Herbal Whitening). The company is in a good shape. They should invest in the promising question mark to make it star and to maintain stars, so that they will become cash cows as their markets mature. Fortunately company has good sized cash cow whose income finance the companys question

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mark, Although Colgate Herbal Whitening is a dog but can be build as few of the consumers are using the product. The company can repositioned the product as a concept of cosmetic via toothpaste. The company can hold the MCP as to yield more positive cash flows. Colgate Gel should be harvested as the brand image is stronger in the protection point of view.

COLGATE

INTRODUCTION

GROWTH

MATURITY

DECLINE

The over all toothpaste market is in the maturity stage, Colgate itself has crossed its growth stage as there is a slowdown in the sales 2006 because the product has achieved acceptance by most potential buyers. Many competitors are their in market to share the profit i-e Pepsodent, crest, English, aqua gel etc The maturity stage divides into three stages divides into three phases: growth, stable, and decaying maturity. The sales slowdown creates the over capacity in the industry which leads to intensified the competition. Colgate Palmolive has to increase the R&D budget to develop

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product improvement and line extensions. They should increase advertising and trade and consumers promotion.

STRENGHTS: 1. World Wide Leader. 2 Leader in Oral Care. 3 Catering to all segments. 4 Oral Care supported by dental community. 5 High in relationship marketing. 6 Good brand equity. 7 Less costly. 2 They are into natural product category. WEAKNESSES: 1 2 3 4 Sales Promotion. Advertising and product orientation. Dont have much variation in soaps. Not effective for severe dental problems.

OPPORTUNITIES: 1 2 3 4 5 6 7 Effective business introducing hair products. People are now more conscious about there image and appearance by using branded products. More and more people are using personal hygiene products. More and more people are getting vulnerable to the media exposure. Increase in dental hygiene awareness and the importance of it. Increase in population. Increase of usage of soap has an anti bacterial agent, hence increasing product usage.

THREATS: 1. Increase in competition. 2. Local companies producing low priced products. 3. Low brand loyalty. 4. Inflation. 5. Export of effective branded products. 6. Increase in raw material price.

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7. People are more inclined towards variety.

COLGATES strength is brand equity and as customers are being more conscious about their health they want something branded. They are being brand aware so Colgate has strength to utilize this opportunity

Colgate is not much involve in sale promotion and the market competition is increasing rapidly many other manufacturer of oral product are offering sales promotion to their product which can attract many buyers is a high risk or treat for Colgate Palmolive.

As inflation is consider as a threat for many manufacturer but Colgates strength is that they are selling their high branded product on a very deserving prices. So this threat wont be too much effective in case of Colgate Palmolive.

Today people are vulnerable to media; media has a great impact on peoples buying practices. They make their decisions highly based on the ads or other promotional activities happening around them but unfortunately Colgate Palmolive is not focusing much on promotional activities so it is a lost opportunity for Colgate Palmolive.

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Year

Increase in sales (%age)

2008 2009 2010 2011 2012

5% 10% 15% 12% 11%

We think that Colgate Palmolive will enjoy higher return on asset and their asset turnover will be greater in the year 2007 and 2008 because of the aggressive planning like casting Saif Ali Khan as a poster boy of oral product but in the year 2009 and beyond company has to take some strong decisions regarding their oral products because the toothpaste as a product has been matured. They have many options like modifying their product and can also modify their marketing mixes and they can also modify their market segments We have interviewed the marketing director of Colgate Palmolive he stated that "Our Company possesses a long and unique heritage with the trust, loyalty and confidence of millions of people consumers in Pakistan. It has built a superior foundation to enhance oral care leadership by taking bold decisions with a future focused vision and a long term strategy for the sustained growth of your company". The company's strategy in future will be - A focus on investments in R&D - High quality standards - A wide range of relevant new products for different price segments - Continued thrust on encouraging oral health practices in partnership with the Indian Dental profession "With the long term strategies, proven internal strengths, devoted and professional staff supported by access to leading edge worldwide research and technology capabilities, Colgate is strategically positioned to capitalize on the opportunities in our four core categories of oral, personal, household and fabric care in the coming years."

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C O LG A T E S M A R K E T I N G M I X
Colgate has a good controllable set of tools through which it tact with its target market. Colgate tends to use each of these tools in a way that it can attract its customers and maximize its sales. Colgate collects many possibilities through the term used four Ps: product, price, place, promotion and services The goal or the purpose of marketing mix Colgate has designs is to co build strong and profitable connections with targeted customers. Market consists of many customers, products and needs .Colgate has determine which segments offer the best opportunity for achieving companys objective , we have already covered the segmented market for Colgate. Now to succeed in todays competitive market place, Colgate must be customer centered So that they can maintain their position in the market and for this sound marketing and communication is necessary, To gain the competitive advantage, the Colgate offered greater value to chosen target segments by charging We will now go through the four Ps and marketing tool under each P that Colgate uses.

MARKETING CONSIDERATION FOR COLGATE ORAL PRODUCT Colgate oral products are convenience product

Marketing consideration Consumer buying behavior Price Promotion Distribution

Convenience Frequent Purchase , light planning, little comparison or shopping effort, low customer involvement reasonable price Mass promotion Wide spread distribution, convenient locations

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Colgate offers services to its target market. Evaluating each of the segments, it selects the target market and goes through various stages and steps to attract its customers and retain them by providing them satisfaction through its services. Colgate can take the following step to maintain or increase its sales The company can also come up with the Anti-Nicotine and Tarter for smokers and people who eat beetle nuts. They can also come up with the idea of Cigarette Filters, Which can be used to filter all the excess tarter and nicotine which can cause bad breadth and tooth decay. The company can also make the Colgate after Smoke Chewing Gums which can be eaten smoking to freshen up the bad breath. The company also has the potential to come up with the Dental Floss for people who really need something extra then anti-cavity toothpaste and mouthwash to have clean nice teeth. They can also step into the kids segment offering them flavored toothpaste like strawberry, Apple, Banana, Orange etc. Colgate can also step into the mouthwash category, with the suggested name of Colgate Mouth wash. The mouthwash can be targeted as antiseptic mouthwash with fluoride, whose regular use prevents gum diseases and throat infection. They can also enhance their product by adding features to it Colgate has a reputable position into the market The company can preserve the position of Colgate Herbal by keep on adding new herbs like clove, eating Soda Powder. Colgate Oral Product should come up with another strong brand name other than Colgate and Cibaca. They should recommend for a new product development and emphasize on R&D. they should try to position some innovative toothpaste with a brand name other than Colgate but under the umbrella of Colgate Palmolive. In toothpowder, they would endorse the development of Colgate Ayurvedic Toothpowder' focused toward rural rich and consuming class. They should come up sachets of these tooth powder and position toward rural population who buy in smaller lots. For Urban population, they should come up with the products suiting to young generation. For Urban rich and consuming class, they should come up with the products on the basis of functional benefits. E.g. they should expand Colgate Herbal brand to herbal clove flavor, herbal lime and mint flavor etc. For toothbrush, they should concentrate on functional benefits and should launch different toothbrushes for different age groups. They should also launch a special toothpaste and toothbrush for kids in the age group from 4-10 years.

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We think Colgate Palmolive should try to increase product penetration to rural population as by 2008-09 the rural population I would try to increase the wholesalers to smaller towns and would track the distribution path so that they are covering all the village areas around the towns. Currently they are intensively distributing i-e their toothpaste are available in many outlets. Colgate needs to view its intermediary in the same way that it views its end users. The company currently arranging trainings for the wholesalers and retailers so that their can perform their best in the market to boost up companys sales. To make their distribution channels more effective Colgate should provide them market research program and capability building programs to improve intermediaries They are doing a satisfactory job. To sustain their performance they need to work in the similar pattern in a more efficient way. Colgate should offer incentives to the large and small distributors who had signed on to sell their products. Colgate should also evaluate intermediaries performance against such standards as sales quota attainment, average inventory levels, customer delivery time, and corporation in promotional and training program. This evaluation would help them a lot.. They are planning to evaluate their distributors. The company is planning to evaluate their distributional strategy they wants to make their product easily available not only in the urban part of Pakistan but the rural areas too They following steps would help them 1. research target customers, value perceptions, need and desires regarding channel services output 2. Examine the performance of the companys and competitors existing distribution systems in relation to customers desires. 3. find services output gaps that need corrective action 4. identify major constraints that will limit possible corrective actions 5. design a management-bounded channel solution 6. Implement the reconfigured distribution system.

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Promotion is the activity that communicates the merits of the product and persuades the target customers to buy it and that is what Colgate looks for the most. As being firm in the detergent world of Pakistan, it needs to work more for the promotion of the product. Promotional tools cover advertising, personal selling, sales promotion, public relation and direct marketing.

Promotional Tools:
Colgate doesnt cover all of the above mentioned promotional tools. It goes through two major tools that are: advertising and sales promotion.

Advertising:
The latest in line is the advertisement in which SAIF ALI KHAN (celebrity) is portrayed as user of Colgate crystal , which gives him fresh breath .this advertising appeals is pointing out the benefits of using Colgate that are desirable, by casting a superstar which is a reference group for teens and adults they have made this add more believable Colgate will help make the product more accessible to the youth, and the buzz is that Khan may well be roped in for Colgate gel campaigns as well. With its already youthfocused marketing, Colgate Gel can benefit from the attributes that Khan brings to the table Colgate Oral care can initiate a campaign with some qualified dentists, where they can provide free dental inspection to its customers/ people once in six months or three months. They have to come up with innovative and creative ways to sustain its position into the market. They should search for the ways to gain efficiency by substituting one promotional tool to another

SALES PROMOTION:
Although sales promotion tools coupons, contest, premium and the like are highly diverse they offer the benefit of communication with customer Colgate doesnt highly focusing on sales promotion; they can use sales promotion to draw a stronger and a quicker buyers response. Like they can arrange live musical concerts as Sony Ericson does in Pakistan to gain the publicity. As Colgate Palmolive oral product is in maturity stage it is better for company to use promotional tools to increase sales they can place banners to remind people of their product, they should go for aggressive TV and news papers advertising.

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Promotional Cost

TV Advertising

60%
percentage of total promotional cost

50% 40% 30% 20% 10% 0% 2003 2004 2005

years

NEWS PAPER Advertising Sales Promotion

Public Relations

Personal Selling

Direct Marketing

Comparison with competitors 60% 50% 40% 30% 20% 10% 0%

english close up doctor aqua gel medicam dentonic colgate pepsodent

Promotional cost as a percentage of sales

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Basically oral products are convenience product so the prices should be low. Colgate consider following factor before setting prices Marketing objective of Colgate Palmolive Manufacturing expenses Demand of their product Price elasticity of oral product Competitors cost, prices and offers

PRICE COMPARISON OF ORAL PRODUCT AVAILABLE IN PAKISTAN

Product Name Colgate Total Toothpaste Pepsodent Toothpaste Medicam Dental Cream Dentonic Toothpaste Close-up Toothpaste English Toothpaste Aqua gel tooth gels Doctor toothpaste Pack Size 100gms 100gms 100gms 100gms 130gms 100gms 100gms 100gms Price Rs. 42 Rs. 60 Rs. 55 Rs.45 Rs.55 Rs.18 Rs. Rs.45

The price would largely be based on the competitor's price. From the niche products e.g. Colgate herbal, Colgate Miswak etc, they should charge higher premium than the generic dental white crme that would be focused on consuming and lower income

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classes. The pricing would be done on the basis of price points and the packaging would be customized on the basis of price points. The price must be consistent with the company pricing policies. Colgate Palmolive should set up a pricing department to develop policies and establish or approve decisions. DISCOUNT PRICING Colgate Palmolive should not offer discount because everyone else does. They should be creative with discounting. If they offers discount they should put time limits on the deal. They should not offer discount to frequently because it would ruin their brand image .

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Marketing Mix Strategies

PRODUCT
Colgate Palmolive is coming up with a line extension of its famous toothpaste brand Colgate. The name of this product is Colgate Clear Gel. The specialty of this product is that it is transparent toothpaste provided with fruity granules inside. The transparent toothpaste is going to be a very different concept as no one in the toothpaste market has come up with this idea, nationally. The transparent aspect is focused to attract youth. It is also going to highlight the hygiene factor because it is CLEAR. The Fruity granules would include 3 fruity flavors: Strawberry flavor - Red color Lemon flavor - Yellow color Mint flavor - Green color

Pakistani

The colored granules would be highlighted in the clear gel. Packaging: A transparent plastic tube will hold the tootpaste, which would help to expose the clear gel and would work as a symbol of attraction and distinction from rest of the toothpastes.

PRICE
Market penetration pricing: Rather than setting a high initial price to skim off small but profitable market segments, Colgate is planning to use
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market penetration pricing. They will set a low initial price in order to penetrate the market quickly and deeply. The price for the 100gms pack of Colgate Clear Gelis going to be Rs.35 which is very less as compared to other quality toothpastes.

PLACE
The toothpaste will be available in many outlets. It will implement a mass marketing strategy.

PROMOTION
Colgate usually uses only two promotional tools i.e. Advertising and Sales Promotion. Therefore, this time it will again focus on these tools only. Colgate is going to emphasis heavily on advertising as it is the most attention gaining source currently. Advertising: Colgate will come up with colorful and lively TV commercials as its main focus is on the young generation. They will also go for aggressive newspaper advertising.

Estimated Budget for The New Product

Fixed cost Rs. 20 Million

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Marketing and advertising budget Rs. 10 Million Packaging Research and development Distribution Miscellaneous expenses Rs. 15 Million Rs. 3 Million Rs. 5 Million Rs. 10 Million

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