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SUBMITTED TO: MAAM SHAHNAZ MEGHANI

DUE DATE:

SESSION: MONDAY-WEDNESDAY, FIRST SESSION

SEMESTER: FALL 2006

SUBMITTED BY: MUHAMMAD ZUHAIB MARIUM HASSAN RIZVI ASMA IQBAL NAVEED AHMED SHAIKH NABEEL SHAHID

2006-01-20-6297 2006-01-20-6633 2006-01-20-6507 2006-01-20-6666 2006-01-20-6605

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TABLE OF CONTENTS

S.# 3 4 5 6 7 8 9 10

PARTICULARS
INDUSTRIAL BACKGROUND COMPANY PROFILE COMPANY VISION &MISSION STATEMENT PORTFOLIO MARKET STRATEGY AUDIT  STRATEGIC OBJECTIVES MACRO ENVIRONMENT SWOT ANALYSIS TASK ENVIRONMENT AUDIT  COLGATE-PALMOLIVE BCG GROWTH MATRIX  TARGET MARKET  SEGMENTATION COMPETITIVE ANALYSIS AUDIT  MARKET SHARE AS COMPARED TO COMPETITORS  BRAND COMPETITION: PERCEPTUAL EXTERNAL ANALYSIS  INDUSTRY LIFE CYCLE  PRODUCT LIFE CYCLE STAGES IN COLGATE  MARKET SIZE ANALYSIS MARKETING MIX AUDIT CONCLUSION & RECOMMENDATIONS

Page #
6 7 8 9 10 10 10-11 12-13 14-16 14 15 15-16 16-19 18 19 20-21 20 20 21 21-24 25

11

12

13 14

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INDUSTRIAL BACKGROUND
Plaque is the major contributing factor to dental caries and periodontal disorders. As part of good oral hygiene measures, toothpastes play an important part in disease prevention. In addition to flavoring, toothpastes basically contain detergents and polishing agents. Additionally, toothpastes may contain additives for particular benefits, such as antiquaries or ant microbial effect or inhibition of the formation of tartar.

TOOTHPASTES IN PAKISTAN
The total market of toothpaste in terms of usage is not very large because it is only used in urban areas of the country. Toothpaste can be divided into 5 categories. These categories identified by a dentist are: y y y y y Medicated toothpaste Whitening toothpaste Fresh breathe toothpaste Anti-cavities toothpaste Other toothpastes

Other toothpaste of that does not fall under the four broad categories. There are number of companies with different Brand Names Operating in Dental Care, some of the well-known consumed in Pakistan are: y y y y y y y Colgate Tooth Paste. Medicam Tooth Paste. MacLeans Tooth Paste. Close-up Tooth Paste. Sparkle Tooth Paste. Dentonic Tooth Paste. English Tooth Paste etc

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COMPANY PROFILE
COMPANY BACKGROUND
Colgate Palmolive (Pak) Limited (CPPL) is a joint venture of Colgate Palmolive Company USA, a global company operating in more than 200 countries. The company is a part of the Lakson Group of Companies in Pakistan. Colgate Palmolive owns a number of world-renowned brands in categories including Toothpaste, Toothbrushes, Soaps and Shampoos. Their specified fields of operations are: y y y y Oral care Fabric Care Household Surface Care Personal Care

In Pakistan it was introduced in 1988 and is one of the largest consumer product companies. Its well-known brands are Colgate, Palmolive, Brite, Express, Bonus, MaxBar, Azadi Bar, and Sparkle. The rapid expansion in various markets of Pakistan is facilitated by Colgates proven quality products, duly supported by their marketing thrust; down-scale distribution drive covering towns and villages, creative media advertising and 360 degree marketing. The success and growth of CPPL in Pakistan is attributed to their market leadership, acquired through the speed in introducing powerful brands in various markets according to price and income strata. The latest business tools are used, and highly motivated and dedicated professionals work as a team. Colgate Palmolive operates in an environment of mutual respect, trust and commitment, consistent with the global Colgate values of caring, teamwork and a drive towards continuous improvement. Colgate Palmolive has its Head Office in Karachi. All the products sold by CPPL are manufactured in the factory situated in Kotri, near Hyderabad. Inventory is dispatched to six warehouses, namely, in Hyderabad, Sukkur, Multan, Faisalabad, Lahore and Islamabad. Registered Office Address is: Lakson Square, Building No.2, SarwarShaheed Road, Karachi.

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COMPANY VISION
As we plan our strategies to sustain growth for the year to come, our core values of Caring, Global Teamwork and continuous improvement will continue to drive our future initiatives

MISSION STATEMENT
Our three fundamental values Caring, Global Teamwork and Continuous Improvement are part of everything we do. They are the foundation for our business strategy and are reflected in every aspect of our work life.

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."

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PORTFOLIO
COLGATE-PALMOLIVE PRODUCT MIX

Fabric Care

Personal Care

Oral Care Surface Care


Brite Total Express Power Bonus Toothpaste y Colgate Regular y Colgate Herbal y Colgate CDC y Colgate Total Fresh Stripe y Colgate Herbal White y Colgate Whitening y Colgate Fresh Energy Gel y Colgate Clove y Colgate Miswak Toothbrush y Colgate Navigator Plus y Colgate Plus y Colgate Premier y Colgate Extra Clean y Colgate Super Flexible Sparkle y Sparkle Toothpaste Max Bar Azadi Dish Bar Max Scourers Max Liquid Max Antibacterial New Palmolive Naturals Azadi Carbolic Soap

y y y

y y y y y

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MARKET STRATEGY AUDIT


In order to achieve this mission, Colgate Palmolive Pakistan Limited must create value for all the constraints they serve, including consumers, customers. The CPPL creates value by executing comprehensive business strategy guided by six key beliefs:  Consumer demand drives everything we do.  Brand Colgate is the core of our business  Will serve consumers a broad selection of the fresh breath, cleaned environment and beauty throughout the day.  Will be the best marketers in the world.  Will think and act locally.  Will lead as a model corporate citizen.

Strategic objectives
1. Selectively broaden the family of personal and family care to drive profitable growth. 2. Grow system profitability and capability together with packaging and distribution partners. 3. Serve customers with creativity and consistency to generate growth across all channels. 4. Direct investments to highest potential areas across markets. 5. Drive efficiency and cost-effectiveness everywhere.

MACRO ENVIRONMENT
The macro environment of any industry consists of those factors which affect the broad spectrum of the industrys external environment. The toothpaste industry is mainly affected by the following factors in its macro environment: y y y Social factors Economic factors Technological factors

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DRIVING FORCES AND TRENDS IN THE INDUSTRY


The marketers at Colgate perceive the following factors as driving forces of the toothpaste industry:

ECONOMIC CLIMATE
All FMCGs are directly affected by the economic climate. Similar is the case with toothpaste, where growth of the industry is directly attributed to increases in disposable income. Hence factors like reduced inflation and sales tax, and growth in the GNP per capita is desired for the market to expand. Currently, 65% of the potential market lies in the rural areas where traditional forms of dentifrice are still used. Improvements in the economic climate of the country are ideal for the expansion of the market as a whole.

SOCIO POLITICAL CLIMATE


Although political factors do not directly affect the industry performance, social factors such as income distribution and population growth do play a major role. With the everincreasing levels of population growth, there is more and more room for Colgate to realize its vision of having a cavityfree generation. However, considering the fact that most of these increases in population are in the lower segment, and the income distribution in the country is by no means equal or even equitable, these are major considerations in the way the industry is evolving. These factors have led to the range of products available in the toothpaste market, not only in terms of flavors and purposes but also in terms of prices.

DEMOGRAPHIC:
For any company its target market is very important. Colgate focus on almost all age groups except younger than 3 years age. Ages, genders and classes show demography of any region.As far as Pakistan is considered it has younger population than in comparison with many European countries. Therefore Colgate has to follow different strategy to cater the need of younger generation. Besides the younger generation Colgate also target other demographic variables as it is a mass consumed product.

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SWOT ANALYSIS
COLGATESINTERNAL ANALYSIS STRENGTHS
y Focus on innovation and new product launches. y Colgate business planning initiative. y Colgate Palmolive has the wide distribution system in Pakistan, which is a major advantage over its competitors. y Strong financial Position. y Strong social image of the Company y Parent support: Colgate-Palmolive Pakistan Limited has a strong support from its parent Company, which is a world leader in oral care company, with a presence in almost every country.

WEAKNESSES
y The major weakness of Colgate-Palmolive is that its IT system is not up to mark because of recent implementation of SAP and their IT department still lack competency to run it and need training, which makes it difficult for the company to use e-commerce as part of its business, sales and promotion strategy. Competitors have an edge in IT integrated systems that the company is trying to improve. y The Company has high reliance on a single category, Oral Care, which accounts for more than 65 per cent of the company revenue and profit. The other two categories, Personal care and household care, contribute less than 35 per cent to the company revenue.

y Colgate-Palmolive Pakistan Limited is a market


leader in oral care market having presence since 25 years.

y Only emphasize on urban market while


suburban and rural areas are neglected to some extent.

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COLGATESEXTERNAL ANALYSIS
OPPORTUNITIES
y There is low penetration level for oral care in rural market. Most the user in rural market use traditional products like manjan, misvak or other herbal ingredients. Hence there are still lots of untapped potential in rural market. y Emerging markets growth due to change in demographic characteristics of people. y Advance technology which is Enterprise Resource Planning- SAP is implemented in August 2009 which is not fully utilized and still there is opportunity to get the maximum results through efficient and effective utilization. y Colgate-Palmolive highlighted a new segment which is capturing the children and Colgate will be planning to launch three new flavor toothpaste for children which include chocolate, fruity and orange.

THREATS
y A major threat to Colgate Palmolive is that it is competing with two huge multinational companies involve Unilever and GlaxoSmithKline. y Colgate-Palmolive is working as a joint venture with the LAKSON group, which is a local company. So its success depends on the success of the lakson group. y Competition in low end segment is quite high because many regional players apart from some big players are having huge offering in oral care. y Inflation cause continuous increase in prices of their product.

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TASK ENVIRONMENT AUDIT


COLGATE-PALMOLIVE BCG GROWTH MATRIX

Max Liquid

New Palmolive

Express Power

Max Antibacteria l

Colgate

Max Scourers

MaxBar Bonus Azadi

Sparkle

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TARGET MARKET
Demographics:
y y y Male and Female Teens and Young Adults Children

Behavior:
y y y Regular Users Heavy Users Potential Users

Psychographics:
y y y y y y y y High Autonomy Value Oriented Hypochondriacally Conservative High Sociability Active High Self Involvement Hedonistic

SEGMENTATION Geographic  City or metro size  Density Demographic  Age  Gender  Family size 08-65 Male, female, children 1-2, 3-4, 5+ 1.8 Million and Above Urban, suburban, rural

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 Family life-cycle  Income  Occupation Psychographics  Social class  Lifestyle  Personality Behavioral  Occasions  Benefits  User status  User rates  Loyalty status  Readiness stage  Attitude toward product

Above 7 15000+ Professional, Student, Housewives

Upper, lower uppers Fulfillers, achievers, experiencers and believers Action-oriented

Regular Anti-Cavity, Anti-Plaque, Fresh Breath and whitening features Potential users Medium user Medium Intending to buy positive

COMPETITIVE ANALYSIS AUDIT


There are many local and multinational direct competitors operating in Pakistan which are mentioned below: 1. 2. 3. 4. 5. 6. 7. Soda White Toothpaste by English Laboratories (Pvt) Ltd English Toothpaste by Pak English Laboratories Macleans, Aqua Fresh and Sensodyne Toothpaste by GlaxoSmithKline A-1, Snowwhite, Doctor And Mr.White Toothpaste by Ansar Harford Ltd, London Medicam by Medicam Laboratories Close Up and Pepsodant by Unilever Crest by Procter & Gamble

Medicam and Closeup are the major competitors of Colgate. Although the industry has established brand identities (Colgate, Close Up, Medicam, McLeans and so forth), and newcomers may have difficulty in accessing distribution channels, the threat of new entrants is extremely high in the toothpaste industry since there are no proprietary product differences in the

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industry and neither are licenses, insurance or qualifications difficult to obtain. Moreover, start-up and equipment costs are minimal. However, switching costs may be reasonably high if consumers switch from a low quality brand to a higher quality one. And even though new comers can expect strong retaliation from established companies in the industry, new entrants are only on the lower side, which means that companies which started with bigger brands, premium prices and larger SKUs have now begun to offer smaller SKUs and lower prices in order to increase market captivity. Toothpaste substitutes include natural dentifrice such as Miswaak, Neem, Clove and tooth powder. Although current toothpaste users are not likely to shift to these substitutes, the major challenge for the industry is to convert users of these substitutes who mainly reside in the rural and surrounding areas of the country. These traditional dentifice-users represent approximately 65 percent of the market and this is virtually a virgin market for toothpaste manufacturers. These natural means of oral care are not only rooted in the lifestyles of these people but are also more economical. Hence, substitutes are a huge and daunting threat for the toothpaste industry. Since the toothpaste industry caters to end users, it is easy to assume that the bargaining power of buyers is low because an individual buyer cannot have any influence on a company or the industry as a whole. Hence, competing organizations vary in sizes, resources and market share. The main driver behind the growth and rivalry is hence, the price competition, the ease of entry into the industry, the vastly untapped rural market and the established brand identities.

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MAPPINGMARKET SHARE AS COMPARED TO COMPETITORS

Macleans & Medicam 34%

Colgate Toothpaste (Regular) 66%

Colgate Toothpaste (Regular)

According to the retail shop survey it has been observed that Colgate has approx. 66% Share of the toothpaste market in Karachi comparing with MacLeans toothpaste and Medicam Dental Cream. The survey has been conducted from posh class areas small and super stores in Karachi. The main competitors of Colgate toothpaste are Medicam in terms of volume, and Close Up in terms of a similar product range. Colgate captures a market share of 21 percent while Close Up holds 9 percent and Medicam holds 23 percent. The rest of the market is held by other nonpremium brands. Colgate competes with Close Up on the basis of herbal, whitening and gel segments; and with Medicam on the basis of their claim of tooth decay prevention as compared to Medicams claim of prevention and cure.

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BRAND COMPETITION: PERCEPTUAL


HIGH QUALITY

Medicam

Colgate

Closeup

Dentonic

LOW PRICE Sparkle Macleans

HIGH PRICE

English

LOW QUALITY

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EXTERNAL ANALYSIS
INDUSTRY LIFE CYCLE
The toothpaste industry is in the growth stage of its life cycle. There is a massive market of 65% that has not been penetrated as yet. It consists of the rural areas where traditional dentifice is currently and widely used. Presently the industry has only captured 35% of the total potential market. Tooth Product Gels Regular Herbal Herbal Whitening Medicated X X X Introduction Growth Maturity X X Decline

COLGATE
The different segments of Colgate tooth care are shown below with respect to their PLCs. They are in the process of penetrating the rural market with a goal to have a cavity free generation.

PRODUCT LIFE CYCLE STAGES IN COLGATE


Toothpaste Colgate Gels Colgate Regular Colgate GRF Colgate Herbal Colgate Herbal White Colgate Whitening X X X X Introduction X X Growth Maturity Decline

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MARKET SIZE ANALYSIS (LAST FOUR YEARS)

Product

Volume (Million Pieces)

Growth P.A.( % )

2007
Gel Regular Mix Herbal/Herbal White Medicated 20 7.0 64 36 1.0

2008
6.5 69 38 1.0

2009
6.5 74 28.5 12

2010
6.0 80 27 14 4.94 7.7 8.25 9.22

24

27

33

18.24

MARKETING MIX AUDIT

PRODUCT

Delivery & credit Premium quality

Different flavors

Clean teeth & fresh breath


Quality verification by PDA

Soft tube

Customer care centre

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PRICING STRATEGY PRICING OBJECTIVE:


To setup a competitive price that can justify the quality of the product through profit.

Colgate Maximum Cavity Protection Product Price 30 gm Rs. 20 75 gm 150 gm Rs. 52 Rs. 90

Colgate Prices Colgate Max Colgate Herbal Fresh

Colgate Miswak

Product 30 gm 75 gm 125 gm

Price Rs. 23 Rs. 50 Rs. 85

Product 50 gm 100gm

Price Rs.32 Rs.65

Product 50 gm

Price Rs. 35

Competitors Prices Close Up Product 30 gm 70 gm Price Rs. 25 Rs. 50 Sensodyne (Red) Product 40 gm 110 gm Price Rs. 60 Rs. 115 Sensodyne (Green) Product 50 gm 80 gm Price Rs. 57 Rs. 85

ANALYSIS:
Colgate is the only market leader in the oral care in Pakistan and offers its product at a competitive price as compare to its rivals. However Unilever, GlaxoSmithKline are having good contribution in the market. P & G is its world wide competitor but P & G is not marketing its brand Crest tooth paste in Pakistan. English laboratories (English tooth paste) But Medicam is categorized in the medicated tooth pastes.

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PLACE DISTRIBUTION ANALYSIS Household Consumer


General Shops Medical Stores Utility Stores Key Accounts Modern Trade Hotels Hostels

Commercial Buyers

Retailers Distribution Channels Wholesalers

Commercial Institutions

Respective Zones& Distributors

Warehouse Oral Care Industry

The above mention distribution structure shows that how the oral care industry transfers their goods to the end user. Thereare450 Distributors across Pakistan through which the product of Colgate-Palmolive Company reaches to end user.The company is divided into 8 zones on the basis of distribution. y Karachi y Lahore y Hyderabad y Rawalpindi y Multan y Gujranwala y Faisalabad The trend which is mentioned in the distribution structure shows that the consumers are moving towards the key accounts and modern trade because the standard of living is increasing day by day so every segment is increasing their sales through key accounts and modern trades.

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PROMOTION PROMOTIONAL OBJECTIVE AT TIME OF LAUNCH:


Like all new brands, Colgates first promotional objective was to create awareness among potential consumers. It was promoted extensively through television and print media. Back then, promotion costs were not as much and the companys promotional budget was minimal as compared with today. Colgate-Palmolive has been using percentage of sales method for fixing its promotional budget for years.

PROMOTIONAL BUDGET:
Colgates promotional budget for the year 2009 was 15% of it sales of the previous year, accounting to approximately Rs.18 million

PROMOTIONAL TOOLS USED BY COLGATE:


Colgates promotion mix consists of consumer promotions as well as trade promotions. Consumer promotions include television advertising, ground promotions, short-term sales promotions, public relations and posters. Recently Colgate has come up with a scheme on its regular pack, 25% extra toothpaste at the same price. Advertisements on television support this sales promotion plan. Colgate is also planning to set up billboards in Gulshan and Clifton areas promoting this scheme.

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CONCLUSION & RECOMMENDATIONS


Colgate has just moved into the cash cow phase. To help revitalize the cash cow, it has already come up with the 25% extra toothpaste scheme. We would also like to recommend a few tips to Colgate-Palmolive as a way of helping them stabilize and increase their market share.

1. It is said that there is a 65% unexplored market, which is the rural sector. Colgate should try to promote its product in rural areas and educate the people of its benefits and uses. Also, it can launch new low-priced brands to sustain the premium image of Colgate. 2. The company should come up with highly innovative and exciting new flavors from time to time. A new flavor like lemon and mint could be introduced which would give a feeling of cleanliness and freshness. 3. They should worry about the new competition coming into the market and not just worry about the big names already in the industry. 4. They should explore new frontiers like promoting through fairs, festivals and exhibitions. 5. They should come up with different uses for their product. This would automatically increase their market share as the usage rate of the product increases. A few suggestions are: a. It acts as a cure for burns. b. It acts as a cure for acne (pimples). 6. Colgate can also expand its product line by introducing new mouth wash products in different flavors.

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