Executive Summary

The United States. Mexican and Chinese markets all took really different attacks to the release of Colgate-Palmolive’s ( CP ) newest unwritten attention merchandise in 2004-2005. The new toothpaste is called Colgate Max Fresh ( CMF ) . It is a pit forestalling gel with breath-freshening strips suspended in it that dissolve while consumers brush their dentitions. The engineering behind the breath strips is patented. and Colgate was trusting the merchandise would be a large success by supplying alone freshness. In the United States. research was done and new bottling was designed to optimise the visual aspect of the new toothpaste. The advertisement was besides focused on the freshness that consequence from the breath strips and the merchandise was really successful. CP so decided to let go of the merchandise worldwide. In Mexico the ad run was changed every bit good as a few other minor alterations. but non much was spent on changing the selling mix for CMF. Colgate Max Fresh proved popular in Mexico and net incomes were seen in the first two old ages.

In China. 1000000s were spent on reconfiguring the selling mix. and gross revenues were non high plenty to do up for the disbursals in either of the first two old ages. In the first twelvemonth entirely. CMF saw a net loss of over $ 10 million. I have evaluated three options for cut downing costs and increasing gross revenues and have determined that the Chinese sellers decided to alter the selling mix excessively rapidly. Alternatively of looking into what facets of the U. S. selling mix would and would non work in China. they made premises. The advertisement run that they came up with was expensive and uneffective. Chinese consumer penchants should hold been highlighted in the promotional run. and more elements from the original U. S. selling mix that were dearly-won to “improve” might non hold needed to be changed at all.

Current Situation

Colgate-Palmolive ( CP ) is a world-wide company that specializes in unwritten. personal. and place attention. every bit good as favored nutrition. Of peculiar involvement in this instance is unwritten attention. Colgate is an unwritten attention name that is known around the universe. Colgate-Palmolive has the bulk value portion in the United States. Mexico. and China. In each state. Procter and Gamble’s ( P & A ; G ) Crest toothpastes are ranking 2nd in market value portion. In Mexico. the difference between Personal computer and P & A ; G is immense – Personal computer has market portion above 80 % . However. in the U. S. and China the market portions are really close: In 2004. Colgate had 34. 8 % and Crest had 31. 6 % value portions in the U. S. ; in China Colgate had 23. 6 % . Colgate through partnerships had an extra 8. 5 % . and Crest had 21. 2 % portions. CP direction was pressured to vie hard against Crest’s new merchandise called Crest Whitening Expressions ( CWE ) .

In August 2004 CP launched a new toothpaste merchandise called Colgate Max Fresh ( CMF ) in the United States. CMF was advertised as premium toothpaste that would supply a “whole new dimension of freshness. ” The merchandise was so successful that CP decided to establish it worldwide. Colgate-Palmolive’s organisational construction is split up by geographic lines. each part holding its ain direction. However. there is another split by class – there is one group responsible for unwritten attention merchandise scheme. resource allotment. and best-practices transportation between parts. This instance focuses on the launches in the U. S. . China and Mexico. In all three states spirits varied and different schemes were used in packaging and publicity of Colgate Max Fresh. as described in the tabular array below.

Rock-star Jay Chow and “extreme life. ”| “Snowsurfer” extreme life ; provides “a joy drive for your oral cavity. ”| Additional costs beyond initial merchandise development and standard market testing| Base costs – first state to establish the merchandise. | New spirits cost $ 200. 000 to research and develop. New artworks. aesthetics. advertisement run cost $ 1. 5 million. New packaging ( that failed ) be $ 1. 5 million. and would hold increased variable cost by 20 % . New green colour developed for $ 7. 000. | New publicizing run cost $ 500. 000 sum. Not many other expensive alterations were mentioned.

Package size is different from the U. S. . but with similar packaging types ( and likely similar to other Colgate toothpaste bundles ) . | In Mexico the promotional run was wholly changed from the U. S. run and a 3rd merchandise spirit was introduced. The original two spirits were non changed. cut downing costs compared to China. Costss in Mexico were kept low. and in the first two old ages Colgate saw a net net income in the Mexican market with Colgate Max Fresh. In China. nevertheless. many facets of the selling mix were changed. increasing costs enormously. The merchandise was changed by extinguishing one of the two original spirits. altering the colour of the other. and adding two new spirits.

CP China’s direction besides tried a assortment of packaging manners before taking to utilize one that would increase the variable cost by 20 % per unit. It turned out. nevertheless. that the design they chose was non up to CP’s planetary criterions and after passing $ 1. 5 million the thought was thrown out. The advertisement run was changed to a riskier run – that could hold been cancelled at any clip at CP’s disbursal – that cost $ 1. 5 million. Even the merchandise name was changed in China. After all of these alterations and extra costs. Colgate Max Fresh ( Icy Fresh ) was non profitable in its first two old ages. Alternatively. immense net losingss were seen from this merchandise.

Problem Designation

While CP Mexico made some minor alterations to accommodate Colgate Max Fresh to their market. CP China redesigned about every facet of the merchandise besides the one characteristic that made it alone – the breath strips. These alterations were dearly-won and the merchandise failed to do net incomes in its first two old ages in China. Alternatively. the disbursals to a great extent outweighed the grosss. Alternatively of marketing like one company. CP China behaved as if it had purchased the rights to utilize the patented design of CMF and so created a selling program from abrasion.

Alternate Solutions
Solution A: Trial U. S. selling programs.

Start by proving the unchanged U. S. selling programs. From the consequences of that proving. make up one’s mind what countries need to be altered for the Chinese market. Alternatively of taking to alter a big assortment of facets of the selling mix for the Chinese market ( as described above ) . the CP Chinese selling
squad could hold selectively altered facets that would hold large impacts on gross revenues. Solution B: Cut back on selling research.

Eliminate planing a trade name new bottle to set the toothpaste in. Either utilize a somewhat altered version of the U. S. packaging developed for CMF. or utilize a packaging type that has proven successful in China for old Colgate toothpastes. Besides scale back on colour design. Alternatively of developing 10 sunglassess of green. develop merely three. In every measure of redesigning the selling program. seek to cut costs by being sensible. Solution C: Emphasize curative properties.

Stress the curative benefits of the Colgate Max Fresh toothpaste. CMF is designed to supply utmost freshness. and alternatively of concentrating on the extremeness. focal point on the freshness foremost and cavity-protection and other curative advantages. These are the two most of import characteristics for toothpaste to the Chinese market. Although the construct statement mentions the pit protection. it is overshadowed in the advertisement by the “cooling crystals. ” Breath strips have already proved unsuccessful in China. so the advertisement should non concentrate on them. Alternatively. the focal point should be on the characteristics and facets that make sense to consumers – freshness and pit bar.

Evaluation of Options
Solution A: Trial U. S. selling programs.

By measuring the effectivity of the already-produced selling program for Colgate Max Fresh. the selling squad would acquire insight into what works and what doesn’t – what enhances the merchandise in consumers’ eyes and what needs to be re-done for the Chinese market. Money would be saved on marketing countries that can be straight transferred from the U. S. to China. If the ad run proved successful in trial groups. up to $ 1. 5 million could be saved. The down side to this program is that merely a finite sum can be saved. and this does really small to turn to gross revenues ( grosss ) . Solution B: Cut back on selling research.

Merely by extinguishing the packaging strategy. $ 1. 5 million would be saved. A few 1000 may be saved by cut downing the re-coloring attempts for the batch flavored toothpaste. Like solution A. this is a program that would cut down costs. but that does non turn to grosss. It is improbable that these decreases in cost would take to a profitable first twelvemonth in the Chinese market. Solution C: Emphasize curative properties.

Although freshness is a turning market in China. breath strips ne’er caught on and curative toothpastes are large Sellerss. By stressing preferable characteristics to the Chinese market. gross revenues may be higher and the merchandise may be successful. Of class. the selling strategy would necessitate to be tested foremost. In Exhibit 10A. Colgate Max Fresh ranked lower in the “Importance of Main Message” class. The chief message should be of import. so that people will retrieve it and in bend will retrieve to purchase the new Colgate toothpaste. This solution does non turn to cut downing costs. but alternatively addresses altering the message and increasing gross revenues.

Recommendation

I recommend solution C. to alter the advertisement message. The first two options would both diminish initial costs but would non diminish costs plenty to do up for the low gross revenues. Harmonizing to Exhibit 13 in the instance. in its first twelvemonth Colgate Max Fresh had net gross revenues of approximately $ 20 million and net disbursals of about $ 30 million. taking to a $ 10 million loss. In the 2nd twelvemonth gross revenues increased by about $ 3. 5 million. disbursals were reduced. and the net loss was merely approximately $ 1. 5 million. Any loss is bad. but at least there was a important decrease in cost and the merchandise was increasing in popularity. If the merchandise had been more popular the first twelvemonth. that would hold made a large difference.

I besides recommend solution A. but I think C is more of import. Reducing costs by extinguishing unneeded alterations to the selling program already developed in concurrence with a publicity program that emphasizes the merchandise features that are most extremely sought-after would be ideal for CP China. By cut downing disbursals and increasing gross revenues. CMF may hold been profitable in its 2nd ( if non foremost ) twelvemonth.

Execution

An attitude alteration would necessitate to be addressed foremost. It seems like the Chinese Colgate-Palmolive unwritten attention direction squad does non swear that anything the United States squad creates will work in China. They created new. expensive strategies for assorted facets of the selling mix without first checking to see if it was necessary or even advisable. Corporate CP needs to acquire their Chinese squad to understand that as portion of a planetary trade name. many characteristics can be straight transferred from one state to another – particularly successful 1s. Next. the Chinese squad must measure legion facets of the selling mix for Colgate Max Fresh. A few things were evaluated decently. like the name of the merchandise and the manner the breath strips are described.

CP China did their research to happen out if the name “Colgate Max Fresh” with “breath strips” would intend anything to the Chinese market. Because it did non interpret good. they changed the name. This is the attack the squad should take to each facet of the selling mix. For case. when measuring the advertizements. they should foremost find the effectivity of the United States commercials. If the consequences are non favourable. they should alter the ads to concentrate on that aspects that the Chinese consumers seek when taking toothpastes – freshness and pit bar. After measuring each facet. the unsuccessful 1s should be remade by the Chinese selling squad. Once the freshly developed programs have been evaluated. they should be compared to the original programs. After that. the merchandise should be ready for the market.