Segmentation Targeting Positioning

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Capture 10% of market share

23 million units in 2 years

44 million units in 2 years

Consumer promotion 2 million in 2 years

Consumer promotion 7 million in 2 years

Units through professionals 3 million

Units through professionals 8 million

Cannibalization of Colgate Plus

Dropping one or more kids SKUs

Food & Drug stores

Mass merchandisers & Club stores

Question 4) what marketing recommendations would you make to Steinberg?

Answer 4) Based on the Alternative Positioning scenarios and also the communication and promotions executed by the team.

The reaction of the trials with live customers was great and the response was better than expected.

The push points were as follows:-

Prevent gum disease motivated greatest interests among the consumers for buy.

Precision was more effective than their current toothbrushes.

Consumers experienced unique feeling while using it and said they felt it working.

Based on the above findings relating it to the financials and the investment and expected returns on “Niche” & “Mainstream” I would suggest that Steinberg should position it as a “Niche” product given the mass satisfaction during the trials and also the consumer buying behaviour shifting from value based to functional based products and willingness to shell out extra dollar for better results.

Also since Colgate already has mainstream or value products like “Colgate Plus” & “Colgate Classic” they already exist in that segment in a very good competitive position and also placing “Precision” in “Niche” segment will give them a foot hold in Super Premium segment and simultaneously prevent cannibalisation of their mainstream product.

So they will have market presence in all segments targeting all kinds of consumers giving their products a wider reach and branding and bring more credibility in the super premium segment for Colgate.

This will be agreeable to John Phillips & Nigel Burton.

This will also prevent putting pressure on production capacity and prevent the product from going out of stock and they will not have to wait for 10 months lead time either to make “Precision” available as mainstream product.

They should also make sure that their mainstream product does not suffer due to diverting its marketing budget to “Precision” keeping in mind both promotions & Marketing go hand in hand.

This will also prevent IN_HOUSE competition between products. The competition should be withing the market & competitors and not within their own products.

As a back up plan they can always see the tractions of “Precision” as “Niche” and always have the flexibility to convert it into “Mainstream” product later. Till the time they make arrangements in production capacity that will require 10 months to come into force they can run it as “Niche” product.

Question 5) Prepare P&L statement using both positioning and 2 year projections.

“NICHE” Positioning

Units sold: 15 MM * Unit Cost $2.13 = 31.95 MM

After 5% Discount on sales = 30.35 MM

(Sales 30.35MM) – (Equipment cost 0.96MM) – ( Consumer sample 2MM * $2.13 = 4.26MM) + (Dentist sample 2.4MM* $0.79 + 0.6MM*$ 0.95 = 1.36MM) = Net Sales 26.49MM

1st year Projection = $27.28MM

2nd Year Projection = $ 28.64MM

“MAINSTREAM” Positioning

Units sold: 71 MM * Unit Cost $1.85 = 131.35 MM

After 5% Discount on sales = 124.78 MM

(Sales 124.78MM) – (Equipment cost 0.96MM) – (Consumer sample 2MM * $2.13 = 4.26MM) – (Dentist sample 6.4MM* $0.79 + 1.6MM*$ 0.95 = 6.57MM) = Net Sales 117.45MM

1st year Projection = $129.2MM

2nd Year Projection = $ 148.2MM

The above finding state that the mainstream positioning will be more lucrative in the long run.

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