Colgate is one of the highly trusted brands in the oral care industry. It held the highest market share of 54.5 per cent in 2012. The company uses a 'sub-branding' strategy to fight competitors in India.
Akshaya Mathrubootham and Roopa Ramachandran
It extends its brand name by introducing new variants under the same umbrella brand of Colgate. In this case, their market share is being slowly eroded by competitors who create smaller segments to emerge leaders in them.
Suggested strategy:
Yes, Colgate is taking a risk by over-extending its brands where it may lose its share to Oral-B, Pepsodent, Close Up and others. In spite of having a market share of close to 55 per cent, unlike Sensodyne, it is yet to establish itself as a medical brand with a significant dental attachment.
As a brand manager of the company, strategy for long-term profitability would be to create new medical branding, thereby developing medicated oral products as per the dentist’s requirement.
Opportunities in the Indian market
As almost one-third of the Indian population doesn’t have access to oral care facilities; a lucrative prospect market is created for leading players. Per capital consumption of toothpaste is 146 gm, which is lowest globally. Also, dental cavities and gum related problems are prevalent in 63 per cent of teenagers (15 years) and 8 per cent of adults (34-45 age group). This creates an opportunity for oral care products to penetrate further. Research reveals that people upgrade themselves from toothpowder to local remedial solutions to toothpastes, creating wider scope for the toothpaste market to grow.
Toothbrushes are the second largest oral care products, with Oral-B leading in this segment. Colgate is next, and can establish itself in this segment as well.
Need for carrying out brand extension
Colgate has a market share of 55 per cent; it is the No.1 brand as far as general oral care products are concerned. It has had a marginal increase in growth by 1.2 per cent (54.7 per cent to 55.9 per cent). Hence, creation of a new brand in this segment will not be beneficial in terms of increasing its growth drastically as the medical segments account for about half the market share in the country. It can extend its brand in segments like whitening, toothbrush, and mouthwash for specialised medical purposes to strengthen its position.
Need for creating new medical brands
As mentioned above, the Sensitivity segment (30 per cent growth) and the gum strengthening segment (25 per cent growth) account for a sizeable chunk of the toothpaste segment. Sensodyne toothpaste is a leader in sensitivity with around 26 per cent share in the market and is extensively prescribed by dentists to patients facing this issue. GSK'S Parodontax is a leader in the gum-strengthening segment.
The sensitivity and gum-strengthening segments present a steady segment for growth, with an increasing demand for them in the market. This creates an opportunity for Colgate to establish itself in this sector, under a different brand name without its extension so that people can identify with a different brand. That would have a better impact, than under a single, generic brand Colgate.
Promotional strategy for the new brand
Since the suggested strategy is to introduce a specialised brand for medical products, the products can be marketed through point of sale promotions. Dentists and chemists can help with promotions, apart from the goodwill of the original brand – Colgate.
Conclusion
Colgate is the No 1 brand in the US, where there are different, well-positioned brands such as Elmex and Dentaguard. On similar lines, shifting from its single-brand strategy in India, Colgate can either acquire or nurture a brand. But, given the Cibaca episode, Colgate should concentrate on creating and nurturing the brand. Though there are potential risks involved, creation of new brands under the medical segment will help in better market penetration, at par with its competitors.
Akshaya Mathrubootham and Roopa Ramachandran are pursuing MBA from SIES College of Management Studies, Nerul, Navi Mumbai