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Colgate Max Fresh Report

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1. Executive Summary
Despite enjoying a strong year with sales dollar and volume growth, CP’s Operating and Net Income saw a decrease at the end of 2004 by the combined effect of increased marketing spending and increases in raw material and packing costs. Looking ahead in 2005, Colgate will need to address the cost-effectiveness of adapting its marketing strategies implemented in the developed United States (US) market for the emerging Chinese and Mexican markets, each consisting of distinctly different consumer wants, needs and cultures that Colgate will first need to research on and understand. Consequently, it has to evaluate how it can tailor its marketing strategies and re-align its organizational structure to assess whether and how
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Renaming “breath strips” to “Cooling Crystals (珠子)”, meaning “pearl”, facilitates consumer understanding of the new product feature, a must-have. Increasing sophistication and popularity of new flavors mean that Colgate needs to create new flavors, in particular flavors like tea that fit into consumers’ tastes (Zhou, 2014) and competes directly with Crest Tea Fresh, in order to appeal to consumers and hence improve product acceptance and shelf-life. The cost of flavor-testing had only marginal impact on profits (0.985% of sales, Table 2), but 32 weeks taken for flavor development may mean a later launch date; we argue that it pays to be differentiated in urban markets (Niraj, Dawar and Chattopadhyay, 2002), which holds CMF’s target market of middle class consumers. Hence, the investment to create new flavors are a must-have. However, while spending $7,000 to test “10 different shades of yellow” is minute for Colgate, 4 weeks will delay product launch; with quality only marginally enhanced, it is only a nice-to-have. Producing 3 sizes (50g, 100g, 165g), including a small 50g size, is a typical emerging market strategy catering to consumers with lower ss who tend to experiment with smaller sizes, hence it is a must-have. However, the clear “stand-up tube” to convey CMF’s aesthetics, while attractive to consumers, may not be feasible due to the high cost (11.35% of sales, Table
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