Colgate Max Fresh: Roll Out Brand

1106 Words Dec 27th, 2010 5 Pages
FROM: Elieser Feliciano

DATE: January 9, 2010

RE: Calgate Max Fresh: Roll out Brand

Summary:

In February 2005, Nigel Burton, in his third year as president of global oral care at Colgate- Palmolive Company (CP), had every reason to feel optimistic. Worldwide market shares were strong and Colgate Max Fresh (CMF), a new tooth paste that had helped drive Colgate to a record 34.8% value share in the important US market, was in the global pipeline for 2005. Burton had on his desk the proposed marketing launch plan for CMF in China and Mexico. Each plan sought to maximize business potential in the local market. Burton needed to assess these plans from a global standpoint, and he wondered if the benefits of adapting the marketing
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Money would be saved on marketing areas that can be directly transferred from the U.S. to China. If the ad campaign proved successful in test groups, up to $1.5 million could be saved. The down side to this plan is that only a finite amount can be saved, and this does very little to address sales revenues.

Options:

According to Exhibit 13 in the case, in its first year Colgate Max Fresh had net sales of about $20 million and net expenses of about $30 million, leading to a $10 million loss. In the second year sales increased by about $3.5 million, expenses were reduced, and the net loss was only about $1.5 million. Any loss is not good, but at least there was a significant reduction in cost and the product was increasing in reputation.

If the product had been more popular the first year, that would have made a big difference. Reducing costs by eliminating unnecessary changes to the marketing plan already developed in conjunction with a promotion plan that emphasizes the product features that are most highly sought-after would be ideal for CP China. By reducing expenses and increasing sales, CMF may have been profitable in its second (if not first) year. An attitude change would need to be addressed first. It seems like the Chinese Colgate-Palmolive oral care management team does not trust that anything the United States team creates will work in China.

They created new, expensive schemes for various aspects of the marketing mix without first checking to

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