The case study ‘Brighter Smiles for the Masses-Colgate vs. P&G, focused on the working mechanics by the two American consumer giants, on how to connect with the target market and strategically outdoing the competition.
The following are the case analysis and answers to the questions pertaining to the case study.
What is the case statement? What decisions does P & G need to make?
The case statement is the introduction of Crest Whitestrips by P&G that revolutionized the oral care market, by allowing the consumers to whiten the teeth in the convenience of their home and the inception of a new category that became a cash cow for P&G in the tune of millions of dollars, i.e. 80% of the market by 2002 and helped in carving a leading niche in the category by by patenting the strips.
In spite of the setback, Colgate-Palmolive turned the tables by introducing Simply White in Sept 2002, which provided a cheaper and also a simpler alterative to the consumers by simply painting on the teeth, and the product proved to be the biggest success of the company in the American market history, conquering 50% of the market after only one month.
The tests done by P&G scientists showed the product was flawed and Whitestrips was way ahead in terms of quality, so the decisions that P&G needed to take bordered on, how to counter the Simply White threat strategic blunder and how to come up trumps by positively impacting the brand equity against the flawed Simply White.
What are the benefits and costs of using intellectual property (IP) rights to block competitors from entering a market?
In this age of globalization with intense competition, the ability of companies to protect intellectual property (IP) helps them to gain competitive advantage, and with the patenting rights creates in essence a monopolistic position in the category, and the competition takes time to come up with a counter product, a case that happened with Colgate-Palmolive, as it took 2 years to launch Simply White.
The cost that entails in getting the intellectual property (IP) rights is extensive, and the primary reason this step is taken to benefit the company from a costing perspective is the research and development cost and the initial marketing done, as in the case of Whitestrips with the amount totaling $130 million.
What are the legal constraints on licensing agreements?
A licensing agreement is a contractual right that helped in essence helped P&G control, manage and protect their IP for Whitestrips. From a legal viewpoint, the legal constraints on both the licensees and licensors are incorporated into the licensing agreement, since the case study refers to a patent, i.e. an innovation; big companies such as P&G are able to hold the forte since they have the money to invest in R&D and the subsequent legal formalities.
P&G utilized the license to enter a new category, that already has Rembrandt and Aqua fresh, and the licensing helped the company take permission and then enters the market, P&G understood the constraints and thus sourced the product overseas and distributed globally (Canalichio).
What are the legal rules that apply to comparative advertising?
Comparative advertising is fundamentally a process in which a company compares their product with a competitor’s product, however from a legal standpoint; the regulations are very stringent, if not done properly, since it leads to litigation.
The legal rule that is applied in the aforementioned scenario, is referred legally under the Section 43(a) of the U.S. Lanham Act, and the aggrieved party has to prove that the litigate party had intended to mislead consumers with false claims.
This was one of the strategic moves that P&G considered to counter the threat posed by Simply White, in light of the scientific finding regarding the product claims and actual deficiencies of an ineffective product.
Den-Mat Corporation known for Rembrandt whitening toothpaste challenged the advertising claim for Whitestrips as false and misleading through the National Advertising Division (NAD), however, P&G won the challenge.
How does the entry of Simply White affect P & G’s sales and profitability?
The entry significantly affected the profitability margin of Whitestrips and this can be gauged simply by the numbers presented in the case, i.e. the new category by Whitestrips was worth $310 million in 2001, and significantly increased to $460 million and $590 million in 2002 and 2003 respectively.
With the US market share standing at a healthy 80%, Simply White’s launch in September 2002, turned the tables in only one month by capturing the 50% market, as illustrated in Exhibit 1 in the case study, by October Simply White’s market share outdid Whitestrips comfortably.
What role does pricing play in selecting a whitening product?
The role of pricing was paramount in the selection of the product; Whitestrips was launched with a price tag of $40 and with no competition for the next two years, the product sold 12 million units and creating a $200 million business.
The launch of Simply White at $15 per unit helped in carving a strong niche starting with the pricing strategy and put the product at the forefront of the targeted consumers, the pricing strategy of Simply White is one of the main reasons, for the successful launch of the product.
In what ways can/should Ayman Ismail respond to the introduction of Simply White? Justify your recommendations.
The primary mode of action has to be the focus on connecting with the consumers on a one on one basis, by launching a string brand activation campaign, the focus of the campaign will be visiting Malls, Restaurants, Gyms, College and Universities to convey the message of Whitestrips superior quality and a tactical campaign with coupons that will help in increasing the sales.
The communication to be shared in an Infomercial type communication on national TV, besides, promoting the activation campaign through online advertising and outdoor media, the intent should be to give the campaign a 360º perspective.
Price drop is not advised in view of the fact that the coming on Simply White’s level could demean Whitestrips credibility in the minds of the loyal consumers, and due to the lowered price, they may try out Simply White since the price positioning will be the same of the two products.
Review the proposed “Mumbles” copy. Would you recommend producing it? If not, why not? What if any changes would you make before producing/airing the commercial?
I would not recommend producing it, in view of the fact; it will only help glorify Simply White in the eyes of the consumers, rather than focusing the copy on the core strength of Whitestrips and showcasing satisfied consumers with a strong tagline promoting the 10 times cleaner claim.
If the production is necessary, then the changes will be done in making the tone of the copy more focused towards showcasing the effectiveness of Whitestrips and using humor scenarios, to target different segments.
Scenario 1 will focus on a couple, with date night, and when the girl opens mouth to smile, the guy faints and the backdrop voice over comes with a tagline ‘Don’t ‘strip’ the ‘white’.
Scenario 2 will focus on University students and the same will go for older people, so on so forth, with the message communicating the strength of the brand and implying continued usage with 10 times effective claim.
What is the status of Crest White Strips today? Of Colgate’s Simply White? Any other entrants/competition? Discuss.
P&G’s Crest White Strips and Colgate’s Simply White are still amongst the top teeth whitening brand in the world, according to a report shared on PR Newswire (Reportlinker), the other top vendors in the category are GSK, Johnson & Johnson, and other prominent players in the category are as follows:
- Brodie & Stone- CCA Industries- Church & Dwight- GO SMiLE- Henkel- HUL- Supersmile- Ultradent Products
The category is dynamic and it is predicted the category in spite of being a niche category, the Global Teeth Whitening Products market is set to grow at 3.40% during the period 2014-2019.
What are the “lessons learned?”
The lessons learned starts from the marketing perspective, since P&G had the advantage of being the first mover in the category, and still lost the position to a new product, showcase the importance of taking necessary contingent steps to recognize the impending situation and P&G should have been ready with a contingent product with low price, that could have directly competed with Simply White, thus, pricing strategy holds a much importance in the marketing plan.
Such products are impulsive buys, so to be able to keep the consumer’s interested; the need is to connect with them by reaching them out with all kinds of marketing activities.
The focus should be on the product, and if there are any product issues as mentioned for Simply White, P&G should exploit in a manner that does not affect the credibility of their brand image.
Works Cited
Canalichio. P. Brand Licensing Basics. Branding Strategy Insider, 2010. Web 19 April, 2016.
Reportlinker. Global Teeth Whitening Products Market 2015-2019. PR Newswire, 2015.
Web 19 April, 2016.
