What is the case statement? What decisions does P & G need to make?
The Procter and Gamble Company has to revise its advert if it is to make a positive impact in the market. The proposed ‘Mumbles’ advert is comparative and implies negative notions on the use of Colgate and Palmolive’s ‘Simply White’ product. This form of advertising, is also involuntarily shifting the viewers’ attention to the rivalry between the two companies: when the objective, and this is an educative guess, is to show the brand’s prowess over the rival’s brand. P&G, therefore, needs to revise its advertisement approach towards a more positive and more product oriented approach. P&G must also produce a better brand of teeth whitening product to justify the cost of purchase or consider reducing the cost for its Whitestrips: to make them affordable and boost sales.
What are the benefits and costs of using intellectual property (IP) rights to block competitors from entering a market?
Intellectual property protects the ideas a person has put into public use. By law, the ideas cannot be used by another, and if such a case were to occur, the event or act would invite legal consequences on the party violating the IP. According to the World Intellectual Property Organization, an intellectual property can be anything from a product, product idea to an industrial concept with great benefit to the user, and as such must be protected by law from use or modification by other parties. The American Intellectual Property Law dictates that anything that is a product of labor from anybody’s intellect should be protected. As such, the IP law provides benefits such as protection of the idea and compensation under law if discovered by law that other users have infringed upon this benefit. Therefore, a user is free to utilize the IP for own benefit. In this case study, we see P&G applied for intellectual property rights – several patents – for their idea of using white strips to whiten teeth. The firm reaped considerable benefits between the years 2001 and 2003 in terms of gross profits in the ranges of 300 and 500 million in excess. The firm was also the only group to benefit from their product, hence protection: their market share value in the stocks market performed by a figure of 80%. Patents also cost the applicants of such privileges. According to the US Department of Commerce, Intellectual property rights are abstract and as such difficult to value. The US has one of the most developed systems of awarding cost effective patents. However, global companies experience challenges in other jurisdictions applying for intellectual property rights, which incur more cost. The fact that one has to apply for IP while in the process of development also incurs more cost since the performance of such a product in the market is unknown. P&G, being a global company, definitely incurred hefty costs – both home and abroad – to patent the White-strips concept which performed in the market for only 2 years.
What are the legal constraints on licensing agreements?
There are fundamentally two parties to any license agreement, the licensor and the licensee. A license agreement binds the two in a contract. The licensor is the intellectual property holder while the latter is the user. The license agreement is a contract that dictates that the IP holder will make money from an invention by charging the user. Therefore, the license serves the function of protecting the proprietary rights of the IP holder. However, IP is intangible property – essentially, it is abstract and difficult to value – which is why the legal issue surrounding the practice of licensing agreements are challenging and complicated. These constraints may include the particular location where the rights apply; they may be based on the extent of the IP, product feature such as limit on the replications of the product allowed. These legal constraints arise from that fact that IP are inherently difficult to define. For instance the marketing concept utilized by Colgate claimed that their product was able to whiten the teeth as effectively as P&G’s whitestrips. This was a source of controversy, linking their product with the rivals product: in addition to declaring dominion of one over the latter.
What are the legal rules that apply to comparative advertising?
Comparative branding is a way of advertising that gives the consumer a measure of the productivity or benefits offered by two brands. This is accomplished by rival companies who want to undo the competitor. It is achieved by comparing attributes that can be measured and presenting this information to the consumer through adverts. The consumer receives biased information promoting one brand and disregarding another. As such, there are legal rules that apply to protect the concept of a brand. These rules will apply if a rival company misrepresents the competitors brands to mislead and influence the consumer decision. These have market consequences of liability to a company as seen in the Colgate and P%G case. Colgate claimed their gel worked just as well as P&G’s whitestrips, making most consumers purchase their affordable product while P&G sales declined. According to the Lanham Act, Misrepresentation of the traits of another party’s property through insinuation in words symbols and misleading descriptions is defined as comparative advertising and will incur legal consequences.
How does the entry of Simply White affect P & G’s sales and profitability?
Simply White, a product offered by Colgate Palmolive, was presented in the market at $15 accompanied by an advert that claimed it worked just as well as P&G’s Whitestrips product. At the time, P&G was enjoying a market share volume that had increased by 80%. However, P&G sales plummeted between 2002 and 2003 with the introduction of Simply White into the market. At this time, the market share value for Colgate Palmolive improved to 50%
What role does pricing play in selecting a whitening product?
The advent of White Strips to the market was received quite positively by the consumer at the time: who was used to sometimes painful and definitely expensive procedures. For instance, whitening was done at a dentists’ office for $1000 and took the better part of an hour. The White strips offered more convenience and slashed the time by half. It also reduced the price considerably to $40. This product was later usurped with Colgate’s Simply White: through the use of misleading advert. Colgate’s Product was valued at $15 dollars and needed only 30 seconds to achieve the same results offered by White Strips in 30 minutes. The boost in sales volumes for Colgate is a clear indicator that pricing plays the role of influencing consumer decision in product selection.
In what ways can/should Ayman Ismail respond to the introduction of Simply White? Justify your recommendations.
Ayman Ismail should first of all consider the extent of Colgate’s comparative advert violation. He should consider the elements of White strips that were compared to Colgate and what role they play in boosting Colgate’s product. At this point, he can present the case to the National Advertising Division to present his case. This is only possible because P&G had already taken formal steps to patent their product. By the provisions of the law, if any entity violates any aspect of their intellectual property, then they have the right by law to seek for compensation for infringement of their proprietary rights.
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?
The proposed Mumble advert by P&G explores the weaknesses of Colgate’s Simply White Product and portrays it clearly to the consumer. It also clearly documents – use of pictorial assistance – the consequences of the ‘weakness’ explored. This advert therefore compares aspect of Simply White – portraying them as demerits – to aspects of white strips; and also shows that the latter is better than the former. Such an advert is a comparative advert and I would not recommend producing it. This is because, IP laws are absolute and any infringement on intellectual property can lay a claim on the profits made due to such an advert. I would consider removing any aspect of comparative aspects in the advert and focus on revising the White Strip product to the consumer.
What is the status of Crest White Strips today? Of Colgate’s Simply White? Any other entrants/competition? Discuss.
The use of white plastic strips was discontinued by P&G due to their side effects. It was discovered that the main ingredients used in the polythene would affect users negatively. According to an observation made by a dentist in Texas, the product had long term side-effects. Elisha McFarland quotes the dentist in her story, whilst adding to her own concerns, as to the reason why white plastics strips use was discontinued in 2013 and revised. The blue specs that appeared in the gums of users due to long term use were discovered to be elements contributed by the plastic used. Colgate’s Simply white has improved its product and is still in the market despite claims by whistle blowers that teeth whitening products have adverse health implications. Other teeth whitening products have emerged and seized due to counterfeiting.
What are the “lessons learned?”
This case study has furnished me with information that I previously only assumed to know. I now know and understand that intellectual property are intangible, difficult to define in law and incur costs, such as attorney fees. They also don’t apply in the same manner as in the USA in other countries. It was also worth noting that comparative adverts are bad practices that have potential negative legal and financial implications on a company and, as such, should be avoided.
Works Cited
American Intellectual Property Law . An Overview of Intellectual Property. 22 April 2016 <http://www.aipla.org/about/iplaw/Pages/default.aspx>.
McFarland, Elisha. Does Crest Toothpaste Contain Plastic? 30 October 2015. 22 April 2016 <http://www.collective-evolution.com/2015/10/30/does-crest-toothpaste-contain-plastic/>.
US Department of Commerce. Intellectual Property. 22 April 2016 <http://acetool.commerce.gov/intellectual-property>.
World Intellectual Property Organisation. What is Intellectual Property? 22 April 2016 <http://www.wipo.int/about-ip/en/>.
