Assignment #5: Product Management, Branding and Pricing Strategies
Colgate-Palmolive as a whole seems to be excelling in terms of profitability and performance, within the global market. According to the Colgate-Palmolive 2015 Annual Report, their worldwide net sales were over 16 million in the last year alone. The company has become increasingly popular for its longtime production of high quality oral products and home care items. However, there are plans to expand the company’s operation into newer, more relevant products. Following this, Colgate has chosen to introduce a new product segment under pet nutrition. The Colgate brand is mother to world-renowned brands such as Ajax and Softsoap. With the company’s gross profit margin going up by .1% in 2015, it is safe to say that at over 16 million dollars worldwide, personal and home products are doing very well in their respected market. The company has become very successful in its oral segment and boasts a global market share of 48% in toothpaste and 34% in manual toothbrushes (De Sousa). Despite these staggering statistics, the newly introduced pet nutrition product segment has yet to make a significant impact on the market (Colgate-Palmolive Annual Report.).
The Hill’s Science Diet is in the early adopters stage of the life cycle because healthy and natural pet food is slowly but surely making its entrance into the homes of many families each day. The consumer base for higher quality pet food has yet to reach a mature growth. Hill’s holds about 13% of the international pet food market; however, in the domestic market, Hill’s products hold approximately 5% (Kopczak and Johnson 27). Additionally, Colgate-Palmolive is a part of what analysts refer to as the “Big Five” of the 35-billion-dollar pet food industry. The key competitors vying for market share are Mars Inc., Nestle, Procter & Gamble, Del Monte Foods, and of course, Colgate-Palmolive (Fuchs, Manfred, Obernhuber 945). The minimal American market share is a result of stiff competition from already established brands, such as Dry Pet Food by McCormack and Pedigree from Mars. Furthermore, consumers in comparison to other pet nutrition products in the market, consider the Hill’s Prescription Diet products to be on the more expensive side (Kopczak and Johnson 27).
Expectation for the next 12–18 months
In the next 12-18 months, the Hill’s Prescription dietary pet food should make the necessary changes and policy implements that will promote their performance in the competitive market. Since consumers see them expensive, they should figure out how to lower their costs to appear more common to the market. They are also doing better abroad than they are doing at home, so they need to implement promotions that make them look better to consumers at home. The pet nutrition segment of the Company’s product mix has been growing exceedingly slowly over the course of the last decade (De Sousa). However, a strong market response from the mother brand, Colgate Palmolive, will go a long way in ensuring that consumer adoption of their products rise. Solely advertising through veterinary offices is not working out in the company’s favour; diversification and increasing marketing efforts are anticipated to turn this around.
Hill’s Branding Strategy (ie: individual or co-branded strategies?)
New strategies were implemented to ensure that Hill’s pet products acquire a greater market share. The management is entering into new geographic markets both home and abroad. Expansion strategies are a valid policy that the brand will chose to adopt because only advertising in vet clinics was not originally working. Opening up the market would be the next obvious move, given that information. Having more outlets selling their products will ensure that the consumer is acquainted with their products. It was noticed that most stores only sell small quantity bags of Hill’s pet products (Davids and Newcomb 57). It was possible to find large quantity bags of those belonging to competitor brands. The need for increased market share drew innovative ideas evident by the introduction of new flavors of the product. Following this, the brand will be possible to cover consumer needs (Damron 68).
Corporate identity of product establishment
Moreover, the advancement in technology had brought forth online marketing which, Hill’s Prescription could take advantage of and market the new organic products. Hill’s took the success of Colgate’s already prominent corporate identity and naturally took their first step into the pet food industry with strong support (Fuchs and Obernhuber 73). The identity of their brand would be driven by mobile sites, landing pages, and social media ratings. Eventually this would culminate into their products developing their own brand identity with which the consumer can relate.
Pricing Strategies
Colgate Palmolive is fourth place in the pet nutrition market, facing competition from other firms. One of Colgate’s greatest competitors is Mars inc., an industry leader with regard to market share. Considering the rival firm had been in business a few years before the introduction of Hill’s Prescription diet pet food, consumers had already adopted earlier prices. When Colgate ventured into the pet nutrition market, consumers complained that their prices were expensive; their products were almost $11 higher than Mars Inc. This is something that the company needs to focus on, because their prices appear to have stayed the same. They will need to lower their prices to match the already widely accepted market prices for the products they are selling.
Recommendations for change in product/branding/pricing
In response to the increasing competition, Hill’s needs to implement policies that ensure reduced costs of production to ensure the final product is priced within the same range as identical items in the market. Furthermore, this will then allow Colgate to adopt a price policy that will culminate into lower prices for consumers. Also, if they are locally sourced where their brands are sold, they can also help increase profits. Being a large company and going local means that Colgate will have the opportunity to broaden its customer base and make a name for itself in new markets.
Work Cited
Colgate-Palmolive Annual Report. Rep. NYC: Colgate-Palmolive, 2016. Print.
Colgate Oral Products. Digital image. Colgate. Colgate-Palmolive, n.d. Web. 10 May 2016.
Colgate's Sales Mix 2003 versus 2015. Digital image. Colgate-Palmolive. Colgate-Palmolive Company, n.d. Web. 10 May 2016.
Damron, W. Stephen. Introduction to animal science: global, biological, social, and industry
perspectives. No. SF61. D36 2013. 2013.
Davids, Mike, and Kelly Newcomb. "Planning for Marketing Success: Turning the Wheel by
Creating a Task-Oriented, Executable Marketing Plan." Debt321 (2006): 22.
De Sousa, Christopher. "Does Colgate-Palmolive Still Belong In Your Portfolio?" Seeking Alpha. Seeking Alpha, 10 May 2016. Web. 10 May 2016.
Fuchs, Manfred, and Claudia Obernhuber. "Hypercompetitive Rivalries in the Pet Food
Industry." Fallstudien zum Internationalen Management. Gabler Verlag, 2011. 943-962.
Kopczak, Laura Rock, and M. Eric Johnson. "The supply-chain management effect." MIT Sloan
Management Review 44.3 (2003): 27.
Colgate-Palmolive Softsoap Products. Digital image. Colgate-Palmolive. Colgate-Palmolive, n.d. Web. 10 May 2016.
