Case Study: Colgate Max Fresh
The Colgate Max Fresh case study is concerned with the company’s introduction of a new product, “Colgate Max Fresh”. The main objective for Colgate was to focus on high margin core businesses, and the introduction of the Colgate Max Fresh (CMF) proves to be a challenge for Colgate. The main objective in doing so is partly to create consistent volume in sales as well as gross margin growth. The majority of the case deals with competition, mainly with Crest. Colgate enjoys positive volume growth and sales growth, as well as gross profit margins, which showed increases of 6.5%, 7% and 0.1% respectively. However, despite the positive growths in those areas, Colgate still struggles with the declining operating profits and net income. Colgate focus on the premium toothpaste market is due to the perceived opportunity, as CP sees a 3.1% increase in volume of sales in the premium markets. Statistically, only this market is growing at such an increasing rate, and the introduction of CMF may help with the declining profits.
Though it may look simple, the implementation plan is complex. Due to the global nature of the business, CP had to analyze the different markets, especially the emerging markets. The problem arise in the cost structure of the new product as emerging markets are price sensitive and the marketing plan for the US market may not be applicable for other global markets. Also, threat from Crest in the cosmetic segment proved to be a problem for CP as well. Hence, the implementation of the new product must balance the cost of localization with the expected sales and profit increase for the new markets.
One of the strongest strengths of GP is the global brand recognition. The company was established in 1973 and it was the world’s first commercial toothpaste. It has a strong brand name that transcends the global market. Furthermore, it has a leading market share of 39.7%, compared to...