Colgate is not an Indian company but it took over the Indian dental hygiene space two decades ago the reason I wanted to make a business case study because Colgate played the game completely differently to every other toothpaste company out there colgate’s oral hygiene products were first sold all the way back in 1873 16 years after the death of the founder William Colgate the company originally sold soap and only started making toothbrushes and toothpaste after some Market Research in the US proved that there was demand in fact Colgate toothpaste was sold in glass jars tubes were only introduced in 1896. today Colgate does six billion dollars in annual sales 2.76 billion dollars of that is pure profit even though Colgate is based out of New York it’s bread and butter mostly comes from International sales which accounts for 64 percent of their sales the two-page market in India for example is estimated at 6000 crores and growing 20 year on year toothpaste has super high penetration around 78 of urban India Colgate in India is the overall market leader with 56 market share in 1991 Colgate launched two branches or two lines of toothbrushes Colgate classic and Colgate plus Colgate plus was the professional segment it’s a premium segment while classic was the value segment you’ve probably seen many companies do this they’ll have two segments one for the average consumer and one for rich people who can pay more there’s usually never too much of a difference between the two products but companies need to do this otherwise they dilute their positioning one of their Executives in 1990s found a very interesting piece of insight that 82 of toothbrush buys are actually unplanned people seem to buy toothbrushes the same way you buy by chewing gum in a store you’re walking around the store you see a chewing gum and you pick it up because it doesn’t cost much as you will learn in our case studies most businesses are built on top of a single unique Insight that other brands or companies simply don’t understand yet so here’s what Colgate did.
Lower ticket product segment
Colgate sold their toothbrushes like a pack of chewing gum or small chocolate this and the rest of this blog is a very important lesson for the reader who want to understand how to win in the lower ticket product segment okay so back to Colgate
1. They did a lot of buy one get one schemes mostly buy one toothbrush and get one toothpaste free combining the toothbrush with the toothpaste increased sales by 170 percent even though it looks like it’s a bundle the cost of toothpaste has already been bundled with the cost of the toothbrush
2. They spend a lot of their money on in-store displays instead of billboards while their competitors were putting up big Billboards Colgate understood that toothbrush buys are unplanned so it’s not like somebody will look at a billboard and go to a store and say yeah I saw the billboard I want to buy this now instead you need to win the advertising sphere of the entire store so while other companies said the city is our domain and we would put up Billboards to win your attention Colgate said screw all that and they just want your attention inside the store
3. They uniquely position their product in the store they realized the stories are domain so they put their product line in between Oral B and Reach which was another toothbrush brand for maximum sales just like many Sellers and business owners try to optimize their Google SEO ranking today Colgate optimized their in-store positioning they do not care about the outside they realize you make the purchase inside so let’s win the inside they ran another research survey to gain more insights because like I said insights on the business they realize that while most toothbrush purchases are unplanned people still made a choice when presented options in a store according to most customers these were the reasons to choose a toothbrush the first one will absolutely surprise you that’s right the first one is fits most comfortably in my mouth that was the number one customer need proving that customers are not rational when making purchases at all Colgate had to quickly adapt to this sentiment they were winning in store but they also had to make sure their product won against the other people in the store so they introduced the first ever diamond shaped toothbrush that would fit perfectly in your mouth and their tagline was shaped to keep your whole mouth in shape in 1987 they differentiated even more by making the toothbrush look even more odd looking the
How to people choose between A or B
this is another piece of insight for you being diamond shaped and we know this today is not any better for your teeth or for cavity prevention you can ask any dentist this whatever benefits it might provide are minimal at best but what we have learned when you have compared a space of toothbrushes where it’s very easy to manufacture toothbrush differentiation matters more than being better think about it how do people choose between zomato and swiggy if you ask people some people who say well I choose zomato because of fast delivery or I choose Wiki because of better UI but here’s the thing both swiggy and zomato are billion dollar companies they can hire each other’s Talent they can copy each other’s UI they can steal each other’s drivers when a person doesn’t have any of these claims left they say well I choose swiggy because it’s orange and I like orange or I choose zomato because they throw parties the truth is at scale there is no real reason you would choose a or b and that’s my differentiation being different matters more than being better because if you are better someone with a unique brand will just copy you if you are different that becomes your calling card features are not defensible your brand is and to build a brand you need to be different the master stroke of Colgate was that it was different in a way that mattered to the irrational customer who cared more about shape than anything
Magic of Dentistry
Now Colgate story doesn’t end there in 2000s something changed Hollywood became massive actors were on the big screen and the small screen and when they flashed a smile they flashed a white shiny smile important to note here that these smiles were in natural it was because of the magic of Dentistry especially a new technology called dental veneers so what dentists used to do and they still do is that they shave off a little bit of your enamel the top of your teeth and cement on dental veneers dental veneers are tooth-like structures made of porcelain that can be any color you like earlier veneers used to be used to correct the shape of bad or broken teeth but now they were purely being used for color correction for Hollywood companies like Colgate had a hard time keeping up with this because the number one customer requested feature was in comfort in the mouth anymore it was pure white teeth so they introduced a line of products like Colgate visible White and pivoted the marketing story to White Teeth under the pressure from All Things Hollywood
Dental Health
In 2010 the story changed yet again customers now started becoming very health conscious Dental Health also became very important and one company that was starting to win because of this change in customer needs was Oral B now Oral B has always been a niche brand it’s always been small it’s always looked as a medical brand and dentists and you know average customer didn’t care in the last decade let’s get back to the dentist number one brand Colgate keeps talking about the IDA the Indian Dental Association guess what the Indian Dental Association events are sponsored by Colgate the idea in Colgate gives scholarships to students every year as well they have a very tight relationship which is why they keep saying that they recommended they run various programs and conferences on the national level with association with each other sponsor rewards are also granted by the Ada and sponsored by Colgate so while Oral B took decades to win the trust of dentists Colgate simply started sponsoring their events if you know what I mean in 2007 the advertising standards Authority in the UK told Colgate it could no longer make the claim that four out of five dentists recommended Colgate investigation ensured that when they are telephone people and asked them to list their favorite toothpaste their competitors were recommended at similar rates the claim was deemed deceptive so Colgate in its modern form has been around for many decades the product line today literally represents the Decades of changes in consumer needs
Five product lines of Colgate
1.German tooth decay which is the most modern line
2. Sensitivity which is a niche line
3. Whitening like I told you because of Hollywood
4. Gel because it was messy it’s more like a comfort thing like I told you in the beginning
5. Children segment which they started in the early 2000s
Problem
The problem right now is that they are starting to lose in each segment Oral B for example is winning German tooth decay Sensodyne is winning sensitivity the multi-use segment where you say this handles sensitivity plus it handles germs Placid hand is whitening the audience gets doesn’t care about this even if you tell them this space solves all three of your issues audience still prefers to buy a paste that saws just one Colgate has over the years tried to fight these sub segments all of these individual segments by spinning out a separate toothpaste and toothbrush for each for example they have Colgate gel Colgate sensitive Colgate herbal Colgate active salt Colgate Total and Colgate active white and so many more segments right however the story Still Remains every decade customer needs change and customer needs are always irrational and finally if you’re selling low ticket products your fight is not on the Billboards your fight is inside the store
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