Colgate In Argentina Introduction Colgate was founded in the United States in 1806 and for the first 100 years, its business focus was only there. However, in the very early 1900’s, the Company began a very aggressive expansion program that led to the establishment of Colgate operations throughout the world. Today, Colgate-Palmolive is a $9 billion company, marketing its products in over 200 countries and territories under such internationally recognized brand names as Colgate, Palmolive, Ajax, Fab, and Mennen as well as Hill’s Science Diet and Hill’s Prescription Diet. Colgate Total is considered the greatest evolution in toothpaste since the introduction of fluoride. This highly effective formula, containing fluoride and the antimicrobial ingredient, Triclosan, has been demonstrated clinically to help prevent gingivitis, plaque, cavities and tartar.
And, its unique patented formula, containing the co-polymer, Gantrez, continues to be active between brushings. It continues to work fighting plaque, gingivitis, tartar and cavities after you stop brushing, even if you eat or drink. No other toothpaste manufactured in the US contains Triclosan or has been cleared to make claims for gingivitis and plaque reduction. Since the announcement of the FDA clearance of Colgate Total on July 14, 1997, retailers have expressed unprecedented enthusiasm and interest. Dr.
Sigmund S. Socransky, Associate Professor of Oral Biology, Harvard School of Dental Medicine, and Senior Member of the Staff and Head, Departments of Microbiology and Periodontology, Forsyth Dental Center, said, Colgate Total represents one of the most remarkable oral therapeutic achievements in the last 20 years. Colgate Total will benefit the oral health of all users. The most common non-contagious diseases are periodontal diseases such as gingivitis. In fact, 63% of Americans suffer from gingivitis.
As the only toothpaste with this formula, Colgate Total will help Americans take greater care of their teeth and gums than ever before and will help younger people prevent these dental problems. Since Colgate Total was introduced internationally in 1992, over half a billion tubes have been purchased by millions of consumers in 103 countries. However, before permitting it to be marketed in the US, the FDA conducted an extensive review of data in Colgates clinical tests. These included five major studies that supported the safety and efficacy of the toothpaste. Independent dental associations in 30 countries, including the American, Canadian and British Dental Associations, have awarded seals of acceptance to Colgate Total.
Colgate Total will begin shipping to food, drug and mass merchandisers nationwide on December 15, 1997, and will have a suggested retail price of $2.49, $2.99 and $3.49 for 4.2, 6.0 and 7.8 ounce tubes, respectively. Colgate-Palmolive is a leading global consumer products company tightly focused on Oral Care, Personal Care, Household Care, Fabric Care and Pet Nutrition. In the U.S., Colgate sells its quality products under such nationally recognized brand names as Colgate, Palmolive, Mennen, Ajax, Irish Spring, Softsoap, Murphy Oil Soap, Ultra Brite, Baby Magic and Fab, as well as Hill’s Science Diet and Hill’s Prescription Diet pet foods. Executive summary Successful international marketers possess the ability to identify with and adapt to different cultural environments. International marketing requires that one actively anticipate the effects both foreign and domestic uncontrollable environments exert over the marketing mix, and then adequately adjust the marketing mix to minimize potential negative effects.
Often times an international marketers self-reference criterion impede his or her ability to accurately assess and properly respond to foreign operating environments. Rather than rely on their own self reliance criteria, international marketers must conduct far-reaching, comprehensive cultural and economic analyses of potential foreign markets in order to develop more effective and responsive marketing mixes that improve the success potential of their market-development strategies. Argentina certainly represents a viable market-development opportunity for Colgate Total toothpaste. U.S. companies intending to export to Argentina should consider economic, demographic, as well as cultural characteristics that differentiate it from other Latin American countries. Having the highest per capita gross domestic product and the second highest total gross domestic product and life expectancy in Latin America, as well as low rates of population increase and illiteracy rates, Argentina attracts many business opportunities. The population and economic activity are highly concentrated in the Greater Buenos Aires area.
The population is largely of European descent and continues to have strong ethnic, cultural, as well as business ties with Europe. Consumer preferences tend to resemble more those of Europeans than those of other Latin America nationals. However, revenues are highly dependent on MERCOSUR trade, especially with Brazil, and the regional economic situation. In many sectors, European competitors of U.S. firms are already present in the market, and may be well entrenched.
Nevertheless, the U.S. is Argentinas single largest trade and investment partner and many U.S. firms have been very successful. U.S. lifestyle and consumption habits are increasingly influential. U.S.
products have a strong reputation for quality and technological innovation, but U.S. firms are sometimes seen as lacking commitment to the market. It is important to be prepared for a competitive market environment. As in many countries, personal relationships are fundamental to doing business in Argentina. Success requires taking the time to develop a close personal relationship with your representative, agent or distributor.
Marketing U.S. products and services in Argentina requires the same level of research, preparation and involvement–if not more–as domestic marketing. U.S. firms handicap themselves if their product literature, labels, manuals and other written materials are not in Spanish. When preparing Spanish-language materials, care should be taken to ensure the meaning is consistent for all Spanish-speaking markets in which they will be used. Argentine Spanish differs for example, from Mexican or Chilean Spanish, with unintended – and sometimes embarrassing – meanings resulting when a translator is not familiar with variations in the language from market to market.
After analyzing the product and its uses and establishing who the potential customers are, U.S. companies intending to export to Argentina should identify the geographical areas where the major users of the product are. It should be born in mind that 80 percent of the Argentine population is concentrated in urban areas, with over 35% living in Buenos Aires and its suburbs, and almost 10% in three cities Cordoba, Rosario and Mendoza and their suburbs. Argentina experienced a boom in economic growth in the early 1990s as a result of its structural reform (privatizations, trade liberalization, etc) and monetary stability. Real GDP growth averaged over 6% for the 1991-97 period.
Since October 1997, a series of international financial shocks coupled with a fall in international commodity prices have translated into lower growth rates. After growth of 8.4% in 1997, GDP percent in 1998 grew 4.3. In the second semester of 1998 Argentina entered into a recession. Most experts predict negative growth of between -2.5 and -3.5 for 1999, with a possible return to positive growth in the second half of the year 2000. Despite the current recession, Argentina — with a track record of macroeconomic stability, a growing and sophisticated consumer market, free capital flows, lucrative access to Mercosur and nondiscriminatory foreign investment regime — remains an attractive emerging market for U.S.
trade and investment. Many U.S. and other foreign firms continue having strong interest in taking advantage of opportunities in Argentina arising from Mercosur. Major U.S. investors, including car manufacturers and food processors access Mercosur markets through operations in Argentina.
Mercosur has become a key element of the business strategy of many foreign manufacturing and services firms in Argentina. To avoid reliance on self-reference criterion during the marketing plan development process, the international marketer carefully researched Argentinas unique cultural elements (i.e.: geographic setting, social institutions, religion and aesthetics, living conditions and language) and economic elements (i.e.: population, economic statistics and activity, and developments in science and technology). The information gathered through these analyses helped the international marketer to identify key strategic issues and to formulate actionable strategies for the introduction of Colgate Total toothpaste in Argentina. Furthermore, the unique cultural and economic elements exhibited by Argentina guided the international marketer in making decisions throughout the international marketing planning process, which consists of the following four phases: preliminary analysis and screening adapting the marketing mix developing the marketing mix control and evaluation. Preliminary Analysis and Screening In the process of conducting a situation analysis, the marketer must identify the strengths and weaknesses of Colgate-Palmolive and Colgate Total toothpaste along with the opportunities and threats present in Argentina.
Smoking out key strategic issues naturally flows from drawing connections between the strengths and opportunities, strengths and threats, weaknesses and opportunities, and weaknesses and threats of Colgate-Palmolive and Argentina respectively. The most relevant strategic issues related to the introduction of Colgate Total toothpaste in Argentina are listed under the following subheadings: Deep Capital Reservoirs Capable of Fueling Market Development Colgate-Palmolive achieved a recorded-setting cash flow of $917 million for 1996, up 13 percent from 1995. Furthermore, on March 6, 1997, the Board of Directors declared a 17 percent dividend increase and a two-for-one stock split starting April 25, 1997. Undoubtedly, overcoming major barriers to market entry, such as the high costs of educating the public about prevention of periodontal disease, strengthening product distribution intensity, and gaining strategic shelf positioning, would require Colgate-Palmolive to shell out huge amounts of capital. In addition to already having a record supply of internal capital at its disposal, Colgate-Palmolive, could capitalize on stockholder confidence to raise the marginal capital it needs to aggressively introduce Colgate Total toothpaste in Argentina. Experience Curve to Facilitate New Product Introduction When applied to Colgate-Palmolive, the experience curve concept states that product costs, corrected for inflation, decline with accumulated output.
Learning effects, technological improvements, and economies of scale are the three sources for cost declines vis–vis increases in volume. With its extensive expertise in research and development (introduced 602 new products world-wide in 1996), manufacturing, distribution (Colgate Distribution 2000), sales, and marketing its products on a global scale, Colgate-Palmolive would benefit from these gains in worker skill and output with Colgate Total toothpaste in Argentina. Furthermore, Colgate-Palmolive would likely call on several of its factories located in South America to manufacture Colgate Total for Argentina before purchasing domestic production facilities. Foreign-based factories could realize short-term economies of scale until Colgate-Palmolive decides it would like to make a long-term commitment with respect to production in Argentina. Product R&D Capable of Meeting Evolving Consumer Needs Strong global growth in unit volume for Colgate-Palmolive resulted from the introduction of 602 new products by its research and development team. Similar to other developing nations, as personal income grows in Argentina, consumer needs will tend to evolve towards that of a higher order-based on Maslows Hierarchy of Needs.
Newly initiated members of the middle class in Argentina will become more concerned with their health and capable of paying for related products. Since Colgate-Palmolive already markets many oral and personal care products, it could benefit from capitalizing on this growing market in Argentina. Colgate Total toothpaste could serve as the lead product that would leverage future line extensions in the form of oral care products. Gantrez Gives Colgate Total a Sustainable Competitive Advantage A product must fulfill the following criteria in order to possess a strategic competitive advantage: (1) better than competing products with respect to a feature/advantage/benefit that customers and competitors perceive as meaningful, (2) better by a significant amount and not imitable, and (3) advantage must be perceived by customers and competitors. First, Gantrez, a co-polymer additive and key ingredient in Colgate Total toothpaste, prolongs the retention of fluoride, Tricloscan and other active ingredients that help prevent plaque, gingivitis, cavities, tartar, and bad breath on oral and soft tissues.
Gantrez prolongs product benefits for up to twelve hours after brushing, even after product users eat or drink something, giving their teeth unparalleled protection against periodontal disease. Second, performance of and benefits derived from comparably-priced products do not even compare to that of Colgate Total toothpaste, and due to the patent on Gantrez, competitors may not easily copy this product. Third, both consumers and competitors perceive Colgate Total as one of the greatest achievements in oral care over the last 20 years. Essentially, Gantrez provides Colgate Total with a sustainable competitive advantage over competing products in Argentina, which affords Colgate the opportunity to implement a niche-based differentiation marketing strategy. After performing the situation analysis, the marketer must then position Colgate Total Toothpaste to appeal to the needs of a customer segment whose members are identifiable and accessible and also demonstrate adequate potential and responsiveness. When positioning a product, the marketer must proceed through each of the following three steps: segmentation target market selection positioning Following the processes and fulfilling the criteria involved with the aforementioned steps required by this process yielded the following positioning statement: To position Colgate Total toothpaste as offering superior prevention of periodontal diseases to members of middle class households between the ages of 6 and 45 with the competitive superiority of prolonged protection of oral and soft tissues based on its patented co-polymer additive, Gantrez.
A specialty niche positioning strategy best matches the features, advantages and benefits of Colgate Total toothpaste. Ultimately, Colgate-Palmolive should market Colgate Total toothpaste to younger, married, middle class, Argentine women. Gender roles dictate that women exert considerable influence over family related purchase decisions. Especially with respect to convenience and shopping goods, the wife of the household plays the role(s) of the initiator, information gatherer, influencer, decision-maker, and purchasing agent. Adapting the Marketing Mix Laying the groundwork for making marketing mix decisions, the product-market definition serves to keep marketing strategies focused.
To fulfill the criteria for the product-market definition, the marketer must determine product type, geographic area, customer type, and customer needs. Colgate-Palmolive would likely c …