Case Methodology

Case Study 4 Colgate Soft n Shiny

Mirza Zia G1213229

Company Overview
Colgate-Palmolive (Malaysia) Sdn Bhd was established in 1960 as a subsidiary of ColgatePalmolive USA. While initially established for the purposes of manufacturing toothpaste in the country Colgate-Palmolive (M) went on to manufacture household products, toiletries, personal care products and the oral category. Colgate-Palmolive (M) was a market leader in all product categories except for the beauty soap and shampoo category. The company captured 55% of the toothpaste market with it Colgate product. The success of the brand was such that Colgate had become a generic word for toothpastes all together. Colgate-Palmolive (M) also captured 34% of the detergent powder market and 65% of the laundry bar. It was further able to capture 65% of the fabric softener market. The company currently exports products a number of countries in South East Asia, including Singapore, Hong Kong, Brunei, Fiji, and Papua New Guinea.

Industry Overview
The Shampoo Industry In 1980, there were four main competitors in the Malaysian shampoo market, namely, ColgatePalmolive (M), Beecham, Bristol-Myers and Kao Trading, each producing a number of hair care

products of different types. The shampoo market could be divided into two distinct categories; cosmetic and medicated.

Colgate-Palmolive (M) launched its shampoo products in 1976 which offered it customers value-for-money. The target market for the product was mostly the rural Malaysian population and younger consumers who had low incomes. The product met with success, having captured nearly 20% of the total market share by 1978. The success however was short lived as the continuous introduction of new shampoo brands ate into the market share. As a result, by 1981, the market share declined to 16%.

To improve the brands performance in the market, Colgate-Palmolive (M) in 1982 introduced a number of changes to the product, including increasing package sizes and offering newer variants. This however made little difference to the products performance in the market, as Colgate-Palmolive saw its market share decline to 9% by the end of 1984.

Colgate-Palmolive (M) chose to go back to the drawing board and come up with a new and more attractive brand to tackle the Malaysian shampoo market. In 1985, it launched the Colgate Soft n Shiny brand to compete more strongly in the market. To ensure the products success the company improved almost all aspects of the product, including the products brand name, target market, market positioning, packaging and advertising. Colgate-Palmolive (M) launched four variants of the product as well. The firm conducted a name test to decide on the name of the

product, and felt that the Soft n Shiny did a good job in portraying the products gentleness and cleaning abilities.

Problem Statement
This strategic shift has not been able to give Colgate-Palmolive (M) make major inroads into the Malaysian shampoo market. In 1988, despite increasing its market share to 6%, the firm saw a decline in shampoo sales. It is now up to Cik Rose, the Product Manager at the firm to reassess the firms strategies to improve its performance in the shampoo market.

SWOT Analysis
Strengths 1. Colgate-Palmolive (M) has an established track record in the household products and personal care industry having being operating in the country since 1960, as well as having its parent firm being a major global player in the same industry. 2. The firm has a well-established distribution network that reaches both, rural and urban customers. 3. Established brand name in the market, one which customers trust. Weakness 1. Colgate has become a generic name for toothpaste. While this confirms the firm dominance in toothpaste market, it does not allow the firm to explore opportunities where it could sell other products under the same brand name.

2. The promotion strategy is not aggressive enough. At present, print advertisements promoting the product are only limited during promotional events, while television adverts are very infrequent. Opportunity 1. Malaysia has a sizably large female population that spends considerable amounts on cosmetics and personal care products. 2. The manufacture of shampoos is a relatively simple process. As a result, if ColgatePalmolive (M) launches a reasonable priced product, that performs reliably, will give the company the competitive edge in the market. 3. Women are usually choosy about the brand of shampoo they purchase. They believe that switching shampoos often will harm their hair. Given the company has a well-established and developed research and development division, it can develop a shampoo that is well suited to Malay, Chinese and Indian hair types. Threat 1. The barriers to entry into the shampoo manufacturing market is relatively low, increasing the threat from competitors. 2. Consumers do not switch hair care products regularly, and have complex preferences. 3. The complex nature of consumer preferences has forced competitors and ColgatePalmolive (M) to launch a number of variants of the same products, fragmenting the market, and at the same time increasing the cost of production.

Recommendation
The problem lies in the fact the company chose to enter the toothpaste market using a name that is synonymous with toothpaste. The companys dominance the toothpaste market has led consumers to often use Colgate and toothpaste interchangeably. This denies the firm the freedom to enter other markets using the same name. The consumer perception of purchasing a Colgate branded shampoo is that they are applying toothpaste to their hair. For this reason, Colgate will have to choose to brand its shampoo products under some other name. They could also use Palmolive as its brand name for its shampoo line. Alternatively, it could not use either altogether, and come up with a completely new name, as practiced by its competitors. For example, BristolMyers markets it shampoo under the name Clairol.

Another issue is the brand loyalty and complex consumer preferences. Customers do not prefer to switch shampoo brands regularly, as they feel its harms their hair. In such a situation, Colgate will have to play the long term game and establish itself as a reputable brand, one that is very gentle on the hair, so that consumers make the switch to its brand. To do that, the company will need to give out samples of its shampoos for free so consumers can try it first and gauge its affects first hand.

Finally, the company will need to the ramp up its promotional strategy. Its current strategy is very passive and infrequent. The company should aim to imprint its brand name and product in

the minds of its consumers. For this, it needs increase the frequency with which its ads appear to the public.