Colgate-Palmolive: Strategic Marketing - Case Study Example

Table of Contents Executive Summary 2 Pioneer Strategy 2 The pioneer (Colgate-Palmolive) defines the rules of the game 3 Distribution merits 4 Experience and Economies of scale 4 High switching costs for early adopters 5 Possibility of positive network effects 5 Opportunity of pre-empting limited suppliers and resources 6 Strategic choices for the business for maintaining competitive advantage 6 Relevance of the growth-market strategies for market leaders and share-growth strategies for followers 8 Maintaining competitive advantage 10 Marketing metrics and marketing audit in relevance to your business 13 Conclusion 14 References 16 Executive Summary There is unprecedented competition in the market today. The need to have bigger and better market share in the service or the product industry is bigger today than it was ten years ago. This can be attributed to the fact that firms are now than ever before in the quest to understand their customers. Marketing strategies emphasizes that the understanding of the customer is far much important than understanding the competitors. Marketing concept is the new mantra in marketing today. Firms have applied all the strategies they know to better understand their consumers. There are many factors that affect the needs and wants of customers. Therefore, it is important to understand the needs and the dynamics of the customers in the ever-changing environments. They should not only strive to provide the customers with what they want but should also strive to make them affordable. These marketing strategies deals with the fact that the businesses are not the ones which create the needs of the customers but they contribute a lot in influencing the demand by coming up with designs which are attractive, work well, affordable and available. Businesses will also strive to communicate the features of their products to the customers by way of advertising. The paper will analyze the marketing strategies and the effect it has in business operations. Pioneer Strategy At Colgate-Palmolive conservative understanding embraces that though they receive the most perils and possibly experience more disappointments than their more traditional competitors, as flourishing pioneers they are generously rewarded (Berry, 1983, pp. 34). It is unspoken that competitive advantages intrinsic in being the earliest to go into a new product-market can be continued through the growth stage to the development stage of its product life cycles consequential in a tough divide position and considerable returns for maximization of profits. Some of the strategies that make pioneer strategy used by Colgate-Palmolive company to be significant in the market are: Primary choice of market position and segments- Colgate-Palmolive as a pioneer company has the chance to expand a product contribution with features that are most significant to the main fragment of clientele or to endorse the significance of qualities that favor its brands. Thus, its pioneer’s brands are the standard of orientation that consumers use to estimate other brands. This accounts to the most difficult marketing programs that followers’ with many products intended to persuade the open customers about their latest brands are better to the older and more recognizable pioneer (Colgate-Palmolive). If the pioneer in this case Colgate-Palmolive has productively attached its contribution to the preference criteria of the main group of consumers, it also turns into a more complex for followers to distinguish their contributions in manners that are appealing to the mass and economic-market segment. Colgate-Palmolive targets lesser tangential segment or position instead (Booms & Bitner, 1981, pp. 45). The pioneer (Colgate-Palmolive) defines the rules of the game Colgate-Palmolive measures on variables as product quality, distribution, price and promotional budgets and appeals set principles that succeeding competitors must beat and meet client’s demands as well able to persuade them of their different product choices. Pioneer locates those standards higher sufficient enough to elevate the costs of market entrance and perhaps forestall some latent competitors. Distribution merits Colgate-Palmolive pioneer market has most of the options as compared to other competitors. This is because it holds a well designed channel of distribution that paves way for new products to the market. This strategic program was very vital for industrial goods produced by the company-it articulates that with the strategy integration with other business programs Colgate-Palmolive will be able to dispatch all its exercises as well as end up with a network of good and organized suppliers and distributors (Wind, Douglas, & Perlmutter, 1973, pp. 56). Distribution advantage/merit strategy prevents later entrants from the market since distributors are often reluctant to take subsequent brands. The relevance of the strategy shines more when the nature of the product is technically complex and when the distributors have invested on specialized service and training. For consumer packaged goods from Colgate-Palmolive, pioneer strategy makes it more difficult when slowing the entry of competitors that join the market at later stages. This is done by preempting the distribution alternatives. Nevertheless, the pioneer still has the advantage of getting more shelf-facing alternatives at the beginning of market growth stage. By quickly expanding the product line (Colgate-Palmolive) following the first success, Colgate-Palmolive can still appropriate more business shelf space making the challenges that the followers face more difficult. This program makes it possible for the pioneer to secure more shelf-space in retail stores than followers. Experience and Economies of scale Being the first in the market Colgate-Palmolive gains accumulated experience and volume hence lowers production per unit cost at a faster rate than its followers. This merit is pronounced when the brands produced by Colgate-Palmolive are technically complex and involves higher development costs or when the life cycle has been shortened. The advantage that Colgate-Palmolive gets comes when there is an increase in sales during the early growth stages or the introduction stage in the market. As a pioneer company, Colgate-Palmolive enjoys the benefits from it pioneer strategies and programs since it can be able to run over its follower companies when it comes to market growth. The pioneer has the chance to deploy cost advantages in several ways so that it could compete competitively with other companies in the market place. One of the cost strategies that the company uses is by lowering the prices of products, intended to discourage followers from entering the market since it raises the volume for them to break even. The other strategy is whereby Colgate-Palmolive invests its savings in additional marketing efforts so as it could be able to expand its marketing penetration in the market through advertisement, line extension and product improvements. High switching costs for early adopters Colgate-Palmolive has an advantage to other competitors since its customers who are early adopters with Colgate-Palmolive pioneer products hence they are more reluctant to change to other suppliers when there is risk of competitive advantage. This is true when the produced industrial goods have a higher cost or the costs keep on changing. Investment in employees training, the lower risks of production of poor quality products or consumer service makes it easier for Colgate-Palmolive to retain most of its clients over time. Possibility of positive network effects The value of some kind of services and goods to an individual customer increase as the number of other clients adopt the user network and products. According to economists such products exhibit positive network effects as well as network externalities. Communication and information technologies such as wireless phones and internet sites used by Colgate-Palmolive company benefits the network effects. For example, the value of eBay and Amazon auction sites raises the number of potential sellers and buyers. Colgate-Palmolive is an affiliate to this internet business sites hence benefits from the increased number of sellers and buyers visiting the site. The number of buyers and suppliers that companies have depends on entrance time the company or business was included as an affiliate to the sites. Colgate-Palmolive enjoys being one of the pioneers of both eBay and Amazon hence holds more clients that its competitors. Opportunity of pre-empting limited suppliers and resources Colgate-Palmolive may be able to negotiate favorable deals with both the consumers and suppliers who are eager for new ventures or who do not appreciate the opportunities for all the business component part. If later entrants consequently find the components in a short supply there have no choice other than expanding at a constrained period. For example, Colgate-Palmolive was able to absorb more than half of the entire production of personal care products. As a result, all the competitors such as Procter and Gamble, Avon Products and Unilever had difficulties matching the simplicity of their products for many years. Colgate-Palmolive was able to expand its production capacity thus, assuring its clients about their market sustainability. Strategic choices for the business for maintaining competitive advantage Marketing concept is one strategy that has recently received attention and taken to be a tool that Colgate-Palmolive Company can use to increase their productivity levels. As defined by Ashen (2003), marketing concept is getting to understand the dynamics of the customer wants and striving to make sure that they are met. This marketing philosophy has come of age with time. It stresses the need for organizations to analyze the needs of the products and the services that they offer to their clients so that they satisfy the customers. The ever changing technology that is seen in the information and technology field serves as a perfect example of the marketing concept. Borch (2008, pp. 23) gives us the Microsoft example to serve as an example; when computers were introduced in the 60s, users had to issue commands when they wanted to execute something. With the introduction of graphical user interface (GUI), customers were now able to use the computers comfortably than before. Microsoft used the marketing concept to understand the needs that their customers wanted and they acted fast towards meeting it. True to their dream, Microsoft was the first company to produce GUI-based operating system and applications. Other companies like Apple followed suit. This has changed the technological field as well; at least for the better. According to Kotler, Keller, and Burton (2009), businesses and firms do not concentrate and do marketing activities only. There are other factors that affect the businesses they engage in. there is competition from the competitors, political changes, and alteration in social and technological environments. All these factors have to be taken care of as the firm strives to meet the needs and wants of the customers. One of the basic things that should be considered when taking into consideration marketing concept is marketing as a core function of business. Most companies have not given marketing the attention it so deserves. The concept of marketing should be included in the normal operations of the business. Of great importance is the fact that the consumer’s wants should be put into consideration right from the beginning of all the plans that the firm has in store. This therefore follows the fact that marketing should be introduced at the start and not at the end of the production process. All major decisions that are done in the firm should include marketing considerations. The marketing concept is based on two principles which include the fact that the consumer is taken to be the central point of all the activity of the business. The second principle is the fact that the profits are specified as the criteria that will be used for evaluating marketing activities. For a long time, volume sales have been used to evaluate the marketing activities. Relevance of the growth-market strategies for market leaders and share-growth strategies for followers Colgate-Palmolive Company and businesses launches products, with the objective of attaining substantial market share. The target market however is very vital in dictating the success of the products launched. The purchasing behavior of consumers do vary, with some consumers being risk averse, who would not like to try any new product, while other consumers are risk takers. According to Walker et al, (2013, pp. 34), the marketers therefore have to understand the needs of different consumers and behaviors which demand require an in-depth study of their external and internal environment, so as to aid in the formulation of marketing plans. The Consumer behavior is the decision-making strategy that the organization can use for its leaders and followers and physical activity engaged in the acquisition, evaluation, usage and the disposition of goods and services. The consumer behavior is all encompassing function, which heavily influences the marketing and the purchasing process. The purchasing process starts from the consumers’ mind, which influences the alternatives that the consumer chooses, depending on their perceived relative advantages and disadvantages (José, 2005, pp. 43). The after purchase behavior is also of paramount importance as it informs the marketers on the success of the project. There are various opinions regarding the purchasing of new products, with several studies offering divergent opinions. In trying new products, Colgate-Palmolive consumer behavior is of importance, as the decision-making process and physical activity which is involved. The behavior of the consumers is multidimensional, complex and a dynamic process which influences the entire decision making procedure. It is therefore of importance that the organization adopts strategies which are vital towards attaining a strategic competitive advantage, therefore the marketing channels by the organization utilizes are vital towards determining the product’s success. The customer behavior determines the perceived customer value, hence business have to implement a process which entails formulation of marketing strategy. Essentially, the marketing strategy involves market analysis, strategy formulation and decision making. The decision making is a process which entails problem recognition, information search, evaluation, selection procedure, and this finally influences the purchase decision by the consumer. The post purchase behavior depends on how satisfied the client is with the product. In understanding the behavior of the consumers towards new products, it is vital to conduct market analysis, which also includes analysis on the organization, the competition and the conditions. In contacting the research, this is aimed towards offering better customer value, which is the aim of the company. This is dictated to by the consumer needs, the company offerings as well as the environment (Walker et al, 2013, pp. 43). The diversified nature of the factors influencing the market, especially on the consumers’ perception and acceptance of new products, creates challenges on the producers. This is doubled edged sword that assists both growth-market strategies for market leaders and share-growth strategies for followers to improve the company’s profit. Maintaining competitive advantage In today’s business, internet is almost a necessity. Big companies like Colgate-Palmolive Companyand others do their marketing online (Walker et al, 2013, pp. 93). Internet is the most preferred mode of marketing because of its convenience in terms of cost, market niche, and even time i.e. it is the most economical. Colgate-Palmolive Companyhas suppliers and customers sparsely located geographically. To ensure favorable trading environment, Colgate-Palmolive Companyhas to implement an online system that will allow its customers to purchase the car parts online and also allow communication with its suppliers. Colgate-Palmolive Companyis a newly started company that deals with car spare parts and possesses local warehouses and suppliers across the United Kingdom (Walker et al, 2013, pp. 23). It first adopted a business model whereby the customers could go to the warehouse and ask for a specific spare part at the front desk. The operator could the check for its availability, locate it and send a request to general warehouse staff to locate and presents it to the front reception for the customer. In addition, Colgate-Palmolive Companyoperates a “call and collect” service whereby customers could ring, check the stock if available and then reserve an item so as to collect later. It is uneconomical for a customer to visit the warehouse to buy a car spare part. This is because much money and time will be spent. In Motorsport Limited, this is the only mode a customer can use to acquire a car spare part. To justify this, let us take for example a case whereby a customer visits the warehouse coming from far to buy a car spare part and the specific spare parts are not available in the ware house at that particular time. The customer will have spent much money and wasted time visiting the warehouse. Online system is accompanied by many risks. System failure may cause denial of service. This might be experienced when there is intense traffic in network. Another design issue that has to be taken into consideration is the cyber-attack. This is because customers will be using smart cardsin their payment. The payment systems are prone to attacks. Another risk is the difficulty of stock control since it will be hard for children charity organization to manage the circulation cycle of the items. Strategies put in place include online marketing. The company will make sales over the internet thus reducing cost of marketing products. Online promotion is another strategy that is incorporated to increase sales. Contingency plan will be prepared to ensure business continuity if a disaster occur. Key business areas that must be kept include customer relations, customer phone contacts and utilization department. In case of a disaster, continuous availability strategy will be applied since the data center will need to be the same with all operations undertaken at the organization and has to be away from the location of the organization. Remote journaling and electronic vaulting are yet some other strategies that will be applicable. The security personnel, the damage assessment and recovery team, service teams and IT/IS experts are among the teams responsible for recovering electronic systems to normal state. Online system is accompanied by many risks. System failure may cause denial of service. This might be experienced when there is intense traffic in network. Another design issue that has to be taken into consideration is the cyber-attack. This is because customers will be using smart cardsin their payment. The payment systems are prone to attacks. Another risk is the difficulty of stock control since it will be hard for children charity organization to manage the circulation cycle of the items. Strategies put in place include online marketing. The company will make sales over the internet thus reducing cost of marketing products. Online promotion is another strategy that is incorporated to increase sales. Contingency plan will be prepared to ensure business continuity if a disaster occur. Key business areas that must be kept include customer relations, customer phone contacts and utilization department (Grönroos, 1983, pp. 17). In case of a disaster, continuous availability strategy will be applied since the data center will need to be the same with all operations undertaken at the organization and has to be away from the location of the organization. Remote journaling and electronic vaulting are yet some other strategies that will be applicable. The security personnel, the damage assessment and recovery team, service teams and IT/IS experts are among the teams responsible for recovering electronic systems to normal state. This section outlines the exact procedures followed by a customer while interacting with the Colgate-Palmolive Company through the online system. First, the customer has to check for the availability of a specific car spare part of his/her interest (Tybout, Calder, & Sternthal, 1981, pp. 23). There are instructions meant to direct the customer on the process of checking availability of the spare parts in the online store. If the spare part is available, the customer simply places an order and makes payment after which the company arranges for shipment of the same. This system has to interact with a financial system and inventory system. After order placement by the customer, the order is processed by the concerned authority in Motorsport Limited. Shipment arrangements are also done (Smith, 1956, pp. 71). The importance and prospective gains of this new online system are undeniably reflective. First, the customers will be cushioned by the fact that there is reduction in cost. They no longer have to spend money and time making visits to the warehouse. Another benefit of the system is that Colgate-Palmolive Company will get increased number of customers purchasing from its company due to the ease and shortened process of buying (Walker et al, 2013, pp. 14). The system also will help Colgate-Palmolive Company reduce the cost of marketing its products. Marketing metrics and marketing audit in relevance to your business One of the marketing metrics is the cost of customer Acquisition. This is the average amount of money that a company (Colgate-Palmolive) spends in order to win of the new customers in the market (Walker, & Ruekert, 1987, pp. 65). The importance of using this metric is to ensure that the calculation of the cost effectiveness of the marketing campaign. The other metric used by the company is customer life value. It is the average amount of money that the company derives for each customer. The metric helps the company to evaluate the loyalty of a customer as well as improving the customer relations. It is also important in determining specific customers spending and those that deserve higher or specific attention. Another metric that plays a significant role in making sure that Colgate-Palmolive company flourishes is the marketing Oriented Customer Percentage (Weiss, 2002, pp. 12). This metric is important as it helps in determining the amount of profits that one can earn after an increase in customers spending rate. It also helps in determining the efforts of the company’s marketing team and how they are paying off to the company. Marketing Audit is a methodical examination of organizations marketing strategies, objectives as well as organizations performance. It is an important tool for Colgate-Palmolive as: i. It examines the effectiveness of the company’s contemporary marketing strategies and other marketing tactics. ii. To generate recommendations for all the ways in which the company can use more effective ways to utilize its resources. iii. Auditing is also important in answering all the company’s business questions for the better market choice positions. Conclusion Proper marketing strategies have helped many companies to reach epic positions in the competition. With time, they started taking strategic planning and this served to position the marketing concept at the periphery of marketing functions. Now, as many companies lose competition and business, these marketing strategies have back in full swing. Businesses need to rethink their take of the customers and meet their needs. The need to have customers satisfied will never be overtaken by any other business strategy. 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