Pepsodent Vs Colgate: A Marketing Strategy Analysis
Industry Background
In the early 1850’s, the first modern toothpaste was invented by an American dentist named Washington Sheffield. Prior to that, the usage of a paste was to clean teeth and can be traced back to Ancient Egypt in around 5000 B.C. People in India and China are believed to be using teeth cleaning pastes since 500 B.C. When the modern toothpaste was introduced, people were not excited about this product and for around next 50 years only 7% of U.S population were using toothpaste. Then came the marketing strategies of Claude Hopkins for Pepsodent which made 65% Americans to start brushing teeth in hopes of having a better and clean smile. The present day toothpaste industry is worth USD 26.09 Billion (2018 data) and is estimated to reach USD 36.98 Billion by 2024.
Initially coming in as a beauty product and then moving to being an integrated part of healthcare, toothpaste industry has targeted their audience based on the need of hour. With more than 100 different types of toothpastes only sold in USA, the audience is appealed with different needs. People buy these toothpastes for cleaning teeth, brightening them up, fighting sensitivity, removal of plaque around teeth, some do it for fresh breath and some do it to be ready for a kiss. With almost everyone in USA using toothpastes, it gives industry experts a good opportunity to explore and experiment with different types of ingredient. With Crest 3D White toothpaste generating a sales of USD260 million in 2019, it was the most sold toothpaste in USA. The US market of toothpaste is heavily controlled by Crest, Colgate, Sensodyne and Pepsodent. By Colgate selling around 80 million units of their toothpaste, Crest 3D white selling 60 million units, Sensodyne sold 30.4 million unit. Whereas Pepsodent could only sell less than 20 Billion units.
In this article we will concentrate more on the two old and major players of the industry, Colgate and Pepsodent.
Competitor Backgrounds
Colgate
Colgate was formed by William Colgate in 1806 as a soap and candle manufacturing company based in New York. It also used to sell powders for cleaning teeth. After the invention of toothpaste in 1853, Colgate started manufacturing toothpastes in a jar from 1873 and they switched to tubes instead of jars in the year 1896. After trying various ingredients for soap, Colgate moved to use sodium lauryl sulphate, which is still used in toothpastes. Colgate toothpaste in presently owned by Colgate-Palmolive Company and it is being used in more than 220 countries worldwide. After becoming a public company in 1908, it started expanding to other continents with their promising campaigns regarding cleaning of tooth in schools and in public. Currently Colgate is considered to be the global leader of toothpaste industry because of its reach and high sales across the globe. In USA itself, Colgate and its top variants have made around USD 580 million in sales with around 184 million units sold.
Few of its slogans were:
“It Cleans Your Breath While It Cleans Your Teeth” “Colgate, used and recommended by most dentists”
Pepsodent
Pepsodent toothpaste was found in the year 1915 by the Pepsodent Company in Chicago. They like to promote themselves as “An all American toothpaste”. Since 1942, Pepsodent company is worldwide owned by British-Dutch multinational consume goods company Unilever, whereas in USA and Canada, the ownership is with Church & Dwight from 2003. The Pepsodent company was finding it hard to sell a toothpaste as there was no demand for it. Only 7% of US population was using such a product back then. It was considered a business suicide by stepping in such a business. This is when Pepsodent Company’s owner approached his friend Mr. Claude Hopkins to help him expand his business. Despite being the advertising legend of the century, Hopkins initially disagreed to step in this segment. But after some research and working on the “Habit loop theory”, Hopkins decided to brand this product as a beauty product rather than an oral hygiene product. Pointing out to one of the ingredients of this paste- Pepsin, Hopkins promoted Pepsodent as a product which can help remove the plaque from teeth through Pepsin and offer a better smile. The reward of good looks triggered audience, they started using the toothpaste on a routine, thus completing the Habit loop and making the toothpaste business reach to 65% of US households from a mere 7% in no matter of time. It was the market leader till late 1950s but unless like other brands, it did not add Fluoride in its content and started slipping around from there. Currently Pepsodent is not a leading brand in USA, or the world. At some stores, it can be found as a value brand selling for half the price of similar toothpastes.
Few of its slogans were:
“Gets Your Teeth Their Whitest”
“You’ll wonder where the dullness went / when you brush your teeth with Pepsodent”
Targeting War
Colgate with its various products likes to target need specific audience. Colgate has paste for sensitivity, for white teeth, for fresh odor and even for routine care. With such a vivid portfolio of products, Colgate targets people of all age group. They even has toothpaste for kids called Colgate Kids toothpaste which comes with a fun kid centric packaging. Its pro-relief product targets people aged 20–40. In a conclusion, it can be said that Colgate majorly targets urban and rich class. Tries to create its base from young age and keeps offering different product based on user’s needs.
Whereas, Pepsodent believes in selective specialization. It has been observed that they do not flourish much in urban market. Hence, it has marketed itself as a value product brand in urban stores and it majorly targets rural market. It also has line of products for different age group. Pepsodent’s kid’s line is called Pepsodent Kids. It has cheaper variants for rural areas and can also be found in dollar stores. The main target audience for Pepsodent is the decision maker females of family or the adult male who are breadwinners in third world countries.
Positioning
Colgate likes to brand itself as a product of high quality which offers premium price amongst its competitors. Colgate has all types of products for all kind of market. Colgate also identifies itself as an environment friendly company. They have initiatives which help in making the earth greener. They do charity work in the field of dental progress, nature enhancement and support kids in needs. They have been vocal about these initiatives via television advertisements. Colgate is also known to let their competitors the trick behind how they manage to serve toothpaste in an eco-friendly tube.
Pepsodent on the other hand has initially branded itself as a beauty product. Later, they moved to more towards dental issue part and started producing products which benefit users from tooth decay and other oral issues. Pepsodent knowing its segment is also popular as a value product in retail stores. Pepsodent has a social mission through which they offer free dental checkups, run campaigns through which they enlighten general public about oral hygiene. Since, Pepsodent targets itself as a family oriented product, their advertisement campaigns can be seen being promoted by kids.
4 P’s of Colgate:
Product
Colgate serves a huge global community with its oral care products spreading into 6 broad categories namely toothpastes, toothbrushes, mouthwashes, kid’s products, specialty products and prescription only products. It manufactures toothpastes in 14 different variants and varying sizes from 0.88 Oz to 5.8 Oz packs. They also supply toothpowder to the suburban areas, which further broadens their customer segment. Their toothbrushes are made for adults, children and come in varieties of bristles ranging from soft to hard bristles, for sensitive teeth and zig zag bristle brushes. The also offer mouthwashes for an overall mouth cleansing. Specialty products include overnight teeth whitening pens, peroxyl mouth sore rinse, etc. Their main marketing strategy is to fight bacteria and keep the mouth fresh, hence they focus on the fluoride content in their products. Its competitors include Crest, Pepsodent, Sensodyne, Close up, Oral-B, etc.
Pricing
Colgate maintains slightly lower prices than those of its competitors because it has developed a superior image and with the revenue it generates, it doesn’t mind selling for a slightly lower price. Colgate’s biggest market is India where it owns 50% of the market share with a good reputation. A tube of Colgate Total 5.1 Ounce pack sells for $4. A favorite product Colgate Optic White costs around $12 for a pack of 3 Ounce toothpaste on Amazon. Colgate also sells products in bundles, where the price of the bundle is less than that of individual products combined. It also uses optional product pricing strategy wherein it charges for the main/base product separately, while charging for the other accessories separately. It also has an ecommerce website where one can buy all its products at a slightly higher price, since shipping charges are included in them. It also makes sure that it fixes the prices the products, which in turn allows the sellers, retailers and middlemen in the chain to earn through their own profits. There is generally no sale offered on its products, except for combo offers.
Place
Colgate sells its products via the 2 main marketing channels. One is its e-commerce websites, where it sells all its products at a slightly higher price to cover shipping costs. The other one is the fat distribution channel that it has developed over the years. The distribution is simple: manufacturers sell the products to the wholesalers, who in turn sell the products to the retailers in the chain and finally the retailers sell the products to the customers. This is one of the main reasons why Colgate is able to reach urban, suburban as well as rural areas, making sure their products are available to maximum customers. It has also integrated its online channel and physical stores to provide more flexibility to customers. Colgate also has its own website where they sell all their products. Colgate has built good working relations with its 500 manufacturers that provide it with raw materials, and they in turn help Colgate to research and come up with new innovative products.
Promotion
Colgate has always focused on marketing via advertisements. It advertises heavily on traditional media like TV and radio, which reaches one of the many rural and suburban areas and helps them create brand awareness. Their ads are catchy, humorous and focuses on specific qualities of their product. They also use newspapers, magazines and billboards for promotion. It also advertises on various social media platforms mostly Facebook, Twitter and YouTube due to the traffic that these social media sites contains. They also actively promote their products through various sales promotions, exhibitions, campaigns to promote their products for children, throughout the year. They collaborate with movie studios to create promotional products for upcoming movies and shows for children. They use a percentage of these profits to determine the promotional budget for the upcoming years and so on. Also, the statement red packaging has become an identifier for their products.
4 P’s of Pepsodent:
Product
Pepsodent is a leading dental care brand that is endorsed by the Global Dental Association. Pepsodent primarily offers toothpastes and toothbrushes, the main aim is to keep the teeth cavity-free, strengthen gums, fight cavities and freshen the breath. They also offer toothpastes for sensitive teeth and bleeding gums in powder, gel and cream formulas. They offer 5 different toothpastes namely Expert protection, Clove and Salt, Germicheck, Supersalt and Whitening. The food in and around the teeth is digested by a digestive enzyme called ‘pepsin’ which is present in their toothpastes. They offer toothpastes in the sizes of 150 g, 300g, 100g and 175 g size in Asian countries and 5.5 Oz pack here in USA. Pepsodent’s largest market is India, where the share of toothpastes is the highest followed by toothbrushes. Since, about one third of India’s population does not have access to any of the modern healthcare facilities, it is a huge market for companies like Pepsodent to capture it with their range of products.
Place
With the help of their parent company Hindustan Unilever (HUL), Pepsodent has developed a wide distribution channel. HL has about 7,000 distribution stockists that help them sell their products to about one million retail outlets. HUL currently operates about 100 factories in India, which involves 2,000 suppliers and about 7,000 distributors to fulfil the market demand. They own large warehouses to store their products from where they supply these products to 80% of the stores in India, and they never fall short of inventory because of timely delivery. They reach across the population through these channels. Their products are manufactured and supplied to the wholesalers, who in turn sell it to the retailers and finally customers can buy these products at various outlets and stores available widely. They also supply their products to the rural and suburban markets with their huge distribution channel. They can also be bought online through third party e-commerce websites. They are sold on a cheap price at Dollar Stores and Walgreens.
Price
Pepsodent’s budding target market segment is the urban market where they don’t mind spending a little more for a good quality product. Their main selling point is that they provide cavity and germ protection to the teeth through their germ shield active ingredients. They keep their prices a little above Colgate for the same daily use toothpastes because they offer cavity protection which is not one of the strong marketing points for Colgate. A 5.5 Oz Pepsodent Original toothpaste is sold for $5.98.They use psychological pricing strategy to get customers to buy their products. They invest in a research team that that collects market demand data and studies the pricing strategies of its competitors, which helps them analyze this data to set their own competitive price against the competition. The costing also depends on the different cost factors involved in making of the product plus the amount of profit the company is determined to make. This pricing strategy allows Pepsodent to stand as a good competitor in the market for the claims they make with their toothpastes.
Promotions
Pepsodent has utilized advertisements and social to its best to create a positive and strong image of the brand in the market and ensure good brand visibility. Their marketing campaigns have been experimental so that they can come up with a new idea every time they hit the screen. They make use of famous celebrities to campaign for their ads to gain customer attention. They try to target customers from a young age, so mostly children centric aggressive ads can be seen in their campaigns. In addition to this, they try to maintain a family image in the ad, so that the product also calls out to all members in the family. In the year 2002, Pepsodent included a freshness indicator inside their packets to tell the efficiency level of the toothpaste to the customer. They also focus on making informative ads that urges customers to brush their teeth at night, in turn increasing their market demand. For the rural market, they also introduced small and cheap packages, which also includes free trial packs and a free small tube when you purchase a bigger one. The strategy behind selling the trial packs was to educate customers about what issues arise because of germs in the teeth and the layer that deposits on the teeth after consuming food. They has also offered free dummy Tron bikes with their toothpastes following the famous tag line like “My toothpaste fights 10”, “Gets your teeth their whitest” and “Protection outside freshness inside”.
Analysis
Colgate was one of the earliest toothpaste company. It was fighting a market segment which did not have much userbase. With Pepsodent’s entry, it gave a path to other toothpaste companies to flourish. But instead of updating their ingredients they stuck with their conventional paste. Other paste manufacturers moved to using Fluoride based pastes and started controlling the market. After Pepsodent’s claim of better smile with Pepsin was negated by the scientists, they had started losing business and were not even updating their formulae. Customers were keen with the idea of using a Fluoride based pastes and that damaged Pepsodent’s business further. Being contemporary is an important aspect of staying in business. But an important thing to learn from Pepsodent’s initial business is how they established a segment and how they flourished it to make it an important part of our daily lives. At a time when people thought toothpastes were a luxury item and they can survive without it, Pepsodent came in the market with their innovative ways to promote the product to an extent that they gave people false hopes about its benefits. Soon the luxury item was a routine.
When William Nebergall invented Stannous Fluoride Toothpastes to fight cavity, Pepsodent stuck with their original plan to post their toothpaste as a beauty product rather than a healthcare product. Whereas others in the market saw this as an opportunity and invested in fluoride toothpastes.
To thrive upon the initial success of Pepsodent was Colgate. Colgate was an old player in the industry. It was doing good for itself with whatever market there was available. Colgate, which started with a soap based paste in a jar gave importance to research and innovation, switched to tube, then jumped into fluoride based paste and till now has been constantly creating products which people demand for. Colgate toothpastes have adapted to the culture of creating different pastes for different markets. They have a toothpaste for everyone. During all these years, Colgate has heavily invested in research centers, programs to reach every city or village in each continent and made itself as a common household name. Colgate’s mass reach can also be accounted to their constant investment in students, sports events and ad campaigns. Colgate has hosted many women’s games to reach such a position. They have had a journey where they have visited to schools, met with children, taught them how to use toothpastes and toothbrushes and also gave free samples to students. These long-term approaches from the beginning helped Colgate hold on to a big market.
Talking about marketing strategies of Pepsodent, their early approaches had pamphlets reading “Just run your tongue across your teeth: You’ll feel a film”. Such tactics helped them target people who wanted to look for a better smile. Such an advertisement targeting people to interact with themselves made them more approachable. They also ran a complimentary advertisement which offered them coupons for free samples. Such flyers could be found with lines like “FREE… a 10-day tube to everyone who wants white, dazzling teeth”. Such campaigns helped Pepsodent gather initial success but their reliance only on such gimmicks did not help much for a longer run.
Presently, both Pepsodent and Colgate have a big business and distribution worldwide. Reaching to Asian countries, small villages they both have become common household names. Both Pepsodent and Colgate have lot of similar products these days. They both have products for kids, adults, to fight decay, for
freshness etc. Since, Colgate has better business they have expanded to certainly more products such as Colgate Optic White, Optic white renewal, Enamel health, Hemp Seed oil and one with charcoal. Colgate as a company has also expanded to move from toothpastes to selling whitening kits, where they sell electronic items helping users get white teeth faster. They also have bleach added stripes for the same purpose.
Talking about their cost, since Colgate majorly targets rich and urban population and it’s vice versa for Pepsodent, the cost for a basic Colgate paste is a bit less than that of a Pepsodent at urban store. With not that much success it also reasons for Pepsodent to not have that much varieties in market. Pepsodent mostly plays only with its Complete Care paste. It has few variants of the same called original flavor, enamel-safe whitening. Apart from these they also offer Germi-check, Pepsodent Kids. Pepsodent kids comes in different flavors such as sweet strawberry, mind MINT and awesome orange. Though they are doing well for themselves but even in the kids segment, Colgate is giving better results. Colgate not only has flavors such as watermelon, strawberry but they also collaborate with movie studios to launch movie character centric pastes. One can find Colgate kids pastes with SpongeBob Squarepants, Barbie, Minions and even DC superhero editions. For their Batman edition, they also offer a glow in dark tube.
Colgate and Pepsodent have similar sales medium. They both sell toothpastes in stores and online. Though Colgate pastes can be found at more retail locations than Pepsodent in USA. Apart from other e- Commerce websites, Colgate also has its own website where they sell to customers directly. Pepsodent doesn’t have their own e-commerce setup. They are dependent on other websites to sell their products.
Conclusion
Despite Pepsodent being the reason toothpastes are an integrated part of our lives, they failed to control the market for long or couldn’t even recapture the market. They initially had an upper hand in USA but it slipped as they did not update the ingredients of their paste. Pepsodent not moving fast to fluoride based paste is something which can be compared to Kodak not moving to digital cameras early or Microsoft phones not switching to an Android based operating system. With such examples we can easily understand the part that be whatever product, it needs to upgrade to what the time requires. Talking about present scenario, Colgate has flourished worldwide with its great range of popular products. They have the best business setup in the world, are in most countries, have the most revenue and their popularity too is higher among urban places.
Cost wise, in urban areas Pepsodent is a bit costlier than Colgate in major retail stores and online. If they somehow manage to lower their cost price, it might help them in reaching more customers and maybe their plans to concur the urban market could be achieved. Colgate relies on celebrities to promote their products. Every country where Colgate is, they try to advertise with local celebrities. On the other hand Pepsodent advertises with family centric advertisements.
The one major thing to learn from Pepsodent’s business is its history of how they created a business segment which is now a USD 26 Billion business industry. And the part to learn from Colgate is how they always updated their products to be relevant in the market. Starting from a soap-based toothpaste in jar to a tube-based toothpaste and then to a fluoride-based toothpaste, they have always updated their products which resulted in their success amongst buyers
Co-Author: Shraddha Upadhyay (https://medium.com/@shraddhau55)
LinkedIn:
Mukul: https://www.linkedin.com/in/mukulpathak/
Shraddha: https://www.linkedin.com/in/upadhyayshraddha/
