Colgate Palmolive Company Marketing Strategy: Situational Analysis For Increased Market Share And Profits

Situation Analysis

Colgate- Palmolive Company, is a USA-based Company dealing with manufacture and distribution of hygienic products such as Colgate toothpaste and other detergents to esteemed customers worldwide (Jones, 2011). The Company’s co-business is to ensure that its consumers are satisfied with products that meet customers’ expectations. The Company produces a variety of the goods but its main being Colgate toothpaste which is improved continuously to ensure it remains a market leader. This Situation Analysis examines Colgate’s current operating environment as part of the development of a long-term marketing strategy that will see the Company gain more market share and consequently increase its net profits and sales.

An analysis of Colgate-Palmolive Company, one of the leading companies in production and distribution of Colgate toothpaste in the US shows a healthy state of operation regarding financial statements and other positive implications of growth (Jones, 2011). Last year, the Company registered an increase in net profits and increased dividends to shareholders. This does not mean that all has been well with the company. The company has however, faced various challenges which ought to be dealt with effectively for continuous growth. Last year, the company recorded a net decrease in the sales due to increased costs of production which resulted in rising in price hence a fall in total sales. The company also faces adverse fluctuations in foreign exchange rates, competition, stringent government policy and other regulatory bodies (Jones, 2008). Therefore, the marketing department has to formulate a proper marketing plan to counter these threats.

Socio-Cultural Environment

With the fact that some consumers value natural local ingredients rooted in their culture has propelled Colgate- Palmolive to manufacture Colgate natural toothpaste for soothing gum. Today, more than ever, our approach to innovation is insight driven (Brandao et al., 2014). The consumers here also believed that natural Colgate helps in preventing dental problems. This company is competing better locally by tapping into insights market-by-market and leveraging trends across regions. Colgate-Palmolive is also keen in participating in consumers’ day to day lives for example by organizing workshops. These participations include deep dives by country, by user groups, such as low-income consumers or millennial and by topic, such as workshop discussions (Rahimi et al., 2014).

Natural environment

The process of manufacturing the paste from the raw materials have some side effects to the environment either through emission of by-products to the air or water bodies around. This has caused a threat to the neighboring households to the Colgate- Palmolive manufacturing industry. With such threats, the laws and regulations tend to be tighter for the company hence it has to navigate the best ways of handling the harmful by- products (Hoffman & Georg, 2012).

Political Environment

With the government in place to regulate the operations of the industries, it imposes stringent business policies on this company which restricts it from healthy competitions and free expansion ideas (Xu, 2011). The regulations also tend to limit the production process and make it difficult for the importation of cheaper raw materials hence making the cost of production to be so high (Taiwo & Moyo, 2012). However, Colgate- Palmolive has always tried to adhere to the rules and regulations making it somehow survive in the market. The business needs to comply with the legal and regulatory requirements in the United States and abroad. The legal and regulatory requirements apply to most aspects of its products, including their ingredients, manufacture, packaging, storage, transportation, distribution, advertising, import, export, and sale. U.S. federal authorities. Food and Drug Administration, the Consumer Protection Safety Commission, the Federal Trade Commission, and further, the Environmental Protection Agency controls different aspects of the business, along with parallel authorities at the state and local levels and comparable authorities overseas.

External environment analysis

Technological Environment

Colgate -Palmolive Company has significantly utilized the internet and social media platforms to reach to the consumer even at a personal level (Man et al., 2009). Currently, the company is strengthening that engagement by increasing the use of digital media from websites to social media to mobile. Moreover, technology is also helping the business to engage with young dental professionals across the board. It facilitated hosting of the first virtual dental conference in last year.

This has been achieved through regular adverts on the online platform. However, the consumers believe that the prices of Colgate should be less since the information reaches them quickly. Selling it cheaply to the customers to raise the sales has led to a lot of losses, but in return, Colgate Palmolive has reversed to the initial cost effective prices.

Economic environment

With the increased inflation rate in the last year which has affected the choice and priority of most consumers during purchases, most consumers have however resorted to basic needs which have reduced the consumption of Colgate being a secondary need. Unpredictable global economic conditions adversely affect the business performance (Maunganidze, 2013). For instance, recent global economic trends pose challenges to the business and probably contributes to declining revenues, cash flows and ultimately the profitability. However, this company continues to devote significant resources to support its brands. It also applies the same efforts to market its products at multiple price points, during periods of economic uncertainty consumers may reduce consumption (Man et al., 2009).

The Company has shown various competencies within its structure to necessitate its good performance on the market. The following are areas which have put the Company on the competing edge:

The company enjoys a pool of personnel that has embraced the organization’s values and goals. These employees have taken a personal responsibility at their various levels of being leaders who need not be followed to achieve. They are committed to ensuring that the integrity of the Company remains for continuous leadership on the market.

The Company has been recording growth in its net profits and dividends to its shareholders over the past five years. The Company also can generate more funds by established efficiency programs for investing in business growth to ensure it cuts trims operational costs. There has been an increase in operating cash flow in the financial year 2016 and also not forgetting substantial market share of 44%.

Colgate is cultured in innovation and has invested deep into innovating new ingredients for the products to suit the ever-changing consumer tastes and preferences.  This results into value-added new products which put the Company on the leading frontier of its competitors on the market. Colgate is out to meet the particular need of both its actual and potential customer (Babatunde & Adebisi, 2012).

Colgate is committed to venturing into dynamic market campaigns like an online advertisement, social media, all of which has yielded a lot of results. The Company have also ventured in intensive research through the consumers of its products to ensure that the business remains relevant, updated and further meet the customer’s needs efficiently (Lamoreaux, 2007). This has helped the Company to remain a leading market winner ahead of its competitors.

Strong managerial leadership.

The Company is committed to employing highly qualified administrative staff who are competent and therefore making it possible to avoid unnecessary perils that come with poor management. Colgate Company is focusing on reducing overall costs as much as possible to be able to meet the impending global challenges on the market. The strategy used to increase effectiveness in research for new products places the Company in a favorable position to compete (Hester, 2013).

Conclusion

Given the above, Colgate-Palmolive Company has made a significant improvement towards great growth despite high competition. In light of all these, the company’s overarching priority and objective are to focus on profitable growth. In the long run, employees discipline and focus on the fundamentals have served the business well. From this, it is evident that business strategies that have been deployed over the decade provides the agility needed to continue winning on the ground despite any headwinds experienced as the year unfolds. The company market share remains high around the globe with Colgate’s leading share of the global toothpaste market.

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