By Chhaya

Colgate's Ring Of Protection is being squeezed. However strenuously he may deny it, 45-year-old N. 'Jay' Jayaraman -- who took over as the CEO of the Rs 978-crore Colgate-Palmolive India (Colgate) two years ago -- knows only too well that his company is under siege in the one market it had considered itself invincible: the Rs 1,200-crore oral-care market. After all, Colgate's marketshare has shrivelled under the onslaught launched by the Rs 8,343-crore Hindustan Lever (Levers) from 65 per cent in 1995 to 60.70 per cent in 1997. And even its flagship, Colgate Dental Cream, lost 3.80 points of marketshare in this period, dropping from 52.70 per cent in 1995 to 48.90 per cent in 1997.

With Levers' marketshare rising from 22.20 per cent to 26.90 per cent, Colgate has been left with a less-than-tangy taste in its mouth. Worse, the Anglo-Dutch transnational has also launched a successful attack on Colgate's advertising for Colgate Dental Cream, forcing an interim injunction from the Monopolies & Restrictive Trade Practices Commission forbidding the use of the phrase Suraksha Chakra -- Ring Of Protection -- in the brand's commercials. Jayaraman himself does not acknowledge these as problems. ''We have aggressively pursued a two-pronged strategy of giving the consumer relevant quality products, and satisfying oral-health needs. The only area where we can be accused of being laid-back is in blowing our own trumpet,'' he argues.

Perhaps. Actually, Colgate hasn't really uncapped a new strategy in the marketplace anywhere near as fresh as the feeling it promises to generate. The signals are clear: in Bihar, Levers leads Colgate by 10 percentage points. And in urban markets like Delhi, Levers is breathing down Colgate's neck. Warns K.B. Dadiseth, 52, CEO, Levers, ominously: ''To increase our sales volumes in toothpaste is our objective. We are looking at share-point gains too.''

No wonder the pressure to brush up Colgate's act is mounting. At a high-powered meeting in March, 1998, four senior managers from the New York-based $9.10-billion Colgate-Palmolive -- which holds a 51 per cent stake in its Indian subsidiary -- made it clear to the local marketing team that quick responses and results were required. And the middle- and long-term targets are formidable too: Building a consumer-base of 500 million people for oral-care products by 2000, up from 212 million today. Establishing sustainable marketshares in personal hygiene and surface-care products. Doubling turnover by March, 2001.

Can Colgate cope? At one level, Jayaraman has moved, inducting several hi-flying marketers -- including executive vice-president (marketing), Ninu Khanna, 43, the former CEO of Procter & Gamble Distribution; senior media manager M. Suku, 37, who headed Levers' media buying operations before he left to join Amitabh Bachchan Corp. in January, 1996; market research manager G. Chandrasekhar, 33, who was vice-president (west) at Mode Research; and associate director (sales) Suresh Narayan, 38, who was general manager (sales) at Levers -- into the organisation. Deep down, however, what Colgate is a victim of is not merely competition, but complacency too.

For, even as it continues marketing its oral-care products to consumers on the platform of habit, Colgate has shown symptoms of being a prisoner of habit itself: the habits of pursuing the same selling-pitch, the same advertising, the same marketing tricks Explains Rajan Saxena, 48, a professor of marketing at the Narsee Monjee Institute of Management Studies (NMIMS) in Mumbai: ''Until now, no competitor could shake Colgate from its marketing inertia.'' It shows. Adds Alyque Padamsee, 65, creative consultant, McCann Erickson: ''All leaders tend to become fat and complacent. It becomes easy for a new player to come from behind, and challenge them.''

Now that Levers has done just that, Colgate must shake off the shackles imposed by the force of leadership. It is caught in a time-trap, with the complacency of yesterday's successful strategies leaving it bereft of a vision for tomorrow's growth. In a four-hour presentation to BT, Jayaraman suggested that change is, indeed, what marks the company's future plans even though he, simultaneously, defended Colgate's past strategies. BT diagnoses Colgate's habits, and the cures that Jayaraman and his team are trying to effect.

Curing The Conversion Habit

THE SYMPTONS. Its traditional strategy of targeting non-users in rural India, and converting them into consumers of toothpaste has been one of Colgate's strong points. Colgate spends Rs 4 crore every year to preach the value of using branded oral-care products to villagers, using 72 vans, each of which covers an average of three villages every day. Or 78,000 villages per annum. Using a 30-minute film as its communication vehicle, the company distributes for free an average of 7 million toothbrushes every year to initiate toothpaste-usage. And Colgate has also launched toothpaste and toothpowder in sachets -- Rs 2 for 15-gm, and Rs 1.25 for 10-gm, respectively -- as well as a special 30-gm tube priced at Rs 9 -- with a free toothbrush thrown in -- to offer an entry pricing-point for the low-spending customer.

This thrust has brought Colgate Dental Cream a distribution reach of 46 per cent in rural markets versus Close-Up's 20 per cent and Pepsodent's 12 per cent. Boasts Jayaraman: ''Colgate has single-handedly increased the number of people using modern dentrifice creams from 25 million in 1975 to 212 million today.'' In the urban markets too, Colgate continues to target the early user, conducting lessons in oral-care for over 1.20 million schoolchildren in the third and fourth grades of primary education every year. Trouble is, it is losing a larger proportion of consumers at the upper end than it is adding at the entry-level. Thus, Colgate's rural marketshare has fallen from 70.30 per cent to 68.50 per cent in the past four years, and from 62.60 per cent to 57.30 per cent in urban markets. Worse, Levers has jumped from 16.70 per cent to 22.70 per cent, and from 20.70 per cent to 22.70 per cent, respectively, in these segments.

THE JUSTIFICATION. Colgate does not believe that toothpaste can be marketed, and targeted, like other consumer softs. Its rural thrust is based on the low penetration level of 10 per cent in India's villages, based on the assumption that this amounts to a huge potential market. Indeed, with a national average penetration level of just 30 per cent -- compared to, for instance, 90 per cent in the case of soaps and detergents -- the company reasons that the conversion of non-users is the easiest way to grab sales. In fact, Colgate plans to increase its rural reach to 60,000 villages from the present 30,000, thus covering every village with a population of over 2,000, increasing the number of non-urban super-stockists in the process from 140 to 325.

EXPLAINS JAYARAMAN: ''Only 30 per cent of our population has access to modern dental care. As a leader in oral-care, this places a responsibility on us to accelerate the task of educating people on the benefits of oral-hygiene.'' In other words, by establishing an early relationship with the new user, whose conversion is, necessarily, for reasons of health. Agrees S. Raghunath, 42, professor and co-ordinator, corporate strategy and policy area, Indian Institute of Management, Bangalore (IIM-B): ''If Colgate has maintained its leadership in oral-care, it has done so by establishing and maintaining its oral health-education programmes.'' Unfortunately, in focusing primarily on new users, Colgate has let go of the customer who is willing to be converted to a new benefit-platform.

THE CURE. Awareness of the fact that consumers may be slipping out is, finally, dawning on Colgate. That's why it is, for instance, trying to shorten its time-horizons to new launches in a bid to keep pace with changing customer needs instead of relying on its own rhythms. Of course, it is also focusing on long-term brand-development by building awareness through dentists.

A marketing programme for communicating with the customer through dental professionals covers 20,000 dentists every year, through a separate retail-force, in five cities: Bangalore, Delhi, Chennai, Mumbai, and Pune. By end-1999, Colgate will expand this to 39 towns. Agrees Jayaraman: ''We have such programmes because their target-audience will be the backbone of our business in future.''

THE MESSAGE FOR MARKETLEADERS: Retaining old customers is important for the leader when competition is mounting. But changing the brand-benefits to address new customers can prove equally important for the leader -- even at the risk of distancing itself from loyal customers.

Curing The Media Habit

THE SYMPTOMS. In the fourth quarter of 1997, Levers decided to go on an advertising rampage to dislodge Colgate Dental Cream from the consumer's mind. Lavishing Rs 7 crore in just the month of October, 1997, by blitzing TV channels with Pepsodent's now-infamous 102 Per Cent Better commercials, Levers succeeded in bringing the brand top-of-mind attention. And Colgate played into Levers' hands by lodging a complaint over the reference to an ordinary toothpaste that was clearly meant to be Colgate Dental Cream, thus attracting more attention to the ad than it might have normally gained.

Despite spending 11 per cent of its sales on advertising in 1997, amounting to Rs 104 crore across 15 brands -- an average of Rs 6.93 crore per brand -- Colgate lost out to Levers, whose budget of Rs 450 crore for 75-and-odd brands -- Rs 6 crore per brand -- was actually lower. Indeed, the Rs 20 crore that Colgate spent on advertising Colgate Dental Cream brought it a Share Of Voice (SOV) of just 12 per cent, with Colgate Gel's Rs 5 crore garnering for it a SOV of 6 per cent. In contrast, the Rs 25 crore each that Levers lavished on Pepsodent and Close-Up earned it SOVs of, respectively, 17 and 16 per cent.

THE JUSTIFICATION. Volumes don't matter; positioning does, argues Colgate. Claims Jayaraman: ''With media-spend, the issue is not how much, but how well. The key to this is how much more one invests in the consumer in terms of quality of products, and oral healthcare-education.'' Is this the voice of orthodox marketing? Or the sound of the post-hoc rationalisation of a failure to match a rival in the communication market? Scoffs Richard Usuquen, 35, vice-president (marketing), Colgate: ''Levers is spending ridiculous amounts. We don't want to do that because we want to sustain our leadership, which we cannot with tactical measures.''

But neither has Colgate attempted to change tack in response to the crucial shift that its rival has engineered in the product-category. Thus, Colgate Dental Cream has not abandoned its advertising platform of ''prevention of bad breath and tooth decay'' over the past two decades even as Levers has succeeded in transforming toothpaste into a lifestyle product. As a result, Colgate was forced to play catch-up with Colgate Gel, among others, without succeeding in differentiating the brand-extension sufficiently. And it chose a similar brand appeal, summed up in the line Fresh Breath That Goes On And On -- virtually identical to the rival brand's fresh breath pitch. Concurs Vandana Luthra, 27, assistant vice-president, Merrill Lynch: ''It's a me-too product.''

THE CURE. Behind Colgate's recent media strategy is the emerging awareness that the toothpaste market has been splintered into a habit-driven, brand-loyal segment, and a value-driven, price-conscious segment, where consumers are prompted by experiment and excitement when making choices. For instance, its commercials for Colgate Fresh Stripe have shifted the appeal from healthy living to a zingy lifestyle.

THE MESSAGE FOR MARKETLEADERS: A defender's unchanging message needs more media-exposure -- not less -- to be heard amidst the excitement generated by a rival's launches. And repackaging the form is essential to prevent viewer- and reader-fatigue.

Curing The Brand Habit

THE SYMPTOMS. Three years ago, realising that Levers was snatching sales from under its nose, Colgate realised that it would have to launch variants aimed at meeting specific customer needs if it wasn't to lose its loyal buyer-base. Over the next five years, it debuted Colgate Total (1993), Colgate Gel (1994), Colgate Calciguard (1994), Colgate Fresh Stripe (1997), and Colgate Fresh Mint (1997), with propositions ranging from the therapeutic (Calciguard and Total) to the cosmetic (Gel and Fresh Stripe). Their collective marketshare, however, stands at a mere 11.80 per cent.

In 1994, Colgate also acquired the well-known Cibaca brand from the erstwhile Hindustan Ciba-Geigy, but allowed its marketshare to shrink from 4 per cent to 2.30 per cent, focusing only on rejuvenating Cibaca toothbrushes. By contrast, while Levers' Close-Up accounts for 17.80 per cent of the market, Pepsodent has a 7.60 per cent share, and its therapeutic cousin, Pepsodent-G (formerly Mentadent-G), has garnered 1 per cent within two years of launch. The inescapable conclusion: Colgate's flanking strategy hasn't protected its flagship.

THE JUSTIFICATION. Why has Colgate chosen to retain the Colgate brandname, only tacking on extensions, despite the obviously-different positioning of its new brands? Argues IIM-B's Raghunath: ''Colgate has achieved penetration through continued innovation by linking the health of consumers with its research findings and technological advances.'' Which is why the cosmetic appeal of extensions like Gel and Fresh Stripe sit uneasily with the core proposition of the Colgate brand.

As for Colgate Total, it has been suffering from unrealistic pricing, retailing at Rs 29.25 per 100 gm, amounting to a premium of 67 per cent over the average of Rs 17.50 per 100 gm. Admits Usuquen: ''Because of its price, Total is targeted at just 5 per cent of the population. We launched it at double the price of Colgate, but we've brought down the price by about 25 per cent since then.''

Even so, Colgate is confident that technological superiority, translating into what it claims is a better product, will, eventually, win over customers. Warns marketing guru Siddharth 'Shunu' Sen, 58: ''Technology and, therefore, a better product, is certainly a driver. But the strengths should not only be rational, but also emotional.''

THE CURE. With a sizeable portfolio of variants to dip into, Colgate has a wide choice of products at its disposal to address emerging segments, and the urban customer's desire for experimentation. That is just what the company plans to do, deploying products -- like Colgate Sensitive Care Toothpaste, Colgate Gel Kam Gel, Colgate Perio Gard Mouthwash, Colgate Total Plax Mouthwash, Colgate Oragard-B Mouthpaint, Colgate Platinum Teeth Whitener, and Colgate Pho-Flur Daily Oral Rinse -- to meet specialised needs. Being sold only by dentists and chemists at present, these brands will, eventually, be marketed as consumer products with over-the-counter advertising.

THE MESSAGE FOR MARKETLEADERS: Its success often tempts a leader to retain its links with an old formula when it tries to change. Making a complete break with older associations -- however successful they were -- is, perhaps, more effective.

Curing The Portfolio Habit

THE SYMPTOMS. Although oral-care accounts for 31 per cent of Colgate's business globally, it contributes more than 60 per cent to the company's turnover here. And the company squeezes out 80 per cent of its profits from Colgate Dental Cream alone. But instead of growing the non-oral-care segment to ensure support for the core business when it came under pressure from Levers, Colgate actually allowed its marketshares in many of these categories to shrink.

In the Rs 390-crore shampoo market, Colgate's Halo and Palmolive brands used to command a share of 20 per cent in the 1980s. Now, despite the high-profile launch of Optima in October, 1995 -- earning a marketshare of 6 per cent for the brand in 1996 -- Colgate's collective shampoo marketshare remains at 6 per cent, with Optima's share having dropped to 3 per cent. In fact, even as the Rs 650-crore Procter & Gamble Group invested Rs 25 crore in building its Pantene and Head & Shoulders brands in 1997, Colgate retreated.

THE JUSTIFICATION. ''Colgate's main problem is that it has focused mainly on one segment, and that too with just one brand,'' complains Merrill Lynch's Luthra. So long as detergents-and-soap-manufacturing was reserved for the small-scale sector, Colgate did not want to market products it could not manufacture itself. True, it entered the soaps market as soon as the sector was dereserved in the late 1980s, but never worked sufficiently on either the positioning or the image of its Palmolive brand. And, despite launching shampoos, the company shifted to a lower gear every time there was a shift in the marketplace.

For instance, when Budget 97 levied excise duties on a percentage of the maximum retail price instead of the ex-factory price, Colgate quickly concluded that since this would lead to higher prices and a slowdown in growth, investing in its shampoo brands at that point would be pointless. Reasons Jayaraman: ''The shampoo market did not grow as much as in the previous year given the heightened level of adspend. We are waiting for the right time to make our next strategic moves.''

In other words, wait and watch. Says marketing professional Manohar David, 56: ''In consumer products, memory is very short. Even a well-entrenched brand can take a dive in the absence of regular reminders.'' This has not only hurt the company's marketshares, it has also robbed Colgate of the cushions that might have permitted higher investments in its core business as well.

THE CURE. Finally, Colgate is attempting to correct its under-investment in building its non-oral-care brands. In hair-care, while Optima awaits a new thrust, Halo will be relaunched this year. In skin-care, however, the company plans to barely retain support for Charmis Cold Cream which, despite dropping from 21.20 to 9.70 per cent in terms of urban marketshare over the past four years, continues to be a profitable brand.

Importantly, Colgate is looking at new launches too, such as the Mennen deodorant range as well as liquid detergents like Ajax. And having launched Axion dishwashing paste in November, 1996, the company has already conducted a Rs 4-crore sampling exercise to convert users to the new product.

THE MESSAGE FOR MARKETLEADERS: When markets are flat and competition is mounting, new opportunities cannot be ignored even at the risk of diluting product focus. If the entry-barriers to the core product are low, growth must come from other markets and products.

COLGATE'S PREDICAMENT IS CLASSIC. Having assiduously built its strength in a particular product-category, a particular brand, and a particular positioning, it is loath to abandon them. But to staunch the flow of its customers to competitors, widen its appeal it must even as it cannot afford to jettison its original USP.

Sure, the marketing-driven top management that Colgate now has may be just the team for the job. And it will need its entire attention since Jayaraman's parallel appointment to the post of vice-president and general manager of Colgate-Palmolive Worldwide -- which was announced in March, 1998 -- will prevent him from focusing on India alone. It could even see him, at some point in the future, elevated to the parent company's ranks.

What the J-Team must remember is that only by resolving its basic contradiction between yesterday's strategy and tomorrow's strategy can Colgate scrape off the tartar that is beginning to gather on its prospects. And regain the ring of protection that surrounds a marketleader.

Issue Contents  Write to us  Subscriptions