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The Story behind Colgate-Palmolive’s Commercial Strategies

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Apr. 6 2016, Updated 4:07 p.m. ET

Market share

Colgate-Palmolive’s or Colgate’s (CL) global market share is ~45%. Colgate is the leading toothpaste compared to Oral-B (PG) and Close-up (UL), especially in emerging markets like India. Although Colgate was a little late entering the rechargeable toothbrush segment, the company holds global leadership in the entire toothbrush category, including manual toothbrushes, according to Ian Cook, Colgate’s Chief Executive Officer.

Colgate believes in forceful commercial strategies to increase market share against competitors. The mouthwash segment is the smallest segment in the oral care category. However, mouthwash segment’s global market share is ~17%.

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Professional endorsement

The company’s oral care and Hill’s business have a strong professional endorsement. This is because Colgate toothpastes are recommended by most of the dentists worldwide. Also, veterinarian recommendations to use Hill’s products for sick pets are more than double that of the nearest competitor.

In its Hill’s business, Colgate is planning to introduce a new wearable band for pets that will help vets and owners monitor pet behavior. This is thus an interesting space because it will not only help pet parents maintain and manage their animals but also give Colgate a competitive edge. Clorox (CLX) and Kimberly-Clark (KMB), notably, do not have a presence in pet nutrition.

Commercial investment

The company continues to focus on successful pricing and margin planning, with significant consumer engagement to build brand reputation. In addition, Colgate aims for increased commercial investment in 2016, with partners at the retail level. The company is also working hard to provide value at all price points. For example, in India, toothpaste prices are as cheap as $0.05, while in other places, prices can be as high as $5.

Colgate-Palmolive represented 0.3% of the iShares S&P 500 Value ETF (IVE) as of March 31, 2016.

Keep reading for our discussion of how Colgate is extending its reach through digital media, especially in Latin America.

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