Business Strategy and Marketing Analysis of Colgate-Palmolive Company

This report provides an in-depth analysis of the Colgate-Palmolive Company, examining its strategic marketing, organizational structure, and business strategies. The report delves into the company's history, core values, and global presence, highlighting its commitment to quality, innovation, a...Read More

An in-depth research report of Colgate-
Palmolive Company.

1. Abstract
Colgate Palmolive, the American manufacturer and distributer of consumer goods in
personal hygiene, healthcare, household cleaning and very recently veterinary care is one of
the largest companies globally and has its presence in the majority of nations. The more than
2 centuries old company has their core values based on three main pillars – global teamwork,
care for the customers community and environment and continuous improvement. Global
strategies and local strength is the basic business strategy followed by the iconic company.
This report analyzed the intricate strategic marketing aspects of the company in terms of
communication mix, marketing strategies, logistics, organizational structure, market
dynamics, corporate social responsibility etc. Sustainability and commitment towards
improved quality, and innovation are the strategies which will protect the competitive
advantage of the company, and as has happened in the last 2 centuries, the company is likely
to retain its profitability and market dominance in the future by keeping their focus on their
innovative and multi domestic business strategies.

2. Table of Contents
1. Abstract..................................................................................................................................2
3. Introduction............................................................................................................................4
4. Analysis..................................................................................................................................4
4.1. Importance of the company.............................................................................................4
4.2. Organizational Structure..................................................................................................5
4. 2.1. Neoclassical Organization Structure........................................................................5
4. 2.2. Coordinating System................................................................................................6
4. 2.3. Control System........................................................................................................6
4.3. Communication mix........................................................................................................6
4.4. Marketing Mix.................................................................................................................7
4.4.1. Product......................................................................................................................7
4.4.2. Price..........................................................................................................................7
4.4.3. Place..........................................................................................................................8
4.4.4. Promotion..................................................................................................................8
4.5. Distribution & Production...............................................................................................8
4.6. Logistics..........................................................................................................................9
4.7. Quality Management.......................................................................................................9
4.8. Service Aspects.............................................................................................................10
4.9. Porters Five Forces Model for Colgate Palmolive........................................................10
4.10. Multi-domestic business strategy................................................................................11
4.11. Corporate Social Responsibility of Colgate Palmolive...............................................12
5. Conclusions..........................................................................................................................12
6. Recommendations................................................................................................................13
7. Bibliography.........................................................................................................................14

3. Introduction
Colgate-Palmolive Company is a United States based global company for consumer
products. Founded in 1806, by William Colgate, this more than 200 year old company is
iconic to say the least in personal care, healthcare and cleaning agents. Headquartered in Park
Avenue, New York, the company that employs over 35,900 employees as per December 2017
had very humble beginnings. In 1806, a devout immigrant from England, William Colgate
started a candle, starch and soap factory under the name of William Colgate & Company.
Though the company underwent drastic changes in the subsequent years, what remained
constant was their undeterred commitment towards quality and performance. In 1896 the
company launched the first toothpaste and in 1898, Palmolive soap was introduced (Colgate-
Palmolive, 2018). The twentieth century witnessed the meteoric rise of the company in
product variety, innovative product lines and its focus on quality.
As of December 2017, the operating income of the company was US $ 3.589 billion
and the net income was US $ 2.024 billion (Sec-Gov, 2017). The revenue generated was US
$ 15.454 billion. The company in its last 212 years of operation is a storehouse of a large
number of iconic brands namely, Colgate, Palmolive Soap, Protex, Brite, Sanex and others.
In total, the company has more than 40 brands in its own kitty.
The future seems bright for the company as Colgate – Palmolive understands its
responsibility towards the market, its consumers and its dedication to quality. The company is
continuously working to innovate and improve the production, and is also committed to
creating products which will improve health and will leave a minimal impact on the world
around (ColgatePalmolive, 2018). The future strategy of the company is to bring about safe,
ethical, environmentally conscious high quality products to the stores to retain and attract
more loyal customers in their midst.
4. Analysis
4.1. Importance of the company
Colgate Palmolive is a very important company globally due to its host of high quality
products in personal hygiene, home cleaning, healthcare and recently its venture into the
veterinary products. The company for the past 2 centuries have delivered products which
have promoted cleanliness, hygiene and good health worldwide and this is where the

importance of the company lies. Its host of brands and the associated products have served
consumers around the world and the company has worked with several developing
communities to spread awareness on the importance of basic hygiene maintenance (CP,
2017). In the words of the company itself, they have innovated globally, brought efficiency
and effectiveness and succeeded with their global customers and have effectively customized
their offerings depending on the market in which they were serving – developed nations or
developing ones.
The company believes in one simple strategy – global strategies and local strength.
This depicts that irrespective of the fact that the company is global, and has presence in
almost all the nations of the globe, they have tweaked their offerings suiting the taste,
preferences and needs of the local markets. They have effectively utilized and analyzed the
local needs and developed products and community programs to help mitigate those needs
(CP, 2017). They have created jobs globally, and this has subsequently helped a large number
of economies. Therefore the key advantage of Colgate Palmolive going global is that, the
nations and communities from all around the globe will get to experience and use their host
of products for their benefit and for the uplift-ment of general health and hygiene.
4.2. Organizational Structure
4. 2.1. Neoclassical Organization Structure
Colgate Palmolive is using a neoclassical organization structure. As the company is
huge and located in a number of nations and has global presence, having a specific
organizational structure might not serve the purpose, as the organizational structure adopted
for the head office in New York, United States might not work in a nation like India, which
believes in different hierarchies and the work culture is different. Therefore, this complex
workflow patterns, different networking dynamics, changing workplace behaviour all have
called for a neoclassical structure which gave rise to complex and dynamic network structure
and the presence of a dynamic organization, where the business decision makers and
executives are linked to one another through virtual system, and can take real time decisions
even when they are geographically distant by thousands of miles (Ambrosini & Bowman,
2009). The key advantage of this structure is that, it is relevant, it is adaptable and it brings
together all the executives from different time zones together and makes decision making and
problem solving fast and immediate (Orcullo, 2007).

4. 2.2. Coordinating System
Colgate Palmolive utilizes coordination by plan. For a number of years, the company
used to use the coordination by standardization. But as the company has a long history of
international association, and more than half of the total sales of the company are generated
outside United States they soon understood that, having a regional approach would help in
supporting the cultural values, and this would focus an individual business unit autonomy, a
spirit of entrepreneurship and will enable the business units to act locally to the different
factors which dominate them. Colgate Palmolive manages geographic divisions by a
specified group named as the International Business Development Group which sets the long
term company plans, goals and manages the global coordination of projects and the
communication (Daft, 2015). The key advantage of this is that, the company can develop
products and services more suitable for the local tastes and preferences and this helps in more
profitability and popularity.
4. 2.3. Control System
Colgate Palmolive uses the clan control system, which depicts that the most optimum
manner in which the business can be done is through developing certain shared values
amongst the employees. The key advantage of this system is that it helps in developing a
common collective ethos which impacts the workplace behaviour of the employees (Coberly,
2017). And this type of control depends on the beliefs, the values, and the norms in order to
control the behaviour of the employees. The main goal of such a control is that, employees
must be socialized to relate to the organizational vision and subsequently align their day to
day operations to achieve such vision (Laasch & Conaway, 2015). This clan control also
empowers individual employees and makes them feel valued about how each of them can
contribute to achieving the overall strategic vision. This helps the employees to feel cherished
valued and positively impacts the job satisfaction as well.
4.3. Communication mix
Colgate Palmolive has been using a host of communication strategies to directly
interact with their customers and to provide the products to their end customers. Advertising
form a key aspect of this communication mix. In nations like India, where celebrity following
is huge and brand endorsements are a proven method to guarantee a loyal customer base,

Colgate Palmolive has employed famous faces from cinema and sports to become their brand
ambassadors. Colgate Palmolive does direct selling as well, as they have a very extensive
distribution channels in all districts and rural areas, and organic promotional strategies help
them to take their products to their customer base (Ozer, Subramanian, & Wang, 2015). Due
to the large product lines and variety of products, Colgate Palmolive enjoys a high visibility
in stores, and automatically through this presence dominates over other brands. Due to the
effective advertising strategy whereby Colgate Palmolive and high quality product, it directly
connects to its customers. Consumers after using the products for generations have high
levels of faith in the company and this enables repeat purchase and sustained dominance of
the company (Graeme & Ruth, 2007). Colgate Palmolive understands the importance of local
preferences and values, and has customized its sales strategies to suit the needs and wants of
the local individuals. This acts as one of the key success strategies for the global brand.
4.4. Marketing Mix
4.4.1. Product
Colgate Palmolive deals with a large number of brands all of which are focused on
oral hygiene, personal hygiene, cleanliness, healthcare and very recently veterinary offerings.
Therefore, the host of products which belong to a total number of brands exceeding 50 almost
serves as the key for the company. As the name of the company suggests, Colgate Toothpaste
and Palmolive Soaps are the two key products having a wide variety in terms of uses,
preferences, tastes and the other popular products are Protex, Sanex, Brite, Gard, Irish Spring,
Ajax, Tahiti, Fluffy etc.
4.4.2. Price
As the company is global, having its presence in a large number of nations, the
pricing strategy is moderate but the actual pricing across the nations cannot be projected in
this report. The product pricing of the brands are moderate and are affordable by the majority
of people (Wilken & Sinclair, 2011). Colgate Palmolive has similar variants under the same
brand, and the packaging is also done as per the affordability of consumers. Where big family
packs are easily purchased by individuals having moderate to high disposable income, small
packs are more suitable for consumers hailing from modest income groups. Pricing is done in
a manner, that no consumer feels as if they are obtaining less value for the money they are
spending.

4.4.3. Place
Colgate Palmolive’s distribution strategy is so exhaustive, that distant rural areas also
have a solid availability of its products. Along with presence in large supermarket chains, and
other grocery outlets, the products of the company are available in small shops present in
rural areas (Kumar, 2008). Therefore, this distribution strategy of Colgate Palmolive stands
out and is a key aspect behind its dominating success.
4.4.4. Promotion
As already mentioned advertising forms a key promotional strategy for Colgate
Palmolive, and in advertising they actively involve celebrity endorsements. Along with this,
holding kiosks at malls and trade fairs, directly approaching consumers through direct selling,
social media consumer engagement strategies are some of the promotional activities which
the global giant engages in. Attractive packaging is a strategy adopted by the company, and a
specific colour scheme has been given to individual brands, by which consumers can relate
more to the products. Namely, for Colgate toothpaste, the iconic colour scheme given is red
and white. When advertisements in audiovisual medium or print medium is selected, care is
taken that the dominant colour scheme of the brand is selected to create a distinct brand
association in the perception of the consumers associated to the specific product.
4.5. Distribution & Production
Colgate Palmolive is using an intensive channel of distribution, whereby the company
sells through as many outlets as is possible, so that consumers can encounter the concerned
product wherever they go starting from drug stores, to supermarket chain, to malls, to
individual small shops etc. This distribution strategy is effective as it gives the maximum
brand and product visibility and therefore, keeps the brand on top of the customer perceptions
(Lovelock, 2011). Intensive distribution strategy is extremely beneficial for products which
need repeated replenishment and the core advantages are increased product awareness,
immediate impulse buying and higher revenue. The intensive channel results in taking the
products from the Manufacturing site to the warehouses. Such products are again distributed
from the 1st level warehouses to 2nd level warehouses, and from there to different retail joints.
The overall sketch is as follows;

Figure 1: Intensive Distribution Channel
4.6. Logistics
Colgate Palmolive has a very strong yet silent global supply chain strategy tied to its
financial strategy. The company intends to protect its gross margin, and at the same time
reduce its cost of overhead so that the surplus can be invested in the new products and
advertising, and as a result the operating profit increases. The four stages of the global supply
chain strategy are – elimination of the regional silos of supply chain; make the procurement
system go global; investing in the right customer service and the logistics strategy and lastly
giving immense importance on support (Gunn, 2015). The manufacturing configuration
followed by Colgate Palmolive is multi-domestic manufacturing and the company follows
and invests in information technology heavily for quick and convenient production, for
improved management of inventory, for improving the communication with the suppliers
which all get translated to improved customer satisfaction.
4.7. Quality Management
Colgate Palmolive has their own “Global Colgate Quality Standards” which are to be
met in manufacturing, in distribution as well as design. Along with this the company ensures
that its product offerings meet and exceed all the consumer expectations and government
regulations worldwide (Colgate, 2017). The commitment of the company in quality and a
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continuous focus on improving such is evident from the manner in which the company is
operated.
4.8. Service Aspects
Colgate Palmolive is conducting their strategic service management by optimizing the
after sales service by providing improved quality products and conducting their sales through
local channels and partners, who are able to mix well with the customers of a specific market
and the customers also as a result feel more relevant and can depend more on the products.
As already mentioned Colgate Palmolive has in place several specific policies when it
comes to maintaining quality, following best practices, commitment to quality, following
ethical production norms etc (Colgate Palmolive, 2018). Apart from these global quality
standardizations are followed by the company along with governmental regulations and
standardizations.
4.9. Porters Five Forces Model for Colgate Palmolive
The following is the model and the strengths of the forces for Colgate Palmolive;
Sl.
No
Forces Strength Explanation
1 Threat of New Entrants High – Moderate New entrants can enter the
market with lower price
points, and create new value
proposition to the consumers
2 Bargaining Power of Suppliers Moderate Powerful suppliers can
negotiate and exercise their
right to obtain higher prices.
At the same time Colgate
Palmolive being a global
giant, the suppliers would not
lose such a big client.
Therefore, the total force is
moderate
3 Threat of Substitute Products Moderate Colgate Palmolive needs to be

service oriented and should try
to attain further customization
and can look for means to
increase the switching cost of
customers
4 Bargaining Power of
Customers
High The switching cost is
practically zero for customers,
but as Colgate Palmolive is
around for centuries the brand
strength is extremely high.
Still the company needs to
look for means to hold on to
the customers
5 Competitive Rivalry High Competitive rivalry is high
making the pricing very
competitive. Main competitor
is Pepsodent Toothpaste for
the key product of Colgate
Toothpaste of Colgate
Palmolive
4.10. Multi-domestic business strategy
The key benefit of using such a strategy is it leads to very specifically targeted and
customized strategy which connects the company directly with the market. For a typical
multinational company having presence in a large number of nations, it is important that the
individual markets connect with the brand and it might so happen that the target customers
from each market can perceive varied benefits from the same product. If such occurs it is
important for the company to create different marketing and communication strategies to
promote the products differently in different nations (Cavusgil, Knight, Riesenberger,
Rammal, & Rose, 2014). And a multi-domestic strategy comes extremely handy in such
situations, as has been the case for Colgate Palmolive.

4.11. Corporate Social Responsibility of Colgate Palmolive
Colgate Palmolive is extremely dedicated towards improving the community health
and for protecting the environment in which they are operating. The company takes great
importance in its corporate social responsibilities and has launched several health programs in
developing nations for improving the overall community health. Amongst these, the notable
ones are – the global program of bright smiles and bright future, several oral health programs,
the clean hands initiative and the good health initiative by the company, the celebration of
hand-washing day etc. The company is working with several healthcare ministries, the public
health executives, clinics and local schools around the world to educate millions of
individuals and children regarding the health benefits of being hygienic and practice certain
basic tenets of hygiene maintenance. Some of the other initiatives are – women’s games,
giving kids a smile, the Starlight Children’s foundation, the health fund for children,
scholarships for several ethnic minorities around the globe and others (Colgate Palmolive,
2018). The sustainability initiatives of Colgate Palmolive are as follows – Improving the
health of employees; encouraging healthier lifestyles for employees and families; ensuring a
safe and healthy workplace; providing education and spreading awareness on financial
planning; expanding the bright smiles program to reach 1.3 billion children; investing in
improving the environment for thousands of communities worldwide; partnering with animal
shelters and expansion of “Colgate Cares Day” (ColgatePalmolive, 2018).
5. Conclusions
Today’s business world is characterized by rapid technological advancements,
changes in regulatory environments, rapidly evolving expectations of the customers, ever
rising competitive rivalry and changes in the manner of doing business. In such a dynamic
environment it becomes the imperative for every organization to adopt specific strategies by
which its competitive advantage is secured and it sustains its profitability and market
dominance. Colgate Palmolive is one such company, which has effectively done so for the
past 2 centuries. The iconic brand has effectively strategized its marketing and operations and
given rise to high quality high value products which have sustained its customer bases and
market dominance. In this paper, a humble attempt has been made to analyze its marketing
operations to understand how the organization has enabled to sustain its profitability and
popularity over the years. The scope of this paper lies in its effectiveness in helping the

readers gain comprehensive understanding about marketing operations of a hugely successful
company and gain inputs about being a socially responsible and profitable company.
6. Recommendations
Innovation and creativity are the two pillars which have helped Colgate Palmolive in
the past to come up with innovative and high quality products which created the market for
personal hygiene and helped in mitigating the latent needs of the consumers. The company
stayed ahead of the competition in anticipating the needs of the future market and delivering
the products much before its competitors. For sustaining this streak of performance, focus on
innovation and creativity should be undeterred and the company should continue its
investment in R&D to come up with new products and exceed customer expectations in the
future.

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