Introduction Of the Company: Cottle Taylor
Philadelphia based Cottle was founded in 1815 as a hand-soap manufacturer, which by the year 2009 was catering to three consumer-product categories: Oral care, Personal Care and Home Care. Faced with declining U.S revenues, Cottle had looked to emerging markets to offset domestic losses thus adopting geographic expansion, sales of high margin products and new-product development as key drivers and extending its operations to North America, Europe, Latin America, Asia and Africa. The company believed that hiring local talent is critical to maximizing international sales and driving country specific innovation. The company’s US headquarters relied on strategic advice and research on the Indian Market. In the Indian market which is the area of focus in this case, operations was conducted through a subsidiary- Cottle India and focused on manufacturing toothpaste, toothbrush and toothpowder.
Issues / problems People in India are not very concerned with oral hygiene. Cottle has been working on informing and educating the Indian culture on the importance of oral care. Cottle wants to expand to new product development but the Indian culture has not fully adapted to the use of low-end and mid-range toothbrushes.
They live on less than $2 a day and have low discretionary spending. The population in India has grown but so has poverty. Cottle faces a tough market with very low spending capacity.
Overall penetration of dentists in India was very low. In 2005, the majority of Indians had never visited a dentist, and just 2% visited one regularly. More than 50% of rural India did not use a toothbrush to clean teeth.
Logical analyzing of problems:
Despite of the economic growth of India which served as the basis of Indian market being viewed of great scope, what was critical was to notice that only 3 of the 37 states and union territories namely Maharashta, Uttar Pradesh and Andra Pradesh contributed to 30 percent of India’s total GDP while more than 80 percent lived on less then $2 per day.
In rural India which accounted for 78 percent of the total Indians, access to health care was limited, they were living on inconsistent daily or weekly wages and thus were extremely price sensitive and despite of that accounted for 64 percent of total Indian Expenditures.
In semi urban and rural areas, consumers purchased most household products from independent grocery stores and these customers mostly preferred buying daily disposable small sized products at affordable prices and Patel did not see value in building relationships with seed distributors after a study indicated that every village or small urban outlet contributed only $150 in revenues yearly while, Cottle had invested in cultivating large distributor and supermarket relationships expecting high rising income as urban consumers on the were into higher disposable incomes, less price sensitive and shopped mainly at convenience stores. This lead to issues where many distributors handled multiple manufacturers and product lines thus did not give the much needed attention to Cottle’s toothbrushes.
Communication was a drawback at rural areas where distributors did not speak the local dialect.
Rural retailers found inventory planning difficult as sales were correlated with daily and weekly income of the customers and since wages of day laborers fluctuated highly due to changing factors such as job availability and weather.
Many people in rural area did not associate dental problems with improper dental care rather attributed it to bad eating habits or genetics and thus Indians residing in rural areas were more likely to refrain using oral care products then their urban counterparts.
More than 50 percent of the people in rural India did not use toothbrush to clean the teeth while amongst brushers, people who followed brush replacement in every three months was very low thus reducing sales.
Cottle’s competitive advantage in toothbrushes helped maintain profit margin while revenue from toothpaste and toothpowder reduced. Research indicated that only a small subset of wealthy consumers would afford a battery operated toothbrush while majority of Indians wanted to upgrade from home grown dental remedies to inexpensive modern oral care products.
The US headquarters focused on 3 key messages : 1. Persuading customers to buy brush for the first time 2. Increasing the incidence of brushing 3. Persuading consumers to upgrade to mid range or premium range products. While it was later recommended by Patel that in the Indian scenario, major focus should be on advertsing the first two messages rather than the 3rd message even though Lang was wanting to focus on the third message. Patel however understood the backdrop of the same due to lack of awareness in this country.
Solutions:
Securing early market share in emerging markets. To achieve a toothbrush unit growth rate of 25-30% in 2010 in India. Specially, when it has a
competitive advantage over its competitors as Cottle has invested so much in toothbrush manufacturing capacity and productivity over the time that it can meet demands without relying on import processes.
To educate consumers from semi urban and rural areas about oral hygiene so as to increase the oral care sector’s growth rate and in turn their own company’s market share by being the pioneers in that field as it has already been recorded that amongst rural residents, those exposed to the campaigns were twice as likely to adopt toothbrushing within a year than those who had not been exposed.
Having the highest share in market. They could now create demand for their products and can make consumers habituated of their product. This would help them to manipulate the consumers buying habits. They also have the benefit of being the only providers of the Battery operated toothbrushes and existing loyal consumer base can be utilized so that they can be transformed to high end product users.
Brinda Patel should target the low-end manual and mid-range manual toothbrushes rather than targeting battery operated because the sales of battery operated toothbrushes are low considering its high price and also due to majority of Indians wanting to upgrade from home grown remedies to inexpensive modern oral care products.
Indian toothbrush market can be segmented on bases of the cultures. India is country of various cultures and people even today follow their culture, like the one of using neem twigs for brushing teeth. So the marketers of Cottle can identify such people and can educate them about the utility of their products through campaigns and workshops or by collaborating with IDA. .
Cottle should aim to establish and reinforce brand awareness mainly by targeting the unexplored segment. It should enter the un-penetrated market
with basic models and competitive prices and once brand awareness had been established and distribution networks were in place, they could introduce more profitable lines and more advanced products.
Cottle Should adopt various incentives to increase the sales by educational programs, free samples in rural india, mass media campaigns, conventions and dentist workshops in order to persuade consumers to brush for the first time and increase the incidence of brushing.
They should establish a network of loyal distributors and with the help of retail outlet personnel, try to enhance the visibility of their products to the consumers. They should encourage their distributors to interact in local dialects in rural parts of the country.
Advertising campaigns should all be focusing on delivering importance of brushing, encouraging first time users and motivating them to follow IDA’s recommendation on brushing twice a day and to replace their brushes every 3 months which can help increase their sales.
They could diversify into the Indian market by shifting their focus from only toothpaste, toothpowder and toothbrushes to ancillary products like mouth wash and dental floss at least in the urban market. 