Bus 162: Case Study 1 -- Colgates Distasteful Toothpaste 1.

Identify the major strategic and ethical issues faced by Colgate in its partnership with Hawley and Hazel. Answer: Colgate made the decision to acquire fifty percent of Hawley and Hazel as a way to quickly get a large share of the Asian market without having to build its own plant. Strategic issues included increased growth, sales activity, and profits. The ethical issue confronting Colgate was that it promoted the brand label Darkie toothpaste in foreign markets. The use of Al Jolson to promote the product brand Darkie had ethical and legal repercussions for Colgate and Hawley and Hazel. This campaign was widely criticized in the United States, and Colgate was forced to develop a strategy to repair the damage it suffered with consumer perceptions of the product brand Darkie toothpaste. Colgate proposed that the brand name be changed to Darlie, Darbie, Hawley, or Dakkie, and that a new logo be developed that included a dark, nondescript silhouette and a well-dressed black man. 2. What do you think Colgate should have done to handle the situation? Answer: Colgate should have been more aware of the implications of the product and its marketing campaign from the start. Once the problem became apparent, Colgate should have moved quickly to make changes to both the product name and the promotional campaign associated with it. 3. Is it possible for Colgate and Hawley and Hazel to change the toothpastes advertising without sacrificing consumer brand loyalty? Is that a possible reason for Colgates not responding quickly to domestic complaints? Answer: The promotional mix along with the advertising must be changed to reflect a more positive image of the product brand. Sales promotions, advertising, public relations, and personal selling efforts must be pursued to recapture market share and growth in the future. A reactive strategy is not the solution however a more proactive approach should have been pursued by management. These types of issues must be pursued and anticipated to accommodate the needs of the consuming public. This can be related to the Firestone case where a combative strategy was utilized and would not be recommended. 4. In the end, was a no management rights clause good for Colgate? What could have happened during the negotiations process to get around this problem? Answer: The no management rights clause was not right for Colgate. As part of negotiations, Colgate should have maintained management rights to make any decisions relevant for their marketing strategy of this product brand. It is important to maintain management rights when acquiring a competing firm. Colgate should have maintained a social responsibility with an ethical code policy to be enforced with all subsidiaries.