Case- P&G v/s Colgate - 2003: An Exercise in Competitive Dynamics

Harshal Gadge / X01012

Overview-

This exercise describes the competitive dynamics situation faced by two large companies,
Colgate – Palmolive and Proctor and Gamble in oral care business. Both of them introduced a tooth
whitening solutions and anticipated to sustain their competitive lead. P&G introduced its solution in
August 2000 and Colgate followed it in September 2002. This was followed by another introduction
by Colgate April 2003. The intensified the competitive battle between the two companies. The
participants are required to get into the shoes of either Colgate or P&G to think through a competitive
strategy. The case provides information on the estimated demand for tooth whitening solutions, gains
and losses of the two companies, R&D expenditure, players in the oral hygiene market and legal
framework for complaining to facilitate the analysis of the situation and decision making by the
participants. The case can be used in modules on competitive strategy, innovation, and economics of
strategy.

Summary-

The problem of tooth discoloration is a widespread one. This problem is faced by all
members of the society; poor, rich, kids, adults, male and females. So there is a great business
opportunity. Also there are some high demanding careers, female teenagers are more cautious
about the yellow teeth issues.

The dentist were charging very high charges of about 1000$ and dental trays were available
at the cost of 400$. This was quite an expensive treatment. As a result a lot of whitening toothpastes
were introduced by all competitors at very low price. But it was not able to deliver the desired
results. The whitening solutions available before 2000 were not standardized and imperfect
concentration of that could lead to sensitivity issue. Also the common people were unaware or the
treatment was not in their budget.

P&G gained the first mover advantage with the launch of Crest whitestrip in August 2000. In
only seven months it was able to sell 140 million strips. By this product P&G was trying to regain its
lost leadership in oral care from Colgate. In September 2002 Colgate launched Colgate Simply White.
This was quite similar to the P&Gs product. It was priced at one third of the rate of Whitestrip. Thus
taking majority of market share back. After this in 2002 only P&G launched speciality toothpaste for
women in attractive packaging. Again in April 2003 Colgate launched Colgate Simply white Night.
This was again priced competitively way below the price of whitestrip from P&G.

The companies like colgate, P&G, unilever are having products for each aspect in oral care.
They all have testing facility, hefty promotional budgets, R&D facilities. Any new product launched
by one of the competitor is challenged by a rival product in very short period of time. This is due to
the interfirm rivalry between them. The attacks on rival products are direct and are generating high
motivation to respond. The awareness has to be high in oral care industry. High awareness strategy
increases the speed of the competitors response, which is seen in the above case.