Colgate Profile
The company was founded in the year 1806 and is the current global leader in the oral hygiene products market. The company reported global sales of $15, 327 million in the year 2014, with an operating profit of $6,675 million. The company enjoys a global market share of 44.4% with active operations in 234 countries.
Significant Trends in the External Forces
Political trend
The political environment within which Colgate has been operating is varied. As mentioned, Colgate is operating in the global market. However, the major market for its products has been the United States and Europe. These two regions have experienced a prolonged period of political stability. Other than the ongoing political strife in Ukraine, Colgate has enjoyed a peaceful market in Europe. The political environments in other markets such as Egypt, Syria, Kenya, and Nigeria have been affected by political instability in recent times. This is a threat.
Economic factors
The economic environment has been marred by a number of challenges in the recent past. The United States, the largest market for Colgate’s products, was affected by the 2008 economic recession that reduced the purchasing power of its customers. Europe and other markets around the world were also affected. However, these regions have recovered from this recession, and this has stabilized the sales of the firm. This is an opportunity.
Social environment
The social environment for this firm has been varied in many countries. There is a consistent rise in the size of the middle class in many Asian and African countries, making these two markets very attractive. The desire for high-end products by this class has created a massive market for the first grade Colgate products across the globe. This is an opportunity.
Technological environment
The technological environment has offered Colgate a rare opportunity to develop sophisticated dental hygiene products that meet the needs of its target market. According to Wang (2007), Colgate has been keen on studying the technological changes and modifying its products to reflect these changes (Wang 32). The ‘Colgate 24 Hours’ product by this firm is a clear indication that the company is making the best out of the emerging technologies. This is an opportunity (Colgate Palmolive par. 2).
Demographic shifts
The world population is estimated at 6.85 billion and is expected to increase by 9.2% in the next two years. This means that the company will have at least 2.35 billion new potential clients in the next two years since everyone is a prospective user of a dental hygiene product. This is an opportunity.
Cultural trends
The success of the Colgate Company is its ability to motivate employees to exercise proactive leadership in research, production, and marketing. The company is renowned for its teamwork and continuous organization enhancement. Apparently, the ability to balance the human element in production presents an ideal opportunity for the company current expansion strategies.
Primary Competitive Issues and Significant Trends
As previously stated, Colgate is facing stiff competition from numerous dental hygiene firms in various countries around the world. The main competitor in almost all the sectors that Colgate operates in is the Aquafresh brand. This giant US-based company is currently considered the second largest dental hygiene firm in the world (Kotler 24). It has been keenly following the trends taken by Colgate, a fact that has enabled it to produce almost similar products.
Just like Colgate, Aquafresh has global market coverage, with its presence in the emerging markets being stronger than that of Colgate, especially in the Asian continent. There are other smaller companies that offer Colgate stiff competition in the field of dental mints, such as Wrigley Company. These competitors have constantly posed serious competition to Colgate as they struggle to increase their market shares. Apparently, excessive competition is a threat to the existence and profitability of the Colgate Company.
Strengths or Weaknesses of Colgate to Leverage these Trends
The company has been very successful in expanding its product line through the strategic rebranding of its products to different market segments. For instance, in 2013, Colgate introduced the 24 Hours Protection, mint, and teeth whitening products to improve its competitive advantage in the diverse market (Colgate Palmolive par. 6). However, the company’s centralized organization culture has made it difficult to penetrate the Chinese market that wants products to some aspects of local culture. This weakness is common in the emerging markets since Colgate products are not customized to suit each target market.
Colgate’s long years in this industry offer it the experience it needs to manage competition and emerging technologies. The huge profits of this firm give it much needed financial strength to support research and marketing strategies. Despite these beneficial factors, Colgate has some areas of weakness that may affect its operations in the market. The market offers opportunities that this firm must find a way of exploiting maximally in order to improve its market share.
The growing size of the middle class in China and Africa offers this firm a wide market to exploit. The fact that barriers to international trade are reducing also offers Colgate a perfect environment to export its products to all parts of the world. However, there are some threats that this firm must be aware of in the market. The stiff competition, the threat of terrorism, the rising cost of production, and dynamic technologies may affect the ability of the firm to achieve success in the market (Cheverton 19).
BCG Matrix for Primary Product Lines and Relative Contribution
The Colgate Company has been strategic in product introduction to minimize cases of failure. As part of its long-term strategic value creation, the company decided to diversify its products to target the mint and mouthwash segments. Besides, the company has created several brands such as the toothpaste and flossing accessories besides the license revenues for merchandise across the globe. Apparently, toothpaste has the highest market share, followed by the mint product. The accessories are categorized in the cash cow matrix since they have a high market share of 29% for the company despite the low growth. However, the licensing revenues have the lowest market share in the company’s market control matrix of less than 10% (Colgate Palmolive par. 3).
Summary
The management unit of this firm has been restructured in order to ensure that this firm remains successful. The massive profits that this firm has been receiving have been used extensively in research and design to improve the quality of the firm’s products. The management has also invested a lot in marketing. The external and internal analysis reveals that the company is well-positioned to survive any turbulence on the dental hygiene market.
Works Cited
Cheverton, Philip. Key marketing skills: strategies, tools, and techniques for marketing success, London, UK: Kogan Page, 2008. Print.
Colgate Palmolive. About Us. 2015. Web.
Kotler, Paul. Marketing management: Analysis, planning, implementation and control. New Jersey: Prentice-Hall, Englewood Cliffs, 2007. Print.
Wang, Weijun. Integration and innovation orient to e-society. New York: Springer, 2007. Print.