Introducing a new product is never an easy task, but when a company is a market leader in a particular product category, introducing an addition to that category can be a sound business decision. Colgate Palmolive faces this situation with regard to toothpaste. It is a market leader in this category, and is contemplating introducing a new addition to the category in the form of a lemonade flavored toothpaste. Aimed at children as end users, the toothpaste will also be marketed to adults who make the purchasing decisions in most households.
By positioning the product as a member of the existing Colgate Palmolive toothpaste family, the company should be able to gain access to shelf space in retail outlets and use its existing distribution system. In addition, the company can price the product as a brand name since it is part of a larger family of products. All of these factors suggest that the product should be successful in the market if the taste can be accepted by consumers.
Financial projects indicate that prices of $2.49 and $4.79 should yield unit sales in excess of 11 million units per year, resulting in revenues of $50 million in the first year; these are expected to increase at a rate of 12 percent per year for the first three years, and then increase at a rate of seven percent annually as the market becomes attuned to the new product. The overall marketing budget for the toothpaste is $205 for five years; this, combined with projected revenues, results in gross profit in excess of $100 million for the initial five-year period.
This research presents the marketing plan for a new lemonade flavor of toothpaste to be marketed by Colgate-Palmolive. The goal is to bring consumers into the Colgate-Palmolive brand as early as possible; having a lemonade flavored toothpaste should help do that. The marketing will address parents, since these are the actual decision makers, but the product will be targeted to children (al...