Marketing Report: Standardization vs. Adaptation in Colgate Company

2021-07-20 07:02:44
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Carnegie Mellon University
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Report
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Colgate is an umbrella brand fundamentally involved with the selling of oral hygiene products. Its products collection entail toothpaste, toothbrushes, mouthwashes and dental floss. All these are produced by the American manufacturer of the consumer goods conglomerate name as Colgate-Palmolive (Cook, 2016). The company started selling its oral hygiene products in 1873. Research that was conducted by Kantar Worldpanel in 2015 shows that Colgate is the only brand which is purchased globally by more than of the households. The global market penetration of the company is approximately 67.7% and boasts a global market share of approximately 45percent (Riani, n.d.). The company is also reported to have been able to maintain the highest growth rate concerning brands that were included in the survey by Kantar World-panel.

Colgate in United States, England, and China

Colgate has been very successful in the United States with statistics showing that the company is the leading toothpaste products brand in the United States. The company has successfully developed a marketing strategy that appeals the local consumers (Cook, 2016). Colgate has had a history of using a fairly aggressive global expansion strategy. Since the 1920s the company was able to enter in the various developed, industrialized and semi-industrialized nations such as UK, Switzerland, Mexico, and France among others. The company has been able to enter the UK market successfully. This can be seen in which Colgate has been ranked as the leading toothpaste brand in the United Kingdom. It was estimated that there approximately 33.9 million users of Colgate in the country which is double the number of those that use Aquafresh. Due to increased competition from companies such as Proctor and Gamble, Lever Brothers (presently Unilever) and Crest, Colgate needed to expand into more markets for its sustainability. This led to Colgate developing strategies to enable gain market share in the emerging markets. Unlike the previous markets, Colgate had to strategize for the markets in China carefully (Riani, n.d.). In the beginning, the company outsourced manufacturing services and Foreign Direct Investment in China before it started acquiring other companies to gain a foothold in that market.

Product Differentiation

Colgate has successfully adapted the product differentiation strategy to the point consumers have been able to differentiate Colgate products from that of competitors. For instance, if anyone is asked about the red color toothpaste, Colgate is the brand that comes to mind. This is the effect of product differentiation which results in differentiating company products from that of competitors (Geibel, 2016). Colgate has been able to differentiate its products to cater to its customers. For example, there has been the launch of Colgate herbal. The purpose of this strategy is the provision of unique products to potential consumers which they can appropriately differentiate with other offerings (Geibel, 2016).

Standardization versus Adaptation

There has been increasing significance of the concept of globalization which means homogenization on an international scale. With the advancement of globalization, there has been the minimization of the differences that once existed between counties (Hou, A. 2001, 7-8). Globalization and internationalization have had implications on the view and planning of businesses concerning particular global marketing strategy. As businesses start marketing their products internationally, they have the question regarding the best strategic decisions to make (Krishnamurthy, 2016, 1). The decisions have been whether to employ standardized marketing mix or to adjust the strategies and marketing mix to align with the specific features of each nation's market (Hussain & Khan, 2013, 155-156). According to one perspective, the similarity of markets is converging and progressively becoming global and therefore the need to standardize for company survival (Chand, 2017, 1). The other perspective points the shortcomings of utilizing standardization approach thereby supporting customization and market adaptation (Theodosiou & Leonidou, 2003, 142-143).

The Marketing Mix of the Three Countries (USA, UK (England), China)

Product Differentiation Home Country USA UK (England) China

Product Brand Colgate in the United States deals with many products that are related to care of oral hygiene. There have been different products aimed at reaching its current and potential consumers (Babu, 2014). For instance in United States market, the company has had Colgate Herbal and Colgate Max Fresh among others. Colgate products must be differentiated to fit the needs of consumers in England. For instance, there is high fluor content in the UK local water which is not the same with the US. Another example is the ingredients used in Colgate herbal toothpaste in the UK which include Lavang, Neem, Saunf, and Khadir among others which are not used in the United States. In China, the products that Colgate presented were adapted for that population. The company had to develop eastern flavors. The flavors of Colgate toothpaste and mouthwash entailed tea, ginger, herbal, fruit and ginseng (Geibel, 2016).

Place In the United States, Colgate has adopted a strategy has adopted a strategy that presents its products as unique. In this market, this has helped in the maintenance of the interests of its customer base. It has built a distribution channel includes the manufacturer, and from this point, a quick dispatch to wholesalers and then retailers who ensure products reach the consumer (Babu, 2014).

Colgate needs to distribute its products across England. In the UK, Colgate uses a hybrid marketing system in which various distributors are used. These include retailers, catalogs, and vertical marketing systems. Another difference and the reason for adaptation is that the UK uses drugstores for distribution (Anon, 2012, 12). In the distribution of the products, the company used large retailers such as Walmart or Kmart or large drugstore chains. Before this, they used small neighborhood stores, street vendors, and transient merchants.

Price Colgate has positioned toothpaste as its mainstream product with other oral products being highlighted around it. The company has then employed a competitive pricing strategy to deal with the competitors. For instance, Colgate Max Fresh is considered a premium product in the United States market which is not the case in the emerging markets (Bhasin, 2017). The pricing strategy in the UK is affected by some factors such as internal and external factors, cost of production, and the price of competitor's products among others (Cook, 2015). The pricing strategy means there are different prices as those of competitors.

When entering China, Colgate understood the price sensitivity of the consumers in which it had adjusted to the emerging middle class. They used a plastic tube, incorporation of local ingredients and reduction of the package size. This allows appropriate adjust the prices (Geibel, 2016).

Promotion To appeal to consumers, Colgate has used innovative schemes and attractive packaging strategies. In the United States market, it has used promotion means in the digital media such as radio, television and print media such as magazines and newspapers. It has also employed social media sites such as MySpace, Facebook, and Twitter (Bhasin, 2017). In promoting the products in England, various means are used, and they include billboards, shop fronts and store headboards, posters and stickers, media (Television, media, and even social media) (Bol, 2016).

When entering China, Colgate used outdoor advertisements in rural areas I addition to the use of TV and print. They also used traditional means which included traditional billboards, painted building, and sandwich boards.

Analysis on Standardization vs. Adaptation

Standardized Strategy

Constricting ourselves to the United States market, Colgate has used a standardized approach. The reasons why this approach has been successful in the United States is that it deals with consumers with often similar characteristics. This is as it concerns the consumer's culture, market, needs, usage patterns and economic development. The legal restriction in United States markets is also very similar which means Colgate can standardize its products to meet the consumer needs. In this case, standardizing is quite easy due to some similarities in language, values, beliefs, music, and lifestyle among others.

Adaptation Strategy in England

There exist some differences between consumer characteristics in England. For instance, the prices, promotion strategies, mode of distribution among others are different.

Initially, Colgate had been using the standardized approach to reach its international consumer base. However, the company has started using the adaptation approach to appeal to the different consumers (Zabanga.us, 2017). The reason the company used adaptation approach is due to the differences in culture, economic development, usage patterns and legal restrictions among others. One instance of adaptation approach is the advertising used for the Colgate Paste (Anon, 2012, 12). The globe/smile image has been used in almost all countries as the visual, but the copy is different. Some other drivers of adaptation in England include the role of drugstores, and the type of communication concerning Colgate is non-medical.

Adaptation Strategy in China

In the United States, oral care often concerns clean teeth and fresh breath which results in the use of flavors such as spearmint, wintergreen or peppermint (Geibel, 2016). This couldn't be the same case with China. One way Colgate adapted its products was through the use of toothpaste and mouthwash with flavors such as tea, ginger, fruit, herbal, berry, and ginseng. The company also used innovative packaging materials to reduce wastes (Geibel, 2016). Colgate also conducted price adaptation which was achieved through the appropriate plastic tube, integrating local ingredients and a minimized package size. By this, Colgate could sell its products using a recognizable brand name with same prices as the competitors or slightly higher.

Conclusion

The utilization of standardized approach or adaptation approach is dependent on some factors. Considering globalization and internationalization of the global market, companies have to make strategic decisions on which approach to use. Additionally, the multinational companies need to know the best approach for the various market characteristics. The decision to use adaptation approach by Colgate was important for the company to get accepted in China and England. This is because it had to adapt to the different needs of the consumers in different market environments.

Internationalization Process Theory

The internationalization process theory has its relevancy in the global business history studies due to its dynamism. It is essential in the provision of explanations concerning the foreign market entries and the expansion into the global market (Cortesi, E. 2011, 15). The dynamism aspect is due to the assumption that the internationalization process is due to decisions concerning the knowledge that has been accumulated over time. According to this theory, companies gradually internationalize through the development sequential steps from the production for the local market to the exportation of agents (Karlsen, S. 2000, 16-20). This is before the establishment of production in the other country. For instance, during Colgate entry into China, it first entailed outsourcing or manufacturing services and the use of Foreign Direct Investments. This...

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