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Can Oral Care Keep Up the Pace?
By: Irina Barbalova, Euromonitor International
Posted: February 2, 2009, from the February 2009 issue of GCI Magazine.
page 2 of 4Nonetheless, these developments are expensive—and not just in research and development terms. Colgate-Palmolive increased its global advertising spending by 17% in 2007, despite the negative impact on margins due to fuel and raw material costs. These trends seem impossible to sustain, but the market continues to grow and is anticipated to see a value development of 2% compound annual growth rate (CAGR) 2007–2012. This is hardly record-breaking growth, but for a product category with such high levels of commoditization, it is still impressive.
New Products Seek Authority
In terms of product development, brands are looking to segment the market to the greatest possible degree, with “professional” alignment helping to support price positions. Leading brands have all developed products that are clinically aligned. Procter & Gamble, for example, launched its new Crest Pro Health Whitening toothpaste with the tagline “protects all those areas dentists check most,” and the product’s distinctive packaging and marketing all underline its professional positioning. This gives such products an air of authority, and reinforces claims of function—but, most importantly, it supports price positioning.
Manufacturers typically spend heavily to build this relationship—making sure they are visible at dental conventions in old and new markets, supporting global oral health campaigns and running widespread professional sampling programs. These trends are not restricted to mature markets. In Brazil, for example, professional endorsements helped drive up Colgate-Palmolive’s market share for its premium toothpastes, Colgate Total and Colgate Sensitive, with Colgate Total growing its share of the company’s toothpaste sales from 1% in 2005 to 3% in 2007.
Market Focused on Large Brands
Growth has also been helped by revised branding strategies. Most leading marketers have incrementally increased their share of the global market over the review period not through innovation, but by using their largest brands to leverage share. Brand strategies have become increasingly monolithic as a result. Larger, unified brands are cheaper and easier to market, and marketers are able to have the largest possible brand equity to develop new markets. This trend characterizes the market as a whole. However, the high degree of concentration in the oral hygiene market—the top five manufacturers, Colgate-Palmolive, P&G, GlaxoSmithKline, Johnson & Johnson and Unilever, hold a combined 67% share of the global market, with private label holding another 3%—makes it more pronounced. Share movement is gradual.
Fluctuation in global share has increasingly become a result of external factors. P&G, for example, lost share over the review period after merger-related dislocations following its 2005 acquisition of Gillette, which saw the new company unable to fulfill increased demand for Oral-B toothbrushes.