Colgate-Palmolive

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Introduction

Colgate-Palmolive (NYSE: CL) is one of the world's biggest Consumer Goods companies by market share with business transactions on six continents. Since its 1806 founding, Colgate has grown into a cosmopolitan corporation known for its toothpaste and oral health care goods. As of 2011, the firm holds a staggering 44.7% universal market share with its flagship toothpaste line.

Colgate Palmolive's main advantages are the strength of its brand and its strong, universal existence: over three quarters of its revenue depends on outside the United States. About half of sales depended on swiftly growing emerging markets, with Latin America referring Colgate Palmolive's single largest source of revenue in 2010. Colgate Palmolive's brand strength in foreign markets enables the firm to command effectual market share and high margins of profit. Colgate Palmolive has been repeatedly expanding its transactions along Latin America, Africa, and Asia, conservation consistent positive sales expansion in these regions.

Colgate Palmolive has transactions in North America, Latin America, Europe/South Pacific, and Greater Asia/Africa. The firm divides its transaction into two goods segments (especially Colgate): Oral, Personal and Home Care, and Pet Nutrition.

Oral, Personal and Home Care (86.1% of net sales, 99.1% of business profit)

1. Channels of Distribution

Colgate Palmolive is a huge firm; it is not possible to specifically describe their specific distribution strategies. If we look at the strategies that are predominantly about market coverage or intensity; we can easily analyze that their types of merchandises specified above would fall the category of intensive distribution or complete market coverage. However, there are several leads to that the general channel distribution Colgate Palmolive has been using. For instance; this firm has its own separate distribution company under the name of Colgate Palmolive Co Distributers, as a subsidiary of this company in Puerto Rico. Being the firm has market penetration to approximately the whole world, there is not only one single distributer for each market they do business to, those markets comprising some of the main continents all over the world. This situation would result in to believe that this distribution heart in Puerto Rico is Colgate Palmolive's wholesaler for its Western Hemisphere transactions in both North and Latin America. It is also known that there are several Colgate Palmolive producers in Europe, where merchandises are shipped to a single distribution heart in Denmark. From this place, the diverse merchandises are distributed to markets in Europa. The implication is that this distribution heart in Denmark is a variation of the distribution firm in Puerto Rico; we can say that this is the same kind of distribution firm subsidiary which implements for Colgate Palmolive's market scope in Europe. Consequently, Colgate Palmolive has distribution channel that is categorized as starting from the producer, then on to an intermediary distributor, then finally to the retailer.

The chart below shows us a simplified visual model that Colgate Palmolive has been using as a distribution channel for consumer goods.

Being there is a huge amount of goods distributed by Colgate Palmolive, there should to be a channel for the raw materials needed for the lots of goods they sell. This channel seems like that; being the distribution channel for industrial goods and also this operation coming before the channel of distribution for consumer goods. Thanks to the knowledge that this is a universal firm, that has transactions in approximately each main continent, it would not be extremely effective to procure all the essential materials for their goods from one single raw material manufacturer. According to this strategy, Colgate Palmolive more likely to use subsidiary firms in this facet of business of well. For instance; in Puerto Rico as discussed in the customer distribution channel, Colgate Palmolive has a distribution heart running as a subsidiary of itself under the name of Colgate Palmolive Co Distributors. The presumption can be that a producer of the feedstock sends them to the distribution heart, where they are then transferred to the goods producer. This is where or when the industrial process of channel would finish, and the customer process of the channel would start, because from there the finished goods are shipped back to the single mass circularization subsidiary, and finally onto the retailers.

The chart below shows us simplified visual model that Colgate Palmolive has been using as a channel of distribution for industrial goods. And realize that how the second channel member for each channel is the identical, because the subsidiary distribution heart is dispatching goods two different ways to maximize effectiveness( these two strategies would be the feedstocks from the raw material manufacturer to the consumer goods manufacturer, and finished goods from the consumer goods manufacturer to the retailer). The most significant thing to know is that the channel of distribution for industrial goods come before the channel of distribution for consumer goods.

2. Problem and Solution

In this part, we are going to focus on problem and solution about rural distribution. The place that we will talk about is India.

As we mentioned before Colgate Palmolive is the world's leading producer of oral care goods, manipulates the Indian oral care sector with a market share of approximately 63%. The word `Colgate' has been remembered as a synonym of `toothpaste' for several consumers in India, particularly those in the rural Indian context.

As a pioneer, Colgate Palmolive sometimes face with the main challenges of expanding the market that will eventually come to a conclusion increased business for all players. The urban market is approximate satiated with several customers in this segment already using oral care goods in one from other. Within rural context, but, there is activity-area for growth, nearly 30% of the population of 780 million still uses traditional way of oral hygiene. Colgate Palmolive's rural scope reaches down to villages with a population more than 5000 by way of direct channels of distribution, however it is unviable to penetrate farther. A progressively actual competition is putting farther pressure on Colgate Palmolive. Other big players like Hindustan Unilever are prepared for a hard fight with their Pepsodent brand, while minor regional corporations like `Anchor', `Ajanta' and `Amar' are gaining ground on religious sentience with vegetarian toothpaste, progressively segmenting the market farther. They are also in the deep internals the fight against look-alikes and imitations has made a heavy dent in Colgate Palmolive's share in the market.

The significant challenge, Colgate Palmolive executives informed their agency -MART (which gives consulting service for Colgate Palmolive)- was that the residuary not penetrated villages with populations of nearly 5000 residents account for 85% of the rural population of India. These hamlets Small villages in India would have some economic improvement, with a small rate being on easy street and the crowd at the bottom of the pyramid. In such a social stratum, people would generally have to take a trip out of the hamlet for the aim of some necessities; at certain intervals visiting other temporary markets not only them but also shops at around bigger villages or the block town. Low per head in these hamlets promotes an environment where there is insufficient scale for investment return and that makes systematic access for present channels of distribution. The proposal is extremely clear about that issue; create a model or strategy which can feasibly and sustainably mention the serious problems facing Colgate Palmolive at this period of time.

The chart below displays the oral hygiene penetration figures ;

We can easily analyze that; rural areas have less penetration when we compare with both India and Zones numbers' that is the reason why Colgate Palmolive should give importance for rural areas.

As we mentioned before many times Colgate Palmolive is the market leader and pioneer of the oral care industry in India and the charts below show us company's current situation based on both brand share ( million households) and market penetration (%);

When we have to summarize these data; Colgate Palmolive should start with a holistic understanding of the oral hygiene sector, the degrees of rural penetration and some other problems dogging in the aggregate. The charts above are the summaries of current situation and issues of Colgate Palmolive and its' competitors. colgate palmolive market distribution

When we look at the current strategy of Colgate Palmolive; the present distribution structuring permitted direct access to the residents more than 5000 people that are living in hamlets. Colgate Palmolive desired that to penetrate more deeply with 2000 population. It also has tried to experiment with different strategies; none worked. The diagram below displays current distribution structuring of Colgate Palmolive in India.

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