Colgate Boosts Digital Marketing Spend, Trims Product Line
This article was originally published in The Tan Sheet
Executive Summary
Colgate has 45 Facebook pages for all its brands and is building digital marketing programs in partnerships with Microsoft, Yahoo! and Amazon.com. The firm trims its product lineup as part of the ongoing stock-keeping unit-reduction program within its cost-savings initiative focused on increasing efficiency.
Colgate-Palmolive is dedicating approximately 13% of its advertising spending in 2012 to digital media, including expanding its social media footprint, while discontinuing about 5% of its products.
Colgate has 45 Facebook pages for all its brands and is building digital marketing programs through partnerships with Microsoft, Yahoo! and Amazon.com.
“We are continuing to use digital media more broadly and more extensively,” said President and CEO Ian Cook at the Consumer Analyst Group of New York conference in Boca Raton, Fla., Feb. 24. He noted the firm spent 2.5% of its total advertising budget on digital media in 2006.
The company also is using a broad platform of mobile communications to advertise, provide information and send targeted messages “to reach the shopper when they're in store” and offer apps consumers can “play with,” he said.
For example, the Colgate SmileCapsule iPhone app allows users to build a slideshow. They can add captions, music and voice messages and send images to view immediately, or designate a specific date the capsule will open. The company also has mobile apps for Colgate Max toothpaste and Wisp dental floss.
Among retail brand-building initiatives, Colgate positioned its offerings to conform to the low-price environment in Walmart stores and reorganized the oral-care aisle with supermarket chain Kroger.
Creating Marketing In Stores
Colgate hopes to drive customer engagement with “retail category development” that improves the basic product planogram – a visual representation of products or services – by creating specific activities at the store level, Cook noted.
“It allows us to bring our knowledge of the consumer, the community and the environments around clusters of stores to bear, and it allows us to provide solutions that are category-based” to benefit both the retailer and the company, the CEO said.
For example, in Walmart stores, the company positions its products and displays to conform to the low-price environment consumers have come to expect. Separately, the firm created planograms specifically targeted to Hispanic consumers in the U.S.
Colgate also has collaborated with supermarket chain Kroger to reorganize the oral-care aisle, which has attracted more shoppers and increased category sales, the firm notes in its recent sustainability report. “Based on a variety of shopper insights and customer data, Colgate's cross-functional commercial team worked closely with the retailer to implement a more shopper-friendly aisle.”
Trimming Costs, Building Brands
Colgate is trimming its product lineup this year as part of the ongoing stock-keeping-unit reduction program within its cost-savings initiative focused on increasing efficiency.
Cook said since 2007, the firm has reduced its total portfolio by 36% and the initiative has delivered around $400 million in cost savings annually for the past six years (Also see "Colgate "Unafraid" To Hike Prices To Offset Rising Costs" - Pink Sheet, 2 May, 2011.).
The firm also plans to trim costs through sustainability initiatives. In its Feb. 6 sustainability report, Colgate notes it aims to reduce water and energy use in product manufacturing by 40% and 20%, respectively.
Colgate also is working to grow sales of its strongest brands, including the Sanex personal-care line it acquired from Unilever PLC in 2011 for $940 million (Also see "In Brief" - Pink Sheet, 4 Apr, 2011.). The brand, sold mostly in Western Europe, will be introduced into additional markets and expanded with new products, Cook said.
Colgate currently augments Sanex with a line of Dermo-Repair products for women, formulated to repair damaged skin, as well as Sanex Zero%, a deodorant collection formulated without aluminum chlorohydrate, alcohol or parabens.
The firm also intends to transfer technology from Sanex to other categories, Cook said. “I think we're going to see some of the Sanex technology find its way into existing Colgate brands.”
Cook added the brand has “very good innovation” that Colgate will use to its advantage, but he declined to provide specifics on those products, or whether any of the Sanex line will launch in the U.S.