Table of Contents
- 1 The Secret of Colgate India’s Marketing Strategy to Capture the Mouthwash market!
- 2 “The supreme art of war is to subdue the enemy without fighting.” – Sun Tzu
- 3 The Puzzle of Mouthwash Market!
- 4 Competitive Advantage
- 5 Epiphany
- 6 “In war, the way is to avoid what is strong, and strike at what is weak.” ― Sun Tzu, The Art of War
- 7 THE BATTLE GROUND
- 8 “If you are equal, then find an advantageous battleground.” – Sun Tzu
- 9 Doubt-Avoidance in Consumers
- 10 Evolution and Pain Pleasure Principle
- 11 What options does Listerine have?
- 12 “The expert in battle moves the enemy, and is not moved by him.” ― Sun Tzu, The Art of War
- 13 Conclusion and Takeaways
The Secret of Colgate India’s Marketing Strategy to Capture the Mouthwash market!
“The supreme art of war is to subdue the enemy without fighting.” – Sun Tzu
As you read this article on the marketing strategy of Colgate India, you will feel you have discovered something very obvious, but also something incredibly potent.
What genius says may seem obvious at first, but at the same time, it is also extremely powerful.
Gravity seemed apparent only after Newton discovered; it isn’t it?
The human brain is the most complicated thing in the universe. And, an idea is more intoxicating than any drug that has ever existed. You will often not realize it, but your brain will present solutions to your problems as an idea.
Last Saturday, an idea struck me for a problem which was troubling me for a long time. Allow me to give you a backdrop to this.
The Puzzle of Mouthwash Market!
As an Investor and Research Analyst, While I was researching Colgate India’s Stock, there was one crucial thing I really couldn’t figure out.
A big piece of the puzzle was the mouthwash market.
Colgate is the Dominant player in the toothpaste market, but its business in toothpaste segment has matured.
For future growth, the mouthwash category is crucial because the mouthwash category is targeting towards premium consumers.
Currently, the mouthwash market is dominated by mainly two players
Listerine (Johnson and Johnson) and Colgate India.
Although the mouthwash segment is small, approximately 300 Crores. It is expanding rapidly, growing at 25-30% each year, especially in the Urban areas.
Most value investors will tell you to invest in a company which has a competitive advantage or a moat around it ?.
Now of course if you are smart enough to be reading this .. you instinctively will tell me that the competitive advantage for Colgate is its brand image and distribution. However true that may be for the toothpaste market; when you think about the mouthwash segment the following questions will arise as part of your thought process
- Does Colgate have a competitive edge over Listerine (Johnson and Johnson) in the mouthwash market?
- If yes is it sustainable?
- Is it’s competitive advantage expanding or shrinking?
And will it be able to leverage its existing distribution and brand strength from the toothpaste market?
I remembered my start-up days when everyone I met told me one thing.
Investors look for value, and you should focus on creating value.
The problem was nobody knew what defines value.
That Saturday night at the store, as I proceeded to find the shelf where they stack mouthwashes. ( I visited every store across Mumbai after this to complete my research)
What I found blew my mind and as you read along you will experience the same.
The answer was sitting there all along, and as I continued to look at it I came to understand…
How Colgate is excellent when it comes to Branding, Connecting with the consumer and creating a competitive edge.
“In war, the way is to avoid what is strong, and strike at what is weak.” ― Sun Tzu,
So there I am ready to buy my mouthwash. Here is the what I saw and the epiphany that struck me…
1) The first thing I observed was this bunch of Listerine and Colgate mouthwashes stacked next to each other dominating the shelf space.
2) Listerine packaging with the message saying “6x Better Clean than Brushing & Flossing, Removes 99% of germs….”
3) Colgate Packaging with the message saying “No Alcohol No Burning Sensation, removes 99% of germs… “.
THE BATTLE GROUND
“If you are equal, then find an advantageous battleground.” – Sun Tzu
“No Alcohol No Burning Sensation“- What so Great about it?
Just by writing this message on their packaging. Colgate has induced doubt in the customer’s mind about Listerine having alcohol and burning.
Therefore, I decided to do some research and check it out.
It turns out Listerine does contain alcohol, and when you use it there is a burning sensation.
In Listerine’s defense (Johnson and Johnson) alcohol may clean your mouth better, and it might be so, that you get the burning sensation because of it. I have no idea because the scientific data is not sufficient as of now.
However, Colgate India has used this chink in Listerine’s armor to position itself beautifully.
Colgate India Knows where the battle for the mouthwash segment is happening. It wants to target that very second when you decide which product to pick! It has chosen its battleground correctly.
Doubt-Avoidance in Consumers
Another psychological aspect is consumers tend to avoid doubt and don’t want to put in much effort. Think about it, as humans, we have evolved to survive, and we had to make quick decisions to survive from predators.
Our evolution is such that we find it easier to make a decision quickly when it’s not imperative to put in the effort.
This tendency of Doubt-Avoidance been tested and demonstrated by psychologists like Nobel Prize winner Daniel Kahneman in his book “Thinking, Fast and Slow.”
Follow me to the conclusion
So in that split second when you decide to buy which mouthwash to buy one of these questions may pop up in your head.
- Will you like a burning sensation?
- Would you like your loved ones or kids to have a burning sensation?
- Would you like alcohol in your mouthwash? I am not even considering the cultural or religious implications of this.
- Would you like your loved ones or kids to have alcohol in their mouthwash?
It’s a masterstroke when it comes to guerrilla marketing to induce doubt.
Colgate has managed to use its shelf space which is distribution and their packaging for guerrilla marketing.
Also, consider this, I was using Listerine and then switched to Colgate. How did Colgate capture me as a customer?
At the microsecond when I was about to purchase my mouthwash, I was reminded of the burning sensation every time I was using my existing mouthwash ( Listerine).
Evolution and Pain Pleasure Principle
Although alcohol may clean your mouth better and it might be, so you get the burning sensation because of it. I have no idea due to lack of scientific evidence. I know this:
The marketing guys at Johnson and Johnson may believe they have a better product, but in my view, they have forgotten one important aspect about the consumer.
Human Beings (consumers) move away from pain and towards pleasure. And purchase decisions are based on feelings more than on logic. Our emotions/sensations which include taste are a biological yardstick of what’s right or wrong for us, in the context of survival. That’s how we as humans have evolved.
But that’s not enough you need to tell and make your customers realize that you are reducing pain for them. And the marketing guys at Colgate India are very very good at it.
The messaging “No Alcohol No Burning Sensation” is strategically placed and I can’t stress how much of an ROI such a tactic can generate for business.
Colgate is targeting that microsecond when you are making a decision. Let me break this down again!
- You enter the store. Locate Mouthwash section.
- See Colgate and Listerine Mouthwash side by side.
- Think About which one to buy for a few seconds.
- See the messaging on Packaging of both,
- Get reminded of the pain (burning taste) you experienced when using Listerine
- Your subconscious guides your senses to buy Colgate mouthwash.
What options does Listerine have?
“The expert in battle moves the enemy, and is not moved by him.” ― Sun Tzu,
It will be tough for Listerine to respond to this as they either over the longer term
- Will have to introduce a variant with no burning taste
- or convince consumer the burning taste is good for them which is against principles of evolutionary psychology.
Colgate is pushing it into a grave by associating Listerine with burning taste (pain) without them even realizing it.
Conclusion and Takeaways
- As an investor or businessman, you need to think about where your company is fighting its battles.
- And what it’s doing to win them. Battles are fought every day in the marketplace
- You create value by connecting with the consumer, reducing their pain, telling them that.
- Thereby creating a long term association – Brand which no one can break!.
I will reserve my right to pick a side as the Reality is a game of probability, but I know which side has a better chance.
What do you think? Comment Below