Colgate In Argentina Essay

Colgate was founded in the United States in 1806 and for the first 100 years, its business focus was only there. However, in the very early 1900’s, the Company began a very aggressive expansion program that led to the establishment of Colgate operations throughout the world. Today, Colgate-Palmolive is a $9 billion company, marketing its products in over 200 countries and territories under such internationally recognized brand names as Colgate, Palmolive, Ajax, Fab, and Mennen as well as Hill’s Science Diet and Hill’s Prescription Diet.
Colgate Total is considered the greatest evolution in toothpaste since the introduction of fluoride. This highly effective formula, containing fluoride and the antimicrobial ingredient, Triclosan, has been demonstrated clinically to help prevent gingivitis, plaque, cavities and tartar. And, its unique patented formula, containing the co-polymer, Gantrez, continues to be active between brushings. It continues to work fighting plaque, gingivitis, tartar and cavities after you stop brushing, even if you eat or drink. No other toothpaste manufactured in the US contains Triclosan or has been cleared to make claims for gingivitis and plaque reduction. Since the announcement of the FDA clearance of Colgate Total on July 14, 1997, retailers have expressed unprecedented enthusiasm and interest.
Dr. Sigmund S. Socransky, Associate Professor of Oral Biology, Harvard School of Dental Medicine, and Senior Member of the Staff and Head, Departments of Microbiology and Periodontology, Forsyth Dental Center, said, Colgate Total represents one of the most remarkable oral therapeutic achievements in the last 20 years.
Colgate Total will benefit the oral health of all users. The most common non-contagious diseases are periodontal diseases such as gingivitis. In fact, 63% of Americans suffer from gingivitis. As the only toothpaste with this formula, Colgate Total will help Americans take greater care of their teeth and gums than ever before and will help younger people prevent these dental problems.
Since Colgate Total was introduced internationally in 1992, over half a billion tubes have been purchased by millions of consumers in 103 countries. However, before permitting it to be marketed in the US, the FDA conducted an extensive review of data in Colgate’s clinical tests. These included five major studies that supported the safety and efficacy of the toothpaste.
Independent dental associations in 30 countries, including the American, Canadian and British Dental Associations, have awarded seals of acceptance to Colgate Total. Colgate Total will begin shipping to food, drug and mass merchandisers nationwide on December 15, 1997, and will have a suggested retail price of $2.49, $2.99 and $3.49 for 4.2, 6.0 and 7.8 ounce tubes, respectively.
Colgate-Palmolive is a leading global consumer products company tightly focused on Oral Care, Personal Care, Household Care, Fabric Care and Pet Nutrition. In the U.S., Colgate sells its quality products under such nationally recognized brand names as Colgate, Palmolive, Mennen, Ajax, Irish Spring, Softsoap, Murphy Oil Soap, Ultra Brite, Baby Magic and Fab, as well as Hill’s Science Diet and Hill’s Prescription Diet pet foods.
Executive summary
Successful international marketers possess the ability to identify with and adapt to different cultural environments. International marketing requires that one actively anticipate the effects both foreign and domestic uncontrollable environments exert over the marketing mix, and then adequately adjust the marketing mix to minimize potential negative effects. Often times an international marketer’s self-reference criterion impede his or her ability to accurately assess and properly respond to foreign operating environments. Rather than rely on their own self reliance criteria, international marketers must conduct far-reaching, comprehensive cultural and economic analyses of potential foreign markets in order to develop more effective and responsive marketing mixes that improve the success potential of their market-development strategies.
Argentina certainly represents a viable market-development opportunity for Colgate Total toothpaste. U.S. companies intending to export to Argentina should consider economic, demographic, as well as cultural characteristics that differentiate it from other Latin American countries.
Having the highest per capita gross domestic product and the second highest total gross domestic product and life expectancy in Latin America, as well as low rates of population increase and illiteracy rates, Argentina attracts many business opportunities.

The population and economic activity are highly concentrated in the Greater Buenos Aires area. The population is largely of European descent and continues to have strong ethnic, cultural, as well as business ties with Europe. Consumer preferences tend to resemble more those of Europeans than those of other Latin America nationals. However, revenues are highly dependent on MERCOSUR trade, especially with Brazil, and the regional economic situation.
In many sectors, European competitors of U.S. firms are already present in the market, and may be well entrenched. Nevertheless, the U.S. is Argentina’s single largest trade and investment partner and many U.S. firms have been very successful. U.S. lifestyle and consumption habits are increasingly influential. U.S. products have a strong reputation for quality and technological innovation, but U.S. firms are sometimes seen as lacking commitment to the market. It is important to be prepared for a competitive market environment.
As in many countries, personal relationships are fundamental to doing business in Argentina. Success requires taking the time to develop a close personal relationship with your representative, agent or distributor. Marketing U.S. products and services in Argentina requires the same level of research, preparation and involvement–if not more–as domestic marketing.
U.S. firms handicap themselves if their product literature, labels, manuals and other written materials are not in Spanish. When preparing Spanish-language materials, care should be taken to ensure the meaning is consistent for all Spanish-speaking markets in which they will be used. Argentine Spanish differs for example, from Mexican or Chilean Spanish, with unintended – and sometimes embarrassing – meanings resulting when a translator is not familiar with variations in the language from market to market.
After analyzing the product and its uses and establishing who the potential customers are, U.S. companies intending to export to Argentina should identify the geographical areas where the major users of the product are. It should be born in mind that 80 percent of the Argentine population is concentrated in urban areas, with over 35% living in Buenos Aires and its suburbs, and almost 10% in three cities Cordoba, Rosario and Mendoza and their suburbs.

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Argentina experienced a boom in economic growth in the early 1990s as a result of its structural reform (privatizations, trade liberalization, etc) and monetary stability. Real GDP growth averaged over 6% for the 1991-97 period. Since October 1997, a series of international financial shocks coupled with a fall in international commodity prices have translated into lower growth rates. After growth of 8.4% in 1997, GDP percent in 1998 grew 4.3. In the second semester of 1998 Argentina entered into a recession. Most experts predict negative growth of between -2.5 and -3.5 for 1999, with a possible return to positive growth in the second half of the year 2000. Despite the current recession, Argentina — with a track record of macroeconomic stability, a growing and sophisticated consumer market, free capital flows, lucrative access to Mercosur and nondiscriminatory foreign investment regime — remains an attractive emerging market for U.S. trade and investment.

Many U.S. and other foreign firms continue having strong interest in taking advantage of opportunities in Argentina arising from Mercosur. Major U.S. investors, including car manufacturers and food processors access Mercosur markets through operations in Argentina. Mercosur has become a key element of the business strategy of many foreign manufacturing and services firms in Argentina.

To avoid reliance on self-reference criterion during the marketing plan development process, the international marketer carefully researched Argentina’s unique cultural elements (i.e.: geographic setting, social institutions, religion and aesthetics, living conditions and language) and economic elements (i.e.: population, economic statistics and activity, and developments in science and technology). The information gathered through these analyses helped the international marketer to identify key strategic issues and to formulate actionable strategies for the introduction of Colgate Total toothpaste in Argentina. Furthermore, the unique cultural and economic elements exhibited by Argentina guided the international marketer in making decisions throughout the international marketing planning process, which consists of the following four phases:
preliminary analysis and screening
adapting the marketing mix
developing the marketing mix
control and evaluation.
Preliminary Analysis and Screening
In the process of conducting a situation analysis, the marketer must identify the strengths and weaknesses of Colgate-Palmolive and Colgate Total toothpaste along with the opportunities and threats present in Argentina. Smoking out key strategic issues naturally flows from drawing connections between the strengths and opportunities, strengths and threats, weaknesses and opportunities, and weaknesses and threats of Colgate-Palmolive and Argentina respectively. The most relevant strategic issues related to the introduction of Colgate Total toothpaste in Argentina are listed under the following subheadings:
Deep Capital Reservoirs Capable of Fueling Market Development
Colgate-Palmolive achieved a recorded-setting cash flow of $917 million for 1996, up 13 percent from 1995. Furthermore, on March 6, 1997, the Board of Directors declared a 17 percent dividend increase and a two-for-one stock split starting April 25, 1997. Undoubtedly, overcoming major barriers to market entry, such as the high costs of educating the public about prevention of periodontal disease, strengthening product distribution intensity, and gaining strategic shelf positioning, would require Colgate-Palmolive to shell out huge amounts of capital. In addition to already having a record supply of internal capital at its disposal, Colgate-Palmolive, could capitalize on stockholder confidence to raise the marginal capital it needs to aggressively introduce Colgate Total toothpaste in Argentina.
Experience Curve to Facilitate New Product Introduction
When applied to Colgate-Palmolive, the experience curve concept states that product costs, corrected for inflation, decline with accumulated output. Learning effects, technological improvements, and economies of scale are the three sources for cost declines vis-?-vis increases in volume. With its extensive expertise in research and development (introduced 602 new products world-wide in 1996), manufacturing, distribution (Colgate Distribution 2000), sales, and marketing its products on a global scale, Colgate-Palmolive would benefit from these gains in worker skill and output with Colgate Total toothpaste in Argentina. Furthermore, Colgate-Palmolive would likely call on several of its factories located in South America to manufacture Colgate Total for Argentina before purchasing domestic production facilities. Foreign-based factories could realize short-term economies of scale until Colgate-Palmolive decides it would like to make a long-term commitment with respect to production in Argentina.
Product R;D Capable of Meeting Evolving Consumer Needs
Strong global growth in unit volume for Colgate-Palmolive resulted from the introduction of 602 new products by its research and development team. Similar to other developing nations, as personal income grows in Argentina, consumer needs will tend to evolve towards that of a higher order-based on Maslow’s Hierarchy of Needs. Newly initiated members of the middle class in Argentina will become more concerned with their health and capable of paying for related products. Since Colgate-Palmolive already markets many oral and personal care products, it could benefit from capitalizing on this growing market in Argentina. Colgate Total toothpaste could serve as the lead product that would leverage future line extensions in the form of oral care products.
Gantrez Gives Colgate Total a Sustainable Competitive Advantage
A product must fulfill the following criteria in order to possess a strategic competitive advantage: (1) better than competing products with respect to a feature/advantage/benefit that customers and competitors perceive as meaningful, (2) better by a significant amount and not imitable, and (3) advantage must be perceived by customers and competitors.
First, Gantrez, a co-polymer additive and key ingredient in Colgate Total toothpaste, prolongs the retention of fluoride, Tricloscan and other active ingredients that help prevent plaque, gingivitis, cavities, tartar, and bad breath on oral and soft tissues. Gantrez prolongs product benefits for up to twelve hours after brushing, even after product users eat or drink something, giving their teeth unparalleled protection against periodontal disease. Second, performance of and benefits derived from comparably-priced products do not even compare to that of Colgate Total toothpaste, and due to the patent on Gantrez, competitors may not easily copy this product. Third, both consumers and competitors perceive Colgate Total as one of the greatest achievements in oral care over the last 20 years. Essentially, Gantrez provides Colgate Total with a sustainable competitive advantage over competing products in Argentina, which affords Colgate the opportunity to implement a niche-based differentiation marketing strategy.
After performing the situation analysis, the marketer must then position Colgate Total Toothpaste to appeal to the needs of a customer segment whose members are identifiable and accessible and also demonstrate adequate potential and responsiveness. When positioning a product, the marketer must proceed through each of the following three steps:
target market selection
Following the processes and fulfilling the criteria involved with the aforementioned steps required by this process yielded the following positioning statement: To position Colgate Total toothpaste as offering superior prevention of periodontal diseases to members of middle class households between the ages of 6 and 45 with the competitive superiority of prolonged protection of oral and soft tissues based on its patented co-polymer additive, Gantrez. A specialty niche positioning strategy best matches the features, advantages and benefits of Colgate Total toothpaste. Ultimately, Colgate-Palmolive should market Colgate Total toothpaste to younger, married, middle class, Argentine women. Gender roles dictate that women exert considerable influence over family related purchase decisions. Especially with respect to convenience and shopping goods, the wife of the household plays the role(s) of the initiator, information gatherer, influencer, decision-maker, and purchasing agent.
Adapting the Marketing Mix
Laying the groundwork for making marketing mix decisions, the product-market definition serves to keep marketing strategies focused. To fulfill the criteria for the product-market definition, the marketer must determine product type, geographic area, customer type, and customer needs. Colgate-Palmolive would likely choose to market Colgate Total toothpaste in 4.2, 6, and 7.8 ounce squeezable tubes. Considering that 84.5 percent of Argentines live in urban areas, Colgate-Palmolive could achieve greater economies of scale and better measure correlation between promotions and sales by distributing Colgate Total through larger, more modern grocery store chains located in densely populated, cosmopolitan Buenos Aires and Southern Santa Fe. As stated earlier, Colgate-Palmolive should market Colgate Total toothpaste to younger, married, middle class, Argentine women to fulfill their needs for value (longevity of product benefits requires fewer brushings per day than regular toothpastes to achieve similar benefits), convenience (multi-faceted nature of product features acts as a substitute for purchase of regular toothpaste and antibacterial mouthwash), and peace of mind (special formula performs much better against most major adult preventative concerns than competing products).
At first glance, demand for toothpaste in Argentina appears to be selective, but substantial primary demand has yet to be cultivated due to lack of personal income and/or consumer education. Worldwide annual per-capita consumption of toothpaste averaged 363 grams or 12.8 ounces while consumers in India used only 67 grams of toothpaste annually. The average annual per-capita consumption of toothpaste in Argentina is probably somewhat lower than the worldwide average due to a lower average personal income and a lack of consumer education. However, with the help of Colgate-sponsored mobile clinics that would bring dental hygiene programs, dental care professionals, and product samples to uneducated consumers throughout the major urban areas in Argentina, primary demand for toothpaste could grow along with selective demand for Colgate Total.
Cultural constraints often inhibit the fulfillment of international marketing objectives. Due to the cultural similarities between Latin America countries, it is entirely plausible that government officials and local businessmen in Argentina customarily accept bribes from domestic and foreign-owned corporations. Despite the fact that local citizens regard these practices as an observed cultural tradition, American businessmen should not conduct business deals according to the adage When in Rome, do as the Romans do, especially if they involve bribery. The Foreign Corrupt Practices Act deems that any bribes paid to foreign officials, candidates, or political parties as being illegal, and those company officials, directors, employees, or agents found guilty of paying a bribe or authorizing payment of a bribe are subject to stiff penalties. Since Colgate-Palmolive already operates in more than 200 countries throughout Asia, Latin America, Central Europe, and Africa, Company officials, directors, employees, and agents are probably very familiar with questionable business practices-when judged according to U.S. ethical standards and law codes. However, although measures must be taken to grease the wheels, perhaps it would be safer and just as effective for Colgate-Palmolive officials, directors, employees, and agents to have a sales expense account at their disposal so they could use company funds to take influential people deep-sea fishing or sky-diving rather than pay an outright bribe (Cateora 181).

Economies of scale occur when a company markets a product globally and experiences higher levels of efficiency through the standardization of marketing mix elements. Colgate-Palmolive could standardize the paste, tube, and packaging materials for Colgate Total toothpaste. If another nearby factory in a neighboring country also manufactures product for Spanish-speaking consumers-such as Ecuador, standardization could be achieved for the copy imprinted on the Colgate Total tubes and boxes. Colgate Total appeals to members of the emerging middle classes in other Latin American countries, so standardized consumer and trade advertising could be implemented across borders to appeal to socioeconomically similar target markets. However, some primary research should first be conducted to test consumer reaction to language differences, such as colloquialisms and annunciation.
Developing the Marketing Mix
The lion’s share of the product decisions have already been made by Colgate-Palmolive’s product development team. After analyzing product information, the marketer subdivided product information for Colgate Total toothpaste into features, advantages, and benefits. In its consumer advertising, Colgate Total toothpaste should focus on communicating product features, advantages, and especially the benefits that most appeal to target market members. The features, advantages, and benefits for Colgate Total toothpaste are as follows:
ADA Seal of Acceptance
Advantages: Protects against plaque, gingivitis, and cavities
Benefits: Increased confidence in product claims and benefits
Unique Colgate Total formula (fluoride and Tricloscan)
Advantages: Works to fight plaque, gingivitis, tartar, cavities, and bad breath; remains the only toothpaste in the United States made with the antibacterial ingredient, Tricloscan, which effectively controls a wide range of bacteria.

Benefits: Added-value derived from special formula that addresses most major adult oral preventative concerns under the guise of one product.

FDA clearance
Advantages: Affirms that the FDA believes this everyday toothpaste is safe for all patients over 6 years old, and most important, effective for its intended use, which validates its product claims and benefits derived from its new ingredient.

Benefits: Greater reassurance as to product’s basic safety and efficacy
Patented co-polymer additive called Gantrez, or PVM/MA
Advantages: Prolongs the retention of Tricloscan on oral and soft tissues and in plaque, causing product benefits to continue to work, even after you eat or drink something, for up to twelve hours after you stop brushing.

Benefits: Added-value derived from increased longevity of active ingredients, and corresponding product benefits.

Key compensatory flavor ingredients
Advantages: Influenced an overwhelming majority of consumers to choose Colgate Total over their regular toothpaste based on taste.

Benefits: Pleasurable taste and brushing derived from toothpaste flavoring
Carton made from recycled material
Advantages: Motivates consumers to perceive the product as being green, or environmentally sensitive.

Benefits: Peace of mind from purchasing an environmentally conscious product
As mentioned earlier, Gantrez provides Colgate Total with a sustainable competitive advantage, which dictates that Colgate-Palmolive implement a product differentiation strategy. In terms of product pricing, a product differentiation strategy equates to a value-pricing strategy. Value-pricing methods determine product price based on consumer demand, or charging what the market will bear. Value-pricing applies to Colgate Total because it provides customers with unique benefits that far exceed production costs. By differentiating its product from that of competitors, Colgate-Palmolive incorporates inelasticity into Colgate Total’s demand curve, which means consumer demand would be very insensitive to a change in product price. According to the price inelasticity concept, Colgate-Palmolive could raise the price for Colgate Total in Argentina above the going market rate while increasing revenue and enjoying increased margins (Nylen G-78, G-233).
Colgate-Palmolive manufactures Colgate Total toothpaste in 4.2, 6.0, and 7.8 ounce tubes that retail in the United States for $2.49, $2.99, and 3.49 respectively. Starting with the base price for Colgate Total in dollars, which already includes a target level of profit, the marketer may arrive at the cost to end consumers in Argentina. A strong correlation has been shown to exist between toothpaste price and sales because on average, smaller sizes are more affordable to the greatest number of people. Since larger sizes of Colgate Total may be priced beyond the budgets of some middle class Argentines, the marketer stipulates that initial product introduction will initially only involve the smaller 4.2 ounce tube priced at $2.49. The calculations for import taxes and fees are as follows (Argentina Trade Regulations and Standards):
Base Price $2.49
Freight (8%) .?20
C&F $2.69
Insurance (1.5% of C&F) ?4
Dutiable Base $2.73
10% Duty ?27
3% Statistics Tax ?8
VAT Base $3.08
Port Costs (6%) ?18
Freight Forwader Fees (1.5%) ?5
Bank Charges (2%) ?6
Subtotal $3.37
VAT (21%) ?70
Grand Total $4.07
If Colgate-Palmolive integrates a consumer education theme throughout its promotional mix for Colgate Total in Argentina, its new toothpaste will usurp the toothpaste product category and steal considerable market share away from competitors. Research conducted by Colgate-Palmolive has shown that a direct relationship exists between increases in income and educational levels and per capita toothpaste and toothbrush consumption, especially in high growth markets where consumption has grown by more than two hundred percent over the last five years. Taking these statistics into consideration, Colgate-Palmolive should implement educational programs similar to those that achieved successful sales results in other nations with low-frequency consumption of toothpaste, such as India. Colgate-sponsored mobile clinics specially adapted to appeal to the needs and tastes of Argentines could bring dental hygiene programs, dental care professionals, and product samples to housewives in residential neighborhoods and working mothers in the business districts of major cities. These mobile clinics would increase consumer awareness of Colgate Total toothpaste’s product features, advantages and benefits, which would grow product adoption and usage frequency. If employed in a culturally sensitive manner, this education-based aspect of the promotional mix could serve as a catalyst for incremental growth in sales in Argentina.

To further integrate consumer-directed education about the prevention of periodontal disease and the benefits of Colgate Total, Colgate Palmolive should promote its new product through select print and television media. Colgate-Palmolive should place full color spreads in housekeeping and businesswoman magazines targeted at housewives and working mothers. The Colgate Total toothpaste logo and tube should be pictured, but the advertisements should focus on conveying to mothers the perceived harm(s), such as gingivitis and cavities, that could negatively influence the health of their children and husbands. A cents-off promotional coupon redeemable at the local, major cosmopolitan grocery store chain should be included on the lower right hand corner of each spread. Complimentary half page newspaper advertisements posted in the business and fashion sections of major newspapers, such as La Naci?n and Clar?n, should share similar advertising copy and cents-off similar to magazine advertisements.
Colgate-Palmolive should wrap-up its promotional campaign with television commercials and sponsorship of product-based game shows and soap operas. Colgate-Palmolive could include humorous commercial based on the cultural mainstays of Argentine culture, such as skits played-out on gaucho or tango settings. Consumer-based television commercials would target parents of middle-aged family households. Advertising copy would focus on family-wide product benefits, such as value, convenience, peace-of-mind, but would focus on perceived risk for adults surrounding bad breath. In the Latin American culture, people maintain very little distance between each other when speaking, which could make for some embarrassing situations for those people with bad breath. Finally, housewives who stay at home and care for the house and children habitually watch product-based game shows and telenovelas, or soap operas. To reach housewives, Colgate-Palmolive should advertise its Colgate Total toothpaste on these day and evening shows.
Control and Evaluation
Colgate-Palmolive could implement several control measures to measure the effectiveness of current marketing strategies. For example, the Company could conduct coupon tracking analysis of promotional coupons disbursed through local newspapers and magazines. In this context, tracking of specially numbered coupons could tell management in which areas promotional effectiveness and/or consumer consumption are/is highest. Feedback gathered from coupon redemption analysis would effect future modifications in the distribution and promotion strategies present in the marketing plan. By choosing to initially conduct a new product roll-out through more modern grocery stores, Colgate-Palmolive could request and analyze sales records for Colgate Total toothpaste on a store-by-store basis to conduct correlation analyses to determine which promotional strategies yielded the best results based on a regional basis. Again, feedback gathered from these correlation analyses would effect future modifications in distribution and promotion strategies.
Colgate-Palmolive should also solicit for valuable feedback from its customers, employees, and distributors. A toll free number should be placed on every package and tube of Colgate Total toothpaste so that customers can ask questions about product usage or give feedback on product performance. Colgate-Palmolive should also solicit for feedback from domestic employees and distributors. No one knows the Argentine marketplace better than the local players, and their feedback plays an integral role improving efficiency and profitability in international markets. Invaluable feedback gathered from customers, employees, and distributors would give management the feedback they need to modify product design, marketing mix strategies, distribution processes respectively.

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3. Border crossings: brands unify image to counter cult of culture. (companies strive to
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4. Colgate-Palmolive posts higher results. United Press International, Oct 21, 1999,

5. Colgate profit rose 18% in second period, led by Latin America. Wall Street Journal;
New York; Jul 25, 1997
6. Dusseau Charles. A new opportunity. (Mercosur: Achievement and Perspectives).
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7. Harvilitcz, H., Colgate, Church ; Dwight report good quarters .
Chemical Market Reporter; New York; Aug 3, 1998
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America Trade Finance Directory, 1993-94). Latin Finance, Jan-Feb 1994 n54

9. Kindel, S., Selling by the book. (Colgate-Palmolive’s global product-rollout strategy
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10. Miler, C., Not quite global: marketers’ ?discover? the world but still have much to
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11. Randy Mye R., Palagonia, L., MERCOSUR’s potential market is now over 200
million people with a combined economy of nearly $1 trillion. Business America,
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12. Parker-Pope, T.,Whistle-Blower: P&G Calls the Cops As It Strives to Expand Sales
in Latin America Noted Marketer Tries to Sell Antitrust Notions in Bid To Catch Its
Giant 13. Rivals Sending In Legal Precedents. Wall Street Journal; New York; Mar
20, 1998.

13. Wirth Fellman, M., C-P sinks teeth into global opportunities. (Colgate-Palmolive
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