Listerine in Brazil Case BriefListerine was looking to become a lifestyle brand and become a household name. The consumers in the oral care market are usually provided with four products: toothpaste, toothbrush, mouthwash, and dental floss. Most customers in Brazil did not have a fully established oral care routine and would therefore buy less than the suggested volume of mouth care products. The brand managers have the task of creating awareness, ensuring innovation and gaining market visibility. Art, the brand manager for Listerine in Brazil, was headstrong in trying to establish a oral care routine for Brazilians that included Listerine products.
However, there was a disconnect between what they were offering, and what the segment they were targeting wanted. This is a great case of trial and error, and the importance of knowing your market before you enter it. Listerine priced their products 15% lower in an attempt to reach lower and middle class people- only to find that price wasn’t necessarily their problem. People, and the dentists who had a lot of recommendation power in land were not happy with the strong alcohol taste.
Art was strategic in not giving free samples of the brand away, but rather starting a “21-day challenge” that would give customers the opportunity to return if they werent satisfied. Although risky, Listerine started a promotion that gave 1.5L bottles with the purchase of a 350mL bottle. This was strategic on their part because it increased the usage of the brand, but tricky because their competitor was offering free mouthwash with the purchase of any Colgate brand. Colgate was a strong competitor, but through this kind of strong market penetration, towards the end of 2014 Listerine acquired 96% product category volume at a time when the major competing brand had 94%. Then, Listerine was able to expand its market share from 37.7% in 2013 to 38.4% in 2014 and to 41.7% in 2015. It is important to note that Colgate experienced a reduction in its
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sales from 2013 to 2014.
If a significant number of consumers are willing to give samples of the brand for free at a participating cola brand, if the Brand will be allowed to become an advertiser in an online advertising market, then the brand’s ability to attract, retain and monetize it will be greatly enhanced.
When deciding to acquire all the other brands of Colgate, it is important to understand the true value and scope of a given brand with the intent to attract, retain and monetize it by selling a small percentage (less than 1%) of your brand. At the very least, the Company has the option to have it remain an an advertiser and may even buy off Listerine’s existing customers. However, the Company has a small choice in the matter as to whether or not to buy off Listerine. At the current time Listerine’s future is in the hands of the Company, and Colgate can only do both. If the Colgate brand is sold to an advertiser without selling, this will limit its ability to attract and retain additional customers, which is not necessarily a great business decision, but will also limit our ability to drive new customers (whose only way to drive potential investors around is to purchase Listerine). This can result in loss of momentum and the Company’s prospects of retaining a significant portion of the market share during the 2016 fiscal year.
This strategy of selling off Listerine creates a greater chance that Listerine will reach its valuation at a price competitive with Colgate, rather than the competitive prices it was able to achieve in its previous market growth and to keep its price competitive against its competitors. By doing so, Listerine can increase its valuation in an attempt to drive potential investors to buy the brand (or other brands of Colgate) in an attractive market.
If the Company chooses to acquire all the other brands of Colgate, we will retain the Company’s market share on the remaining cola brands and we will not take any further action when we consider a possible acquisition at a cost of less than the Company’s current level of profitability. The Company holds the right to buy and acquire any number of further brands of Colgate for substantial profit or other benefit. The Company will retain all of the company’s assets if this opportunity presents itself.
In addition to investing in other alternatives and market makers, the Company invests in key technology technologies of choice that are valuable to the Company. However, in any case, the Company will not take any action or attempt or attempt to do any of the aforementioned in order to have a significant effect on the Company or its competitors.
The Company will be conducting competitive investigations to assess whether we are performing the necessary or appropriate market segments to meet our objectives. We will continue to keep a close eye on our internal product research and development and continue to closely track trends in the industry and ensure that we are maintaining confidence in what we think is an important portion of our customers’ needs.