Introduction:As the big brother of the past, Colgate, who was once taken away by Procter & Gamble as the No. 1 in the soap and toothpaste market, how did he come back to life?
Jin Mei |Author Stone Business Review |Produced
Like a melodious epic, Colgate's ups and downs record the vicissitudes of life over the course of two centuries.
From a small workshop of the son of a poor immigrant to the absolute leader of the global toothpaste market, Colgate is now sold to more than 200 countries and regions in the world, accounting for 42% of the toothpaste market share, and the second largest market share in the industry is 151%。
Its unique "scattered wealth" gene, as well as its history of maintaining good deeds in the turmoil of business, have become its sharpest in the world.
This business legend, full of wisdom and regret, is worth savoring.
The art of "scattering wealth".
Many companies have become the world's leading companies because of their amazing ability to amass wealth, but Colgate's success stems from the company's strong "scattered wealth" genes.
In 1789, the U.S. Constitution came into effect, and George Washington became the first to establish the United States. Six years later, 8-year-old William Colgate's father was incurred by the British authorities for supporting the colony's struggle for independence.
My father moved to the United States from England with his family, settled in Bartimore, and made ends meet by running a farm.
Colgate, who is smart and clever, has helped his parents work since he was a child, and his poor family did not enter college in his life, but his mother's generosity helped those in needand the teaching that "people should not be too selfish in life, and only by benefiting others can they bless themselves" became his life creed.
At the end of the 18th century, Battimore was an important port and commercial center in the United States, and one of the most important hubs on the Atlantic coast. In a strong business atmosphere, my father and a friend opened a factory that produced soap and candles.
Unexpectedly, what they were waiting for was not the improvement of life, but the departure of their partners and the closure of the factory.
Looking at her depressed father, Colgate was determined to revive the family business. At the age of 19, he produced soap under his own name with the help of his aunt, but unfortunately the business also failed.
In 1803, Colgate decided to go to New York.
Early in the morning of the day of departure, his mother said that he should be a kind person; Stand up for what you believe in; give back to society a tenth of his income, because that wealth is not his, but a gift from society; Always make sure that each bar of soap is sufficiently heavy.
He found a job at the Schrieder soap factory and volunteered to work in the dirty and bitter workshop. Here he keeps a close eye on the employer's management methods and learns from the mismanagement. After three years of hard work, Colgate learned the technology of making soap, and also figured out the skills of factory operation and employee management.
In order to start his own business as soon as possible, he saved every penny carefully, but still did not hesitate to donate a tenth of his salary to the church.
In 1806, he resigned to found Colgate at 6 Holland Street. He made his own soap and candles, worked as a worker, housekeeping, bookkeeping, and delivery, and followed his mother's instructions to operate in good faith, donating one-tenth of the income from the business to the society.
In an industry rife with fraud and substandard products, Colgate's products quickly gained the trust of consumers. He weathered the difficulties of his start-up years, adding products such as starch manufacturing, hand sanitizer and shaving soap.
In 1817, Colgate's first advertisement appeared in a New York newspaper. The company's profits skyrocketed, and Colgate soon became one of the wealthiest businessmen in New York. A tenth of the company's profits is becoming more and more significant, and Colgate has unexpectedly increased its own donation.
10……Colgate, who was almost fanatical about religion, did not ruin the company, but ushered in a thriving business.
But 20 years later, the birth of a "little brother" made everything change quietly.
Counterattack and defeat again
In 1837, 31 years after Colgate's founding, Procter & Gamble was born.
Panic of 1837 was the beginning of a six-year recession in the United States, and Procter & Gamble launched more affordable and efficient new products, discounts** and other marketing activities, and rose strongly in the economic crisis.
When William Colgate died of illness in 1857, Colgate's cash cow remained in the soap business.
After his death, his son, Samuel Colgate, began to manage the company. Under Samuel's leadership, Colgate started the perfume soap and perfume fragrance business.
In 1873, Colgate introduced the first aromatic toothpaste in a glass bottle, but it did not take a share of the tooth powder market because it was too expensive to package and inconvenient to use.
In 1881, Procter & Gamble launched the "ivory" cleansing soap, which nearly shook the foundations of Colgate's traditional business under the company's strong marketing. In 1890, Procter & Gamble established the first corporate R&D center in history to equip the company's innovations with motors.
Seeing that Colgate is about to be overtaken in an all-round way, it has finally ushered in a turning point.
An American doctor was inspired by hose pigments to produce a collapsible hose toothpaste, and Samuel was instantly intrigued by the idea. When the machines at Colgate's factory began rumbling to produce the toothpaste, the fortunes of the business quietly changed.
In 1893, Colgate's first tube toothpaste in the world was born, and Colgate's main business shifted from soap to toothpaste, standing firmly at the forefront of the toothpaste industry and squeezing out "gold" from toothpaste.
In 1896, Samuel hired chemist Martin Itner to set up a research group, and the company's products began to diversify. The following year, Samuel died, and the company was jointly run by his five sons and became a joint-stock enterprise.
In 1900, Colgate won top honors at the Paris Exposition Universelle for its fine soaps and perfumes.
But this year, Procter & Gamble became one of the largest soap and candle manufacturers in the United States. In the following 30 years, P&G sold more than 30 kinds of soaps and soaps by studying the preferences of different consumers, forming the prototype of a multi-brand strategy, and the company's management was institutionalized and formalized.
In 1928, Colgate was sold to the Palmolive-Peet Company (a merger of Palmolive and Pitt, which is said to be privately owned by the Colgate family). The three oldest and largest soap and perfume companies in the United States merged in this way, with combined sales of more than $100 million. As a result of the merger, Colgate-Palmolive had seven manufacturing facilities in the United States, factories in 14 countries, and was listed on the New York Stock Exchange in 1930.
The combination of strong and powerful has made Colgate Palmolive the leader of the American cleaning products market, but Procter & Gamble, not to be outdone, is constantly stirring the tide of the market and trying to overturn its dragon chair.
In 1937, when the new marketing method of television advertising was born, it was firmly grasped by Procter & Gamble, and the "soap opera" was born. At the same time, in the face of the channel changes brought about by chain stores and department stores at that time, P&G quickly changed the previous grocery store and wholesaler sales model and carried out channel changes.
Colgate also joined the soap opera sponsorship competition, but unfortunately P&G's series of operations made it almost powerless.
Procter & Gamble, which has the upper hand in marketing and channels, launched Tide laundry detergent, the king of fried products, after World War II, and with the popularity of washing machines, it pulled away thousands of Colgate's soap users. At the same time, P&G has grown rapidly through large-scale corporate acquisitions and global expansion.
In 1955, Procter & Gamble was the first to launch fluoride toothpaste worldwide, and Colgate once again lost its position as the number one toothpaste in the market.
In the 60s of the 20th century, Colgate had been struggling in the shadow of Procter & Gamble.
Procter & Gamble's Tide laundry detergent beats Colgate's Fibo by a 5:1 advantage; Colgate's soap is now difficult to see P&G's back; P&G's dishwashing liquid market share is twice that of Colgate. In the minds of the masses, Colgate became synonymous with inferior soaps and laundry detergents.
Roundabout attack
Colgate needed a victory.
In 1962, Colgate opened a research center in Piscataway, New Jersey, and in 1968, Colgate toothpaste with MFP fluoride was introduced to protect teeth more permanently and reduce tooth decay.
But Colgate didn't change his mind until 1971, when David Foster took the helm of the company.
After a series of pre-war surveys, Foster found that Procter & Gamble still had more than 3 times the advantage at the retailer level, and P&G's researchers were also 3 times that of Colgate. Throughout the 1970s, P&G's Pampers diapers had a staggering 92% market share.
The enemy is strong and we are weak, and there is obviously no hope of a frontal attack.
Foster decided to lead the team in a roundabout way, using his unique technological advantage to bypass competitors and attack easier markets in order to expand his resource base.
First, to strengthen Colgate's leading position overseas. In terms of toothpaste, Crest has an absolute advantage in traditional retail channels backed by Procter & Gamble, how does Colgate establish a leading position? Due to its better medical results, Colgate aggressively attacked community and hospital channels where P&G's Crest was not adequate, and sold toothpaste according to the idea of drugs by improving its product lineup.
In this way, Colgate has successfully occupied the core channels of foreign dental fields, and has also established its own authority in the dental field. Just like Haitian soy sauce, which occupies the commercial channel, Colgate, which occupies the community and hospital channels, has its own "diamond diamond".
Secondly, diversify in China, enter the market that P&G has not entered, and make a detour to outflank P&G. Diversify unrelated products, diversify with existing products into new regional markets, and manufacture new technologies to replace existing products.
Colgate acquires companies in textiles, medical pharmaceuticals, cosmetics, sports equipment, food, hair care products, pet nutrition, and more. In 1979, Colgate grew into a conglomerate with annual sales of $4.3 billion.
The fledgling Foster decided to launch a frontal attack on Procter & Gamble to gain more market attention. In 1989, Colgate's annual sales exceeded $5 billion. Since then, it has made acquisitions around the world in core areas such as cleaning and oral care, so as to face P&G to compete with it.
Taking the Chinese market as an example, Colgate did not adopt an all-out strategy in China, but first launched a free sample in Hong Kong, which covered almost most families, because of the free gift, Hong Kong residents used Colgate whether they liked it or not.
The giveaway event attracted reports from local newspapers, television, and mainland newspapers, so that Hong Kong was used as a bridgehead, so that all Chinese people knew that Colgate "Our goal is to have no tooth decay!" This is a resounding slogan.
Colgate, which has made a breakthrough in the field of oral care, has completed the oral hygiene enlightenment of many people by relying on the sharing and feedback consciousness in its genes, so as to easily win the market. This "gentle knife" cultivated because of sharing genes allows Colgate to easily open the market and "kill" the Quartet.
However, as it made its strides toward Procter & Gamble, new problems began to plague Colgate.
Through acquisitions and expansion, Colgate operates in more than 200 countries, with 70% of its sales in international markets and 80% of its employees located overseas. The large business system and decentralized organizational structure make Colgate's organization bloated, extremely expensive to operate, and slow to respond to market changes.
In the mid-1990s, Colgate, whose revenue reached new heights, faced a new crisis, with personal care product sales falling 12 percent in North America and operating profit falling 26 percent.
It is imperative to apply new technologies to solve enterprise management problems, shorten product delivery cycles, reduce operating costs, and make Colgate have an integrated business environment and standard business processes.
Colgate began the digital transformation of the ** chain in 1995, integrating the ** chain in 80 countries and the distribution system in 200 countries, and the company shortened the product delivery cycle by 60%, reduced inventory, and increased profitability.
The savings were used to invest in the development and promotion of new products, including the successful development of the Target toothbrush, which regained the number one position in the U.S. toothbrush market that was lost more than 30 years ago.
In recent years, Colgate's Oral, Personal and Home Care segment revenue accounted for the vast majority of the company's total revenue, accounting for the majority of the company's revenue**. At the same time, the average growth rate of its pet nutrition in the past 6 years has reached 117%, with good prospects.
In 2022, Colgate's total revenue will be 179$6.7 billion, although with Procter & Gamble's 801$8.7 billion in revenue is still far from it, but it is still very commercially instructive to keep its position at the top of the toothpaste market thanks to its beautiful campaign.