Balance key for Colgate

30 January 2012

NEW YORK: Colgate-Palmolive, the consumer goods group, is "balancing" its marketing spend worldwide, favouring in-store activities in mature markets and advertising in fast-growth economies.

Ian Cook, its CEO, reported that the company does distinguish between above-the-line channels like TV ads, and below-the-line schemes, like in-store and shopper marketing.

However, while above-the-line spending is often used as a "proxy" for investment in building brands, market share and volume sales, Cook argued true "commercial" expenditure must add below-the-line into the mix.

He said: "We are ... balancing our marketing techniques to take advantage of the in-store activity, where that's good, and use the more fundamental basic engagement advertising where we believe that is important."

This model has been motivated by the fact buyers in mature markets are increasingly making decisions while shopping, whereas enhancing awareness assumes a greater priority in fast-growth economies.

"We really balance between the activity we do in the retail environment, which is more developed world-oriented, and the investment we put in the emerging markets, and that is a roll-up that we do from the ground up," he said.

Among Colgate-Palmolive's most recent offerings is Optic whitening toothpaste and, in the same category, Luminous, enriched with minerals.

"Competition at its best is innovation-led ... and that's a world we are, I think, well-equipped and happy to compete in," Cook said. "What we have resisted is what one might call price-driven competition."

Some countries, like Brazil and the UK, have seen intense promotional competition, including couponing and discounting. Colgate's spending rose by 3% in this area in the last year, but it has been selective.

"We compete with it where we choose to and ... certainly not at the same level as our focus is on innovation to build the business," said Cook.

Despite the challenging financial climate in many markets, the high-end Optic White and Colgate Sensitive Pro-Relief brands have remained resilient, aided by couponing and trial generation.

"That kind of consumer engagement strategy is indeed building trial and repeat," he said. "When consumers, whether they're developed world consumers or so-called emerging market consumers, adopt a premium product, it's because they see a value and a benefit in that product."

Data sourced from Seeking Alpha; additional content by Warc staff