Colgate Max Fresh: Global Brand Roll-Out

9-508-009
OCTOBER 23, 2007

JOHN A. QUELCH JACQUIE LABATT-RANDLE

Colgate Max Fresh: Global Brand Roll-Out
In February 2005, Nigel Burton, in his third year as president of global oral care at ColgatePalmolive Company (CP), had every reason to feel optimistic. Worldwide market shares were strong and Colgate Max Fresh (CMF), a new toothpaste that had helped drive Colgate to a record 34.8%1value share in the important U.S. market, was in the global pipeline for 2005. Burton had on his desk the proposed marketing launch plans for CMF in China and Mexico. Each plan sought to maximize the business potential in the local market. Burton had to assess the plans from a global perspective. He wondered if the costs of adapting the CMF marketing programs in each country would generatesufficient incremental sales and profits to justify the added complexity.

Company Background
The Business
By January 2005, CP was a $10.6 billion global company2 operating in 200 countries worldwide. The company focused on two core product segments: Oral, Personal, and Home Care; and Pet Nutrition. Some of CP’s well-known brands included Colgate, Palmolive, Speed Stick, Ajax, and Hill’s Science Diet.Colgate was the world’s leading toothpaste and toothbrush brand; Palmolive was the world’s third largest soap brand.3 CP derived 70% of its sales outside of the U.S.4 CP had enjoyed a strong year in 2004, reporting +6.5% unit volume growth, +7% sales dollar growth, and +0.1% point growth in gross profit margin to 55.1%. Operating profit and net income were negatively affected (-2% and -7%,respectively, versus 2003) by the combined effect of increased marketing spending and increases in raw material and packing material costs.5 To drive growth, CP focused on its higher margin core businesses. Advertising spending was carefully targeted at new high margin products and at high potential markets, notably the U.S., China, Russia, India, Mexico, and Brazil.6 In 2004, approximately 40% of totalcompany sales were from products launched within the past five years. These new products drove market share growth and market leadership in key categories.7
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Professor John A. Quelch and Research Associate Jacquie Labatt-Randle prepared this case. Certain details have been disguised.HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2007 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163,or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Colgate Max Fresh: Global Brand Roll-Out

Organizational Structure
CP was organized alonggeographic lines with management teams responsible for the financial results of their respective regions: North America, Latin America, Europe, and Asia/Africa. Each region had a president with profit-and-loss responsibility who reported to the chief operating officer. Each region oversaw local country managements. Consumer Innovation Centers (CICs) including marketers, “insighters,” and productdevelopers were set up to develop shorter term (2–3 years) innovations for each region. They meshed local market knowledge with global protocols and knowhow. CICs evaluated ideas against “action standards,” an assessment tool measuring an initiative’s ability to meet pre-determined financial, product quality, consumer acceptance, and timing objectives. Once a marketing or product idea was...