H |
The toothpaste market is a mature but still growing market and the marketing strategies of the main competitors is all about improving product quality, adding new product features, new sorts and flanker products, entering new market segments, new distribution channels and so on, to strengthen the firms competitive position.
The toothpaste industry is one typical model of a monopolistic competition this means that it’s a cross between a perfectly competitive market and a monopolistic market.
Each firm produces a toothpaste which is differentiated (i.e. different in character) from all other toothpastes produced by the other firms in the industry. Thus one firm might produce
a red, white and blue toothpaste with a spearmint taste, another might produce a white toothpaste with a wintergreen taste. This assumption is similar to a monopoly which produces a unique (or highly differentiated) product. Under monopolistic competition, each firm produces a differentiated product. Products are close substitutes but not perfect substitutes. The toothpaste market is a market with many competitive rivals, with similar products that are aimed at the same customer group.
The differentiated products are imperfectly substitutable in consumption. This means that if the price of one toothpaste were to rise, some consumers would switch their purchases to another toothpaste. From the perspective of a firm in the industry, it would face a downward sloping demand curve for its product, but the position of the demand curve would depend upon the characteristics and prices of the other substitutable products produced by other firms. This assumption is intermediate between the perfectly competitive assumption in which goods are perfectly substitutable and the assumption in a monopoly market in which no substitution is possible.
The barriers to entry are also relatively low making it easy for new competitors to get in the game. Typical for a monopolistic competition is that there is free entry and exit of firms in response to profits in the industry. Thus if one toothpaste company are selling well and making profits on a type of toothpaste, it sends signals to the competitors to open up or start selling similar toothpaste.
Thus, the market is fragmented and the brands have a hard time to differentiate. As soon as you have come up with something new, the competition will be there and have their own versions of it, right next to you in the store.
How do they differentiate?We have earlier talked about how a brand can differentiate their toothpaste, on feelings, product features like tastes and so on. Many of the larger brands seem to have a similar strategy with large amount of product offerings, trying to offer a toothpaste for every age and thinkable problem that could occur. Aquafresh have many toothpastes for children and has games and things for younger children on their homepage, and Colgate talks about what happens with the teeth when you get pregnant, just to mention some examples.
Then we have the “outsiders” with a more focused differentiation strategy, trying to find a niche and compete on a different term.
For example Sensodyne toothpaste, that also is owned by GlaxoSmithKline like Aquafresh, has a more serious health- and medicine approach. Giving a solution directed to health problems like prevention of brown teeth for smokers and gum disease, and protection of sensitive teeth. Vademecum is saying that its a little bit stronger than other toothpastes, and that children should use just a small amount, giving the impression of that it is more of a medicine than just a toothpaste with natural ingredients. And we also have the specialized toothpastes that are sold only in pharmacies, giving them an exclusive distribution to make them seem more medical and exclusive. We also have Email Diamant, portrayed as the “cosmetic toothpaste”, that concentrates on the cosmetic angle of it, making toothpaste sound like a small surgery enhancement. Looking young and fresh with whitening of your teeth, without going to a professional dentist and getting them whitened. Also Denivite concentrates on a “professional whitening at home”- approach.
For example Sensodyne toothpaste, that also is owned by GlaxoSmithKline like Aquafresh, has a more serious health- and medicine approach. Giving a solution directed to health problems like prevention of brown teeth for smokers and gum disease, and protection of sensitive teeth. Vademecum is saying that its a little bit stronger than other toothpastes, and that children should use just a small amount, giving the impression of that it is more of a medicine than just a toothpaste with natural ingredients. And we also have the specialized toothpastes that are sold only in pharmacies, giving them an exclusive distribution to make them seem more medical and exclusive. We also have Email Diamant, portrayed as the “cosmetic toothpaste”, that concentrates on the cosmetic angle of it, making toothpaste sound like a small surgery enhancement. Looking young and fresh with whitening of your teeth, without going to a professional dentist and getting them whitened. Also Denivite concentrates on a “professional whitening at home”- approach.
A new differentiation key driver that is also emerging in the toothpaste market, is for toothpastes to be more organic, vegetarian and more green and eco friendly.
There is also the in-store brands that have more of a “no frills strategy”, Carrefour, for example, is offering its own “BIO”- toothpaste, for a smaller amount of money than the similar competitors.
At a first glance many of the large competitors seem to have similar strategies, but as you can see there is still room for differentiation. Later on in the blog we will concentrate on 5 brands and go in depth, and show you how each of them are trying to keep their differentiation in this large market.
Sources:
http://www.colgate.co.uk/app/ColgateTotal/UK/faq.cwsp
http://www.ooshop.com/
Source: Google Image
