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Case Title:

Colgate Palmolive’s ‘Natural’ Route to Growth

Publication Year : 2006

Authors: Vasudha.A

Industry: Home Appliances and Personal Care Products

Region:US

Case Code: BBP0056C

Teaching Note: Available

Structured Assignment: Not Available

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Abstract:
The case talks about the take over of Tom’s of Maine, the leading player in the natural personal care market in the US, by Colgate-Palmolive in early 2006. Colgate is the market leader in oral and personal care markets the world over. The naturals market has been showing good growth in the recent years in the US while the market for mainstream products witnessing sluggish growth. Natural/ organic brands such as Tom’s of Maine are showing remarkable growth in this stagnating market.

Since 2002, Colgate due to intense competition and increase in price of commodities is following an aggressive restructuring strategy aimed at strengthening its market leader position. The case gives the details of this takeover, and the reasons behind this move.

The case brings to attention the latest trend of multinational companies taking over smaller ethical brands in order to gain a foothold in the booming ethical markets. It also raises questions on whether these takeovers, would lessen the appeal of the ethical brands among consumers or whether consumers would continue patronizing them irrespective of the change in parentage. The case also facilitates a debate on whether Colgate’s decision to take over a small natural brand at this critical juncture was wise and about the success of the same.

Pedagogical Objectives:

    To understand the Strategies for growth in the organic segment for established FMCG companies-Impact of brand equity, in case of take-overs.

Keywords : Oral care, Ethical Marketing, Corporate Social Responsibility, Tom Chappel, Tom’s of Maine, Colgate, Natural oral care products, Ruben Mark, green brand, Colgate-Palmolive, P&G, Crest, Inorganic growth, entrepreneurship, ethical brands

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