Section II: Contemporary Business Environment
Toothpaste is a product that is geared towards everyone who has teeth. Toothpaste is a
relatively inexpensive product and most of the brands only slightly differ in pricing. When
toothpaste was first created it was purely a therapeutic and was used as a product to keep breath
fresh and the mouth relatively clean. But toothpaste had evolved greatly over the years. In the
60’s is when toothpaste finally included fluoride, which protects against cavities.
At this point in time, toothpaste was still considered therapeutic. In most of the twentieth
century, toothpaste once again evolved and was seen as having a dual appeal to consumers.
Toothpaste was now used to both prevent tooth decay, but also to maintain a beautiful
appearance. “Cosmetic appeal and cavity protection are hardly mutually exclusive, and it is
reasonable to assume that consumers have looked to their chosen brand of toothpaste to provide
an element of both” (Miskell,Peter 2004).
Today, toothpaste is considered more cosmetic than therapeutic since multi- benefit
toothpastes are extremely important to consumers. Almost all of the advertisements for
toothpastes inform consumers that their toothpastes do it all, they protect against cavities, deep
clean, gum disease protection, fresh breath, whitening, and overall oral health benefits. Since
Americans believe in good oral hygiene, toothpaste companies compete against one another
through their advertising since this is truly the only way that they can differentiate themselves
from another brand. As stated earlier, most toothpastes appear to be the same and offer relatively
similar benefits. As a result, toothpaste companies must brand themselves and entice consumers
to buy their products based off of their advertisements.
In 1950, it was a race amongst all of the toothpaste companies to create toothpaste with
dual benefits, which included both cosmetic and therapeutic. Crest was the first company to do
so with the help of research done by Indiana University professors. The IU professors created
stannous fluoride, which was the main ingredient that protected against cavities and tooth decay.
“The development (or invention) of this product, however, was only the first step in a much
longer process of innovation, which would culminate in P&G's domination of the U.S. toothpaste
market with its Crest brand. The story of Crest toothpaste, in fact, provides a clear indication of
the distinction between "invention" and "innovation" made by Schumpeter, who argued that "to
carry any improvement into effect is a task entirely different from the inventing of it, and a task,
moreover, requiring entirely different kinds of aptitudes" (“How Crest Made Business History”
2005).
“The impact of Crest's success on the U.S. market was a good illustration of Schumpeter's
concept of "creative destruction," in which markets are periodically revolutionized, with new
products, systems, or ideas replacing existing ones. Crest was important not simply because it
became market leader in the United States but also because it triggered a major readjustment in
the entire market. The introduction of fluoride into toothpaste, and the subsequent endorsement
of these products by the ADA, effectively changed the rules of the game in toothpaste
marketing” (“How Crest Made Business History” 2005).
Typically around 12 months old is when most
children start brushing their teeth. Although, the primary market for toothpaste would be
considered adolescents and adults. Within this age category includes the main consumers of the
product. This primary group regularly brushes their teeth and is concerned about issues relating
to luster and whiteness of teeth, fresh breath, and overall health of their teeth and gums. Children
do not focus on insecurities and fears that are installed into consumers through advertising.
Adults are the primary market because they can manipulate them with advertising and make
them believe that they need to purchase their product in order to have fresh breath and white
teeth.
The secondary market for toothpaste is younger children and toddlers. Since their mouths
are smaller they typically use less toothpaste than an adult would. Also, children have to use a
special type of toothpaste that is safe for them incase it is ingested. Children’s toothpastes do not
include benefits such as teeth whitening or a mouthwash mixed in. The ingredients for a
children’s toothpaste is much simpler and therefore not as big as a market as adult toothpastes
are. In addition, children do not really care what type of toothpaste they use, nor do children have
the financial means of buying toothpaste. Advertisers depend on parents to buy children’s
toothpaste. So even if there are children’s ads for toothpaste they are directed towards the parents
instead of the kids.
Some examples of recent media trends and economic developments that support
the popularity of oral hygiene products include at home whitening strips and whitening
systems. Recently, toothpaste and mouthwash companies have teamed up and created
toothpastes that have mouthwash incorporated into the ingredients to create even long
lasting fresh breath. Other recent break through products includes the Sonicare electric
toothbrush and portable wisp tooth brushes. Sonicare provides consumers with professional
grade dental products that produce results similar to visiting the dentist office. Wisp, on the
other hand, is the first disposable mini-toothbrush. Wisp allows consumers to take the product
virtually anywhere to freshen their breath and brush their teeth with no water needed.
Major competitors in the toothpaste industry include Crest, Colgate, and Rembrandt.
Minor competitors include Aquafresh, Arm & Hammer, Sensodyne, Tom’s of Maine, Close up,
Ultra Brite, Reach, and Aim.
P&G, the company that produces Crest toothpaste, has started to globalize the toothpaste
industry and specifically their brand into China. The first challenge that Crest had to overcome
was that their market of over 700 million potential customers would be a first time buyer of the
Crest brand. Another problem that factored in was that in rural China, the average annual income
only amount to $466. Lastly, while citizens who live in cities shop at large retail shops, people
who live in villages and rural areas tend to shop at smaller mom-and-pop- shops.
Crest did some major research and sent its staff into the villages of rural China to live
with villagers for a few days in order to observe their daily lives and to obtain information on
how much these people were willing to spend on Crest. From their information they concluded
that rual China consumers prefer products that are at lower prices, but that it’s equally important
to have products that relate to cultural traditions. “Urban Chinese are happy to pay more than $1
each for tubes of Crest toothpaste with exotic flavors such as Icy Mountain Spring and Morning
Lotus Fragrance. But those living in the countryside are apt to prefer 50 cents Crest Salt White,
since many rural Chinese believe that salt whitens teeth” (“Scrambling To Bring Crest” 2007).
Since toothpaste is a produce that is used orally and has the
potential to be swallowed it is extremely important that all
components of the product are regulated and safe. The American
Dental Association was founded in 1859. It is the largest and oldest
dental society in the world. They are a highly respected corporation
and are committed to the public’s oral heath and are a leading source
of oral health related information. “Over 300 oral health products,
including toothpastes, dental floss, toothbrushes, mouth rinses,
denture adherents and chewing gum carry the ADA Seal of
Acceptance, universally recognized by consumers as a symbol of
safety and effectiveness” (“American Dental Association” N.D.).
Besides the ADA, the Food and Drug Administration, also known as FDA, is responsible
for protecting the public’s health by regulating products such as toothpaste. Over the past several
years there have been very few controversial issues that have occurred in the business. Many of
the problems occurred in 2007. In discount stores located in New Jersey, New York, Maryland,
and Pennsylvania a company discovered counterfeited Colgate toothpaste that had been
distributed. The problem was discovered in a routine testing by the FDA. The 5-ounce tubes of
toothpaste did not include fluoride, but instead included diethylene glycol, a chemical normally
found in antifreeze. This is the same chemical that has led to the recall of several other brands
imported in China earlier in 2007.
The toothpaste had been made in South Africa, but Colgate representatives stated that
they do not use that chemical in their product, nor do they import toothpaste into the United
States from South Africa. “The statement from Colgate-Palmolive. “In addition, the counterfeit
packages examined so far have several misspellings including: ‘isclinically,’ ‘SOUTH
AFRLCA’ and ‘South African Dental Assoxiation” (“Counterfeit Colgate” 2007).
This type of event may alarm and scare consumers, but it also makes them more aware of
the products they buy and use. Although these types of occurrences rarely happen, it is very real
and the reason that we have associations that have our health in their best interest. Colgate’s
name was not ruined by the incident and they still have their good name because of their
excellent P.R. team.