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The U.S. Toothpaste Market: A Competitive Profile

Journal of Economics and Public Finance

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Title The U.S. Toothpaste Market: A Competitive Profile
Creator Datta, Y.
Description This paper follows the path of seven studies (see below). However, it is different in one important respect: it also offers a benefit segmentation profile of the U.S. Toothpaste Market.Porter associates high market share with cost leadership strategy which is based on the idea of competing on a price that is lower than that of the competition. However, customer-perceived quality—not low cost—should be the foundation of competitive strategy, because it is far more vital to long-term competitive position and profitability than any other factor. So, a superior alternative is to offer better quality vs. the competition.In most consumer markets a business seeking market share leadership should try to serve the middle class by competing in the mid-price segment; and offering quality better than that of the competition: at a price somewhat higher, to signify an image of quality, and to ensure that the strategy is both profitable and sustainable in the long run. Quality, however, is a complex concept that consumers generally find difficult to understand. So, they often use relative price, and a brand’s reputation as a symbol of quality.In 2008 retail sales in the U.S. were $1.27 Billion for the Toothpaste Market. The market leader Crest had a market share of 34.7%, closely followed by Colgate with a share of 33.5%. We focused on the most popular pack-size—5.8-6.5oz—which had a 45.3% share. Employing Hierarchical Cluster Analysis, we tested two hypotheses: (1) That a market leader is likely to compete in the mid-price segment, and (2) That the unit price of the market leader is likely to be somewhat higher than that of the nearest competition. Employing U.S. retail sales data for 2008 and 2007, we found that, for both 2008 and 2007, the market leader in the U.S. Toothpaste market—Crest—was a member of the mid-price segment. Furthermore, the unit price of Crest was somewhat higher than that of Colgate, the runner-up, which was also a member of the mid-price segment.Thus, the results fully supported both Hypothesis I and II—for 2008 and 2007.We also found strong support for the idea, that relative price is a strategic variable, as we have hypothesized.We discovered five benefit segments. The most fundamental result of this analysis is that it revealed an avalanche of various brands of toothpaste that not only whitened teeth, but were also helpful in preventing tooth decay, as before.Finally, we discovered four strategic groups in the industry.
Date 2020-02-27
Type info:eu-repo/semantics/article
Peer-reviewed Article
Format application/pdf
Source Journal of Economics and Public Finance; Vol 6, No 1 (2020); p145
Language eng
Rights Copyright (c) 2020 Y. Datta