Agenda

! Executive & Case Summaries ! Colgate-Palmolive Company ! Colgate Max Fresh/US Product Launch ! Mexico and China Launch ! Insights ! Recommendations ! Q&A

Executive Summary
! Organizational Restructuring ! Streamline Product Development ! Optimize Marketing Operations

Case Summary

! February 2005 ! Nigel Burton - President of Global Oral Care ! China and Mexico

Colgate-Palmolive Global Financials 2004

! ! ! ! 7% Revenue growth (sales $) 0.2% Growth in Gross profit -2% Operating Profit -7% Net Income

Colgate Max Fresh US Launch

! August 2004 ! Freshness + Whitening ! Breath strips --- uniqueness ! Principal consumer benefit: cosmetic ! Value share for cosmetic benefit toothpastes up by 19% (2000-2004) ! Main competitor: Crest Whitening Expressions (CWE) ! Big success

CP Organizational Structure
Global Business Development Group Oral Care (Category Lines) ! STRATEGY ! Evaluated on Global Market Share ! Resource Allocation ! Report to COO

Geographic Division Asia/Latin America ! EXECUTION ! Responsible for all products in the region ! Supervised regional CIC ! P&L responsibility ! Report to COO

$
Consumer Innovation Center (CIC) Asia/Latin America Work on strategy with GBD Groups Marketers and product developers Involved in new product development (Global R&D) Report to Regional Division Marketing VP

! ! ! !

Go to Market Team ! Launch plan and execution

Country Subsidiary China/Mexico ! Develop and execute local marketing campaigns ! Report to Geographic Division

2004 Toothpaste Market at a Glance

1000 900 800 700 US$ in Millions 600 500 400 300 200 100 0

868

Total Toothpaste Market Colgate's Market Share

492.16 348 285.36

56.7%

82%
Mexico

China

Reasons For Buying Toothpaste

China Shares by consumer benefit 2004 Mexico Shares by consumer benefit 2004

2000

89.3

10.7 Total Therapeutic Total Cosmetic

2000

84.7

15.3 Total Therapeutic Total Cosmetic

2004

82.9

17.1

2004

87.3

12.7

Chinas preference to cosmetic benefit of toothpaste increased 6.4%; a reflection of changing purchase drivers.
Source: Exhibit 7A.

Mexicos preference to therapeutic benefit increased by 2.6%; a reflection of stronger traditional purchase drivers.
Source: Exhibit 14.

*In the US, therapeutic benefit decreased and cosmetic benefit increased.

CMF China TV Advertisement

CMF Market in China

! $868 million retail toothpaste market ! 1.1% decrease of value shares in 2004 of Colgate Equity from 2001 ! 8.4% increase of value shares in 2004 Crest from 2001 ! Fresh breath top reason for buying toothpaste in China

Sources: Table C & Exhibit 7B.

CMF Adaptation Strategies in China

Adaptation New Commercial/TV Ad Renaming of Breath Strips Celebrity Endorser New Flavors* Filling Machines Packaging Research I Packaging Research II Color Testing* *Does not fall in either Therapeutic or Cosmetic Value Share. Need Costs ! ! " " !!! !!! !!! " $7,000 $500,000 Up to $1,000,000 $200,000 $1,500,000 $7,000 Time Frame 32 weeks 12 weeks 24 weeks 4 weeks

New packaging is 20% variable cost premium/package. Packaging for existing tube in carton format is 40% of COGS

CMF Mexico TV Advertisement

CMF Market in Mexico

! $348 million retail toothpaste market ! 82% market value share of Colgate ! 10% approximated market share of Crest ! Relatively flat toothpaste demand

CMF Adaptation Strategies in Mexico

Adaptation New Commercial/TV Ad Renaming of Breath Strips New Freshness Message* Pricing Strategy Sources of Volume Need Costs ! ! ! ! ! $500,000 Time Frame -

*An additional Therapeutic Benefit message would have possibly increased sales.

CMF Adaptation Matrix

Adaptation New TV ad Celebrity endorser New Flavors New Packaging Pricing Sizes Renaming Breath Strips China Must have Nice to have Nice to have Nice to have Must have Must have Must have Mexico Must have Nice to have Nice to have Nice to have Must have Must have Must have

China adapted to their local market better than Mexico, according to concept and product tests. However, better test results do not necessarily mean that there will be better profits.

CMF Comparative Media Investments

China
! ! ! 13.5 million dollars 6 months duration 6% expected share of voice (SOV)
! ! ! ! ! ! Internet ads Dedicated website PR event in-store displays trade support consumer sampling advertising to communicate

Mexico
! ! ! 2 million dollars 8 months duration 14.7% expected share of voice (SOV).
! ! ! ! In-store merchandising Sampling Advertising Public Relations will communicate single-minded benefit of:

WHOLE NEW DIMENSION OF FRESHNESS

NEW DIMENSION OF FRESHNESS

CMF Launch Pro-Forma Profit-and-Loss 2005 & 2006

China
Net Sales (In millions) 20303 23773 10054 9745 10249 14028 4710 5515 15880 10000

Mexico
Net Sales (In millions) 10336 13487 4848 5458 5488 8029 1406 1834 1500 1400 2582 4795 Source: Exhibit 20

Cost of Goods Sold

Cost of Goods Sold

Contribution Margin

Contribution Margin China Year 1 China Year 2 NonVariable Ovherhead

Mexico Year 1 Mexico Year 2

NonVariable Ovherhead

Marketing Expenses

Marketing Expenses

-10261 Operating profit -1487 Source: Exhibit 13

Operating profit

Projected CMF Growth & Marketing Campaign ROI

Market Sales (tons) Growth YOY 2005-2006 China Mexico 12.5% 15% Net Sales Growth YOY 2005-2006 17% 30% ROI 2005 ROI 2006

-165% 72%

-85% 242%

Source: Computed from Exhibits 13 & 20

More marketing dollars spent does not necessarily lead to more sales & profits.

CMF Launch Pro-Forma Profit-and-Loss 2005 & 2006

China
Net Sales (In millions)

Mexico
20303 23773 Net Sales (In millions)

Gross Revenue : Cost Ratio Year 1

Cost of Goods Sold

Gross Revenue : Cost Ratio Year 1

Cost of Goods Sold

10336 13487

$0.64 : $1
10054 9745 10249 14028 4710 5515 China Year 1 China Year 2

$3.65 : $1
4848 5458 5488 8029 1406 1834 Mexico Year 1 Mexico Year 2

Contribution Margin

Contribution Margin

Gross Revenue : Cost Ratio Year 2

Marketing Expenses

NonVariable Ovherhead

Gross Revenue : Cost Ratio Year 2

Marketing Expenses

$1.40:$1
15880 10000 Source: Exhibit 13

NonVariable Ovherhead

$5.70: $1
1500 1400 2582 4795 Source: Exhibit 20

-10261 Operating profit -1487

Operating profit

Recommendation 1
Organizational Restructuring
! Geographic Divisions, Global Business Development Units and the Consumer Innovation Center groups should have communication and reporting protocols in place. ! Everyone should have ROI accountability ! Control and allocation of marketing budget

Change in Organizational Structure

Global Business Development Group Oral Care (Category Lines) ! STRATEGY ! Evaluated on Global Market Share ! Resource Allocation ! Report to COO

Geographic Division Asia/Latin America ! EXECUTION ! Responsible for all products in the region ! Supervised regional CIC ! P&L responsibility ! Report to COO

$
Product launches evaluated by ROI
Consumer Innovation Center (CIC) Asia/Latin America Work on strategy with GBD Groups Marketers and product developers Involved in new product development (Global R&D) Report to Regional Division Marketing VP

! ! ! !

Go to Market Team ! Launch plan and execution

Country Subsidiary China/Mexico ! Develop and execute local marketing campaigns ! Report to Geographic Division

Recommendation 2
Streamline Product Development
! Develop product features and packaging with strict regulations in mind to avoid waste of R&D resources. ! Local market adaptations and added complexities should only be executed if it can contribute to the bottom line.

Recommendation 3
Optimize Marketing Operations
! Marketing dollars need to be spent with ROI in mind. ! Marketing campaigns should be executed by country subsidiaries because they have better knowledge of the market.

Contact Us
Stella Schour Stella.Schour@gmail.com Linkedin.com/in/sdschour Ognyana Toneva Toneva.Ognyana@gmail.com Linkedin.com/in/ognyanatoneva