Marketing Planet

Colgate’s restructuring plan aims sales and marketing initiatives

In the official press release on December 7th of 2004, Colgate announced to reduce their worldwide workforce with 4.400 jobs - almost 12% - and to close one third of its factories as part of a four-year plan aiming a boosting its sales and profits.

Objectives of the plan

The benefits of this reduction should be allocated to initiatives in Sales and Marketing. Though the main idea is to continue a solid growth and increase the sales and earnings per share, two out of the three objectives of the plan are directly linked to sales and marketing:

  • "Accelerate innovative marketing and new products, especially in high potential countries by reallocating and enhancing organizational resources."
  • "Maximize the effectiveness of global advertising and commercial investment funds to build worldwide market shares by rolling-out proprietary and innovative global systems, processes and organizational capabilities".

Marketing within Colgate

Colgate Palmolive was long time considered one of the practical marketing schools where young graduates could learn the best marketing methods. Other marketing reference companies are Proctor and Gamble.

In an article from the Associated Press however, a critic is being made on the way Colgate would have neglected its marketing strengths in the last years, taking their market place for account. The article states: "Colgate has been milking its worldwide brands for far too long, for both its sales and marketing." As a result it would have become easier for local brands to undermine Colgate brands and enter the market and take a share or it.

The marketing efforts are going to be accentuated in high potential markets such as Latin America, Eastern Europe, China, Asia and Russia. These are priority markets for most of todays strong worldwide brands out of which more and more notice the need to «conquer» these markets in order to stay competitive.

Since the glory times of Companies like Colgate, a lot has changed and the new «potential» markets might not operate in the same way. Colgate seems to be aware of this and informs that wherever needed, the current staff may be replaced by people who meet today’s needs better than the current staff.

Future

Colgate has called his plan a four-year plan, but it is added that part of the initiatives are already underway. Anyway, right after the declaration, the share of Colgate went up a bit but didn’t get back to the level it was in mid-2004. Some voices say that the initiatives are good but too late and not strong enough.

A big company like Colgate will not be easy to change drastically or in a short time. Remember the story about Unilever; in 2000 they announced their Path to Growth that was to change a lot within Unilever. It was their five-year plan and with strong decisions they have managed focus on their brand portfolio, sold off 140 business and have by now 12 brands that generate more than 1 billion Euros (five years ago only 4, ten years ago only 1).

Will Colgate also be able to operate strongly and will their marketing be able to gain market shares and enter new markets? Time will tell how their combination of new actions in marketing and sales will affect their results.

  • Sources:

This article is partly based on the following press articles: