But it may be time to shuffle the deck. And that seems to be what Colgate-Palmolive Co. Chairman-CEO Reuben Mark is doing.
Said Mr. Mark, "There is no question that we are being more aggressive in the U.S. than we have been. The half-dozen new products launched in the last 11 months are good evidence of that. In line with expected overall good results for the total corporation in 1995, we expect the U.S. to perform better next year than this year."
A global marketing juggernaut, Colgate has been widely faulted for not taking care of business at home and being too complacent about the long-term upside in emerging markets where Procter & Gamble Co. and Unilever are trying to flex more muscle.
For the first nine months of 1994, Colgate's worldwide sales increased 6% to $5.6 billion. But North American sales declined 9%, a downturn attributed to retail inventory reductions from its shift to everyday low pricing-a practice that induces retailers to buy-to-need rather than load up when special promotional prices are proffered. About 50% of the company's business is now in EDLP.
"The critical challenge for Colgate and for all companies who aren't No. 1 or No. 2 in certain categories," said Burt Flickinger, a consultant with A.T. Kearney, New York, "is the largely worldwide retailers, as they shrink store size, will carry only the top one or two brands plus private label. Colgate has to vigorously reinvest in ad spending and product innovation in the U.S."
While the Colgate name is the brand leader or No. 2 in 150 countries, as many as 20 brands out of 45 in the U.S. have less than a 1% share while another nine have a 1%-2% share, "making Colgate one of the worst players in terms of brand dominance," PaineWebber analyst Andrew Shore wrote in a report earlier this year.
Colgate is the leading U.S. marketer of toothbrushes and liquid soaps and is No. 2 in toothpastes. But it stands No. 3 in deodorants, No. 4 in bar soaps and liquid laundry detergents, No. 5 in powder laundry detergents, and doesn't win, place or show in hard-surface cleaners, according to Information Resources Inc.
When Colgate consolidated its agency roster in February, U.S. ad spending was projected to rise 30% for 1994, following an 8.2% cut in 1993 to $88.8 million. Instead, for the first eight months, it dipped 1.7% to $65 million from the year-ago period, according to Competitive Media Reporting, though Colgate maintains its spending against higher-margin businesses like oral care is up.
In the past few months, Colgate has stepped up U.S. product launches, including: Irish Spring Waterfall Clean soap, Murphy's Kitchen Care cleaning products, Colgate Platinum toothpaste and Palmolive Dishwashing Liquid & Antibacterial Hand Soap. And in the first six months of 1995, Colgate will spend $40 million to go after Unilever's highly successful Mentadent with new Colgate Baking Soda & Peroxide With Tartar Control toothpaste (AA, Dec. 12).
David Edelman, a partner in the Boston Consulting Group, said Colgate is becoming "more aggressive with new products, looking at a lot of products they have been able to aggressively push out in foreign markets with the possibility of bringing them back to the States."
Colgate Senior VP-Global Business Development John Steel said it's really about "technology more than products. It's a global technology effort." Colgate, for instance, has taken safe cleaning technology honed in Europe on Ajax and applied it to the Murphy's lines.
But Colgate is also leveraging successful overseas products in the U.S. Fabuloso, a floor cleaner launched in Latin America, is coming into the U.S. targeting Hispanic markets. Ajax Con Expel, a cleanser with bug repellent that first rolled in Latin America, is awaiting Environmental Protection Agency approval. And Total, the triclosan toothpaste that has $150 million in international sales, is expected to almost double sales when the Food & Drug Administration finally approves the ingredient for use in U.S. oral-care products.
Colgate's international markets and pet dietary business have long been its strength; Latin America, Asia-Pacific and Hills Pet Foods its growth drivers.
But some analysts express long-term concern about emerging markets. "You don't unseat the No. 1 in toothpastes very easily," said Morgan Stanley analyst Brenda Lee Landry. "But detergents and bleaches will present a problem for Colgate. Procter & Gamble continues to make joint ventures and buy local companies. And in some parts of the Third World P&G is larger in total though they are also in more categories. In Latin America, P&G for the year ended June 1994 had $2.2 billion in sales while Colgate for 1993 had $1.5 billion."
Observed Mr. Edelman: "They have to switch their thinking in developing countries from building to consolidating their positions. It's not dissimilar from the position of Coca-Cola and others. They have to move from a distribution focus to a marketing focus."