The world’s largest toothpaste maker Colgate-Palmolive Co.’s has reported declining in its sales due to the harsh competition. It’s fourth-quarter earnings slipped 1.1%. The company uses a costly amount of money for higher materials, and got a lower than expected revenue. Colgate reported a profit of $624 million from usually getting $631 million. The gross profit margin shrunk from 59.5% to 59.1% due to higher material costs, negative foreign exchange effects and increased promotional investments. Colgate’s biggest market by sales is in Latin America, but its profits have dropped 7.5%, and in North America sales have dropped 2%. Looks like this is not a good year for Colgate-Palmolive Co. Colgate is well recognized all around the world and is often what people usually buy. But because other toothpaste brands are cheaper and just as good people have stopped buying Colgate toothpaste.
http://online.wsj.com/article/SB10001424052748704268104576107810159628214.html
I find it really interesting that Colgate is using better materials and people aren't recognizing this or aren't caring enough to buy the higher quality brand. It is true that the economy is going through a rough time so people are trying to save money but one would think that people would stay with the brand they know and trust. I am interested to see how Colgate will bounce back from this deficit, either with a new product maybe or better advertising. Until the economy makes a turn for the better, they may need to lower their prices.
ReplyDeleteI think Colgate needs to find a way to make their toothpaste cheaper or else they will continue to drop. They are loosing out to the cheaper brands. The only problem is how can they just use not as good ingredients if people are used to their better materials. They need to find a way to lower prices while keeping the same quality of ingredients.
ReplyDelete