Church and Dwight (Oral care product)

Posted by Winnie Melda on October 12th, 2018

Church and Dwight Company is a leading producer of oral care products. The company’s consumer products are organized into two segments. These include consumer domestic, which encompasses both household and personal care products, and consumer International, which primarily consists of personal care products. The company develops manufactures, and markets household, personal care, and specialty products, in its current and new global markets primarily in North America.
Church and Dwight Company current competitors
The likely key competitors in its current markets for Oral Care product are the Johnson & Johnson, Colgate or Procter & Gamble. These key competitors have more than seven times its market capitalization and as a result, benefit from a scale advantage. This difference is especially reflected in the operating margins and the marketing expenses. Hence these competitors can benefit from a leading brand and economies of scale. For example when the prices of the oral care products went up it negatively affected the margins of several companies. As a result of the threats from the competitors, Church & Dwight principally competes in niche markets, to have  some of its brands exposed to “main markets”. As a result the company is constantly engaged in a price war which is exactly what is happening in oral care product  segment. Moreover, Church & Dwight is further suffering from aggressive pricing since input costs are raising rapidly and Church & Dwight is unable to increase its prices due to its large exposure to the value segment. (Ludovic 2012)
In a situation where the US economy improves and customers begin to trade up, Church & Dwight will most likely lag its peers.
Church and Dwight Company international competitors
Internationally, the Company competes in similar competitive categories for most of its products. Its international competitors include The Procter & Gamble Company (“P&G”), The Sun Products Corporation, The Clorox Company, Colgate-Palmolive Company, S.C. Johnson & Son, Inc., Nestle Purina PetCare Company. Many of these companies have greater financial resources than the Church and Dwight Company and have the capacity to outspend the Company if they attempt to gain market share. (Ludovic 2012)
For example a company such as P&G, has M market is not attractive for Church & Dwight especially when it has to build a brand name. For that reason, these niche markets constitute a clear competitive advantage for Church & Dwight.
Potential competitive advantage of the company and how it’s differentiated from its competitors
Company’s domestic consumer products are sold under the ARM & HAMMER brand with is key derivative trademark being the oral care dental toothpaste. Therefore the combination of the core ARM & HAMMER brand and the other eight power brands make Church & Dwight one of the leading consumer packaged goods companies in the United States. Moreover, Church & Dwight products grew their market share in 6 of its eight power brands in 2010. (Ludovic 2012)
In its current Business, Model Church & Dwight concentrates its efforts on niche markets, leading brands, and a focused portfolio. This gives the company a competitive advantage and which compensate for its disadvantage of scale. Moreover, Church & Dwight owns several strong brands which have an excellent reputation with customers and a strong penetration with retailers. For example, its trademark brand is the Trojan or Arm & Hammer. These brands a have leading market share since they principally compete in niche markets. This is an important factor for Church & Dwight since it can avoid competition from larger peers. (Church & Dwight annual report 2014)
The company’s value brands have clearly benefited from consumers trading down during the recession, although this has resulted in a negative mix impact to sales due to the lower price per unit. (Church & Dwight annual report 2014) Its premium brands are primarily personal care products in niche categories. This include value-oriented toothpaste which are also Value-branded products that typically sell at 33-50% of the price of premium brands. (Church & Dwight annual report 2014)
On the other hand Church & Dwight’s capital base in manufacturing, logistics, and , logistics, and purchasing provides it the  possibility to achieve a sustainable competitive advantage of its rival competitors. This is attributed to the fact that eight of their power brands represent 80% of their revenues and profits of which seven were acquired in the past ten years,. (Ludovic 2012)
Finally, despite its defensive positioning, management has proven that it can grow its business by acquisitions and defends itself effectively against larger competitors. Hence it has a assumed sales growth and margin expansions.
In addition, Church and Dwight market Share Creates an advantage. It has a  leading market share in its Oral care products that gives it’s a competitive advantage over its rival competitors. It’s higher market share, the more power it will have with retailers. This helps to ensure that its products are given prime shelf space.
Second, if a product is in high demand, the company will be able to produce it in large volumes, resulting in manufacturing and distribution efficiencies. As a result its substantial market share translates into more sales dollars, which the company can use for additional advertising and promotional spending to support the brand further. The company has also managed to leverage a strong brand name by developing product line extensions. (Euromonitor International ,2015)
Church and Dwight Company potential weaknesses about the competition?  How are competitors portraying its weaknesses?
Despite being the leader in oral care products, Dwight and Church household products market find it difficult to enter on a small scale as the manufacturers of most household products. This is because of its competitors utilize inherently large-scale processes that require significant capital input to set up. Such processes are used by some of its key competitors such as Procter & Gamble, Johnson & Johnson, and Colgate that dominates the industry.
Also the, because of the competitive environment facing retailers, the Company faces pricing pressure from customers, particularly high-volume retailer store customers, who have increasingly sought to obtain pricing concessions or better trade terms. These concessions or terms could reduce the Company’s margins. Furthermore, if the Company is unable to maintain price or trade terms acceptable to its customers, they could increase product purchases from competitors and reduce purchases from the Company, which would harm the Company’s sales and profitability. (Ludovic, 2012); Church & Dwight, 2015)

References
Church & Dwight (2015) annual report, 2014
Colgate-Palmolive Co in Home Care | Aug 2015
Euromonitor International (2015) Church & Dwight Co Inc in Home Care
Ludovic J. (March 23, 2012) Church & Dwight Qualitative Analysis
Procter & Gamble Co, The in Home Care | Jul 2015