Editor's Note: In the mid-1950s, P&G's new Crest toothpaste gained a modest 10 percent market share. But starting in 1960, Crest would dominate toothpaste sales for thirty years. What changed? P&G spent big to make Crest a therapeutic as well as a cosmetic product, and the endorsement of the American Dental Association shot Crest into orbit. This excerpt comes from a broader look in Harvard Business School's Business History Review at toothpaste innovation and marketing from 1955 to 1985.
The significance of a toothpaste that offered genuine dental protection was well understood by manufacturers in the 1950s. A detailed report on the market by Unilever in 1959 made the following observation:
Unfortunately, the true therapeutic toothpaste giving a high degree of protection against dental caries still remains a dream, one which seems unlikely to come true for some time. If this problem could be solved it might give us a world beater.44
Until the publication of this report, Unilever's personal care business (then known as "toilet preparations") remained in the shadow of its margarine and detergents operations, and it had conducted relatively little research on toothpaste. Yet, while Unilever's managers pondered the potential of a "true therapeutic toothpaste," their rivals at P&G had already been committing considerable resources to developing one, and by the end of the 1950s they were on the verge of achieving a major breakthrough.
Growing scientific evidence that a chemical, fluoride, helped to reduce the likelihood of developing dental cavities had intrigued managers at P&G even before that company became involved in the dentifrice market. With no experience in the field of dental research, in 1950 P&G enlisted Indiana University to carry out research for the purpose of developing a therapeutic toothpaste. Over the next fourteen years, P&G would spend over $3 million on this joint project, working with researchers at Indiana (led by Dr. Joseph Muhler) to create a product that could be proved effective in reducing tooth decay.45
By 1952 Muhler and his team had managed to produce a dentifrice product containing stannous fluoride, which was believed to protect against cavities. A patent was issued to Indiana University, although P&G paid royalties for an exclusive contract to use the formulation. P&G's own scientists then designed a process to mass-produce the product.46 The development (or invention) of this product, however, was only the first step in a much longer process of innovation, which would culminate in P&G's domination of the U.S. toothpaste market with its Crest brand. The story of Crest toothpaste, in fact, provides a clear indication of the distinction between "invention" and "innovation" made by Schumpeter, who argued that "to carry any improvement into effect is a task entirely different from the inventing of it, and a task, moreover, requiring entirely different kinds of aptitudes."47
|Crest became the first brand of toothpaste to receive an endorsement from the American Dental Association.|
Between 1952 and the initial launch of Crest in 1955, Muhler's team at Indiana University conducted trials involving 1,500 children and 400 adults. Around half of the trial participants showed some reduction in levels of tooth decay.48 P&G was confident that its product was effective, and the Crest brand was rolled out nationally across the country in January 1956. The promising clinical results achieved in product trials, however, were not reflected in market share for the new brand. In both its test markets in 1955 and its national launch the following year, Crest struggled to hold as much as 10 percent of the toothpaste market. This was hardly disastrous, but the brand still lagged a long way behind the market leader, Colgate, whose market share was hardly affected by the new entry (Table 4). If Crest was indeed the first genuinely therapeutic toothpaste, its benefits were not immediately apparent to U.S. consumers, who, it seems, remained skeptical of advertising claims.49
The breakthrough that resulted in Crest's dominating the U.S. market came four years after its national launch (and eight years after its "invention"), when, in 1960, it became the first brand of toothpaste to receive an endorsement from the American Dental Association (ADA). P&G had first approached the ADA in 1954 with evidence from clinical trials of Crest, but a dental profession long skeptical of the claims made by toothpaste advertisers was not easily persuaded of the therapeutic benefits of this new brand. Scientists and marketing managers at P&G remained in close contact with the ADA, however, and between 1954 and 1959 the company continued to invest heavily in further research at Indiana University. The effectiveness of Crest was analyzed in twenty-three separate group studies, each one lasting two years and costing between $10,000 and $20,000 to conduct. When the ADA staff eventually felt that enough evidence had been amassed, a formal submission was made to the Association's Council on Dental Therapeutics, which agreed that Crest had been shown to be "an effective anti-caries" agent.50
In 1960 Crest was given a "category B" endorsement by the ADA, indicating a reasonable level of effectiveness in preventing tooth decay. This was enough to set it apart from all other toothpastes on the market and to convince many consumers that its therapeutic claims were genuine. Within two years, Crest's market share had leapt to over 30 percent, making it the new market leader.51 Yet P&G's research efforts did not stop there. Over the next few years, as competitor brands also added fluoride to their formulations and sought ADA endorsements of their own, clinical trials continued at Indiana. By 1964 Crest had been tested in fourteen different types of situation (compared with just five in 1960), and its endorsement in that year was elevated to "category A," which meant that the ADA seal could be displayed in Crest advertisements.52 It was not until 1969 that Crest's nearest rival, Colgate, was able to obtain a similar endorsement, by which time it lagged some fourteen percentage points behind the market leader.53
The impact of Crest's success on the U.S. market was a good illustration of Schumpeter's concept of "creative destruction," in which markets are periodically revolutionized, with new products, systems, or ideas replacing existing ones.54 Crest was important not simply because it became market leader in the United States but also because it triggered a major readjustment in the entire market. The introduction of fluoride into toothpaste, and the subsequent endorsement of these products by the ADA, effectively changed the rules of the game in toothpaste marketing. First-mover advantage in this new marketplace belonged not to Colgate-Palmolive, but to P&G. Its Crest brand would remain the market leader until the 1990s. The extent to which toothpaste shifted out of the cosmetic category to become known as a therapeutic product in the United States between the 1950s and the 1980s is illustrated in Table 5.
The rapid growth of the "therapeutic" segment was caused partly by the success of Crest and partly by Colgate's reclassification, resulting in its switch from a cosmetic to a therapeutic marketing platform. For most of the thirty-year period covered in this article, Crest's market share was around 35 percent, compared with Colgate's, which was about 20 percent. Most of the new brands to enter the market in the 1960s, however, were positioned in the cosmetic sector, as new entrants competed to fill the perceived gap left by Colgate's repositioning. Beecham was first to do so, launching its Macleans brand in 1962, followed by the introduction in subsequent years of smaller cosmetic brands by Alberto Culver (Mighty White) and Hazel Bishop (Plus White). Colgate reestablished itself in the cosmetic sector with the launch of Ultrabrite in 1967, while Unilever introduced Close-Up in 1970 (though by this time it had withdrawn one of its other cosmetic brands, Stripe, from the market). While Macleans, Ultrabrite, and Close-Up all enjoyed some success in their early years (Close-Up held a market share of 14 percent in 1971), they fell into decline in the 1970s and 1980s. These three brands, in addition to P&G's Gleem and Unilever's Pepsodent, accounted for only around 10 percent of toothpaste sales by 1985.
The most successful new toothpaste brands to be launched in the U.S. market during the 1970s did not fall entirely into the cosmetic sector, but neither did they compete directly with Crest or Colgate. Beecham's Aquafresh and Unilever's Aim could best be described as brands that straddled the cosmetic and therapeutic sectors. Aim, launched in 1973, was a gel dentifrice promoted for its distinctive texture and supposedly superior taste. The main functional claim made for it, however, was effectiveness against caries. Yet, despite being positioned directly against Crest, the smaller cosmetic brands were the ones that lost out as Aim gained a 10 percent market share. With Aquafresh, Beecham made a rather more deliberate attempt to straddle the cosmetic and therapeutic sectors of the market. This product was part paste, part gel, and it came out of the tube in three stripes. One stripe was described as containing fluoride, another was advertised as fighting plaque, and the third was held out as a breath freshener. Like Aim, the brand was successful (maintaining a share of between 11 percent and 12 percent in the first half of the 1980s), and gains were achieved at the expense of the purely cosmetic brands.55
The shift from cosmetic to therapeutic toothpastes was also evident in Europe, although there the therapeutic sector developed somewhat differently than it had in the United States. P&G took Crest into Europe, but perhaps because of legislative restrictions, the brand was surprisingly unsuccessful outside its home market.56 More significant, as far as European markets were concerned, was the repositioning of Colgate as an anticaries product. Colgate was an important brand in many European markets, and its move to the therapeutic sector caused a number of other leading manufacturers to follow suit. Unilever, for example, added fluoride to its Pepsodent brand in Sweden and to its Gibbs SR brand in the United Kingdom in the early 1960s. By the 1970s Unilever was marketing Signal as an anticaries product in most parts of Europe.57
|The first mover in the "gum health" sector of the toothpaste market was the German firm Blendax.|
In Germany and Austria, therapeutic brands, such as Blendax's Blend-a-Med and, later, Unilever's Mentadent, promised to protect gums rather than fight dental caries. Indeed, throughout Europe, the gum health sector was almost as important as the anticaries ones in developing the therapeutic toothpaste market.
The first mover in the "gum health" sector of the toothpaste market was the German firm Blendax (acquired by P&G in 1988). Its Blend-a-Med brand, introduced in 1951, can lay claim to being the first therapeutic toothpaste to be sold in either the United States or Europe. For almost the first two decades of its existence, however, this brand could only be purchased from pharmaciesit was not sold as a mass-market item. The limited distribution of Blend-a-Med meant that it did not build up a significant market share in the 1950s and 1960s, nor did it attract the attention of larger competitors. Only in 1968, when the brand became available for the first time in food outlets, did the gum health sector of the toothpaste market really take off.
In Austria, where it was first distributed on a mass scale, Blend-a-Med reached a market share of close to 17 percent by 1971. In Germany, the switch to selling through food outlets had a more pronounced effect on sales: the brand's market share reached almost 25 percent by 1973. In both countries, Blend-a-Med's long-standing identity as a specialized health care product that was sold through pharmacies built its reputation over decades. There was no equivalent of an ADA endorsement to reassure consumers that the product was effective, though Blendax did enjoy good public relations with the dental profession. Blend-a-Med was widely advertised as "the toothpaste the dentist gives to his family."58 Once it was firmly established in the mass market, however, Blend-a-Med was subjected to intense competition from the multinational toothpaste manufacturers as they developed their own gum health brands. In the early 1970s, Unilever responded by launching Mentadent in a range of European countries, and Colgate-Palmolive did likewise with its Dentagard brand. By the mid-1980s, Mentadent was available in ten countries and Dentagard in seven.59
Blend-a-Med's role in pioneering this market sector in Europe was similar to the part played by Crest in triggering the growth of the anticaries sector in the United States. Interestingly, neither Crest nor Blend-a-Med was very successful outside its home market. Instead, the multinational companies, which were forced to imitate the first movers, provided the impetus to spread innovations to new national markets.
Between 1971 and 1985 the decline of cosmetic toothpaste brands was even more dramatic in Europe than in the United States (Table 6). The remarkable growth of gum health brands in Europe in the 1970s, in addition to the strong anticaries sector, meant that cosmetic brands constituted only 10 percent of the total market by 1985. The shift away from cosmetic toothpastes to therapeutic ones was clearly an international phenomenon, but nowhere was this more pronounced than in the United States and Europe.
44 "World Toilet Preparations Survey, 19591960," 28.
45 "Toothpaste Tempest," Chemical Week (22 Aug. 1964): 53-4.
46 Schisgall, Eyes on Tomorrow, 205.
47 J. A. Schumpeter, The Theory of Economic Development: An Enquiry into Profits, Capital, Credit, Interest and the Business Cycle (trans. by Redvers Opie, Cambridge, Mass., 1934), 88; also Mark Casson, ed., Entrepreneurship (Aldershot, 1990), 128.
48 "Adult Approach," Chemical Week (2 Apr. 1955): 80-3.
49 "Competition in the US Toothpaste Market," Table 3; Schisgall, Eyes on Tomorrow.
50 "Toothpaste Tempest"; Schisgall, Eyes on Tomorrow.
51 "Competition in the US Toothpaste Market," Table 3.
52 "Toothpaste Tempest," 53.
53 "Dentists Endorse Colgate Formula," Business Week (11 Oct. 1969), 467; "Competition in the US Toothpaste Market," Table 3.
54 J. A. Schumpeter, Capitalism, Socialism and Democracy (London, 1976 edition), 81-6.
55 "Competition in the US Toothpaste Market," 7-8.
56 In many European countries, such as France, Belgium, Sweden, and the Netherlands, any products making medical claims, could only be distributed through pharmacies. Unilever Marketing Division, "Gum Health Toothpaste Review," June 1974, Reports Box 8, SC 5216, Appendix 2. Unilever Archives, London [UAL hereafter].
57 "Toothpaste Strategy," paper 3.
58 See "Toothpaste Strategy: An Economics Contribution," paper 6, 2; "Gum Health Toothpaste Review," 12; L Sutton and F. van den Berg, "Blendax: A Profile of What P&G Have Bought" (Nov. 1987), ES 87042, UAR.
59 "Toothpaste Strategy," paper 4, 2.