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Analysis of Probabilities - Colgate

In the mid-1990s, Colgate-Palmolive had developed a new toothpaste for the U.S. market, Colgate Total, with an antibacterial ingredient that was already being successfully sold overseas. However, the word antibacterial was not allowed for such products by the Food and Drug Administration rules. So Colgate-Palmolive had to come up with another way of marketing this and other features of their new toothpaste to U.S. consumers. Market researchers told Colgate-Palmolive that consumers were weary of trying to discern among the different advantages of various toothpaste brands and wanted simplification in their shopping lives. In response, the name "Total" was given to the product in the United States: the one word would convey that the toothpaste is the "total" package of various benefits.

Young & Rubicam developed several commercials illustrating Total's benefits and tested the commercials with focus groups. One commercial touting Total's long-lasting benefits were particularly successful. Meanwhile, in 1997, Colgate-Palmolive received FDA approval for Total, five years after the company had applied for it.

The product was launched in the United States in January of 1998 using commercials that were designed from the more successful ideas of the focus group tests. A print campaign followed.

"Within three months, Colgate grabbed the number one market share for toothpaste. Ten months later, 21% of all U.S. households had purchased Total (a product of Colgate) for the first time. During this same period, 43% of those who initially tried Total purchased it again. Colgate Total had been successfully introduced into the U.S. market."

1) What probabilities are given in this case? Use these probabilities and the probability laws to determine what percentage of U.S. households purchased Total at least twice in the first 10 months of its release.

2) Is age category independent of willingness to try new products? According to the U.S. Census Bureau, approximately 20% of all Americans are in the 45-64 age category. Suppose 24% of the consumers who purchased Total for the first time during the initial 10-month period were in the 45-64 age category. Use this information to determine whether age is independent of the initial purchase of Total during the introductory time period. Explain your answer.

3) Using the probabilities given in Question 1, calculate the probability that a randomly selected U.S. consumer is either in the 45-64 age category or purchased Total during the initial 10-month period. What is the probability that a randomly selected person purchased Total in the first 10 months given that the person is in the 45-64 age category?

Solution Preview

1) What probabilities are given in this case? Use these probabilities and the probability laws to determine what percentage of U.S. households purchased Total at least twice in the first 10 months of its release.

I put the probabilities in bold. The percentage of US households that purchased Total at least twice is 0.21 x 0.43 = 0.0903, or 9%.

2) Is age category independent of willingness to try new products? According to the U.S. Census Bureau, approximately 20% of all Americans are in the 45-64 age category. Suppose 24% of the consumers who purchased Total for the first time during the initial 10-month period were in the 45-64 age ...

Solution Summary

This solution calculates using simple equations the probabilities in the case, as well as determining whether age category is independent of willingness to try new products.

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