Brighter Smiles for the Masses--Colgate vs. P&G

In 2000, Procter & Gamble Co. introduced Crest Whitestrips, a new, revolutionary product that allowed consumers to whiten their teeth at home. With Whitestrips, P&G created an entire new category in oral care, worth $460 million in 2002. Whitestrips sent P&G's main competitor in oral care, Colgate Palmolive Co., scrambling because several patents protected the strips, making it difficult for Colgate to copy the invention. But in September 2002, the tables turned. Colgate introduced Simply White, a favorably priced whitening product that consumers could simply paint on their teeth. One month after its introduction, Simply White had captured one half of the market, and Crest Whitestrips lost more than 50% of its share. However, P&G's tests of Simply White indicated that Colgate's new product was largely ineffective. Had Colgate just committed a major strategic blunder by introducing a product that did not work? And, if so, how could P&G best take advantage of the situation?