Case Study Unilever

Strategic Marketing Case Study „Unilever“page 1

Unilever‘s QuestGrowth by Shedding Brands

Stefanie BayerMarlen Haverkamp

Heike TiebenLeón Zenteno Tovar

19.05.2010

Strategic Marketing


Agenda

| Company profile

| Case Study

| Q1: Advantages / Risks of reducing the size of product portfolio

| Q2: BCG Growth-Share Matrix and General Electric Market Attractiveness-Competitive Position model (FitzGerald era)

| Q3: Attractions / Dangers for small companies of buying marginal Unilever brands

| Q4: Unilever‘s approach to global marketing of its brands

| Q5: Sale of Bird‘s Eye and its North American detergent business from a strategic perspective


„One Unilever“ with Patrick Cescau CEO, Antony Burgmans

non-executive chairman

Selling of Cosmetics and Fragrances arm

Timeline of the Case Study

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Niall FitzGerald „Path to Growth“ strategy (from 1600 to 400 brands)

Goals achieved

Departure of Niall FitzGerald

Below expectations

Selling of Bird‘s Eye

Selling of NA detergent business

Mr. Ceseau retires, Paul Polman becomes CEO


Question 1

What were the advantages to Unilever of reducing the size of its brand portfolio?

What were the risks?


The brand clearing

Regional and local brands are up for sale immediately or over a period of time

Source: H. Sattler, F. Völckner (2001). Markenpolitik. Stuttgart.


Advantages of the „path to growth“

| Get rid off unprofitable brands, factories, locations…| Cost reduction (brand development, advertising, storage, transportation,

management …)| Reduction of overlapping segments / bundling | Avoid intervening of Antitrust Office (commitment to sale) | Strengthen and promote the remaining brands| Reallocation of resources (elimination of redundancies)| Focusing on “Core brands”, exploitation in new markets| Opportunities to brand extension to serve a whole segment


The “path to growth” as a risk?

| Loosing (local) market share (end customer)| Shedding brands that could be successful in other markets| Inadequate change management| Strengthen your competitors


Question 2

To what extent does it appear that Unilever followed| (i) the BCG Growth-Share Matrix, and| (ii) the General Electric Market Attractivenes-Competitive Position model

approachesto portfolio planning during the FitzGerald era?


Mar

ket

attr

acti

ven

ess

high

medium

low

lowmediumhigh

Competitive strength

100%

0%

0%

100%

54

1

2

3

The two portfolio planning approaches

| BCG Growth share matrix 2 dimensions:

- Market growth- Relative market share

4 Cluster provide strategy guidance

| General Electric Market Attractiveness Competitive Position model 2 dimensions:

- Market attractiveness: market size, growth rate, rivals, entry barriers, …

- Competitive strength: market share, reputation, cost advantage, service quality, …

5 zones provide strategy guidance


Measures Portfolio effects and examples•Critical product selection based on current market share (> 2 top sellers)

•Concentration on high-growth brands

•Cut off „poor dogs“ and „question marks“ Timotei shampoo, Brut deodorant

•Savings used to increase brand expenditures for strong brands

•Strengthen „stars“ to maintain status ice cream brand alignment (heart-shaped logo)

•Boost sales of„cash cows“ to skim the market Magnum, Dove

•Selective aquisition to enter new markets •Addition of premium brands Ben & Jerry•Penetrate existing markets •Promote development of „stars“ Slim fast

BCG growth share matrix orientation

Unilever’s portfolio measures (2000 – 2004)


Question 3

What are the attractions to small companies of buying marginal Unilever brands?

What are the dangers of doing so?


Attractions / dangers for small companies acquiring Unilever brands

| Attractions– Marginal brands for Unilever could represent the acquisition of a well known product

to a small company in order to increase its revenues– Increase of market share if it continues to launch the brand– Decrease competition if it discontinues the brand– Attractive cost of acquiring a brand maximizing cost-benefit– Get introduced into a new market with a positioned brand– Some brands were well position in local markets, small companies in that market

could benefit itself| Dangers

– Image of some brands might be bad and will never increase acceptance of customers– Brand name might be strong related to Unilever’s portfolio– Selling a brand as unwanted might impact on the customer’s taste in the same way– A brand transfer from one company to other doesn’t mean transfer of same number

of customer


Question 4

Comment on Unilever‘s approach to the global marketing of its brands.


The global marketing approach

Brand Building Team Germany

Brand Building Team France

Brand Building Team UK

Brand Building Team NL

Brand Development Team HQ

….


Comments on the global marketing approach

+ Financial Synergies– Human Resources– Economies of scale (marketing material)

+ Improvement of customer recognition– Standard packaging– Same advertising campaigns– Same logo (e.g. Ice cream “Heartbrands“, margarine “Becel” and “Flora”) or also

same brand names (“Lipton”, “Rexona”)+ Concentration on the strongest brands+ Same approach for all products makes it easier to launch products in new

markets (marketing package)

– Taking away power from local teams (motivation)– Working on marketing package only with key countries


Question 5

Why did the sale of Bird‘s Eye and its North American detergent business make strategic sense for Unilever?


Sale of Bird‘s Eye, Detergent (laundry) business

| Focus on core / large brands – dispose noncore brands– Detergent Business: Brands „All“, „Snuggle“, „Wisk“, „Surf“ (sales of $1 bn in 2007)– Bird‘s Eye: Brands „Iglo“, „Bird‘s Eye“, „Findus“ (sales of $1,2 bn in 2005)

| Focus on emerging markets / faster-growing sectors (higher growth rates and larger sales revenue)– Detergent Business: NA, Canada, Puerto Rico– Bird‘s Eye: 11 European countries

| Focus on core categories food, cleaning, personal care (sold cosmetics and fragrances arm)– Bird‘s Eye: frozen food

Also:| Trend towards health an well-being - consumer prefer fresh food (in case of

Bird‘s Eye)


http://www.unilever.com/

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Case Study Unilever

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