Unilever Brazil

5Cs Situation Analysis

Consumer Needs:

1. Market size and growth:

In 1996, detergent powder was a $106M (42,000 tons) market in NE, growing at an annual rate of 17%. The laundry soap market was 102M (81,250 tons), growing at an annual rate of 6%.

2. Market segments:

Market segment consisted of low income NE population in Brazil who primarily use laundry soap for washing followed by detergents for cleaning tough stains.

3. Benefits that consumers are seeking:

Although the consumers would love to buy Omo, her tight budget meant that she could only buy cheaper local brands.

4. Retail channel:

Consumers purchase the product from small local kirana shops since they offer credit facilities.

5. Consumer information source:

Television because of its high penetration rate, recommendations by the local shops

6. Buying process:

Thoughtful cost considerations

Company Resources:

1. Product line:

Unilever has a 19.1% share with Minerva in its laundry soap category and 75% market share in its detergent powder category. In the detergent powder category, its flagship product Omo is perceived highly on both price and quality indices. Minerva ranks well mid-way on both perceived price and quality indices, while Campeiro ranks low on both.

2. Image in the market:

Unilever has been known to mostly cater to high and medium income population categories, and has traditionally kept out of low-income consumer groups, fearing its brand image in the local and global market and investor communities.

3. Technology and experience:

Unilevers research team possesses technical know-how to manufacture products as desired by the business division. However, it hasnt had much experience with low-income consumer group.

4. Goal:

To increase its penetration to low-income consumer group in detergent or laundry soap categories, depending on which one is more profitable

Competitor Vulnerabilities:

1. Actual or potential:

P&G is the next biggest market share holder in the detergent powder segment; however, it lies far behind Unilever. It is difficult for a new player to enter this segment since it has a high barrier to entry because of high fixed costs of production. It is likely that P&G will launch its own low-income brand in due time, and Unilever must act before it is too late.

On the other hand, the laundry soap segment is fragmented with small local brands with no competitor holding a significant chunk of the market. Barriers to entry are low, and most companies struggle to keep its profit margin.

2. Strength and weaknesses of its competitors:

The laundry soap market category is highly fragmented with local brands mostly fighting on price.

The detergent powder category is mostly dominated by Unilevers existing product Omo, P&Gs Ace being far behind.

Collaborators:

1. Distributors:

Unilevers existing generalist distribution caters mostly to malls and supermarket consumers, and they dont have a high outreach for local small shop owners. However, they can try to reach out to those stores for an additional variable cost.

Possible Questions for Unilever:

1. Should Unilever change its current marketing and branding strategy? Could it reposition its existing cheaper brands such as Minerva and Campeiro or should it launch a new brand?

2. If it is launching a new brand, what would be its ideal marketing and positioning strategy?

3. At what cannibalization rate would Unilever start losing money?

4. Did Unilever had right skills and organization to compete in this market?

5. What would Unilever gain and what would it risk if things went wrong?

6. Is positioning of the existing brands ideal? Would it be really necessary to develop a new CVP?

7. Could Unilever use a brand from its international portfolio of existing brands?

8. If Unilever went ahead with Campeiro, would it deliver the benefits that low income consumers wanted?

9. Minervas formula might be too expensive in case a new brand is launched. What would be the ideal formula for the new brand if it decides to launch it?

10. What would be the right packaging type and size?

11. How would the new brand be priced?

12. Should Unilever use coupons or other means to reduce the cost of the product for low-income consumers?

13. Should it change the price of Omo Minerva and Campeiro?

14. How should Unilever communicate its new strategy to consumers? What is the mode for marketing that it would use?

15. What should be the key message for marketing?