Unilever Case
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Transcript of Unilever Case
Unilever- BrazilMarketing Strategies for low Income
Consumers
feel good, look good
and get more out of life
Abhishek Sagne
ICFAI Business School
Hyderabad
CONTENTS
Introduction to case.
Brazil- Economy and customer demographics.
NE and SE Contrast.
Brazilian fabric wash market.
Brand and Marketing Strategy
Product Mix.
Conclusion.
Introduction
Project – “Everyman”Interdisciplinary team – sales, finance, manufacturingExtensive studies to understand Brazilian market demographics.Preparing to enter the low income North-East market – varied opinion.
Brazil- Regional DifferencesBrazil- largest country in Latin America- Population of 170 million people.
Geographically divided into two clusters NE & SE.NE states of Brazil- colonized by Europeans.
Famous for sugarcane & cocoa Plantations.
NE economy is predominantly rural and remained heavily on agriculture.
40% Population is illiterate. In 1996, 65% population was of mixed
African & European culture.In contrast, SE states were developed later in 1880’s.
So, the Economic and Political power rooted in SE region.
SE states are famous for coffee Plantations.
15% Population is illiterate.
Brazil- Regional Differences
Last 3 decades- Brazil has experienced cycles of deep recession and Strong economic recovery.GDP Growth- 8.1% / year during 1970’s and only 2.6% during 1980’s.In 1994, Introduction of new currency ( Reais, R$)In1996, Brazil’s per capita income was $4420.
In SE per capita income -$6600 In NE per capita income-$2250.
Per Capita Income
$4,420
$4,370
$4,310
$1,050 $380
Brazil
Hungary
Malaysia
Indonesia
India
Brazil- Washing Techniques
North East South EastIn Recife(NE) only 28%of households own a washing m/c and 73% women think bleach is necessary to remove stains.
In Sao Paolo(SE) 67% of families have washing m/c & 18% women think bleach is necessary to remove fat stains.
Women here scrub clothes using bars. Then they add bleach to remove stains & little detergent at the end to make clothes smell good.
Women here mix detergent and softener in the washing m/c and bleach only to remove tough stains.
Frequency of washing cloths is 5 times a week.
Frequency of washing cloths is 3.9 times a week.
Considered as most pleasurable activity as they often wash clothes in public laundry, river or ponds.
Most women wash clothes at home.
Brazil- Washing Techniques
North East South East
Cleanliness of cloth is considered as a indicator of dedication of mother to her family.
It is much less Important.
They use lot more soap and less detergent.
As they have washing m/c, they use more detergents.
They are proud that they keep themselves & their families spotlessly clean despite their low incomes.
As most women have washing m/c, It is much less important for the self esteem and social status
How do North Eastern consumers evaluate Detergents?
Along with price, Low income consumers evaluate detergents on six key attributes:
Perceived Power of detergent. Smell of Detergent. Ability to remove stains. Ease with which the powder dissolves in water. Packaging. Harm to colors.
Consumers Expectation from detergents in NE
24%
20%16%
16%
13%
11%
Cleanliness,Whitening.
Smell, softness
Stain Removal
Dissolving power
Packaging
Fading(Harm to Colors)
Unilever Brazil- At a Glance
Unilever- US$65 Billion Company(HQ-Ldondon).
3 Lacs Employees In more than 150 Countries.
In 1996, Portfolio of 1600 brands worldwide and including 45 key detergent brands.
Brazil- started Operations in 1929 and opened First plant to manufacture Sunlight Soap.
Omo - Unilever’s most successful brand was launched in 1957.
Acquired CIA Gessy Industrial for Personal care brands in 1960.
Food Operations initiated in 1970.
Unilever Brazil- At a Glance
In1996, 3 Divisions Lever- For Home care. Elida Gibbs for personal care. Van der Bergh for foods.
In 1996 leader in Detergent market with 81% market share. Achieved with 3 brands viz;
Omo- Detergent powder and a favorite brand.
Minerva- Only Brand to be sold as detergent and laundry soap.
Campeiro- Unilevers cheapest Brand.
Brazil Fabric wash Market
Unilever’s Plan - Low Income Consumers.The Brazilian fabric wash Market consist of two Categories: Detergent powder and laundry soap.Major competitors were: Procter and Gamble,
and other Local detergent manufacturers.Procter and Gamble started operations in Brazil in 1988. Brands were :Quanto (Now Ace).
Odd Fases (Now Bold) Pop- Low price brand. P&G had a market share of 15% in Detergent
market. Threat was from P&G’s marketing expertise
across the world and their formidable R&D.
Brazil Detergent Market
Detergent Market:
In 1996, detergent powder-$106 Million (42000 tons) market in NE at a 17% growing rate.
Barriers: High capital Investment.
Unilevers Market share is 75% which comprises of
Omo-52% share.
Minerva-17% share.
Campeiro-6% share.
P&G Market share is 17.5% which comprises of
Ace-11% share.
Invicto-5% share.
Brazil laundry Soap Market In 1996, Laundry soap
market- $102 Million (81250 tons) market in NE at a 6% growing rate.
Barriers: low as compared to detergent but difficulty in perfuming.Unilever’s Minerva -19% share.Local manufacturer-ASA- Bem-te-vi- 11% market share.Flora Fabril- 6% shareP&G does not make laundry soap.
Key information of detergents in Brazil Market
Brand Packaging Positioning Key Brand facts
Key Data
Cardboard Pack: 1Kg & 500g.
Removes stains with Low quantity of product, thus reducing need for soap or bleach.
Unilever Owned
Brazil’s top brands.
Market pioneer.
Sales:$55 million.
WP:$3/kg
Cardboard Pack: 1Kg & 500g.
Emotional appeal.
Delivers pleasant smell and softness to clothes.
Traditional brand of CIA Gessy Industrial. Acquired by Unilever in 1960.
Sales:
$17.60
million.
WP:$2.40/kg
Brand Packaging Positioning Key Brand facts
Key Data
Cardboard Pack: 1Kg & 500g.
Price brand.
Focus on cost reduction across all dimensions valued by customers.
Acquired by Unilever from Henkel in 1984.
Sales:
$6.05 million.
WP:$1.70/kg
Cardboard Pack: 1Kg & 500g.
Offers superior whiteness. Removes dirt and protect the fabrics.
Acquired by P&G from Bombril in 1996 as Quanto.
Sales:
$11.80
million.
WP:$2.35/kg
Key information of detergents in Brazil Market
Key information of detergents in Brazil Market
Brand Packaging Positioning Key Brand facts
Key Data
Cardboard Pack: 1Kg & 500g.
Key competitor of Minerva with a similar positioning.
Focus on softness.
Acquired by P&G from Bombril in 1996 as Odd Fases.
Sales:
$5.35
million.
WP:$2.50/kg
Cardboard Pack: 1Kg & 500g.
Price brand with small sales in NE.
Focus on cost reduction.
Acquired by P&G from Bombril in 1996.
Sales:
$1.40
million.
WP:$1.70/kg
Key information of detergents in Brazil Market
Brand Packaging Positioning Key Brand facts
Key Data
Cardboard Pack: 1Kg & 500g.
Entry level detergent.
Key competitor of Campeiro. Focus on cost reduction.
Owned by ASA.
Only popular in NE.
Sales:
$5.20
million.
WP:$1.70/kg
The big dilemma
Whether to enter a low income market.
Diverting money from premium brands.
Threat of cannibalization.
Fear of loss of image and reputation
High risk.
Brand and Marketing Strategy
Should the basic marketing and branding strategy be changed to accommodate new product and market ?
Reposition/extend existing brands or introduce new brand ?
Ideal marketing mix and positioning ?
More strategy……
Value proposition - New - Existing
Brand strategy - Develop new brand - Draw from Unilever’s
international portfolio
Marketing Mix
Product :
Product formulation
Key attributes retained
Superfluous attributes eliminated
Fragrance selection
Froth creation
Price
Critical decision
Avoiding cannibalization
Re-pricing existing brands
Value pricing
Striking the right balance
Promotion
Objective of communication
Key message
Image creation
Accurate positioning
Resource allocation
Medium of communication
Packaging
Size of unit packages
Image balancing
Use of sachet
Point of purchase displays
Distribution
Small shop – the key medium
Distribution structure
Cost of distribution is significant and hard to reverse.
Retail credit – a key market feature
Personnel
Local staff
Retail representatives
Recruit, train, maintain quality personnel
ConclusionUnderstanding the North-Eastern market
Decision to enter market
Strategic business unit
Implementing accurate strategies
Growth planning
Market segmentation
Acquisitions
Test marketing