Strategies adopted by Unilever
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 3391 words||✅ Published: 17th May 2017|
On the basis of the case study and marketing theories different aspects have been explained in the assignment as well as a new strategy which Unilever needs to adopt to target low-income consumers.
Marketing is an organizational function and a set of process for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. 
The focus of the marketing concept is to satisfy consumer’s wants and needs and therefore we need to understand what those needs and wants are. The decision process and action of people involved in buying and using products are termed their buying behavior – those who purchase products for personal or household use. 
Types of Consumer Buying Behaviour
Consumer behavior can be classified into one of three broad categories: 
Routine Response Behaviour: Behaviour that occurs when buying frequently purchased low-cost, low-risk items that need little search and decision effort.
Limited Decision-making: Behaviour that occurs when buying products purchased only occasionally, for which a moderate amount of information gathering and deliberation is needed.
Extensive Decision-making: Behaviour that occurs when a purchase involves unfamiliar, expensive, high-risk or infrequently bought products for which the buyer spends much time seeking information and comparing brands before deciding on the purchase.
The North-eastern Brazilian buyers/consumers fall under the second category of limited decision-making for purchasing detergent powders as they bought detergents primarily to make the clothes smell good and their usage was less as compared to South-eastern consumers i.e. 11.4kgs per year per buyer. 
For laundry soap, the North-eastern consumers fall under the Routine Buyer’s category as they used a lot more soap then detergents (Exhibit 3). 53%  of the total population in NE plunged under the low income group and due to the tight family budget they owned few clothes which forced them to buy laundry soap over the detergent powder as soap was cheap. They washed their clothes more frequently i.e. 5 times a week (versus 3.9 in SE). 
Influence on Consumer Decision Making
A number of different factors in consumer’s life influence the consumer decision making process. The 3 factors are Social Influence, Internal Influence and Situational Influence which are classified in Appendix 1. 
Culture is defined as the set of basis values, perceptions, wants and behaviors learned by a member of society from family and other important institutions.  Brazil has a strong cultural influence in making decision, as in 1996, 65% (versus 30% in SE)  of population in Northeast was of mixed African and European origin. Lifestyle, culture and religion all share African influence.
If you need assistance with writing your essay, our professional essay writing service is here to help!Essay Writing Service
It is defined as an individual’s enduring evaluation, feelings and behavioral tendencies towards an object or activity.  The attitude of Northeastern women for washing clothes in Recife was different because only 28% of household used to wash their clothes in washing machine and the rest 73% of women used to scrub clothes using laundry soap bar. They viewed washing clothes as pleasurable activity, since they washed their clothes at public laundry, river or pond where they used to meet and chat with their friends. Whereas in Southeast 67% of families owned washing machine and washed clothes at home alone. 
Is the set of unique psychological characteristics that consistently influence the way a person responds to situations in the environment; it also refers to the way people see themselves and the way people believe others see them.  People in North-east had a very high value attached to cleanliness as it was the main topic of gossip and an indication of dedication to house-work. In South-east cleanliness was of less importance for social status and self-esteem.
A lifestyle is a pattern of living that determines how people choose to spend their time, money and energy and that reflects their values, tastes and preferences.  Since the income of Northeastern is low, they prefer to spend only on the detergent powder which satisfied their six attributes (Exhibit 3).
Consumer-buying decision process
A major part of buying behaviour is the decision process used in making purchases. It has 5 steps as shown in Appendix 2:
Almost everyone in Brazil, including low-income people in North-east would love to buy Omo detergent powder, Unilever’s flagship brand; but due to their rigid budget they could only afford to buy cheaper brands.
Consumers in Northeastern evaluated detergent powder on the bases of six attributes and its important as shown in the above table  , product OMO and Ace satisfies all the importance but was expensive. Bold and Minerva satisfies most of the importance in comparison of other 3 product.
Key Industry players in Brazil 
The Brazil fabric wash market consist of two categories: detergent powder and Laundry soap which is target by many players such as Unilever, Procter &Gamble, ASA, Flora Fabril and smaller local companies. The below Pie diagram illustrates market capture of each player.
The NE market for Laundry soap was very fragmented as shown in above diagram where the top four players only had 38% of market share. Unilever Minerva brand is a leader with 19%. Unilever’s main competitors were local Brazilian companies and biggest competitor was ASA, which gained 11% share by its brand Bem-te-vi.
Unilever captures Market share by 75% in Detergent powder in NE which is below its national average. Omo is its dominant brand by 52% share, Minerva has 17% share and Campeiro has 6% share. Whereas P&G has second highest selling brand i.e. Ace with 11% market share. P&G’s market share is slightly above its national average and captures 17.5% of overall market share.
Current Market Strategy
Unilever was dealing with 3 products in detergent market and targeted to different income group (concluded as per Exhibit 2 and price in Exhibit 10) as shown in Unilever brand portfolio 
If we compare Unilever’s product with Boston Consultancy Group Growth-Share Matrix  , Omo is a ‘Cash Cow’ because it has highest market share and low market growth. Whereas Campeiro is a ‘Dog’, since it has low market share and low growth rate. Minerva seems to be a ‘Problem Child’.
Unilever Brazil was utilizing their ‘Cash Cows’ as a fuel for growth of food and personal care divisions. As per my understanding they should also take an advantage of their cash cow to improve their dogs if possible and Children Problem.
P&G was the second player with 15%  market share in the detergent market. They were dealing with 3 different products targeted to different income group as shown in their brand portfolio  below, where Bold and Ace is their global brands.
I think they didn’t enter the laundry soap market, since it was too fragmented.
The below SWOT analysis  will help to understand the Unilever’s Strength, Weaknesses, Opportunity and Threats:
Unilever had leadership position in the detergent powder with 75%  of market share. Omo, Minerva and Campeiro are ranked 1st, 2nd and 4th respectively in terms of market share (Exhibit 7).
Detergent powder market in North-east is growing at remarkable annual rate of 17%  .
Unilever brands in detergent powder are well known and perceived by Brazilians. As shown in Exhibit 3, most of Brazilians in North-east have either seen or have tried one of Unilever’s brands i.e. 97.2%  of consumer bought at least once per year. Also Exhibit 8 provides information that Unilever brands had high brand awareness, knowledge and penetration in NE in 1996.
Detergent remained the cash cow of Unilever Brazil, providing fuel for growth in other sectors.
Unilever were facing a big distribution issue in the North-east as its detergents are not present on shelves in approximately 75,000  small outlets. Northeastern were not fond of going to big stores such as Wal-Mart or Carrefour where Unilever use to sell its brand but prefer going to small local stores.
No attention was paid to Low-income segment and its attributes.
Brazil had a strong economic recovery, which was particularly beneficial to lower-income group and their purchasing power grew by 27%  per year.
If Unilever target the small local shops to sell their products, it will be a great source of income and will also boost up their market share.
In 1990’s, federal and local governments started providing tax incentives to companies investing in the North-east region, because the economy in the North-east was predominantly rural.
The real threats is P&G as they are drawing on worldwide R&D and marketing expertise which is closing up and can attack on low-income segment.
Strategy for low-income group
Unilever’s top management is looking forward to target the low-income segment living in the Northeast region of Brazil. Since Unilever doesn’t have any experience in dealing with low income group, this is a very new market for Unilever and due to which they can’t use their current or traditional strategy to market low-income group. There are 48 millions of people living in Northeast of Brazil, where 40% of people are illiterate with an average per capita income of $2,250  .
Unilever should not change its strategy for current products. In order to gain market share in the course of targeting low-income segment they have three options:
Develop a new brand
The marketing costs  for the above 3 options are as follows:
Option 1: Repositioning Minerva
This option has no cost of marketing as Minerva is already available in the market and in the mind of people, but it has a negative side as it is not perceived as a very good quality product. Repositioning of this product might pull the product further down and might drop its market share. This can also give an upper hand to its competitors.
Option 2: Re-launch Campeiro
This option is less costly and ineffective as Campeiro has a very bad image in peoples mind as the quality is low and product is perceived to be cheap. It will be very difficult to change people’s mind and belief to change the image of Campeiro.
Option 3: Develop New Brand
This is a bit costly but effective, as a new product will create a new image in peoples mind if promoted correctly.
Taking into consideration the Pros and Cons of all the 3 options as stated above, I would strongly suggest that Unilever should launch a new brand named ‘Sun-Light’ detergent powder at an affordable price. The new brand would be positioned between Minerva and Campeiro on perceptual map  as shown below:
In the long run this new product would replace Campeiro. The reason for this is that, since the purchasing power of the 10% of the poorest population has increased by 27% per year (due to boom), the consumer would love to switch to Unilever’s new product.
The Ansoff matrix  helps in determining growth that can be implemented through marketing strategies. As shown in Appendix 3, Unilever’s strategic objective falls under Product development which indicates intense growth.
Unilever should adopt a separate market mix, to target Low-income group. Every marketer must create a marketing mix that satisfies the customers in the targeted segment. The main components of market mix are shown in Appendix 4.
Unilever should develop a new formula which is cheaper than Minerva but better than Campeiro. The new formula should be developed which satisfies all the six attributes (Exhibit 5) and also fits in consumer’s budget. The cost of formulation should be half-way between Minerva and Campeiro; so I assume that it should be $1.00 per kg (Exhibit 10). The packaging has to be very simple and be different in term of colour with the ones of Omo and Minerva. Selecting the right packaging size and type is also very essential. As per the research in Exhibit 5 packaging is given 13% importance, since Low-income consumers were attached to boxes the cost of packaging will be same as before $0.35per kg (Exhibit 10).
Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.View our services
The most important decision for Unilever was to decide the wholesale price. As per my calculation shown in below table, on basis of the information available in Exhibit 10, wholesale price should be $1.75 per kg. Also it’s cheaper than the competitor’s (Ace) price which is $2.35 per kg. This will encourage consumer to buy our product and will circumvent cannibalization of Minerva.
There are two type of strategy which can be considered: ‘Push’ versus ‘Pull’ strategy as shown in Appendix 5. The promotional mix is influenced by whether the company chooses a push or a pull strategy. Some small companies only use push strategies; some direct marketing companies only use pull strategies. However, some large companies use the combination of both.
Unilever should use the pull strategy. In short-run will have to use the combination of both push and pull to produce a promotion mix. Unilever will have to maintain low-margin for its new brand in order to achieve profitability with towering levels of sales. Unilever can penetrate the market by issuing free samples in small plastic sachet of about 10g during the launch of the product and target 30% BTL, as this would be cheaper and will also give a chance to people to try their new product. If women in North-east are comfortable by using plastic sachet then Unilever can switch its packaging from cardboard to plastic sachet in future which will help them save 30% of their cost on packaging. This will support Unilever to position its new brand as a very successful product which can be used in everyday’s life. 70% above the line should be used as this is a low cost-per-contact and high reach benefit, as all Brazilian irrespective of income, were enthusiastic about watching television. Advertising should target low-income group by visiting them and capturing live washing of their clothes the slogan should be “Sun-light will make your clothes shine”, this will increase the consumer satisfaction and also motivate the consumer.
Unilever could rely on its existing network of generalist wholesalers for selling Omo and Minerva whereas they should sell ‘Sun-Light’ through specialized distributors because it is the distribution channel where low-income consumers normally purchase their goods. In long run Unilever can build up a contract with dozens of specialized distributors who would get exclusive right to sell all Unilever brands. This will help Unilever to build up the ability to distribute their products through 75,000 small outlets.
I assume that the new product will be welcomed by the low-income consumer. Once the product is launched and is up-running, the new product should fall under STAR category in the Boston Consultancy Group Matrix, as it will have high market share as well as higher market growth.
Appendix 1: Influence on Consumer Behaviour
Appendix 2: Consumer Buying Decision Process
Appendix 3: Ansoff Matrix
Appendix 4: Marketing Mix
Appendix 5: Pull and Push strategy
Push strategy means a promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to wholesaler and the he promoted to retailers, and retailers promotes to consumer.
Pull Strategy means a promotional strategy that calls for spending a lot on advertising and consumer promotion to build up consumer demand. If the strategy is successful, consumers will then demand the product from channel members, who will in turn demand it from producers.
Cite This Work
To export a reference to this article please select a referencing stye below:
Related ServicesView all
DMCA / Removal Request
If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: