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Lever Brothers' Introduction of Snuggle Fabric Softener

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Lever Brothers' Introduction of Snuggle Fabric Softener 27 CASE 9 Lever Brothers’ Introduction of Snuggle Fabric Softener t was early May 1990 and Lever Brothers Eastern Today’s Unilever traces its roots to nineteenth- I Regional Sales Manager, Mr. David Lewis, was century Europe. The company is a direct result of pondering his assignment. Mr. Lewis needed to the ingenuity and hard work of three European devise a strategy to introduce Snuggle, Lever families, the Lever and Jurgens families of Brothers’ newest entry into the fast-growing liquid England and the Van den Burgh family of the fabric softener market into his region. Netherlands. The product had already been successfully intro- In 1885, William and James Lever founded their duced into the Milwaukee test market, the Mid- soap company. Through innovative marketing and west, West, Central, Southeast, and Southwest packaging, their soap, known as Sunlight, became regions. Only the Eastern region remained. The the world’s biggest selling soap by 1887. company believed it had the right combination of Years earlier, Anton Jurgens and his three sons ingredients for unprecedented success—a quality became engaged in the butter trade. Unfortunately, product, a lower price, and a magical “spokesbear.” as time went on, they found it increasingly difficult Snuggle had broken all records since its introduc- to obtain their raw materials. Luckily, in 1869 they tion, and it was Mr. Lewis’s job to continue its found a way to overcome their supply problem. success. They simply bought the rights to a French chem- ist’s latest product, margarine. Finally, Simon Van den Burgh and his sons, rival HISTORY exporters of cheap butter from the Netherlands, Lever Brothers Company is one of the United also heard about the new invention, and they also States’ best-known manufacturers and marketers began to make margarine. of soaps, detergents, toiletries, and food products. All three firms grew at great rates. Each firm It is a member of the worldwide Unilever corpora- expanded its product line. Jurgens and Van den tion, which includes more than 500 companies and Burgh even entered the business of manufacturing offers one of the widest varieties of products and soap. services in the world. All three firms shared a great deal in common. The name Unilever was coined in 1929, when All relied on the same basic raw materials of oils the Margarine Union merged with Lever Brothers and fats and the same refining processes. Their pro- and changed its name to Unilever Limited. At the duction was on a large scale and their distribution same time, the Margarine Union in the Nether- channels were alike. Their products also tended to lands became Unilever N.V. Unilever Limited has be ordinary necessities intended to be consumed or its head offices in London; the offices of Unilever used in millions of homes. N.V. are in Rotterdam. With such similarities, it was logical that these Each Unilever director is on the board of both companies would someday come together. Through parent companies and, as much as possible, both a series of mergers and acquisitions, the three grew companies work as one company—Unilever. into today’s Unilever. This case was prepared as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative situation. 646 653 654 Lever Brothers' Introduction of Snuggle Fabric Softener CASE 9 Lever Brothers’ Introduction of Snuggle Fabric Softener 647 In 1989, Unilever operated over 500 companies From its modest start in 1895, Lever Brothers has in more than 70 countries, employed over 330,000 grown to be one of the largest soap, detergent, and people, and had sales of over $24 billion. One of its toiletry producers in the country. most important companies is the Lever Brothers Company in the United States. LEVER BROTHERS ORGANIZATION: Lever Brothers started in 1895, with a small sales HOUSEHOLD PRODUCTS office in New York. Slowly, the company grew with such products as Lifebuoy, Sunlight, and Welcome. Lever Brothers was a decentralized company that For its first 25 years, the company concentrated on had three operating divisions. These were House- the New England market. Then in 1919, with the hold Products (HHP), Personal Products (PPD), introduction of Rinso, the first granulated pack- and Foods. Each division had its own president aged soap, the company went national. In 1924, and officers, and each was responsible, as far as is Lux, the first white milled perfumed soap to be practical, for all resources and services necessary made in America and sold at a popular price, was for its operation. This organizational structure was introduced. By 1929, Lever Brothers became the completed in 1981. third largest producer of soap and glycerine in the The sales force sold Lever’s household products United States. throughout the United States. To facilitate this sell- Through the 1930s and ‘40s, Lever Brothers ing activity, the sales force was divided into six grew. It expanded its manufacturing capacity time regions. Each region was divided into districts, and and again. It built or acquired plants in Hammond, each district was divided into areas/units. Finally, Indiana; Edgewater, New Jersey; Baltimore, Mary- each area/unit was divided into sales territories. land; Chicago, Illinois; and St. Louis, Missouri. The These were, in turn, headed by regional sales man- company diversified into shortening, margarine, agers, district sales managers, area assistants, and and toothpaste (Pepsodent). district field sales managers, who were assigned to In the 1950s, Lever Brothers introduced a pro- assist district sales managers in managing some cession of new products. Such products as Lux liq- districts. uid detergent, the first liquid detergent to be This organization allowed maximum flexibility packaged in cans; Wisk, the first liquid heavy-duty when making decisions to best serve the require- laundry detergent; Imperial, the first premium ments of different market zones throughout the margarine; Dove, the new type of toilet bar con- country. For example, local promotions were deter- taining one-quarter cleansing cream; and Mrs. mined by buying preferences and competitive Butterworth’s syrup, the first syrup blended with approaches in a particular market, and these could butter, were all introduced. be different from those in another district. Through the 1960s and ‘70s, Lever Brothers The six regions and 22 districts are listed in introduced more notable new products such as a Exhibit 1. Pepsodent denture brush, Soft Imperial margarine, Drive detergent, Close-up and Aim toothpastes, HOUSEHOLD PRODUCTS DIVISION: Caress body bar, Promise margarine, and Signal CHANNELS OF DISTRIBUTION mouthwash. Finally, the 1980s brought us Shield deodorant Lever Brothers used two different channels of dis- soap, Aim Mint toothpaste, Sunlight dishwashing tribution. They were as follows: liquid, Impulse body spray, Sunlight automatic 1. Manufacturer (Lever Brothers) who sold to whole- dishwashing detergent, Snuggle fabric softener salers and chain headquarters who supplied to sheets, Surf high suds detergent, and now Snuggle retailers or chain stores who sold directly to Liquid Fabric Softener. consumers. Lever Brothers' Introduction of Snuggle Fabric Softener 655 648 CASE 9 Lever Brothers’ Introduction of Snuggle Fabric Softener EXHIBIT 1 Lever Brothers Household Products Division Field Sales Organization Eastern Region Central Region Southeastern Region Boston Detroit Charlotte New York Syracuse Atlanta Philadelphia Cincinnati Orlando Cleveland/Pittsburgh Baltimore Southwestern Region Midwestern Region Western Region New Orleans Chicago Los Angeles Dallas Kansas City San Francisco Houston Minneapolis Portland Denver St. Louis 2. Manufacturer (Lever Brothers) who sold directly to crease of 22 percent since 1985. The liquid softener retailers who sold to consumers. market could be expanded because 30 percent of all households still did not use a fabric softener. The HOUSEHOLD PRODUCTS DIVISION: liquid fabric softener category was dominated by CATEGORIES OF MERCHANDISE premium-priced products. Each of the nationally supported brands (i.e., Downy, manufactured by The Household Products division sold four types Procter & Gamble, and Final Touch, manufactured of products: laundry detergents, dishwashing by Lever Brothers) had one thing in common—a detergents, fabric softeners, and toilet bars. In the premium price. An opportunity existed to expand fabric softener field, Lever offered three products: the choice consumers had by offering a quality liq- Final Touch and two types of Snuggle, which came uid fabric softener at a price that was really less in liquids or sheets. expensive. Final Touch was introduced in 1964 and was mar- keted as a premium fabric softener, while Snuggle Category Structure. Fabric softeners are pri- Liquid and Sheets were both priced approximately marily used by consumers to soften clothes, control 10 percent below the premium market. static cling, and provide a fresh scent. The fabric softener market can be segmented by form into two PRODUCT/MARKET INFORMATION groups—liquid softeners and dryer sheets. Product • Liquid softeners are usually added to the washer Snuggle was a premium quality liquid fabric soft- during the rinse cycle. They tend to provide superior softening. ener that softened the whole wash, controlled static • Dryer sheets are pre-cut or come in tear-off fabric cling, and gave clothes a fresh smell at a price that sheets that are tossed into the dryer along with the was really less expensive than other premium fab- wash. Dryer sheets provide superior static cling con- ric softeners. It would be available in the normal trol and convenience. variety of sizes—17 oz., 33 oz., 64 oz., 96 oz., and 128 oz. 1989 Fabric Softener Category Share by Segment Market Unit Share Dollar Share Liquids 56% 59% The liquid fabric softener category was large and growing. In 1989, sales were $398 million, an in- Dryer Sheets 44% 41% 656 Lever Brothers' Introduction of Snuggle Fabric Softener CASE 9 Lever Brothers’ Introduction of Snuggle Fabric Softener 649 Competitive Environment.
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