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Unilever in Brazil: Marketing Strategies for Low Income

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Unilever in Brazil: Marketing Strategies for Low Income UNILEVER IN N-E BRAZIL Marketing Plan 2013 UNILEVER IN BRAZIL Marketing Strategies for Low-Income Consumers 1997-2007 GAGNE Marketing Research Consultants Team Boccanera Vittorio Cimmino Caserta Luigia Cobio Nicola Le Gouz de Saint-Seine Tristan Lam Abby Marketing Plan 2013 “Marketing Is Too Important To Be Left To the Marketing Department” David Packard CONTENTS AND OVERVIEW Brazil’s Unprecedented Challenges Unilever’s response to the changing customer needs Brazil’s NE Population As can be seen from the very foundations of Unilever, the company has always strived to achieve and capture has reached 48 mi llion the most from their customers, in terms of value and in temrs of acquiring a long-lasting response, both in and is thus a considerable market terms of Loyalty and Brand Image opportunity for Unilever 1929 The Lever Brothers Started operations in Brazil Market Split The diverging geographical between Soap and cultures should be 1930 Opened their first Plant in Sao Paolo monitored Detergents 1957 Unilever launches their most successful brand Soft and Hard Water have to this date, Omo. This was the first detergent Water type differs distinct characteristis that powder in the country between the North will be essential in establishing the ad the South target market 1960s Unilever Enriches its portfolio of brands with Personal care items Culture The Culture is at the heart of the Brazilian’s way of 1970s Unilever starts its food operations with the launch is extremely versatile life. of Doriana, the first margarine in Brazil Competition Local and Global competition 1996 Unilever started to expand, and divided into three from P&G is constantly on main divisions, Personal Care, Foods, and Detergents continues to rise the move towards a convergence. 1996 Detergents remain the most prominent cash cow for Unilever in Brazil. Omo, Minerva and Campeiro respectively have 81% market share. CONTENTS Part 1: Introduction Part 4: Marketing Strategy - Executive Summary Segmentation and Targeting Segmentation Analysis Part 2: Overview Target Markets Positioning and Propositions for the future Company Description Goals and Strategic Focus Unilever’s Mission: Brazil Part 5: Marketing Mix Product Strategy Part 3: Situation Analysis SWOT Pricing Strategy Promotion Strategy Competition Analysis Distribution Strategy Company Analysis Customer Analysis Part 6: Appendix Financial Analysis Exhibits EXECUTIVE SUMMARY This marketing plan analyses and forecasts the different ways in which Unilever could suc- cessfully exploit growth opportunities in the marketing of detergents to Brazil’s North East- ern low-income consumers. Unilever’s decision is based on three main corporate criteria fundamental in reaching a conclusion: DIVESTING NEW PRODUCT ATTRIBUTES & STRATEGY Whether Unilever should Whether Unilever should What price, product, divert money from its reposition existing promotion, and distribu- premium brands to target brands to a new large yet tion strategy would allow the lower margin specific target market, Unilever to deliver value segment of low-income expand its product depth to low-income consumers customers. or launch a new brand. without cannibalizing its own premium brands too heavily. Unilever must also consider externalTH ANDfactors such as the diversity in culture from its work- ing market; customer needs thatEN influenceE perceived quality of a product and lifestyle cus- toms. With these considerations, the conclusions drawn revolve around the production of a new Laundry Soap Bar, due to the humid conditions of the NE that would diminish powder quality. In addition, innovative modifications to the soap bar, such as the introduction of bleach in the compound, will increase quality, a high value among the NE consumers. This will help diseases like diarrhoea. COMPANY DESCRIPTION Unilever is an Anglo-Dutch multinational $56 billion consumer goods company. It arose as the result of the merger of the British soap maker Lever Brothers and the Dutch margarine producer Margarine Unie. Founded in 1930, it is one of the oldest multinational companies in the consumer goods industry. Its products range from food to personal care products,Healthy emp includ-loyees and ing beverages and cleaning agents. It is headquartered in London and Rotterdam.better In workplaces. 1996 it had a portfolio of 1,600 brands worldwide. It was present in more than 150 national markets and employed about 300,000 employees. In addition to strengthening its market share in the Brazilian detergent market, Unilever grew in other product types, buying Kibon ice cream in 1997. COMPANY GOAL AND STRATEGIC FOCUS Unilever’s goals are related to growth and an intense sense of social purpose. The company has a clear and compelling vision of their future that consists in their brands and services reaching and inspiring people across the world, helping them double the size of their busi- ness while reducing their environmental footprint and increasing their positive social impact. Unilever aims to improve hygiene, nutrition and health for communities with their wide range of products. The company hopes to strengthen their relationships in emerging markets which will be significant for their future growth. Unilever is committed to support- ing sustainability and has ran many campaigns that reflects its key priorities, a “better future for children, healthier futures, a more confident future, a better future for the planet and a better future for farming and farmers”. MISSION STATEMENT FOR UNILEVER IN BRAZIL MISSION STATEMENT FOR BRAZIL Unilever’s mission statement can be found on their corporate website. It states, “we work to create a better future every day, with brands and We strive services that help people feel good, look good, and get more out of life. TO PARNTER WITH THE WOMEN OF We will lead for responsible growth, inspiring people to take small every- NORTHEASTERN BRAZIL—THE day actions that will add up to a big MOTHERS, GRANDMOTHERS AND difference. We will develop new ways AUNTS- of doing business that will allow us to double the size of our company, while in the simple joy yet significant task of keeping a reducing our environmental footprint household clean. We believe all families in the com- and increasing our positive social munity should have viable washing solutions, and our impact.” detergents seek to provide that. We will be environ- mentally and socially responsible, delivering products that help people get more out of their washing rou- tine”. SWOT ANALYSIS COMPETITION a. ANALYSIS a. Two product types, namely powder detergents and laundry soap, which are in turn divided geographically in terms of dominance, predominantly compose the home care market in Brazil. The histori- cal and cultural geographical differences, as a result of the significant differences in household income levels, have shaped the way in which COMPANY customers wash their clothes, and as a result, Unilever’s competitors have different attributes according to the geographical region analysed. ANALYSIS Unilever faces three categories of competitors in two different market sub-sectors, and should Unilever has several dominant advantages that therefore be analysed on a geographical basis. help its market penetration and market share The most used product in the North East (NE) is retention within both the powder detergent and laundry soap, due to its lower price in compari- laundry soap markets. As the market leader for son to powder detergents. This market is com- both sectors (75% and 19% respectively), Unile- prised of two competitor types, the top 4 players ver can exploit the ever-growing population in having only 4% market share. The biggest com- Brazil. The probability that quality of life is main- petitor is ASA, with its trademark brand Bem- tained ceteris paribus thus decreases, increas- te-vi holding 8% less market share than ing low-income market’s needs for laundry soap Unilever’s Minerva. Minerva also competes with in which it has, however, a $0.5/kg higher cost smaller local brands that hold less than 1% than Bem-te-vi’s. The fact that it is also a clear market share. In contrast, the detergent market leader in the Detergent market, with 45 key is more saturated with brands competing both in detergent brands, amplifies their influence on Brazil and globally. Procter & Gamble (P&G) consumer’s lives, with the addition that this owns 15% market share. Although this is a mere market sector grows at a whopping 17% annu- 20% of Unilever’s 81% share, they are nonethe- ally. It is, as a result, a clear pioneer in the Bra- less the biggest competitor, with R&D and mar- zilian consumer goods industry. Having said this, keting expertise that threatens Unilever’s repu- what makes Unilever’s detergents so attractive tation in the long run. As Exhibit X shows, P&G’s are the specific enzymes and builders that strategy revolves around 3 brands, Ace, Bold and improve the whitening power of the detergent. Pop, each having 11.80%, 5.35% and 1.40% However, hand-washing detergents, although market share respectively. Having said this, cheaper, are of lower quality. Unilever is in an ASA’s Invicto is Unilever’s Campeiro’s main com- opportunistic position, pondering on a “Go/No petitor, both pricing at $1.70/kg and $1.71/kg Go Decision”, whereby tapping in the NE low- respectively. This intertwined market poses all income market would require some product sorts of threats to Unilever’s detergents, and modification or product depth extension. individual product items. CUSTOMER ANALYSIS Unilever wants to target low-income consumers in North Eastern Brazil. 53% of the popula- tion live on less than two minimum wages, 40% are illiterate and per capita income is around $2,250. NE regions have a distinct culture that share lifestyle, culture and religious elements inherited from African and European origins. Majority of poor North-Easterners are proud of the fact that they keep their families spotlessly clean despite their low income, and many women see the cleanliness of clothes as an indication of their dedication to family.
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