Unilever in Brazil

UNILEVER IN BRAZIL

International Marketing Case - Unilever in Brazil1

A case of Marketing Strategies for Low-Income Consumers

Group No: 4 ESCP Europe• ABHISHEK SHARMA• KRISHNENDU C G• M PENCHAL REDDY• SUMAN CHAKRABORTY• TAPAS KUMAR MAZUMDAR

About Unilever and the target segment in Brazil


• Unilever is one of the world’s top makers of packaged consumer goods operating in 190 countries and

• Have a large brand portfolio of over 400 brands under two divisions

- Foods and Home & Personal care.

• Unilever is one of the world’s top three food firms with Nestle and Kraft-

• The world’s second largest packaged consumer goods company –behind Procter & Gamble.

• The main success factor of the company is the constant focus on innovative product developments


High Success in the Overall Brazilian Detergent Powder and Laundry Soap Market

Brand Portfolio

• Omo (powder premium brand)• Minerva (sold as powder & laundry soap)• Campeiro (cheapest powder brand)

81% market share in detergent powder category

Vs. 15% market share of P&G, the next biggest competitor


Low- Income Consumers in Northeastern Brazil Constitute a Large but very Specific Customer Segment

Demographic Background• 48 million low-income consumers

• 28% of Brazil‘s total population• 40% illiterate• Per capita income of $ 2,250• 53% live on less than two minimum wages

Laundry and Detergent Use Patterns• Clothes washed frequently due to few

clothes and more time• Pleasurable activity (washing in a public

laundry, river, or pond; meeting and chatting with friends)

• Q 1) Should Unilever target the low-income segment of consumers in the Northeast? What are the short-term and long-term implications of the decision?


• Unilever enjoys the market leadership with 81% of market share in detergent powder category.

• There is no other way to grow other than expanding into new segments.

• The competition from P&G is a threatening one, in view of their formidable R & D and marketing expertise.

• With a growth rate of 17% the detergent market is a swiftly growing and lucrative one.

• Hence it is imperative that Unilever enter the market of low income consumers.


IMPLICATIONS OF ENTERING THE NEW MARKET SEGMENT


Short-Term Implications

•Entering a new market segment implies that money has to be invested for setting up infrastructure and facilitating marketing activities. This causes the diversion of funds earmarked for the premium brands , affecting their promotional activities.

• The positive side of such a move is that Unilever can obtain first mover advantage in a fast growing market and this momentum, if utilized effectively can bolster their market leadership in this category.


Long-Term Implications

• By employing the right strategy, a whole new class of consumer segment will be opened up for Unilever.

• A suitable positioning of the product in the perception map will ensure that the new product does not cannibalize the market of the flagship brand, Omo.


• Q 2 a. Evaluate Unilever’s current brand portfolio.


Current Brand Portfolio


Unilever in Brazilian Fabric Wash MarketDetergent Powder- Market worth $106 mn

- Growing at 17%- 3 major competitors

Omo- Premium product

- USP is having high ability to remove stains- 52% market share at $3/kg

Minerva- Relatively cheaper

- USP is its ability to dissolve easily- 17% market share at $2.4/kg

Campeiro- Cheapest

- No USP , targeted at low income group- 6% market share at $1.7/kg

Laundry Soap- Market worth $102 mn

- Growing at 6%- Many local competitors Minerva- Competing with the local brands

- 19% market share, at $1.7/kg

• Q 2 b) Is a new brand necessary to serve the low-income segment or could Unilever reposition one of its existing brands or simply launch a brand extension?


Brand extension V/s Brand repositioning• In case of a brand repositioning , campeiro will be

the suitable candidate.• However, the customer perception of campeiro as

a low quality product may affect the repositioning exercise.

• Introducing a brand extension , backed by suitable product promotion will enable the company to successfully position the product among the target customers

• The proposed positioning of the product is depicted below:



Per

ceiv

ed

Qua

lity

Price Index

• Q 2 c) If you judge that a new brand is necessary, write its positioning statement and choose its name among Unilever’s worldwide brand names.


Positioning Statement• Who we are

– Major manufacturers in Food, Home care and Personal care

• What business are we looking– NE Brazilian Fabric Wash Market

• Who is the Target Market– Low income groups of NE Brazil

• Need of the Target Market– A Detergent powder(like Omo) at an affordable price with better characteristics than

detergents like Campeiro

• Competitors– Invicto , Pop, Campeiro

• The USP– The Cleaning ability comparable to a Laundry soap


Positioning Statement

“For the customers who treats cleanliness a way of life, Campeiro Plus appeals as a detergent powder which gives a better

cleaning power at much less effort than the similar priced competitors.”



• Q 3. Design the marketing-mix. Choose the price, promotion (objectives, message and mix), product (formulation and packaging), and distribution that will allow Unilever to create and capture value for low-income in the Northeast of Brazil.

Features of Northeast Brazil• 48 million people living in the Northeast of Brazil• 40% of population are illiterate• Northeast have a distinct culture and history, mixed Africans

and European origins.• In the Northeast only 28% of households own a washing

machine.• 73% of women think that bleach is necessary to remove fat

stains• NE scrub clothes using bars of laundry soap. Then add bleach

and add only small amount of detergent powder at the end to smell nice.

• Clothes are washed more frequently in the NE• NE view washing clothes as one of the more pleasurable

activities of their week.


Attributes desired in a Detergent• Low income consumers of NE evaluate detergents on 6

attributes along with price.• Perceived power of detergent(ability to clean & whiten

clothes with small amount of detergent), which is often judged by amount of foam produced

• Odour of the washed fabric.• Ability of remove stains without the need for laundry soap

and bleach.• Ease with which powder dissolves in the water and whether

it leaves any residue on the fabric.• Packing must be of box type. Plastic sachets imply that the

product is second rate.• Impact on colours least important.


Desired Marketing MixMarket Mix - 4 Ps• Product-Quality to be better than Capeiro and to be sold in

boxes of multiple types & sizes. Product to form easy lather and should produce foam when dissolved in water. It should also have a pleasant smell.

• Price- Ideally between Minerva and Capeiro.• Place- The existing distribution channels may not be of

much use. May look into highly specialized distributors, who have knowledge and access of the pockets where the low income consumers reside.

• Promotion- promotional activities to take place in mass media as well as in the areas where the target customers reside.


• Unilever to launch a brand extension targeted at lower income customers.

• Distribution channels may be modified to efficiently reach the target segment

• Sufficient funds may be allocated to the project, to gain the first mover advantage and to sustain the momentum.


Conclusions

Merci Beaucoup

Unilever in Brazil

Marketing

Transcript of Unilever in Brazil