Strategic Marketing

Unilevers Quest Growth by Shedding Brands

Stefanie Bayer Marlen Haverkamp Heike Tieben Len Zenteno Tovar 19.05.2010

Strategic Marketing

Case Study Unilever page 1

Agenda
| Company profile
| Case Study | Q1: Advantages / Risks of reducing the size of product portfolio | Q2: BCG Growth-Share Matrix and General Electric Market AttractivenessCompetitive Position model (FitzGerald era) | Q3: Attractions / Dangers for small companies of buying marginal Unilever brands | Q4: Unilevers approach to global marketing of its brands | Q5: Sale of Birds Eye and its North American detergent business from a strategic perspective

Strategic Marketing

Case Study Unilever page 2

Company Profile
| Unilever was formed in 1930 from two companies Margarine Unie (Netherlands) and Lever Brothers (UK)
| 400 brands in 170 countries | Home care products | Personal care products | Food products | 163,000 employees (2009) | 3.7 bn Revenue (2009)

| Marketing of brands but not of Unilever itself

Strategic Marketing
Case Study Unilever page 3

Timeline of the Case Study

Niall FitzGerald Path to Growth strategy (from 1600 to 400 brands)

Departure of Niall FitzGerald

Below expectations

Selling of Birds Eye

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Goals achieved Selling of NA detergent business

One Unilever with Patrick Cescau CEO, Antony Burgmans non-executive chairman Selling of Cosmetics and Fragrances arm Strategic Marketing

Mr. Ceseau retires, Paul Polman becomes CEO

Case Study Unilever page 4

Question 1
What were the advantages to Unilever of reducing the size of its brand portfolio?
What were the risks?

Strategic Marketing

Case Study Unilever page 5

The brand clearing

Source: H. Sattler, F. Vlckner (2001). Markenpolitik. Stuttgart.

Regional and local brands are up for sale immediately or over a period of time

Strategic Marketing

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Advantages of the path to growth

| Get rid off unprofitable brands, factories, locations | Cost reduction (brand development, advertising, storage, transportation, management ) | Reduction of overlapping segments / bundling | Avoid intervening of Antitrust Office (commitment to sale) | Strengthen and promote the remaining brands | Reallocation of resources (elimination of redundancies) | Focusing on Core brands, exploitation in new markets | Opportunities to brand extension to serve a whole segment

Strategic Marketing

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The path to growth as a risk?

| | | | Loosing (local) market share (end customer) Shedding brands that could be successful in other markets Inadequate change management Strengthen your competitors

Strategic Marketing

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Question 2
To what extent does it appear that Unilever followed | (i) the BCG Growth-Share Matrix, and | (ii) the General Electric Market Attractivenes-Competitive Position model approaches to portfolio planning during the FitzGerald era?

Strategic Marketing

Case Study Unilever page 9

The two portfolio planning approaches

| BCG Growth share matrix
2 dimensions: - Market growth - Relative market share 4 Cluster provide strategy guidance

| General Electric Market Attractiveness Competitive Position model

2 dimensions: - Market attractiveness: market size, growth rate, rivals, entry barriers, - Competitive strength: market share, reputation, cost advantage, service quality, 5 zones provide strategy guidance
100%

high

Market attractiveness

3 medium

2 low
0% 100%

4 high medium Competitive strength low

5
0%

Strategic Marketing

Case Study Unilever page 10

Unilevers portfolio measures (2000 2004)

Measures Critical product selection based on current market share (> 2 top sellers) Concentration on high-growth brands Savings used to increase brand expenditures for strong brands

Portfolio effects and examples Cut off poor dogs and question marks Timotei shampoo, Brut deodorant Strengthen stars to maintain status ice cream brand alignment (heart-shaped logo) Boost sales ofcash cows to skim the market Magnum, Dove Addition of premium brands Ben & Jerry Promote development of stars Slim fast

Selective aquisition to enter new markets Penetrate existing markets

BCG growth share matrix orientation

Strategic Marketing
Case Study Unilever page 11

Question 3
What are the attractions to small companies of buying marginal Unilever brands?
What are the dangers of doing so?

Strategic Marketing

Case Study Unilever page 12

Attractions / dangers for small companies acquiring Unilever brands

| Attractions
Marginal brands for Unilever could represent the acquisition of a well known product to a small company in order to increase its revenues Increase of market share if it continues to launch the brand Decrease competition if it discontinues the brand Attractive cost of acquiring a brand maximizing cost-benefit Get introduced into a new market with a positioned brand Some brands were well position in local markets, small companies in that market could benefit itself

| Dangers
Image of some brands might be bad and will never increase acceptance of customers Brand name might be strong related to Unilevers portfolio Selling a brand as unwanted might impact on the customers taste in the same way A brand transfer from one company to other doesnt mean transfer of same number of customer

Strategic Marketing

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Question 4
Comment on Unilevers approach to the global marketing of its brands.

Strategic Marketing

Case Study Unilever page 14

The global marketing approach

Brand Development Team HQ

Brand Building Team Germany

Brand Building Team France

Brand Building Team UK

Brand Building Team NL

Strategic Marketing

Case Study Unilever page 15

Comments on the global marketing approach

+ Financial Synergies
Human Resources Economies of scale (marketing material)

+ Improvement of customer recognition

Standard packaging Same advertising campaigns Same logo (e.g. Ice cream Heartbrands, margarine Becel and Flora) or also same brand names (Lipton, Rexona)

+ Concentration on the strongest brands + Same approach for all products makes it easier to launch products in new markets (marketing package) Taking away power from local teams (motivation) Working on marketing package only with key countries

Strategic Marketing

Case Study Unilever page 16

Question 5
Why did the sale of Birds Eye and its North American detergent business make strategic sense for Unilever?

Strategic Marketing

Case Study Unilever page 17

Sale of Birds Eye, Detergent (laundry) business

| Focus on core / large brands dispose noncore brands
Detergent Business: Brands All, Snuggle, Wisk, Surf (sales of $1 bn in 2007) Birds Eye: Brands Iglo, Birds Eye, Findus (sales of $1,2 bn in 2005)

| Focus on emerging markets / faster-growing sectors (higher growth rates and larger sales revenue)
Detergent Business: NA, Canada, Puerto Rico Birds Eye: 11 European countries

| Focus on core categories food, cleaning, personal care (sold cosmetics and fragrances arm)
Birds Eye: frozen food

Also: | Trend towards health an well-being - consumer prefer fresh food (in case of Birds Eye)

Strategic Marketing

Case Study Unilever page 18

Questions?

http://www.unilever.com/ Strategic Marketing

Case Study Unilever page 19