Case Study 3: Unilever in Brazil

Marketing Strategy
Rotterdam School of Management

1. Introduction and Problem Definition In 1929, Unilever entered Brazil market for their first plant to produce Sunlight Soap. The most successful Unilevers brand OMO was launched in 1957 as the first detergent in the country. Apart from OMO, there is Minerva that sold as both soap and detergent powder as well as Campeiro (Unilevers cheapest brand). This portfolio grasp 81% of market share. Evaluation of the strategic choices the company shows that Brazils growing economy has made it possible for Unilever to focus on the lower end of the consumer market as well. Campeiro, the companys cheapest brand, is affordable for consumers on low incomes but does not meet their product expectations and only has a 6% market share. This is perceived as vulnerability by Unilever management as it leaves them open to attack by competitor Procter and Gamble. 2. North East vs South East Brazil From the given case, it is clear that North East Brazilians has different viewpoint regarding laundry compared to the South East. First of all, given the fact that lowincome consumers in North East wash their clothes more frequently than people who live in the South East (5 times vs 3.9 times a week). Since, low-income consumers in North East own fewer clothes and have more free time. This creates opportunity for Unilever, because there is an opportunity of a 48 millions consumers market that consumers a detergent significantly. Secondly, North East women view laundry activity as on of the pleasure and fun activities of their week. Therefore, this is a chance for Unilever to exploit North East Brazil social aspect of doing laundry. Finally, North East and South East differ symbolic value they attach to cleanliness. Even though Northeasterners are low income, they have the pride to keep themselves and their families spotlessly clean. They also consider cleanliness as of their clothes as a dedication of the mother to her family. Hence, if Unilever can offer a good brand to low-income consumers, somehow it will help those consumers to keep becoming good mothers for their family. 3. Effects of Entering Low-income Market. Short term Investments are needed, which means a shift of money from premium to low-price brands. Long term In a strategic move Unilever will introduce a new better-quality brand for the lower end of the market because Campeiro is not performing well and consumers are no satisfied with the product. This all fits in with Unilevers ideas of consumer-led product development. It will make it much harder for competitors to make any moves and will thus make Unilevers market position safe in the long term. The strategy will also raise Unilevers market share to 11% by 1999, with even 80% market share in the northeast of the country.

4. Brand and Marketing Strategy. Ansoffs Matrix Existing Product New Product

Existing Market

Market Penetration: Focus on developing market share of existing brands like OMO, Minerva and Campiero

New Product Development: 1.Develop a higher quality yet lower price brand new based detergent in order to attract the low-income consumer market. 2.Re-position Campeiro with promotional campaign. 3.Launch brand extension Diversification: launch a complimentary detergent product, for example softener.

New Market

Market Development: Increase activity in the new market

Unilever already has three detergent brands with distinct positionings. In order to gain a market share in low-income consumer, there are 3 possible options that are open to Unilever. 1. Brand Extension Unilever could profit in several ways from extending one of their three detergent brands as long the process is planned and implemented well. Neither OMO nor Minerva should be used as brands targeted at consumers on low incomes: they are higher-priced and have high consumer satisfaction rates, so any extension to the lower end of the market would damage their standing. Only the Campeiro brand could be used as such. Advantages of extending a current brand: (1) New product will be more easily accepted. (2) Lower consumer-perceived risk (3) more efficient spending on promotion (4) lower marketing costs to introduce new product (5) no need to develop a new brand (6) efficiency with regard to packaging (7) more variety for consumers. On the other hand, the disadvantages are: (1) Confusing for customers (2) adverse effects for current brand image (3) lower turn-over for parent brand (4) adverse effect for parent brand image (5) weakening of what the brand stands for (6) miss the opportunity to develop a new brand 2. Brand Repositioning Unilever could reposition one of their three brands to strengthen its position in the lower income market segment. This can be done by stressing the differences between brands in a more compelling way. The differences between OMO and Minerva are clear-cut, which is why Campeiro is the obvious candidate for repositioning. Unilever can do this by: (1) Making the brand more relevant to consumers (2) expanding the ways the product can be used (3) creating a more serious brand image (4) turn round the fall in sales (5) attract new customers (6) stressing differences with other brands (7) a change in market conditions. As already said, consumers see Campeiro as a low-price brand of poor quality and it would be very difficult to change this view. Even if repositioning of the brand turns out to be successful, a New-Brand strategy could be the better choice as it leads to higher returns. 3. New Brand Introducing a new brand is the best strategy for growth in the low-income market segment. Campeiro simply does not have the quality associations with 3

low-income consumers. This fits in with Unilevers general strategy, as one of the companys goals for their products is to add vitality to the life of consumers. From exhibit 5 show that consumers expect detergents to wash clean, to remove stains, to wash white, to smell nice and to make their washing feel soft. Unlike Campeiro, this brand new detergent will be positioned not only as a low-price detergent, but also as one of high quality. It will be a product in between Minerva and Campeiro, will have all the qualities low-income consumers expect and at the same time will yield reasonable profits. Quality rather than price will be stressed. This new product will replace Campeiro in the near future.

5. Marketing Mix Product In order to target low-income consumers, a brand new product that Unilever should create is both detergent and laundry soap covered with one branding strategy. Based on the detergent criteria's, the main benefits of this new product will provide all attributes that are most important to North East consumers. Namely; cleanliness, good smell, softness, ability to remove stains and whitening for clothes. Price With these attributes mentioned in the product section, this brand new product will be priced between Minerva and Campiero in order to avoid cannibalization of Minerva. By pricing this new product at this level it is permitting consumers access to a better quality of detergent at the same value. Place It is a big challenge to market a new product in North East Brazil. From the case information, the low-income consumers have a tendency not to shop in large supermarket. The chosen distribution strategy should include small stores that are available across the North East. Nevertheless, Unilever do not have the capability to embrace all the small stores. Therefore, Unilever must consider having dealers that capable to distribute this product to low-income consumers. Promotion Based on the case, Unilever should keep in mind that promoting and communicating low-income product would means to communicate low-quality product. In order to avoid this, Unilever should focus on how to deliver the key message to low-income consumers. For example, this brand new product would communicate health, pride and happiness for family. Unilever should be able to create image for this new product, which is high quality yet cheap.