Strategic Analysis of

Unilever

Innovation Management Master

Module: Innovation Strategy

By: Roukaya ISSAOUI

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Agenda

Introduction
1-Company Overview
Unilever mission and Vision.
2-Competitive Environment :
Home and personal Care industry
Competitors
Porter 5 forces analysis
Unilever VS Procter and Gamble
Packaged food and beverage Industry
Competitors
Porter 5 forces analysis
Unilever VS Nestl
3- Unilever Strategies and moves
4-Marketing strategy
5-Innovation strategy
6-Situation of Unilever and SWOT analysis
7- Recapitulation

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 Introduction

Unilever is one of the worlds 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 worlds top
three food firms with Nestle and Kraft-
and the worlds second largest packaged
consumer goods company behind
Procter & Gamble. The main success
factor of the company is the constant
focus on innovative product
developments

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Company Overview

Legal Structure

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Company Overview

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Company Overview

Management: leadership executive diagram

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Company Overview

Financial and non financial KPIs (2013)

Unilever Business
Activities Home care, Personal Care, Food and refreshment
Brands >400 ,14 of which generate sales in excess of 1 billion a year.
Employees >174,000
International 190 countries
Customer 2 billions worldwide
Emerging Market 57% of the business
Financial key indicators
Market Capitalization 124.59B

Turn over ( euro) 49.797 million ( -0.3%)

Net Profit ( euro) 5,263 million (+0.9%)
Core earnings per share ( euro) 1.58 ( +0.3%)
Free Cash flow ( euro) 3.9 billion ( 4.3 billion in 2012)
Non financial indicator
R&D annual investment 1 billion euro/ year
Rank innovative company list of Forbes 63
Diversity workforce 58% male, 42% female
Safety 1.03 total recordable accident frequency rate
Engagement score 78%

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 Mission and Vision

Mission of the company

OUR PURPOSE is TO MAKE
SUSTAINABLE LIVING COMMONPLACE
We work to create a better future every day,
with brands and services that help people
feel good, look good and get more out of
life.

Corporate purpose of the company

OUR VISION: the compass strategy
We will lead for responsible growth,
inspiring people to take small everyday
actions that will add up to a big difference.
We will grow by winning shares and
building markets everywhere..

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The competitive Environment

Strategic Groups

Home & Household industry ;laundry

detergent, cleaners
personal Personal care; hair care,
cosmetics, toothpaste
care

Food & Food: packaged meals,

dairy
Refreshment: beverage,
Beverage ice cream

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... 5 forces Analysis

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Home and Personal Care Industry 5 forces Analysis

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Home and Personal Care Industry: Competitors

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 Unilever vs Procter and Gamble
Unilever
Biggest Brands Dove, Axe, Rexona, Vaseline,
Lifebuoy, Signal, Lux,
Sunsilk, Clear, Surf, OMO,
CIF, Domestos, Comfort,
Lipton and Knorr
Turnover $ 66.7
Global Market share / Mens grooming 12.7% (Axe,
activity Dove)
Bath 20.8% ( Dove, Lux)
Deodorants 33.8% ( Rexona,
Axe)
Market Place (2012) 55% in emerging market
45% in developed markets
Strategy Sustainable Innovation+ ++
selective acquisition+ +
Procter and Gamble
Head & Shoulder, Olay,
Pantene, Wella Braun,
Gillette, Crest, Oral-B, Ariel,
Duracell, Tide and Pampers.
$ 83.7 bn
Mens grooming 33% (
Gilette)
Laundry 26% ( tide and ariel)
Hair Care: 19.6% ( H&S)
37% in emerging markets
63% in developed markets
Acquisition +++
Innovation ++
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Food and Beverage Industry 5 forces Analysis

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Food and Beverage Industry: Competitors

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Food and Beverage Industry: Unilever vs Nestl corp

Unilever Nestl corporation

Biggest Brands Knorr, Magnum, Flora, Ben & Nescaf, Maggi, Nestl Nan (
Jerrys, Rama ,blue Band infant nutrition), Kitkat,
Nespresso, Stouffers,
Hagen-Dazs Light ice
creams
Turn over 2013 49.797 million euro 92.158 million euro
Market Place 190 countries 130 countries
Emerging market +++ Emerging market +++
Innovation Strategy 1 billion/ year on R&D 1.5 billion/year on R&D
Sustainable innovation ++ Sustainable innovation+++
Selective acquisition++ Selective acquisition++

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Oxfam ranking list of sustainable companies (2013)

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3- Unilever strategies and moves

The Business Model of Unilever :

Sustainability duty and an opportunity to do
business

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How does Unilever drive profitability from this business model?

Profitable volume Growth:

is the growth in physical volume of sales its mean
more consumers buy more product which leads to
build a brand equity which is the mean target of
Unilever, this is driven by investment in innovation and
marketing the brands.

Cost Leverage + efficiency:

the volume growth allows to optimize infrastructure
and reduce average cost per unit which improve
profitability and more investment in the business

Innovation and Marketing Investment:

driving by improving efficiency and growing of
investment ability, new and improved products are the
result of investment in R&D and, together with effective
marketing, strengthen the brand equity

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 4-Marketing strategy

Building brand equity

The aim objective of Unilever is building brand equity, according to the business
Dictionary the brand equity is a brand's power derived from the name recognition that it
has earned over time, which translates into higher sales volume and higher profit
margins against competing brands. Unilevers strategy is to connect brands with
peoples live and needs by creating Brand with Purpose.
Brand with purpose via program
As a marketing strategy to win market share in emerging market, Unilever
associate programs and purpose to their brands which identify and respond to
the local need of people, for example in Africa in a region with vit A deficient
children, Rama and Blue Band margarines are fortified with 7vitamines
including vit A.
Brand with purpose strategy is another competitive advantage of Unilever to
establish strong Brand Equity.

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 4-Marketing strategy

leverage bigger brands (The top brands makes up more than 54% of
Unilever business)
Since the arrival of Paul Polman in 2009 Unilever is engaged in a
process of brand rationalization as it reduces its large portfolio by
removing 30% of the number of references in 2013 to focus on the 15
billionaires brands

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 4-Marketing strategy

New channel winning in the Market place:

Investing in marketing and advertising is also a competitive advantage of Unilever
(Unilever earned the title of Most Awarded Advertiser at the 60th Cannes Lions International
Festival of Creativity, bringing home a total of 44 awards)

Unilever explore new media opportunities and partnerships to help the reach more consumers.

To wide their ability of going to market and to reach fast and more consumers, Unilever has
developed new channels such as out of home, direct selling, home vending, e-commerce and
segmented the market.

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 The innovation strategy:

Unilever innovates broadly in science and technology, in deep consumer

understanding of peoples habits, tastes and behaviors and innovation
also covers areas such as design, packaging, marketing and advertising.
3 pillar of the innovation strategy:

strategic science group launched 2013:

Unilever has over 20,000 registered patents, sets aside more than $1
billion annually for research and development. Unilever has six strategic
R&D laboratories and 31 major development centres
Some recent sustainable innovation examples include:
An upside-down roll-on deodorant that uses 18% less plastic in each
pack.
Pureit, a battery operated home water purification device which gives
households in India access to clean, pure drinking water at low cost.
Small and Mighty laundry liquids which, because of their size and
concentration, reduce CO2, water usage and transportation costs.

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 The innovation strategy:

open innovation:
Unilever has been in using open innovation for years, and in 2009
established an open innovation unit to work with outside partners.

Unilever is looking outside their walls for sustainable innovation

, they launched an online platform offering experts the opportunity
to help the company find the technical solutions it needs.
Unilever has also published the key areas in which it wants to
innovate such as better packaging, safe drinking water and
sustainable washing

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 The innovation strategy:

New business unit

Unilever is collaborating with start up which can grow to become the
future of Unilever.
The New business unit is constantly looking for developing new
technologies, business models and partnerships which can help stretch
Unilever beyond the companys core capabilities
For example; Unilever launched its Go Global start-up hunt , Unilevers
senior vice president of marketing Marc Mathieu said the initiative aims to
help the company build on its status as a pioneer in marketing.Start-ups
are very nimble, agile and very much able to take risks to invent new
marketing platforms
Unilever has launched also an incubator for breakthrough ideas holder
The Unilever Incubator is a corporate hot-house for exploring brilliant
ideas

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SWOT Analysis

Strengths: ( main competitive advantages):

operational and cost efficiency : building strong network of
distribution ( performing Supply chain) and reduce cost by
outsourcing operation

superior value to consumer via brand purpose ( sustainable

innovation linked to local need )

consumer connectivity : they penetrate consumer life they are

aware of their needs

Well established in emerging market: 50 years in Brazil, China

and India
Use of creative advertising and promotions on website and
commercials ( pioneer in Digital business)

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SWOT Analysis

Weakness:

Organizational structure: 2 Unilever: Unilever NV (Netherlands)

and Unilever PLC (UK) may limit flexibility.

Focusing on Emerging Market may slow down the business

growth ( Emerging countries are not economically and politically
stable)

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SWOT Analysis

Opportunities:
Demographics
Products appeal to wide range of population
Integration of international employees bring broad
cultural and business experience in all processe
Technology
Already using high technology such as digital business
New communication technology to more efficient supply
chain
Environment
Maximize recycled packing materials
Processes environmentally friendly
Products are biodegradable

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SWOT Analysis

Threats
Economic
Internal turmoil in third world countries
Ventures in developing countries are jointly owned
Politics:
Non stable politic situation in some country of emerging
market
Environment
Increased regulations

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 Conclusion

Since 2010, Unilever start the Unilever Sustainable Plan and it became
The spirit of its corporate strategy: to double size the business whilst reduce
its environmental impact and increase social impact.

Unilever invest in Sustainable Innovation: they believe that innovation is the

motor to connect Unilever product to consumer life (reach up premium
consumer, reach down: poor communities, reach wide: to be the first to
understand consumer and meet his need) : this is a competitive advantage
to reduce the gap between Unilever and their big competitors

Unilever is one of the first companies to look outside their walls by giving the
opportunity to expert and start ups to collaborate and share Unilever Vision.

Unilever also invest huge amount on Marketing to reduce the power of

substitution.

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