Strategies applied by Unilever in Brazil
The case study elucidate Unilever and their competitors in two categories; laundry soaps and detergent powders particularly concentrating on Northeast and Southeast regions in Brazil and the marketing strategy that Unilever needs to implement for low income consumers in Brazil.
What is marketing?
Marketing is the management function responsible for identifying, anticipating and satisfying customer requirements profitably  .
Consumer Behaviour is the process individuals or groups go through to select, purchase, use and dispose of goods, services, ideas or experiences to satisfy their needs and desires  (Appendix 1). Different consumers have a varied and wide range of needs and wants. Types of buying situation depend on person's lifestyle, wealth/income and habits. Decision making is often dictated by two factors i.e. involvement and perceived risk  (Appendix 2).
Struggling with your essay?
Northeast Brazilians classified laundry soap under the umbrella of routine-response buying behaviour as it was a low cost product which was purchased more frequently i.e. 20.4 kilograms per year per buyer as compared to 6.8 kilograms in Southeast  . Furthermore, clothes were washed more frequently i.e. 5 times a week against 3.9 times in Southeast because people in Northeast possessed fewer clothes  . On the other hand, detergent powders fall under limited decision-making buying behaviour as they were bought occasionally by North-easterners i.e. 11.4 kilograms per year per buyer as compared to 12.9 kilograms by South-easterners  .
Characteristics influencing Consumers' Decisions
Consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics  shown in Appendix 3 which are demonstrated below:
Cultural Factorïƒ Culture: Northeast state of Brazil had a distinct culture and history. In 1996, 65% of the population was mixed African and European origin in Northeast versus 30% in Southeast so lifestyle, culture and religion all shared African influences  .
Social Factor ïƒ Roles and Status: Northeast and Southeast differ in symbolic value they attached to their cleanliness. Northeast people were proud of the fact that they kept their family spotlessly clean, an indication of their self esteem and social status, despite of their low income and it was their main subject of gossip.
Personal Factorsïƒ Occupation/Lifestyle: Northeast was predominantly rural and remained heavily dependent on agriculture where 40% of the people were illiterate and as per Exhibit 2, 53% of the population lives on less than two minimum wages (Social classes E+ and E-)  . So due to tight family budget people were buying more laundry soap then detergents as it was cheaper. Northeast low income consumers evaluated detergents on 6 key characteristic along with price of the product  .
Psychological Factor of Beliefs and attitudes: Northeast women believed that washing clothes was a dedication of the mother to her family. Their attitude towards washing clothes was considered as one of the most pleasurable activity of the week, as they used to meet and chat with their friends. Whereas, Southeast women were of the belief that laundry should be done alone at home and didn't considered it as a topic of gossip while socialising.
After the extensive field study of low income consumers in Brazil, Unilever's interdisciplinary team found that although people would love to buy Unilever's Flagship brand Omo, tight budget of the family being one of the major factors strained them to buy the cheaper local brands.
Evaluation of Alternatives
The Brazilian fabric washing market had many players competing in laundry soap and detergent powder. Northeast buyers used to evaluate detergent powders keeping in mind the six attributes along with price. As per Appendix 4 they sorted out the best product suited for them.
Key Industry Players in the Brazilian Fabric Wash Market
The Brazilian fabric wash market was governed by Unilever, Proctor & Gamble, ASA, Flora Fabril and other smaller local companies where Unilever and Proctor & Gamble were the major players. The fabric wash market consists of two categories: detergent powder and laundry soap.
As per the above pie diagram, Unilever lead the detergent market gaining 75% market-share most of which came from Omo, its dominant brand, having 52% market share, followed by Minerva with 17% share whereas Campeiro had 6% share. Proctor & Gamble's Ace brand, which is also one of its global brands, ranked third-highest with 11% market share  .
This essay is an example of a student's work
As seen in the above pie diagram, Northeast market for laundry soap was very fragmented. Unilever's Minerva brand was the leader with 19% market share selling to retailers at a price which was 41% discount relative to Omo. Proctor & Gamble didn't manufacture the laundry soap hence; Unilever's biggest competitor was ASA, whose 'Bem-te-vi' brand had 11% market share. Other major competitors were local Brazilian companies as laundry soap was a multi-use product and relatively easy to produce. One of the smaller companies 'Flora Fabril' also had 6% of the laundry soap market  .
Consumers had both brand knowledge as well as a top of mind awareness of Unilever's products in the Brazilian market  .
Unilever constantly strived to penetrate both Northeast and Southeast market, with the variety of products it had in the market as well as being in a position to offer both laundry soap and detergent powders (Appendix 5). Its brand Omo was mainly targeted to high income group, wholesale price being $3 and rated as the best amongst all the brands by consumers giving higher attributes satisfaction  . Minerva brand was available as detergent powder priced $2.40 for mid income group and also as laundry soap priced $1.70 proportionately with its current market competitors; and Campeiro was targeted mainly for the low income group where its price was identical to the Minerva laundry soap  . As per the Product portfolio model introduced by Boston Consulting Group Growth-Share Matrix  , Omo fell under the 'Cash Cow's' box acting as a fuel provider and giving support to the other segments in Unilever widening its scope (Appendix 6).
On the other hand, its main competing rival Procter & Gamble had 2 global brands out of its 3 brands in the detergent market namely Ace and Bold targeted to high and medium income group priced at $2.35 and $2.50 respectively, whereas the third brand Pop, priced $1.70 was mainly targeting the low income consumers  . Procter & Gamble didn't enter the laundry soap market as the market was already very fragmented and they had very less scope of expanding into that segment as they entered the market late and the local companies found it cheaper to produce laundry soap (Appendix 5).
Present-Situation Faced by Unilever Brazil 
As per the above SWOT analysis, Unilever had potency of being a clear market leader in the detergent powder with 75% share of the North-east market  . The detergent powders were "Cash Cows" providing fuel for growth in Personal care and Food divisions. Detergent market segment in North-east was growing at the remarkable annual rate of 17% due to the economic upturn of the Plano Real  . With good historic image of marketing premium brands in Brazil since 1929, Unilever had built their brand heritage and brand recognition and were well renowned and perceived by Brazilians. Most of Brazilians have either seen or have tried one of Unilever's brands in this segment  .
Unilever lacked the knowledge of low income consumers or firsthand experience of the kind of marketing strategy that would work for this segment resulting in lack of attention. Local distributors was another major weakness as Unilever did not had the ability to distribute to approximately 75,000 small outlets spread over the North-east as low income consumers rarely shopped in large supermarkets like Wal-Mart or Carrefour but prefer going to small stores. According to the consumer's perception, Omo was very expensive product whereas the other alternatives presented by Unilever were seemed to be having a low quality  which was surpassed by P & G's Ace brand  .
Freelance Essay Writing Vacancies
Looking to become a writer?
Due to high demand for our services we're always looking for new writers. If you're interested in becoming a freelance writer then why not read more about our freelance writer jobs.
Getting access to the 75,000 small outlets which stretch over the Northeast Brazil would be a key. The Northeast comprises of 47.9 million people who purchases 42,000 tons of detergent powders and 81,250 tons of laundry soaps; and the boom was beneficial as the purchasing power of the poorest population grew by 27% per year giving clear indication of market growth. Brazilian federal and local governments started providing tax incentives to companies investing in the Northeast regions to improve economic conditions and family income of households. 28 % of North-east household had washing machines and North-eastern women washed the clothes frequently (5 times a week) as cleanliness is part of their culture as well as main topic of gossip and discussion  .
Procter & Gamble were the biggest threat Unilever had as they were drawing on formidable R&D and marketing expertise of the company worldwide which is closing up and could attack on the low income segment where Unilever were most vulnerable. With different GDPs, perceptions, habits, race and with a rate of illiterate varying from a region to another, standardising seemed to be impossible.
Marketing strategy for low income consumers
Launched in 1957, Unilever's most successful brand Omo has swayed and influenced Brazilian consumer's minds as the best detergent available in the market but one of the major drawbacks for low income consumers is that they see Omo as very expensive and cannot afford buying it. Therefore, the main focus on Unilever should be to extend and enlarge detergent powder market only by influencing new customers by create a new product for low income consumers, which is not priced too high as well as satisfy their attributes without creating cannibalisation on Omo and Minerva.
Unilever can take advantage of its big portfolio worldwide and have four options to be considered:
1) To develop a new brand; or
2) To re-position Campeiro/Minerva; or
3) To launch a cheaper version of Omo; or
4) To launch a new brand from its global portfolio
In my viewpoint, option 1 is not feasible as the cost of Research and Development will weight too much and it will be a more costly option. Option 2 will be ineffective as Campeiro perceived having low cost and quality, and may require a longer time to change its image in the minds of the consumers. Alternatively, if Minerva is launched further down in the market, it may affect its market share allowing competitive P&G to lead. Option 3 cannot be implemented since people will be confused between a cheaper version and a higher version of the same brands and may create cannibalisation.
Therefore, I strongly suggest we should go with option 4 and launch 'Surf' brand from its global portfolio. The product will be launched with a different name i.e. 'Surf-Ultra'. The following marketing mix  must be implemented where its target group would be low income consumers (Appendix 7).
'Surf' is ranged in two categories i.e. 100 and 60-85  . I am opting for the range of 60-85 due to my target group but suggest changing the formula, enhancing and improving some attributes of the original composition by eliminating the wasteful ingredients and satisfying the needs of low income consumers as per most of their characteristics desired (cleanliness and smell) and avoiding any cannibalisation. There will be slight increase in the formulation cost of the product i.e. $0.95 per kg.
As per ANSOFF's Product Market Matrix  'Surf-Ultra' will fall under the Product Development vicinity (Appendix 8). Unilever should use multiple types and sizes of packaging, all having 1kg and 500gms options. They should retain the traditional cardboard style since low-income consumers gave 13% importance to packaging as well as launch innovative plastic containers which will reduce Unilever's cost of production and will give a chance to consumers to experience new packaging. The cost of cardboard boxes will be $0.35 and for plastic bottles will be $0.25.
For the purpose of break-even analysis I assume that developing a brand will add $0.10 per kg in incremental marketing costs  .
The wholesale price of 'Surf Ultra' would $1.70 for cardboard boxes and $1.60 for plastic bottles as per the calculation shown in the table above  .
As per the perceptual map, Surf ultra will be placed definitely above Campeiro as it will have more improved quality ingredients and in regards to its price, it will be available in the market.
Unilever should use a combination of both the promotion mix strategies i.e. push and pull strategies  to launch Surf-Ultra effectively in the market (Appendix 9). Unilever's main focus target needs to be on below the line concept (in-house trade promotions, point-of-purchasing marketing) which are the small local stores where low income group tends to go for purchasing their product over and above getting finance and advice (widely used in Brazil). While launching Surf Ultra in the market, Unilever should give free testers in the small plastic container of 15 grams each to low income consumers by visiting their house, which will help Unilever to increase their brand awareness for their new product in consumer's mind. There should also promote their product by giving a 2 litre bucket free along with 2 packets of 1 kg each either cardboard boxes or plastic containers. Plus above-the-line concept of advertising their product on television will also be much beneficial as almost all Brazilians, irrespective of their income, are avid television watchers. The advertisement shown to consumers should have a catchphrase saying "Surf-Ultra is all about Gorgeous Laundry for less powder where you get elegant fragrances along with a great clean!"
Choosing the right distribution channel is very important as it was a large component of the product cost which once selected will be very hard to reverse and ultimately will have very strong implications for the ability to push sales and build brands at point of sale. Unilever should select an exclusive and specialised distribution over generalist wholesaler for all the small stores of the NE region for the detergent category. Specialized distributors will cost them $0.05 per kilogram  as a variable cost to reach the smallest stores which will increase their reach to the smaller distributors boosting their sales.
The immediate short term implications of this suggestion will be that Unilever will gain a first mover advantage as compared to its competitors and therefore an edge in the fast growing market for low income group. The small proportion of the money generated from Unilever's cash cows can be utilised for the new product to increase its growth. Long term implications for the suggestion will be that low income consumers will be ready to pay for this new brand satisfying their attributes acting as an addition to the current market share of the Unilever without moving its current buyers of existing buyers which will directly act for Unilever as becoming a leader in the low-income consumer market in Brazil.
Appendix 1: Consumer Behaviour
Appendix 2: Buying Situations
Appendix 3: Characteristics Influencing Consumers' Decision-Making
Appendix 4: Evaluation of Alternatives
Appendix 5: Current Strategies
Unilever's Current Marketing Strategy:
Procter & Gamble's Current Marketing Strategy:
Appendix 6: Boston Consulting Group Growth-Share Matrix
Appendix 7: Marketing Mix
Appendix 8: ANSOFF's Product Market Matrix
Appendix 9: Marketing Strategy for Low income consumers
A push strategy involves pushing the product through marketing channels to final consumers whereas using a pull strategy; the producer directs its marketing activities (primarily advertising and promotion) towards final consumers to induce them to buy the product.
If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please click on the link below to request removal: