Lever Brothers Pakistan Limited Is A Multinational Organization Marketing Essay

“Lever Brothers Pakistan Limited is a multinational organization. Unilever PLC London is its parent company. Unilever is a European based company with headquarters in London, and their shares are quoted at the stock exchange of several European countries. They deal in all kinds of products from animal foodstuff to foods and detergents plus other personal and consumer products. Unilever has its subsidiaries in over 80 countries of the world, to which it spreads its vast knowledge and resources.

William Lever (its originator) commences business in England as a grocer. He established Lever Brothers in 1827 in England Sunlight was the first product of Lever Brothers, which makes the beginning of the marketing of branded products at the same time Margarine Uni was established in Nether Land by Simon Van Berg and Anton Jorgen. These two companies in term of:

     Buying raw material

     Selling finished goods

Consequently both the companies are loosing out money in term of profit. These problems led to think of the mergers in 1930. These two companies merged together and renamed the business as Unilever PLC / the word UNI is taken from margarine Uni and Lever is taken from Lever Brothers. Its head quarter was established in England and Rotter Dam.

Unilever has 500 operating companies in 80 countries. It has 0.3 million employees and turnover of sales in 23000 million pounds. The global business proportion is 60% in Europe 20% in North America and 20% in rest of the world. An identified Board of Directors controls the activities of subsidiary companies throughout the world. Lever Brothers Pakistan Limited started its operations in 1948.

A merger of Sadiq Vegetable Oils and Allied Industries existed in Rahim Yar Khan was taken place with Lever Brothers and HVM Company based at Karachi. As a result of merger Lever Brothers Pakistan Limited was incorporated as an independent Unilever operating company in 1955. The company is quoted on the Karachi, Lahore and Islamabad Stock Exchanges” as described in (Report on strategic management of unilever, 2009)

INTRODUCTION

Unilever is the leader in producing consumer goods related to personal care, foods and beverages. 160 million times a day, someone somewhere chooses a Unilever product.

It has 400 brands spanning 14 categories. Invest nearly €1 billion every year in cutting- edge research and development.

Unilever is the parent company of Unilever Pakistan, which is one of the Fortune Brands in the world. Unilever holds 51.55% of the equity shares of the company. The Unilever in Pakistan has 35 major brands under its umbrella, which cover diverse sections like personal care products, nutrition and hygiene related products.

HISTORY OF UNILEVER:

In the 1890s, William Hesketh Lever, founded Lever Bros.

Later on its name changed from Lever Brothers to Unilever

UNILEVER PAKISTAN:

In 1948, it was established in Pakistan, in a small town of Rahim Yar Khan.

Nature of their business enables their brands to be the pulse and heartbeat of the 164 million people in Pakistan

It operates through 4 regional offices. 4 entirely owned and 6 third party manufacturing sites across Pakistan

The company contributes a significant proportion of the country’s taxes

It employs a large number of local managers and workers.

CORPORATE OBJECTIVES OF UNILEVER

MISSION STATEMENT:

“Our mission is to add Vitality to life.

We meet everyday needs for nutrition; hygiene and personal care with brands

that help people look good, feel good and get more out of life.” “

as described in (Strategic thinking of Hul, 2008)

VISION STATEMENT:

Touching hearts, changing lives.

CORPORATE MISSION OF UNILEVER:

‘Add Vitality to life’

” This is the mission of the company. This is what inspires the employees to deliver their best in making the lives of their customers better. Pakistan Unilever has a total of 36,000 employees who work to add more vitality to the lives of the customers and the result is that their products are used by most of the Indian population.”

as described in (Hindustan Lever, 2007)

CORPORATE OBJECTIVE OF UNILEVER:

“The objective is in line with the corporate mission, which is to add vitality to the lives of the people. The company attains this objective by getting a stronghold on the local markets and a dedicated service by sustaining the exceptional quality of the products over the years. Apart from that the company also believes in maintaining the best form of corporate behavior.”

as described in (Hindustan Lever, 2007)

“Our corporate purpose states that to succeed

requires “the highest standards of corporate

behaviour towards everyone we work with, the

communities we touch, and the environment on

which we have an impact.”

MARKET OVERVIEW

The Home and Personal Care Industry or being more specific in perspective of the product we intend to modify, the Soap Industry is highly concentrated with key players in the segment of the market including beauty soap sellers: ZIL Ltd., P & G with Camay, Colgate Pamolive with Pamolive Beauty Soap, Unilever with brands like Lux and Rexona, Azhar Corporation (Pvt.) Ltd. with Hoor Beauty Soap.

The flood of imported soaps being sold at cheaper prices in the local market, compared to domestically produced soaps, has created a panic among local soap manufacturers, who have finally decided to approach the government to take steps to save the local industry

Market Size

The total consumption of beauty/ bath soap in the country is around 100,000 Tonnes Per Annum. This tonnage when converted to rupees amounts to approximately Rs. 10 Billion Worth of Sales Per Year. Toilet soap market is expected to grow at a rate of in the coming year; therefore, the projected demand of toilet soap in 2009-10 is 130,000 MT/Y (metric tones per year). The country imports nearly 1,500 tonnes soap monthly. 

Total Annual Production of Soap and Detergents in Pakistan:

The following gives an overview as to the annual production of soaps in Pakistan since 1998:

Production of Soaps and Laundry Soaps

Years

Toilet/ Bath Soap

No. of Reporting factories

Production

(Tonnes)

1998 – 99

22

76166

1999 – 00

22

19892

2000 – 01

22

22596

2001 – 02

22

23942

2002 – 03

–

23383

2003 – 04

–

36168

2004 – 05

–

49698

2005 – 06

–

60534

2006 – 07

–

66650

2007 – 08

–

75277

Source: Federal Bureau of Statistics, Government of Pakistan

Market Potential

The total production capacity of this industry is 250,000 – 300,000 tonnes of soap annually. Its contribution to the national exchequer in the forms of various taxes is running in billions of rupees. [3] Since the demand for beauty soap market is to a great extent oligopolistic, variations in price lead to price war which can eventually break down each company’s market share.

Moreover, the population of the country seems to be increasing consistently leading to more demand; which in turn is evident of the fact that there is a huge market out there for beauty soaps that still needs to be covered. The above table shows the consumption trends of bath soaps in our country. Launching a soap in the higher income group gives us a huge market to gratify due to the fact the imported soaps that are already being sold at lower prices, catering their respective market. Developing a product that the higher income group can afford gives us a big market to cater to. Keeping these positive signs in mind one could expect that future of beauty soap market of Pakistan, is promising.

Market Trends

Driven by marketing ingenuity, consumer preferences are speedily changing by the day in terms all products, especially Fast Moving Consumer Goods. Independent retailers and wholesalers are still the largest channel contributors however the role of International modern trade is growing at an increasing rate. Greater awareness in our target markets about maximizing cleanliness, and greater skin care enhances the probability of our product’s success.

There is an additional trend in both our target markets and industry towards organic based soaps. Organic and natural products have become increasingly associated with safety and health in a variety of different markets. Our very organic soap is complementary to this growing market trend. The most common challenges to this industry are soaring prices of raw material, and influx of cheap imported brand through gray-channels.

Market Shares

Unilever occupies the largest share in the market with its brand Lux. The rest of the soaps engage a comparatively small market share.

The beauty soap industry has a few major producers of which Unilever holds market share of slightly less than 50%. Other competing brands like Dove, Rexona and Lux have started to have a strong consumer base, but LUX’s product features distribution and promotional activities have created high brand loyalty for which it is still the market leader.

2.Assumptions

Expansions plans are taken into account while making certain assumptions. In order to formulate the marketing plan for our new product, we have taken the following assumptions for the coming year:

2.1 Marketing Potential Assumption

In order to increase their market share, the intention is to increase the market demand for beauty soaps through innovations and creating the perfect target market. We assume to contain the price and make it affordable, inspite of the rising raw material prices.

2.2 Forecast Assumptions

With increase in the number of competitors in the Pakistani market, Unilever would face a stiff competition. It is assumed that there will be no new entrants in the Pakistani market in the coming year.

It is assumed that the Inflation rate in Pakistan would remain constant.

The interest rates would not fluctuate significantly.

2.3 Other Assumptions

There will be no significant shift in the technology.

Good monsoon ensures adequate availability of raw materials, which are mainly agricultural in nature. We assume that we won’t face any grave energy shortages and raw materials will be available on time.

Government policies in terms of licensing, duties, movement of commodities etc. would remain constant.

The website won’t require much maintenance once it is up-dated.

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3.Marketing Objectives and Strategies for Lux Scent-Sations

3.1Marketing Goals and Objectives

The following marketing objectives have been formulated for a time span of 1st July, 2010 to 30th June, 2011.

Reaching annual sales of Rs. 20,00,000. (as compared to 1.35 Million from last tear)

Inform target audience about features and benefits of our product and its competitive advantage, leading to a 10 % increase in sales in one year.

To increase our market share by at least 5%. This objective will be achieved through intense promotional activities, developed to get to the target market in the best possible manner.

Creating awareness about our product to at least 50% of the target market within six months of launch.

Capturing 60 % of target market within one year of the launch of Lux Scent-Sations.

We want to offset our products to whole sale as bigger parties require bigger amounts and the market wants to buy in big amounts.

Establishing good relations with our customers so they create good word of mouth for us and approach us again and refer others therefore increasing our sales.

Distributing our product to the major retailers in Rawalpindi, Lahore, Karachi, Multan and Peshawar in the first 6 months of the product launch so as to create Brand Awareness in all the four provinces of Pakistan. After gaining primary success we will be available in all big and small stores in almost all the cities of Pakistan.

3.2Population Profile

Talking specifically in terms of Pakistani context, beauty soaps or rather bath soaps are bought as a grocery product in a lot and are used through out the month. The entire family usually uses a single brand of soap making no distinctions for male or female, young or adults. We describe the characteristics of our population as follows based on the survey results afore-formulated.

3.2.1 Geographic Profile:

The consumption of bath soaps knows no boundaries or limits. We have a very efficient supply chain and plan to distribute our product as widely as possible. We will follow the traditional supply chain because of its efficiency and effectiveness seen previously. Furthermore, we intend to continue to export our product.

3.2.2 Demographic Profile:

Our marketing survey tells us that the major consumption of beauty soaps is attributed to the young ladies. On the other hand, the family adults do not pay much heed to what brand is to be used. The demographic segments for our product comprises of following major variables:

Age: Above 12, 12-18, 18-35, 35+

Our product does satisfy the needs of customers of all ages; but our survey has identified that the young females make a more specific and rather defined market segment for us to target.

Gender: Female

Social Class: Middle Class, Upper Middle Class and Upper Class

The social status of our targeted market would consist of Middle Class, Upper- Middle Class and Upper class. The Upper or Elite Class does make the minutest portion in the sales of our product at the moment but the modified product that we intend to launch will be at par with all the imported soaps available in market.

4.Lux Scent-Sations – The Modified Product

Lux Scent-Sations, as the name depicts brings skin care for our customers on one end and a sensational fragrance on the other. Our modified soaps, although targeted to the same young female market, bring them a solution to the intensely expensive perfumes they have to buy. Our soaps will be made using natural ingredients and would have a mesmerizing smell. Our soaps carry the freshness one needs in summer time with five different smells and varieties; we intend to completely satisfy our consumers by catering their diverse needs.

4.1Market Segmentation

We segment our market according to the following five major segments:

4.1.1″Home Stock” Consumers market:

This segment includes consumers who buy a bulk of soaps and amass it at their homes. The consumption takes some time thereof.

4.1.2″Medicated Soap” Consumer Market:

This segment consists of consumers who are more concerned about hygiene and germ protection in soap than any other attribute.

4.1.3 “Liquid Soap/ Face Wash” Consumers Market:

This segment of the market consists of consumers who prefer faces washes or bath gels rather than using soap bars.

4.1.4″Low Income – Low Literacy” ” Consumers Market:

Consumers that have a relatively low purchasing power and furthermore, possess a low level of literacy rate formulate this segment; these generally prefer using a cheap soap and a single low priced brand for the entire family.

4.1.5″ High to Middle Income – Literate” Consumers Market:

This segment includes buyers who make their decisions of purchase in accordance with their income and furthermore, are status conscious, leading them to make purchases of high priced products.

4.1.6 “Uni-Sex Soap” Consumers Market:

This segment consists of soap consumers who intent to purchase a single brand for both the male and the female in the house.

4.1.6″Young Female” Consumers Market:

This segment consists of female consumers who are young and are conscious about the condition and protection of their skin.

4.1.7″Scented Soap” Consumers Market:

This segment consists of consumers who purchase products depending over the fragrance that it holds. Since, perfumes are highly costly, consumers prefer suing soaps that covers that problem for them too.

5. Target Market

Out of the six segments, we intend to target the following four:

“Home Stock” Consumers Market:

According to our Primary research, this segment formulates about 3% of the market. Reason being, that mostly young girls would eventually end up buying our product; and since most of them are young, hence purchase their cosmetics and other beauty products in a relatively small amount but still we will providing the soap in two sizes to cater different needs.

” High to Middle Income – Literate” Consumers Market:

This consists of consumers who actually try anything innovative that comes into the market. According to our survey, a handsome amount of customers are willing to pay more and try something different and quality.

“Young Female” Consumers Market:

This constitutes a major segment of our market and the primary research proves so.

“Scented Soap” Consumers Market:

Our primary research presented that scented soaps are well awaited for, A major chunk of our market consists of consumers that prefer scented soaps.

Product Life Cycle

Lux Scent-Sations is at the Maturity stage at the moment. Strategies employed thereafter, have been engaged keeping in mind the stage our product is, at present. These include a huge amount of advertising and not keeping the prices too high.

Positioning Of Lux Scent-Sations

Lux-Scentsations will be positioned not just as some lame old beauty soap but it will be positioned as a soap that is perfect for the summers; the natural ingredients keeping skin radiant and glowing and a scent that takes your breath away. The five different fruity and sweet smells would leave you smelling sensational and would protect your skin from drying out or oiling too much. The young girls can now have something solely to themselves. Our manufactured soaps would be catered exclusively to the young girls of today, giving them a youthful experience.

Our Positioning Statements:

Soap so aromatic…you don’t need a perfume anymore…

Summers…Fruits…Freshness …The other name for Lux Scent-Sations…

Lux Scent-Sations …The epitome of bubbly indulgence

Tazgi ka ehsas…ab aap ke pass

will help us portray our picture clearly and distinctly in the minds of our target market. We will position our product against the competitors through our efficient promotional methods, using innovational promotional programs and by reaching closer to our target market; one of our exceptionally exclusive means being the arrangement and sponsorship of events like School Dramas, School Events at Collegial and University Level.

Development Strategy:

Ansoff Matrix:

Since we will be modifying our exisitng brand, but at the same timw, will be catering the sae target market, we define our business strategy as Product Development according to the Ansoff Matrix.

Consequently, we will be able to meet the changing consumer’s needs/demands, increase consumers’ satisfaction and meet our company’s growth objectives.

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7.Marketing Mix Strategy For Lux – Scent-Sations

The Marketing mix deals with product specification and development, pricing policies, delivery systems and promotional activities for ‘Lux – Scent-Sations’ are explained below.

Product

Lux – Scent-Sations would not only pamper one’s skin but also leave one smelling sweet and will luxuriously bathe your skin with a variety of fun perfumes. Lux Scent-sations, when used daily will help replenish, nourish, heal and rejuvenate one’s skin harmed due to the scorching heat of the summers. Young skin is delicate and is more prone to getting debilitated and our natural formulas incorporated with fruit essences will provide pure and natural cleansing to the skin.

But the most wonderful thing about Lux Scent-Sations is their unbelievable scents, which we refer to as Flavors!  Each one of these natural soap bars have been infused with a light yet long-lasting fragrance…fragrances selected from the most delicious fruits available. This selection has been very well thought of considering their advantages to the skin too. The rich creamy lather feels silky smooth and the scent of the fruity perfumes enchants ones senses.

The basic difficulty these days is to find a way to clean our skin without causing further damage or aggravate existing skin problems. The word “Soap,” to many means clean, but drying. The natural “glycerin” that is formed during the preparation remains in our soap, therefore, one will notice that their hands don’t feel as dry.  One will feel less of a need to use moisturizers. This tells you that your skin will be better equipped to defend itself against the aging effects of our environment, and to top it all off, the enthralling perfume incorporated in the soaps will leave one breathless. Through Soap Scent-sations we strive to bring you fun, colorful, fruity scented soaps that would make your skin smile.

Brand Name:

We have modified our brand name to Lux Scent-Sations. The addition of the word Scent-sations is a beautiful yet chic combination of the two words, scent and sensation, depicting the captivating perfume our soaps will hold.

Characteristics of Lux Scent-sations:

Available in five exciting fruity fragrances

These large, creamy bars are rich in moisturizing glycerin and palm oil.

Manufactured using natural products and oils

Are long lasting, and do very well in the bath or shower, since they do not quickly dissolve and melt away.

Contains essential oils which offer additional desirable properties to our soaps

All berry and fruit scents (except the citrus fruits), come from synthetic fragrance oils. In order to offer a wider selection of handmade soaps, we do use fragrance oils in some of our soaps. 

VALUE PROPOSITION

Margins have been an extreme focus as input prices have gone up and down unpredictably. It is indeed very important to look at every aspect of our business to simplify it as much as possible.

Providing maximum value for the money spent by the customer we look at the cost element and anything that can potentially add value for the consumer, while making sure to preserve things that are adding value by understanding the consumer value equation, and taking out anything that doesn’t add any value at all.

We’re focused on understanding what’s important to the consumer, and operating where we believe there’s a competitive advantage for us.

Convenience is still important the consumer. They’re scrutinizing the affordability the convenient features and packaging materials today and taking this account, they are looking at everything through a bit of a different lens, but the focus on convenience will go away.

The package still needs to be easy to open, easy to recycle and easy to see on the shelf. It has to be convenient to use portability is paramount. I do not see people moving away from consuming on the go, even in the most developed countries.

Consumers are looking at convenience more closely today than ever and trying to understand the value that it brings. It can only go so far. It will reach a point beyond which it cant go any further, but again its all about making sure that value has been added to the needs of the costumer. If value has been added and a need is addressed that isn’t being met by others then customers are willing to pay the price.

Packaging innovation is a lever we can use in order to gain market share. Our main areas of focus are:

Differentiating ourself to make sure that our package can be seen improving the functionality of the package and making sure the package is communicating what the brand is all about.

We are always looking to upgrade the quality of the packaging design because this is something the customer interacts with.

Market share and profit margins are important to our shareholders, who look to both metrics for the success of the company, so we want to continue to drive profit as low as we can and increase

market share across the board. We’re not going to compromise on profit. It’s about profitable growth rather than unprofitable growth.

I think consumers have a certain expectation around branded goods and I think our goal is to make sure that we’re communicating what the brand is all about. We look at what packaging format and design best does that. We may have made things smaller and we may have downsized the quantity of the product, but we’re not downsizing on the quality of the product or the pack.

I agree that nimbleness and flexibility is important in dealing with these tough times, and being adaptable to the market place and the consumers’ needs are important. We have a suite of tools that we’ve been using and continue to use in order to improve our flexibility to cut cycle time and lead time in the market. We have to make sure that we don’t take too long to make an adjustment to the economic situation. We have to be able to respond almost instantaneously. We’re transferring knowledge across the entire company, thereby using it more effectively across all brands and categories can help increase our speed.

The only thing we can use is our experience gained from our companies in other parts of the world. We have a significant knowledge base on what has worked in different parts of the world in the past and taking that knowledge and translating it to today’s economic situations seems to work pretty well for us, so taking our history, knowledge and cross-category knowledge and applying it against new and existing brands is something we’re trying to leverage more effectively.

The main challenge has been raw material costs and pressures on margins. We’ve done a lot to offset much of the unexpected costs of these difficult times. Our ability to adapt to the consumer’s needs over the last 18 months is down to our history and experiences in other parts of the world when these markets were experiencing downturns. We’ve taken that knowledge and applied it to this business situation.

Over all, we’ve weathered the storm pretty well – much better than some others have – but it’s only because of the experience of the leadership in this company and the ability of our resources and our people worldwide to adapt to the situation as it develops across the globe.