Mitchell Jackson

Unilever Case

Aside from price, low-income consumers in the Northeast (LI-NE’s) evaluate detergents on six main factors. The factor they value the most is the power of the detergent (24%, Exhibit 5), specifically in regards to its ability to clean and whiten clothes keeping in mind that a small amount be used. The second most important attribute is the detergent’s smell (20%, Exhibit 5), and consumers usually relate a strong, pleasant smell to the ability to make the clothes feel soft. The third factor LI-NE’s really care about is the detergent’s ability to get out tough stains without having to use laundry soaps/bleach (16%, Exhibit 5).

Yes, Unilever should target LI-NE consumers. One of the biggest reasons is that the Plano Real legislation has made this market more attractive because the purchasing power of the low-income consumers of Brazil is increasing. These low-income consumers are largely located in the NE (2,250 GDP, Exhibit 1), so there is a huge opportunity for Unilever because market share in this region is below its national average (75% < 81%). Both markets for detergent powder and laundry soap are growing, by 17% and 6% respectively, which is a great reason to want to increase market share. Talking about the detergent market specifically, there are large barriers to enter which is great for Unilever except that P&G and smaller local companies pose a threat. P&G also has great global R&D resources and they are already starting to compete directly with Minerva and Omo. Another reason is the detergent market is Unilever’s “cash cow” and is helping to fund its other two growing segments in Brazil. One con may be lower profit margin but we have proven that these are well worth it in terms of shutting out competitors in a monopolistic competitive market. There is also concern over the cannibalization rate if a new product were launched. These concerns are not needed; as OMO and Minerva are highly regarded by their consumers (Exhibit 8/9) and consumers clearly see the premium benefits of the product (+70% Omo TOM awareness).

In order to properly serve the LI-NE consumer segment, a new brand must be made that delivers what these consumers value most. To start, the two lowest priced Unilever brands must be examined, “Campeiro” and “Minerva”. The Minerva brand does its job in targeting consumers that value softness and smell. Appealing to these consumers emotionally, Minerva dominates its P&G competition, “Bold”. Minerva has 100% brand knowledge and a very high market penetration at approximately 90% (Exhibit 8) so repositioning it to attract LI consumers seems to be a ludicrous task since the product is bought regularly and enjoyed. Repositioning the product will also just confuse consumers and possibly hurt its 17% market share. On the other hand creating an extension of OMO or Minerva is also frightening because that will most likely promote cannibalization of the parent brand. Campeiro has great brand knowledge as well (Exhibit 8), however it tested very badly in the three most important attributes of detergent (Exhibit 5). It will be hard to reposition a product to dominate the LI-NE segment if the majority of consumers know about the product (99%) and are already displeased with its value. In the end, extending or repositioning “Campeiro” would save introductory marketing and development costs, but these savings do not outweigh the disadvantage that Unilever would put itself at by using an inadequate product’s brand name.

In order to make a product that these LI-NE consumers can afford/delivers value, a new formula should be crafted. The new formula should focus on 2 of the 3 most

Mitchell Jackson

Unilever Caseimportant attributes, cleanliness /whitening and ability to remove stains (Exhibit 5). I would assign a 5 to both of these categories and hope they are up to par with Minerva in these attributes. Since Minerva already markets based off of Smell/Softness, this attribute can take a back seat, and I would give it a 3.5. Packaging importance would be a 2-3. Attractive packaging and imagery would be good for a new product launch and would make sure Brazilians do not write it off as cheap. Money should be save on the last two attributes and I would rate them anywhere from a 1-2, as they are the least likely to turn off customer.

We are told LI-NE consumers shop do not shop at large supermarkets, thus for the new product to flourish it must reach the 75,000 smaller outlet stores in the NE. Using these distributors will be cheaper at $.05 per kg, as opposed to $.10 per kg that wholesale distributors charge (Exhibit 13). There is also less Sku’s delivered, allowing for better shelf space, merchandising, and point of sale activity. The partnership will also allow free data flow, which could be used in other LI regions that Unilever operates in. The main con of using these specialized distributors is that they require exclusive rights to distribute all of Unilever’s detergent products. Choosing to contract might cause OMO and Minerva to lose market share. If this were the case, Unilever would have no choice but to go with the wholesale distributors.

The new product should be priced at $2.00; most importantly it needs to be between Minerva and “Campeiro” prices. The profit margin will be approximately $.20. Pricing it at $2.00 allows for LI consumers to afford it and hopefully convinces consumers that buy cheaper products to spend slightly more for increased value. This price will be extremely competitive with similar brands, as P&G’s main two products are $2.40 and $2.50. “Omo” should remain at $3.00, because of its large brand equity and its recognition as the top product (best TOM awareness). “Minerva” should also keep its price or could even increase slightly (.10-.20) as it is currently dominating its counterpart “Bold” by 13% market share. “Campeiro” could possibly move to a plastic container that way it can lower its price to $1.50. With the new product appealing to LI consumers who desire value, it would be beneficial if those trying to wash their clothes in the cheapest manner could afford “Campeiro”. This price cut could help Campeiro dominate its segment, specifically over “Invicto” and local brands.

The new brand has to overcome the “low-income = low quality” stigma in order to flourish. We are told that washing clothes in the NE is enjoyable, and that women take pride in the cleanliness of their families clothes, so the promotion should focus on how the new brand benefits to their lifestyle, not just the price. Another challenge is the LI-NE consumer’s illiteracy rates are 40%. The advertising and promotions should focus on imagery and stay away from long, confusing messages. The focus should be on the whitening and cleaning power, translating to a happy and stress-free lifestyle for the family. The first purchase is extremely important, so getting the specialized distributors to do point of purchase marketing and trade promotions is important. These strategies should make up approximately 40% of the budget. The rest of the budget should be used on advertising and above the line marketing. We are told the majority of Brazilians watch and enjoy television regardless of social class, so this should be the main tool.