The Unilever market analysis and overview

The Unilever grocery store analysis and overviewTo tot vitality to life is Unilevers everlasting corporate mission, and it works to create a better future every day. incessantly since Unilever was established in 1884 by the founder William Hesketh Lever, It has grown to one of worlds leading suppliers of fast moving consumer goods. Winning in the market place is one of the essence secrets of its success (Unilever Global, 2010).In 1996, Unilevers market shargon of powder category in Brazil reached as towering as 81 per cent with iii blots Omo, Minerva and Campeiro. disdain its fire marking name and company good result Unilever was unable to penetrate the detergent market in the North East (NE) of Brazil. The North East of Brazil constitutes 20 eight percent of Brazils total population with close to forty eight million low income consumers (Chandon Pacheco 2007).This report therefore aims at providing recommendations on the merchandising system that Unilever should employ t o position the low-income consumer segment.The report is structured into triple parts videlicet consumer behaviour, strike off identity, and the trade mix followed by our recommendations. First we shall identify the consumer behaviour differences among dry wash growths customers in Brazil. Second we shall discuss whether Unilever should bring out a young brand, reposition its existing brand or go ahead with a brand extension to target the North Eastern Brazilian market. We provide then briefly touch upon the positioning of the brand and discuss in detail the merchandising mix. Theories and empirical data shall be applied where necessary.CONSUMER DIFFERENCESIn order to make an effective marketing system, we should first analyse the consumer behaviour differences between the SE and NE segments of the wash drawing harvesting market in Brazil. A deep understanding of the target consumer group is the first step in promoting a successful intersection point to a new market (Ch andon Pacheco 2007). The following table clearly shows the consumer behaviour differences between the ii market segments.NORTH EASTSOUTH EAST53% of the population live on less than two minimum wages.21% of the population live on less than two minimum wages.Only 28% of ho practiceholds own a washing machine.Washing machines are a necessity with 67% of the population possessing a machine.Women scrub clothes using bars. Then they add bleach to remove stains little detergent powder at the end to make clothes smell good.Women mix powder detergent and softener in a washing machine and use laundry soap and bleach only to remove the toughest stains.North-easterners use a lot more soap (20kg)South Easterners use a lot less soap than the NE (7kg)Women often do their washing in a public placeMost women wash clothes alone at homePeople attach the symbolic entertain to cleanliness women see it as the dedication towards her family.Cleanliness has much lower relevance for self-esteem and brothe rly statusIt is essential to analyse the buyer role framework to understand the shopping habits of low income consumer. This in turn result help the firm in its marketing mix. Table 2 downstairs analyses the buyer role framework for the laundry crossroads in the NE segmentINITIATORWomen of the houseINFLUENCERFriends, neighbours or relatives that the women bump into at the public laundry areaDECIDERHusband or in the slick of the unmarried woman the financial head of the family sometimes even themselves. purchaserHusband and Wife or either one of themUSERThe Whole Family/HouseholdTable 2 NE BUYER ROLE FRAMEWORKSOURCE- own COMPILATIONWhy are there much(prenominal) varied differences between the two consumer segments? The reasons heap be attributed to some factors which influence their choices. totally these factors can be divided into four aspects cultural, well-disposed, personal and psychological.The first factor that should be taken into consideration is motivation which b elongs to the psychological aspect because the motives drive consumers to buy. We all know Maslows hierarchy of needs theory. According to his theory, motives can be divided into five categories the physiological needs, the safety needs, the love needs, the esteem needs and the need for self- actualization.Among these categories, the physiological is the basic need, which delegacy the fundamentals of survival (Maslow 1943, 370-396). Only if the lower needs are well gratified, can new set of high needs emerge (Maslow 1943). As express in the case, women in the NE of Brazil, who have very low incomes and poor living conditions, are just fulfilling the most basic need and hence will prefer a product that offers judge for silver.Another factor related to psychological aspect is beliefs and attitudes. Women in NE of Brazil attach symbolic value to the cleanliness of the clothes. They regard it as the dedication of the mother to her family. Due to this they would probably buy a laun dry product with ability to remove stains.Lifestyle is also an historic factor that influences behaviour under personal aspect. Lifestyle refers to the pattern of living as expressed in a persons activities, interests and opinions. Lifestyle analysis, categorizes consumers according to their beliefs, activities, values, and demographic characteristics such as education and income (Jobber, D. 2007). Women in the NE of Brazil, viewing washing clothes as one of the pleasurable routine activities of their week.The forth factor which influences their consumer behaviour is the societal class. It is a sub factor of cultural aspect. People in NE of Brazil are the working class and those at lowest level of subsistence. Their social class is at the bottom of the gain. Their income can only sustain their daily basic needs, and these factors greatly affect their buying attitudes towards the laundry products. This is one reason for their colossal laundry soap usage.One factor of classifying households is based on their geographic location. This analysis is called geo demographics and is based on population census data. (Jobber, D. 2007). The households different economic conditions plant whether they will buy the kind of laundry product which may be less effective but with a more reasonable price or the best product without considering its price. The geographic location differences can enlighten the company to make the marketing strategies accordingly.BRAND IDENTITY marketing managers aim at growing their products into brands to help them create a unique position in the minds of their customers (Jobber, 2007, p. 326). It is therefore essential to understand the difference between a product and a brand. A product can be anything that has the capacity to satisfy customer need. Branding is the process by which companies distinguish their product offering from the competition. (Jobber Fahy, 2006, p. 133). Branding enables customers to build affinity in terms of presti ge, status, economy and eases the purchase conclusiveness (Jobber Fahy, 2006, p. 134).After analyzing the needs of the target market we as a strategic marketing team get that Unilever should employ the brand extension dodging.3.1 BRAND EXTENSIONBrand extension refers to the use of an established brand name on a new brand within the same broad market (Jobber Fahy, 2006). As mentioned earlier, Unilever has three brands namely Omo, Minerva and Campeiro. Their prices are coherent with the order in which they are listed. Omo has been positioned as an expensive product with the ability to remove stains with low quantity when used in washing machines, thus reducing the need for soap or bleach. Minerva, the only brand having penetrated the laundry soap market and the detergent market has positioned itself has having an emotional appeal where as Campeiro stands out as the price brand (Jobber Fahy, 2006, p. 132). After closely examining the performance, characteristics, consumer prefere nce and market penetration (in both the categories of laundry products) of the three brands we propose that Unilever should apply the brand extension strategy to Minerva. This will provide a good opportunity for Minerva as a brand to increase its market share in the laundry soap market, which is currently being dominated by other local or international products. Also the strong brand identity of Minerva can be sustained into the future through this extension (Jobber, 2007, p. 370). Minerva proves to be the right choice for brand extension because it is correctly priced and positioned contradictory its sister brands which are either too low (Campeiro) giving the idea of low quality, or either too high (Omo) making it out of reach to our target market.Our target market being the women in the North East of Brazil and considering their washing traits (Table 1) we propose that Minervas extension be a laundry soap that will try to cater to all of the needs of the North Eastern women or h ousehold. Also the North East market for laundry soap is very fragmented because laundry soap is much easier to produce than powdered detergent. Laundry soap is also seen as multi-use product that has more home and personal care uses.The brand will be called Minerva Brilhar- Sabo Multi intention (Multi Purpose Soap). Under the brand flagship we propose to launch three products namely Minerva Brilhar Alfazema, Minerva Brilhar Ctrico and Minerva Brilhar Coco.The reason for choosing three variants is to reduce the gamble of the product not being acknowledged by the jackpot. A detailed explanation of all the three variants will be discussed under the marketing mix.3.1.1 JUSTIFICATION FOR CHOOSING BRAND EXTENSIONA strong brand provides a strong foundation for leveraging confident(p) perceptions and goodwill from the core brand to brand extensions. The new brand benefits from the added value that the brand equity of the core brand bestows on the extension (Jobber Fahy, 2006, p. 136). Minerva as a brand has a considerable share in both the laundry soap and detergent market. Though not the largest in terms of sales or market share, its positioning makes it the most popular or sought after brand.The use of brand extension is an important marketing tool. The two main advantages of brand extension in launching new products are thatReduces riskLess costly than alternative launch strategies (Jobber Fahy, 2006, p. 142).Both distributors and consumers may perceive less risk if the new brand comes or is part of an already established brand name (Jobber Fahy, 2006, p. 142). The North Eastern side of Brazil has very few malls and supermarkets. downcast retailers with small-to- midsized shops are very dominant. Due to their restricted clientele and their spending power shopkeepers would generally be skeptical in shelving a new brand, until and unless they were being stipendiary for shelving the particular product.Consumers generally seem to attribute the quality associa tions they have of the original brand to the new one (Jobber Fahy, 2006, p. 142).Launch costs may also be trim down by using brand extension. Since the established brand name is already well known the task of building awareness of the new brand is not required. Consequently advertising, sales and forwardingal costs are reduced (Jobber Fahy, 2006, p. 142). Furthermore, there is the likelihood that the company may be able to bank upon advertising economies of denture since advertisements for the original brand and its extension reinforce each other (Jobber Fahy, 2006, p. 142).Looking at the other side of the coin, there is also the danger that the marketing attention will underfund the launch of the product, beleiving that the spin off effects of the original brand name will compensate. This can lead to low awareness. Another effect is cannibalization, which refers to a situation where the new brand gains sales at the expense of the existing brand. There is also the danger that bad publicity for one brand can affect the reputation of the other brands under the same umbrella. Also if a brand name is extended too far there can be a loss of credibility and this is something that the management needs to guard itself against (Jobber Fahy, 2006, p. 142).Brand extensions are likely to be successful if they make sense to the consumer. If the values and aspirations of the new target segement (s) match those of the original segement, and the qualities of the brand name are likewise highly prized then success is likely (Jobber Fahy, 2006, p. 143).4. MARKETING STRATEGIES4.1Market segmentation TargetingMarket segmentation is the technique used by marketers to gain an understanding around a diverse nature of markets. Market segmentation may be delimitate as the identification of individuals or organisations with similar characteristics that have significant implications for the determination of marketing strategy (Jobber, 2007, p. 275)Market segmentation provides the basis for the selection of target markets. The company decides the target market that it wants to serve. As customers in the target market segment are homogenous, a single marketing mix strategy can be substantial to match those requirements (Jobber, 2007). The consumer segmentation criteria can be classified into three broad groups Behavioural, psychological and profile variables (Jobber, 2007).In reference to the case at hand, Unilever is focussing on marketing its laundry products to the low income consumers in North East part of Brazil. Since the consumers in this region are homogenous a single marketing mix strategy can be developed.The launch of Minerva Brilhar aims at targeting the market with the following factors taken into considerationBuyers Household women from NE part of BrazilBenefits Sought Fragrance, Multi-use product.Purchase thing Self BuyLifestyle Conservatives with traditional values.Gender FemaleSocial Class Lower income.Income 53% of population live on l ess than two minimum wages.Geographic North East VS South East part of Brazil.5. Marketing immingleMarketing Mix is the planned management of the customer kin including product, price, place and promotion (Jobber, 2007, p. 1001). In what follows, each of the aforementioned elements of marketing mix is discussed in further detail.5.1 Product StrategiesFor some time now it has been conventional for marketers to recover in terms of different product levels (Jobber Fahy, 2006).Managing products from a marketing perspective can be explained using the three product levels namely core product, actual product and augmented product as seen in Figure 3.Figure 3 PRODUCT FROM A MARKETING PERSPECTIVESOURCE ADAPTED (Jobber Fahy, 2006)The three product levels that are depicted in the figure above can be applied to the case of Minerva Brilhar as shown in Table 3.Core productConvenience, Familiarity, Reassurance and FragranceActual ProductPlastic pack, Images with text, Modern look to the laund ry bar with a ready to use imageAugmented ProductSatisfaction, Guarantee, peacefulness of use.Table 3 PRODUCT LEVEL ANALYSIS OF MINERVA BRILHARSOURCE OWN COMPILATION USING TEXT FROM (Jobber Fahy, 2006).The characteristics of Minerva Brilhar are discussed below across various criterions unwrap product drivers Various fragrances to choose from, ability to remove stains, better grip, multi-use product (can be used for other home and personal care uses), value for money and longer life of the product.Packaging Plastic pack of 250 gms x 4 bars with images and text. Each flavour will be packed in individually. tactile sensation and Ingredients Three flavours namely Lavender (Alfazema), Citrus (Citrico) and Coconut (Coco). The patented formulae and technology developed by Hindustan Unilever in India for its brand Rin Supreme (sister company) will also be used to develop the above mentioned products. The technology used by HUL is called Pure Clean. The supposed technology would keep cloth es looking new for longer unlike other detergent bars which contains 40% mined ingredients (Exchange4media, 2002)Product positioning Our products tag line would be Keeps your family spotless for longer.The images of the product Minerva Brilhar are seen below.Minerva Brilhar- Sabo Multi PurposeSOURCEOWN COMPILATIONSOURCEOWN COMPILATION5.2 Price StrategyPrice from a marketing perspective can be defined as the sacrifice a consumer is prepared to make in exchange for the benefits of having a product or service, in order to achieve good value. The value is determined as a function of price, operable benefits and emotional benefits (Jobber Fahy, 2006).Therefore in reference to Minerva Brilhar we provide improved value to customers by using the differentiation orgasm strategy wherein the product benefits are enhanced by maintaining the price. Minerva Brilhar is reasonably priced as compared to the other Unilever detergent brands. The product provides enhanced value in terms of functiona l benefits such as ease of use with a better grip and is a multipurpose product. It also caters to the emotional benefits of the NE Brazilian customers such as cleanliness and provides a range of pleasant fragrances.5.21 FACTORS INFLUENCING THE PRICING DECISIONS OF MINERVA BRILHARThe determine decision of products is influenced by internal and external factors. While deciding the price for Minerva Brilhar the following factors were taken into consideration.Marketing strategy The differentiation strategy of pricing is suggested since the product has enhanced value and is priced at a nominally higher price than the existing Unilever products.Marketing Mix The quality of the product was enhanced in terms of better grip and more variety of fragrances for multipurpose use.Length of the statistical distribution channel The length of the distribution channel is long in the NE Brazilian market therefore the distributor mark up price is increased slightly.5.22 KEY BASES FOR PRICE ambitTher e are three key methods used by managers to set prices namely cost based pricing, competition pricing and marketing pricing. The figure below briefly explains the three pricing methods.Figure 4 KEY BASES FOR SETTING PRICESOURCE ADAPTED FROM (Jobber Fahy, 2006)The pricing method adopted in the case of Minerva Brilhar is the marketing/customer based pricing wherein the price of the product is designed based on attaching appropriate price to reflect the benefits offered to the customers (Dr.Angela Tregear, 2010). The market orientation go on was used to decide the prices. Minerva Brilhar will be priced at 1.71$/kg. Table 4 will outline the cost break up of Minerva BrilharThe cost break up constitutes of formulation cost of 1.05$/kg due to added features in the product such as three variants in flavour and better grip with a fine clean formula. The packaging cost will be 0.15$/kg as it is a plastic pack with four bars. The promotional cost is slightly higher at 0.32 $/kg as heavy pro motion is needed to build awareness for the brand extension. The major challenge faced by Unilever in pricing their products was to divert its funds from its premium brands to invest in a lower margin market. Therefore, pricing Minerva Brilhar at a price that is affordable by the mass can allow Unilever to penetrate the market better.5.3 Promotion strategiesPromotional activities can be broad and are aimed at the market as a whole. The general range of techniques available to the marketer is usually known as the promotional mix and comprises seven main elements which are represented in Figure 4 (Jobber Fahy, 2006, p. 217).Figure 5 SEVEN MAIN ELEMENTS OF PROMOTIONAL MIXSOURCE ADAPTED FROM (Jobber Fahy, 2006)The promotion of Minerva Brilhar will be done through advertising, sales promotion and sponsorship. A key point to note here is that almost all Brazilians irrespective of their incomes are avid telly watchers (Jobber Fahy, 2006, p. 133). Despite of this fact, Unilever has res ponded by reducing the measurement of advertising it places on television and instead switching to outdoor and internet advertising (Jobber Fahy, 2006).Therefore retaining the existing Unilever marketing strategy of outdoor and internet advertising the product will be advertised will the help of posters on small stores. Radio will also be used as an alternative to television for delivering the message across to a wide number of audiences.The other means of promotion that we propose for the new brand is through sales promotions. Consumer promotion techniques such as free samples can be introduced to encourage trial as this can be effective for brand extension (Jobber Fahy, 2006). In the case of Minerva Brilhar we will sell 20g of free sample with the purchase of each pack of any flavour.The final step of promotion for our brand will be through sponsorship. Considering the popularity of football in Brazil we propose that the sponsorship be in the form of a football match played by four teams namely Minerva, Minerva Brilhar Alfazema, Minerva Brilhar Ctrico and Minerva Brilhar Coco. We will encourage the North Eastern locals to participate in the match.This will indeed create an awareness among the minds of the consumers.There will also be wet demos of the product at the end of the match for consumers to visualise the features of the product.Radio shall also be used inorder to promote the event.5.4 Distribution strategyThe final part of the jigsaw is the distribution,the place element of the marketing mix.Products must be available in adequate quantities, in convienent locations and at times when customers want to buy them.According to Jobber and Fahy,distribution channel is the means by which products are moved from producer to end consumer (Jobber Fahy, 2006, p. 285).Choosing the most effective marketing channel is as crucial aspect of a marketing strategy.5.41 COMPONENTS OF DISTRIBUTION STRATEGYAll products require a channel for distribution. There are vari ous channels of distributions. The most difficult decision is to decide which channel of distribution to choose. The distribution strategy comprises of three components namely channel selection, distribution mass and channel integration.Channel selection The main challenge for Unilever was that they lacked a strong distribution network in NE part of Brazil (Jobber Fahy, 2006, p. 134).This makes it indeed difficult for a product that is new to the market to position itself well. Keeping the practicality of the situation in mind, to establish a strong distribution channel for Minerva Brilhar would be to get access to as many specialised distributors as possible for the product to be recognised in the market. By keeping the channel length short, we will be able to cater to the mark up price of distributors.Distribution intensity The distribution intensity for Minerva Brilhar will be intensive as it essential for the product to reach the 75,000 small outlets spread over the North East . The product should be easily amicable or else the purpose of creating a brand extension is defeated.6. CONCLUSIONPrahalad Hart (2002) in an article state an interesting statement that low income markets present a prodigious opportunity for the worlds wealthiest companies-to seek their fortunes and bring prosperity to the aspiring poor (Prahalad Hart, 2002). Unilevers own analysis of Nirma and HLLs competition in the detergent business reveals more about the profit potential of the marketplace at the bottom of the pyramid (Prahalad Hart, 2002).This theory is widely known as the bottom of the pyramid theory. It is essential for an organisation to remain in mind that they must focus on low income consumer segments as value-demanding customers (Rajghatta, 2010). In relevance to the case at hand, Unilever can adopt the bottom of pyramid theory and develop products exclusively for the lower income segments wherein producing only cheap and low quality products must not be an ultimat e goal. The company can clear immense profits if it rightly creates a good quality product with the value for money. The brand extension strategy as proposed should be the right decision for Unilever as it can provide a wide range of products with value for money to the customers. If Unilever adopts the bottom of the pyramid theory in the right fashion it surely will move towards the road of success.