Unilever- BrazilMarketing Strategies for low Income

Consumers

feel good, look good

and get more out of life

Abhishek Sagne

ICFAI Business School

Hyderabad

CONTENTS

Introduction to case.

Brazil- Economy and customer demographics.

NE and SE Contrast.

Brazilian fabric wash market.

Brand and Marketing Strategy

Product Mix.

Conclusion.

Introduction

Project – “Everyman”Interdisciplinary team – sales, finance, manufacturingExtensive studies to understand Brazilian market demographics.Preparing to enter the low income North-East market – varied opinion.

Brazil- Regional DifferencesBrazil- largest country in Latin America- Population of 170 million people.

Geographically divided into two clusters NE & SE.NE states of Brazil- colonized by Europeans.

Famous for sugarcane & cocoa Plantations.

NE economy is predominantly rural and remained heavily on agriculture.

40% Population is illiterate. In 1996, 65% population was of mixed

African & European culture.In contrast, SE states were developed later in 1880’s.

So, the Economic and Political power rooted in SE region.

SE states are famous for coffee Plantations.

15% Population is illiterate.

Brazil- Regional Differences

Last 3 decades- Brazil has experienced cycles of deep recession and Strong economic recovery.GDP Growth- 8.1% / year during 1970’s and only 2.6% during 1980’s.In 1994, Introduction of new currency ( Reais, R$)In1996, Brazil’s per capita income was $4420.

In SE per capita income -$6600 In NE per capita income-$2250.

Per Capita Income

$4,420

$4,370

$4,310

$1,050 $380

Brazil

Hungary

Malaysia

Indonesia

India

Brazil- Washing Techniques

North East South EastIn Recife(NE) only 28%of households own a washing m/c and 73% women think bleach is necessary to remove stains.

In Sao Paolo(SE) 67% of families have washing m/c & 18% women think bleach is necessary to remove fat stains.

Women here scrub clothes using bars. Then they add bleach to remove stains & little detergent at the end to make clothes smell good.

Women here mix detergent and softener in the washing m/c and bleach only to remove tough stains.

Frequency of washing cloths is 5 times a week.

Frequency of washing cloths is 3.9 times a week.

Considered as most pleasurable activity as they often wash clothes in public laundry, river or ponds.

Most women wash clothes at home.

Brazil- Washing Techniques

North East South East

Cleanliness of cloth is considered as a indicator of dedication of mother to her family.

It is much less Important.

They use lot more soap and less detergent.

As they have washing m/c, they use more detergents.

They are proud that they keep themselves & their families spotlessly clean despite their low incomes.

As most women have washing m/c, It is much less important for the self esteem and social status

How do North Eastern consumers evaluate Detergents?

Along with price, Low income consumers evaluate detergents on six key attributes:

Perceived Power of detergent. Smell of Detergent. Ability to remove stains. Ease with which the powder dissolves in water. Packaging. Harm to colors.

Consumers Expectation from detergents in NE

24%

20%16%

16%

13%

11%

Cleanliness,Whitening.

Smell, softness

Stain Removal

Dissolving power

Packaging

Fading(Harm to Colors)

Unilever Brazil- At a Glance

Unilever- US$65 Billion Company(HQ-Ldondon).

3 Lacs Employees In more than 150 Countries.

In 1996, Portfolio of 1600 brands worldwide and including 45 key detergent brands.

Brazil- started Operations in 1929 and opened First plant to manufacture Sunlight Soap.

Omo - Unilever’s most successful brand was launched in 1957.

Acquired CIA Gessy Industrial for Personal care brands in 1960.

Food Operations initiated in 1970.

Unilever Brazil- At a Glance

In1996, 3 Divisions Lever- For Home care. Elida Gibbs for personal care. Van der Bergh for foods.

In 1996 leader in Detergent market with 81% market share. Achieved with 3 brands viz;

Omo- Detergent powder and a favorite brand.

Minerva- Only Brand to be sold as detergent and laundry soap.

Campeiro- Unilevers cheapest Brand.

Brazil Fabric wash Market

Unilever’s Plan - Low Income Consumers.The Brazilian fabric wash Market consist of two Categories: Detergent powder and laundry soap.Major competitors were: Procter and Gamble,

and other Local detergent manufacturers.Procter and Gamble started operations in Brazil in 1988. Brands were :Quanto (Now Ace).

Odd Fases (Now Bold) Pop- Low price brand. P&G had a market share of 15% in Detergent

market. Threat was from P&G’s marketing expertise

across the world and their formidable R&D.

Brazil Detergent Market

Detergent Market:

In 1996, detergent powder-$106 Million (42000 tons) market in NE at a 17% growing rate.

Barriers: High capital Investment.

Unilevers Market share is 75% which comprises of

Omo-52% share.

Minerva-17% share.

Campeiro-6% share.

P&G Market share is 17.5% which comprises of

Ace-11% share.

Invicto-5% share.

Brazil laundry Soap Market In 1996, Laundry soap

market- $102 Million (81250 tons) market in NE at a 6% growing rate.

Barriers: low as compared to detergent but difficulty in perfuming.Unilever’s Minerva -19% share.Local manufacturer-ASA- Bem-te-vi- 11% market share.Flora Fabril- 6% shareP&G does not make laundry soap.

Key information of detergents in Brazil Market

Brand Packaging Positioning Key Brand facts

Key Data

Cardboard Pack: 1Kg & 500g.

Removes stains with Low quantity of product, thus reducing need for soap or bleach.

Unilever Owned

Brazil’s top brands.

Market pioneer.

Sales:$55 million.

WP:$3/kg

Cardboard Pack: 1Kg & 500g.

Emotional appeal.

Delivers pleasant smell and softness to clothes.

Traditional brand of CIA Gessy Industrial. Acquired by Unilever in 1960.

Sales:

$17.60

million.

WP:$2.40/kg

Brand Packaging Positioning Key Brand facts

Key Data

Cardboard Pack: 1Kg & 500g.

Price brand.

Focus on cost reduction across all dimensions valued by customers.

Acquired by Unilever from Henkel in 1984.

Sales:

$6.05 million.

WP:$1.70/kg

Cardboard Pack: 1Kg & 500g.

Offers superior whiteness. Removes dirt and protect the fabrics.

Acquired by P&G from Bombril in 1996 as Quanto.

Sales:

$11.80

million.

WP:$2.35/kg

Key information of detergents in Brazil Market

Key information of detergents in Brazil Market

Brand Packaging Positioning Key Brand facts

Key Data

Cardboard Pack: 1Kg & 500g.

Key competitor of Minerva with a similar positioning.

Focus on softness.

Acquired by P&G from Bombril in 1996 as Odd Fases.

Sales:

$5.35

million.

WP:$2.50/kg

Cardboard Pack: 1Kg & 500g.

Price brand with small sales in NE.

Focus on cost reduction.

Acquired by P&G from Bombril in 1996.

Sales:

$1.40

million.

WP:$1.70/kg

Key information of detergents in Brazil Market

Brand Packaging Positioning Key Brand facts

Key Data

Cardboard Pack: 1Kg & 500g.

Entry level detergent.

Key competitor of Campeiro. Focus on cost reduction.

Owned by ASA.

Only popular in NE.

Sales:

$5.20

million.

WP:$1.70/kg

The big dilemma

Whether to enter a low income market.

Diverting money from premium brands.

Threat of cannibalization.

Fear of loss of image and reputation

High risk.

Brand and Marketing Strategy

Should the basic marketing and branding strategy be changed to accommodate new product and market ?

Reposition/extend existing brands or introduce new brand ?

Ideal marketing mix and positioning ?

More strategy……

Value proposition - New - Existing

Brand strategy - Develop new brand - Draw from Unilever’s

international portfolio

Marketing Mix

Product :

Product formulation

Key attributes retained

Superfluous attributes eliminated

Fragrance selection

Froth creation

Price

Critical decision

Avoiding cannibalization

Re-pricing existing brands

Value pricing

Striking the right balance

Promotion

Objective of communication

Key message

Image creation

Accurate positioning

Resource allocation

Medium of communication

Packaging

Size of unit packages

Image balancing

Use of sachet

Point of purchase displays

Distribution

Small shop – the key medium

Distribution structure

Cost of distribution is significant and hard to reverse.

Retail credit – a key market feature

Personnel

Local staff

Retail representatives

Recruit, train, maintain quality personnel

ConclusionUnderstanding the North-Eastern market

Decision to enter market

Strategic business unit

Implementing accurate strategies

Growth planning

Market segmentation

Acquisitions

Test marketing