Unilever in Brazil

Marketing Strategies for Low-Income Consumers

Group Members:

•Aditee Thale•Abhishek Jain•Vishal•Vivek Ganatra•Prachi Ranjan•Satyajeet Sahu

Brazil: Overview & Regional Differences

•Largest country in South America

•170 million people living predominantly in two clusters , Northeast & Southeast.

•Per capita income was $4420 in 1996 as compared to $380 in India.

Differences in lifestyle:

Northeast Southeast

Per capita Income $per month2250 $6600

Illiteracy 40% 15%

Minimum Wages 53% with income70-140$

21% with income70-140$ per month

Northeast Southeast

Laundry soap and bleach used primarily. Detergents used mainly for good smell.

Powder and softeners used mainly. Soap bars used for tough stains.

Frequency of washing clothes more than 5 times

Frequency of washing clothes is less than 3.9 times

Washing of clothes done at ponds, rivers & public laundry

Washing machines used

Washing clothes is a special activity It’s an ordinary activity

• Northeast region has an African influence and is mainly agrarian. Only 28% of the population has a washing machine

• Southeast was developed by the Europeans later and is the main hub of activity. Washing machines are more popular here.

Brazilian Fabric Wash MarketUnilever• It is a US$56 billion company headquartered in London & Rotterdam.• Started in1929 and till 1996 it had 81% of market share in brazil.• Detergent division was the cash cow providing fuel for other division like home care

& personal care.• Popular brands- Omo , Minerva , Campeiro.

Procter & Gamble• It is a US$ 40 billion company headquartered in Cincinnati.• Started in Brazil in 1988 and had 15% of market share.• Popular Brands- Quanto , Odd fases , Pop

Northeast

DetergentPowder

•$106 million(42,000 tons) & Growth rate 17%•Entry barriers High.•75% share of Unilever •Major brands Omo , Minerva , Camperio•P & G’s Ace has 17.5% market share

LaundrySoap

•$102 million(81,250 tons) & Growth rate 6%•Entry barriers Low.•Multiple use of laundry soap .•Unilever faces competition from local players.

Market Structure

Marketing Mix

• Product• Product attributes• New Formula• Packaging

• Price• Re-pricing of all three brands• Dilemma of correct price- not too high or not too

low!

• Promotion• Product to be placed on the map quickly to break even• Avoid advertising as ‘ Product of low income group’• Simple message, but in sync with the product• Choice of media for advertising• BTL activities• Reach and cost

• Distribution• Inability to reach to smaller outlets, reducing reach to low income group

who do not visit supermarkets much.• Use of generalist wholesalers • Need of right distribution channel

Challenges-

• Brand Positioning and Marketing• Internal resistance• Belief that lower income market should be left

alone as they have no money any way• P&G threat in the most vulnerable market• Fear of creating impression of abandoning

premium brands in promotions• Loosing next generation brand managers

interested in handling only premium brands

Market Share in Northeast(1996)

Omo($3/kg); 52%

Minerva($2.4/kg); 17%

Campeiro($1.7/kg); 6%

Ace($2.4/kg); 11%

Other P&G(2.3/kg);

6%

Invicto($1.7/kg); 5% Otehrs; 3%

Detergents

Value proposition

• Value proposition appropriate• Each brand serving a different market

segment.• Catering to consumers’ needs across stratas• But a potential market is there to be exploited

Marketing Strategy

• Introduce an extension of Minerva – named Minerva White

• With more cleaning power while retaining the fragrance, with less emphasis on softness

• Tentative cost : $1.75 / kg (i.e. without changing the cardboard packaging)

• Cost break-up: Formulation cost : $0.99 Packaging cost : $0.35 Promotional cost : $0.35 Distribution cost : $0.05 Total cost : $1.74

Marketing Strategy (contd)

• Targeting the top two wanted attributes by consumers : Cleanliness and Smell

• Capitalizing on the ‘perceived quality’ of Minerva

• Positioned as a tough but fragranced detergent

• Employ Specialized Distributors