A N N UA L M A R K E T I N G M E E T I N GD E T E R G E N T S D I V I S I O N
Unilever in Brazil
Agenda
3. Tactics3. Tactics
4. Operative Stage4. Operative Stage
1. Analysis1. Analysis
2. Strategy2. Strategy
• Current Situation• External Analysis• Consumers• Products• Call to Action
• Market opportunities• Objective• Marketing Strategies• S-T-P
• Marketing Mix (4p’s)
• Timing• Controls • Contingency Plan
1. Analysis
CURRENT SITUATION
EXTERNAL ANALYSIS
CONSUMERS
PRODUCTS
COMPETITION
CALL TO ACTION
Our Current Situation
Extensive experience in detergent category and Brazilian market; launched OMO, the first detergent powder in 1957
Market leader: 81% share of the detergent powder category in Brazil vs. closest competitor P&G with only 15%
The detergent category is the cash cow for the company and fuels the home care, personal care & food category
In the NE region our market share of 75% is below the national average
Lack of experience in low-income segment
1. Situation Analysis
1. Situation Analysis
External Analysis
170 million people living in Brazil, distributed between the Northeast and the Southeast region
The Plano Real initiative, introduced a new currency in 1994 which led to an increase in purchasing power amongst low-income consumers
Brazil’s Northeast and Southeast regions have large differences in income, literacy, culture and history
1. Situation Analysis
1. Situation Analysis
Consumers
NORTHEAST SOUTHEAST
Per capita income: $2,250 Per capita income: $6,600
Consume 11.4 kg/per year per buyer Consume 12.9 kg/per year per buyer
28% of households own a washing machine
67% own a washing machine
28% think bleach is necessary to remove stains
18% think bleach is necessary
Use bars of soap to wash clothes, bleach to remove stains and detergent for smell
Mix powder detergent and softener in washing machines
Clothes are washed 5 times per week 3.9 times per week in Sao Paulo
Women enjoy washing clothes, it is a social activity
Washing clothes is perceived as a chore, look for convenience
Cleanliness has great relevance for self-esteem and is a status symbol and subject of gossip
Cleanliness less relevant
1. Situation Analysis
1. Situation Analysis
Unilever Detergent Products
Sales Market Share Wholesale Price
Contribution Margin
% Contribution
55.20 52% $3 $0.70 23.33%
17.60 17% $2.40 $0.70 29.17%
6.05 6% $1.70 $0.60 35.29%
19.40 N/A $1.70 $0.55 32.35%
1. Situation Analysis
1. Situation Analysis
Competition
Sales Market Share Wholesale Price
11.80 11% 2.35
5.35 5% 2.50
1.40 1.32% 1.70
5.20 4.90% 1.70
POP
1.Situation Analysis
1.Situation Analysis
Call to Action
As a growth strategy for the detergent powder category, should we target low-income consumers in Brazil’s
northeast region? And if so what marketing strategy would work best to reach this consumer?
1. SituationAnalysis
1. SituationAnalysis
Recommended Course of Action:Target low-income consumers with the
most effective marketing strategy
2. Strategy
MARKET OPPORTUNITIES
OBJECTIVES
MARKETING STRATEGIES
S-T-P
Market Opportunities
48 million low-income Brazilians in the Northeast region who are currently using powder detergent from local, lower-priced competitors
17% annual growth rate for detergent powder in Brazil’s NE region
P&G’s limited experience in BrazilFirst mover advantage in Brazil’s low-income
segment for a multinationalPrevent similar situation that occurred in India
2. Strategy2. Strategy
Objectives
Increase Unilever’s detergent category’s market share in the NE market by 10% in the next 3 years
Maintain leadership position in the NE detergent market
2. Strategy2. Strategy
Unilever Strategy
Objective 1:Increase market share by 3%Objective 2:Maintain leadership in the NE market
Product StrategyProduct Strategy
Market StrategyMarket Strategy
Customer StrategyCustomer Strategy
Create a brand
extension
Create a brand
extension
Modify
consumerwashing habits
Modify
consumerwashing habits
Market penetratio
n by increasing
OMOs market share in the low-income
segment
Market penetratio
n by increasing
OMOs market share in the low-income
segment
2. Strategy2. Strategy
Segmentation
Demographic Education 40% illiterate residents60% literate residents
Social Class/ Income Level
A $1400/mo B $700-1400/moC $350-700/mo D $140-350/mo
E+ $70-$140/mo E less than $70/mo
Psychographic
Motivations and attitudes
–Women who view washing clothes as pleasurable activity–Women who associate cleanliness with self-esteem and social status
Behavioral Benefits sought, usage rate
–73% of women in NE who use bleach to remove stains–28% owning a washing machine–72% who do not own a washing machine–Those seeking powerful detergents with a pleasant smell, ability to remove stains and dissolving power.–Consumers washing clothes 5 times a week
2. Strategy2. Strategy
Target
Social Classes C, D, E+, and E- and women who associate cleanliness with self-esteem and status
Why? The segment is large: 83% of NE Population (40 million people) which
represents 24% of the entire population of Brazil Their Purchasing Power has increased by 27% this year
What are they seeking? Value for money in an affordable high quality detergent that is powerful, smells
good, and has the ability to remove stains and dissolving power.
2. Strategy2. Strategy
Target
How can we reach them? Through the development of a brand extension, OMO mini, that can not only meet their needs but also provides a specially formulated detergent powder for hand washing in affordable sizes which is line with their current usage of detergent powder when combined with laundry soap and bleach.
2. Strategy2. Strategy
Why Omo Mini?
OMO is an aspirational product. Our target would use it if they could afford it and given the fact that they use small quantities of detergent the economical sizes and hand wash formulation would be the perfect solution.
“ I would love to buy Omo, but with my tight budget, I can only afford cheaper local
brands”
-- Maria Conceicao
2. Strategy2. Strategy
Why Omo Mini?
1.Will not damage OMO’s premium brand image given that:
It will be distributed in a different channel Targeted to a different segment in the Northeast of Brazil Offered in a smaller package with different formulation
2. Will not negatively affect stockholder ROI
3. Will not harm corporate reputation due to our House of Brands architecture
2. Strategy2. Strategy
Positioning
MINI
0 100 150
2. Strategy2. Strategy
OMO Mini Positioning
Value Proposition: The high quality attributes
of OMO original with bleaching power in
affordable sizes for the NE low-income segment
Brand Positioning:
For women who associate
cleanliness with self-esteem and
status, OMO mini offers unmatched
cleansing and bleaching power
with a fresh scent in affordable sizes
Brand ImageHigh quality for a low
price
Firm Consumers
2. Strategy2. Strategy
Tactic Stage
PRODUCT
PLACE
PROMOTION
PRICE
Product Product Place Place Price Price
Strategy 1:Brand Extension
Strategy 1:Brand Extension
Strategy 2:Market Penetration
Strategy 2:Market Penetration
Promotion Promotion
Tactics
Strategy 3:Modify consumer behavior
Strategy 3:Modify consumer behavior
Modify attributes Modify attributes
Cost-based Cost-
based
Introduce new channels
Introduce new channels
Package developme
nt
Package developme
nt
Revise trade promotions
Revise trade promotions
Sampling, POP displays, events and media ads,
bundling, education
Sampling, POP displays, events and media ads,
bundling, education
Modify communication
expenditure
Modify communication
expenditure
Product
Modify attributes Design detergent for hand washing which reduces
production costsModify packaging
Discontinue traditional cardboard boxes Use 150g plastic sachets which would cost 30% of the price
of the boxes
Formulation Cost
Packaging Cost
OMO 1,000 g $1.70 $0.35
OMO 150 g $0.21* $0.02**
• Assuming a $0.05 decrease in productions costs due to hand wash formula** Plastic packaging is cheaper than cardboard boxes
3. Tactics3. Tactics
Strategy 1: brand extension
Strategy 1: brand extension
Place
Introduce new channels Specialized distributors such as:
Small retail stores and supermarkets with 1 or 2 checkouts
In line with our promotional strategy due to their extensive POP activities
Focused reach will allow us to target our selected customers
Involves an additional cost of $0.05 per kg
3. Tactics3. Tactics
Strategy 2: Market Penetration
Strategy 2: Market Penetration
Promotions
Offer trade promotions:
Develop relationships with store owners by offering them exclusivity to sell all Unilever detergents in certain areas
Emphasize the minimal shelf space required for OMO Mini
Provide samples and training to store owners so they recommend the products to their customers
3. Tactics3. Tactics
Strategy 2: Market Penetration
Strategy 2: Market Penetration
Promotions
Modify communication expenditures 30% above the line (media advertisement)
70% below the line (trade promotions, events, POP)
Reduces communication expenses by half but increases the cost per contact, which will be addressed by distribution through specialized and focused channels
3. Tactics3. Tactics3. Tactics3. Tactics
Strategy 3: Modify Behaviors
Strategy 3: Modify Behaviors
Promotions
Sampling: Provide sample sizes in large events such as Carnival, concerts
and in-store as well
Bundling: Initially bundle trial size OMO with laundry soap to increase
awareness of new productPOP Displays
Highlighting the differences in quality of clothing when using OMO vs. the local competitors
Media Advertisements Include OMO mini in OMO Original TV spots and mention new
packaging and product capabilities:
“And now OMO mini with bleach available in affordable sizes for hand washing”
3. Tactics3. Tactics3. Tactics3. Tactics
Strategy 3: Modify behaviors
Strategy 3: Modify behaviors
Promotions
Promotional giveaways: “For every 10 OMO mini sachets you collect, you get a plastic storage bin to store your OMO detergent”
Contests: With 5 empty OMO mini sachets, enter to win a TV set, a
stereo or a refrigerator
Word of Mouth We will leverage the product’s aspirational nature and strong
brand awareness to create significant promotion through WOM, mainly by creating evangelists who are enthusiastic about the product and tell their friends about it
3. Tactics3. Tactics
Strategy 2: Market Penetration
Strategy 2: Market Penetration
Promotions
Consumer education: OMO Mini eliminates the need for using bleach
thereby removing that step and the need to purchase bleach
Consumers need to be educated on the following 3-step process for washing:
• Wash clothes with laundry soap
Step 1
• Use OMO Mini to remove stains & add scent
Step 2
• Rinse to remove detergent
Step 3
* Omo Mini does not replace laundry soap, therefore cannibalization is avoided
3. Tactics3. Tactics
Strategy 3: Modify behaviors
Strategy 3: Modify behaviors
Promotions
Demonstrations:
As many of our customers are illiterate, demonstrations and visuals will allow us to effectively communicate OMO Mini’s capabilities
Demonstrate the 3-step process when using OMO Mini vs. the 4-step process when using other brands
Highlight the cleanliness and scent attributes of OMO Mini vs. other brands.
3. Tactics3. Tactics
Strategy 3: Modify behaviors
Strategy 3: Modify behaviors
Price
Cost-based pricing: Each 150g package will be sold at a price of $0.60, to
gain a margin of 35%
Wholesale Price
Formulation
Packaging
Promotional
Distribution
Total Cost
Contribution Margin
% Contribution Margin
OMO 150 g
0.60 $0.21 $0.02 $0.02 $0.15 $0.40
$0.20 35.08%
3. Tactics3. Tactics
Strategy 1: brand extension
Strategy 1: brand extension
Operative Stage
TIMING
CONTROLS & FINANCIALS
CONTINGENCY PLAN
Timing4. Operative Stage4. Operative Stage
TACTIC M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12
Design Packaging
Modify Attributes
Bundling
Distributor Partnerships
Distribute Samples
"Win a Stereo" Contest
Win Tickets to a concert
"Win a TV" Contest
Promotional Giveaways
Demonstrations
TV Ads
Measurements of Control
Profitability- Product
-Customer Segment
Market Share- OMO Mini
- OMO brand- Overall detergent
category
Efficiency- Sales promotions
-Distribution channels- Advertisements
4. Operative Stage4. Operative Stage
Financial Results
OMO MINI 1997% of sales 1998 % of sales 1999
% of sales
Revenues $8,681,400 100.00% $24,580,516 100.00% $19,999,021 100%
Cost of Goods Sold
Formulation $303,849 3.50% $860,318 3.50% $699,966 3.50%
Packaging $227,887 2.63% $645,238.54 2.63% $524,974 2.63%
Total Cost of Goods Sold $531,736 6.13% $1,505,556.60 6.13% $1,224,940 6.13%
Gross Margin $8,149,664 93.88% $23,074,959.36 93.88% $18,774,081 93.88%
Operating Expenses
Distribution $325,553 3.75% $921,769.35 3.75% $749,963 3.75%
Promotional $271,294 3.13% $768,141.12 3.13% $4,166 0.02%
Total Operating Expenses $596,846 6.88% $1,689,910.47 6.88% $754,130 3.77%
Net Profit $7,552,818 87.00% $21,385,048.89 87.00% $18,019,951 90.10%
4. Operative Stage4. Operative Stage
Financial Results
In millions of $Market
Share 1996 1996
Market Share 1997 1997
Market Share 1998 1998
Market Share 1999 1999
Market Size $ $106.00 $124 $145 $170
OMO 52.00% $55.12 52.00% $64.49 52% $75 52.00% $88.28
MINERVA 17.00% $18.02 17.00% $21.08 17% $12.83 17.00% $28.86
CAMPEIRO 6.00% $6.36 5.00% $6.20 5% $7 4.50% $7.64
ACE 11.00% $11.66 11.00% $13.64 11% $16 10.00% $16.98
BOLD 5.00% $5.30 4% $5 3% $4 2.50% $4.24
POP 1.32% $1.40 0.32% $0.40 0.32% $0.46 0.32% $0.54
INVICTO 4.90% $5.19 3.90% $4.84 2.90% $4.21 1.90% $3.23
OMO MINI 0.00% $0.00 7% $8.68 17% $24.58 11.78% $20.00
Unilever Market Share in NE
75.00% 81.00% 90.94% 85.28%
4. Operative Stage4. Operative Stage
*Assuming premium brands OMO, MINERVA, and ACE will maintain the same market share as in 1996 and cheaper brands will lose market share with the competition from OMO MINI
Financial Highlights
OMO MINI Market Share is expected to increase by almost 5% in 3 years
Unilever’s Market Share in the NE Detergent market is projected to increase by more than 10% in 3 years to 85% in 1999 (more than the national average of 81%)
Net Profits for OMO Mini are expected to double from 1997 to 1999
Number of OMO MINI units sold is also forecasted to increase by more than half from 1997 to 1999
4. Operative Stage4. Operative Stage
Contingency Plan
If OMO Mini does not meet the forecasted profitability the following actions are recommended: Target segments with more buying power, such as
segments A & B Increase the sachet amount to 300g Price the new packaging at $0.90
Wholesale Price
Formulation
Packaging
Promotions
Distribution
Total Cost
Contribution Margin
% Contribution Margin
OMO 300 g 0.9 0.51 0.03 0.05 0.04 0.62 0.28 30.7%
4. Operative Stage4. Operative Stage
Contingency Plan4. Operative Stage4. Operative Stage
in millions of $
Market Share 1996 1996
Market Share 1997 1997
Market Share 1998 1998
Market Share 1999 1999
Market Size $ $106 $124 $145 $170
OMO 52.00% $55 52.00% $64.49 52% $75 52.00% $88.28
MINERVA 17.00% $18 17.00% $21.08 17% $12.83 17.00% $28.86
CAMPEIRO 6.00% $6 6.00% $7.44 6% $9 6.00% $10.19
ACE 11.00% $12 10.00% $13.64 9% $13 8.00% $13.58
BOLD 5.00% $5 4% $5 3% $4 2.50% $4.24
POP 1.32% $1 1.32% $1.64 1.32% $1.92 1.32% $2.24
INVICTO 4.90% $5 4.90% $6.08 4.90% $7.11 4.90% $8.32
OMO 300 0.00% $0 4% $4.96 15% $21.68 8.28% $14.06
Unilever Market Share in NE 75.00% 79.00% 89.94% 83.28%
*Assuming cheapest brands, POP and INVICTO and premium brands OMO and MINERVA, will maintain the same market share as in 1996 and OMO300 will compete with ACE and BOLD
Contingency Plan
If introduced in 1997, OMO 300g will directly compete with P&G’s Ace and Bold and will produce the following impact on revenues and market shares as compared to OMO Mini with 150g:
Sales for 1997: $4.96 million as compared with OMO Mini’s $8.68 million
Market share for 1997: 4% as compared to OMO Mini’s 7% Sales for 1998: $21.68 million as compared to OMO Mini’s
$24.58 million Market share for 1998: 8.28% as compared to OMO Mini’s
11.78% Increases Unilever’s detergent category market share to
83%
Q & A
Guimaraes, Pedro Pacheco and Pierre Chandon. Unilever in Brazil: Marketing Strategies for Low-Income Consumers. INSEAD. (2007).