Unilever In Brazil
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Unilever in Brazil
Should Unilever target the low income segment in the North East of Brazil? Substantiate your response.
By targeting consumers in the North East of Brazil, Unilever stands to gain a significant profit. Currently, there is not a single product that combines quality with an affordable price point. Although the average Northeastern consumer uses almost double the amount of laundry soap as detergent (20.4 kg/year vs 11.4 kg/year), penetration of detergent powder in the Northeast is almost identical to the Southeast–97.2% vs 97.6%. Considering that the population in the Northeast is roughly 48 million, they do about 25% more laundry per week, and an average growth rate of 17% annually for the detergent market, Unilever stands to gain about six million dollars each year in profit, if they can gain about 6% market share in the Northeast. Achieving a profit in a low-income market is something Unilever already has experience with–they were successful in expanding and becoming a leader in the low income segment of India. The only trick becomes creating the right product for the consumer, without cannibalizing sales of our other top brands, Minerva and Omo. The logical solution here is a line extension for Minerva, which is a highly recognizable brand that is known for quality, but perhaps priced a bit high for the low-income consumer.
By doing a SWOT analysis, we can gain further insight into the detergent market and our reasons for pursuing the low income consumer.
Strengths include an already huge presence in the market–Unilever already commands about 75% of the Northeastern market, and as a result, most Brazilians have already seen or used a Unilever laundry detergent. This familiarity with the product creates another strength; brand awareness and knowledge. Pricing can also be considered a strength, as it creates reputation of quality and other premium characteristics for the Unilever portfolio. Also, the rapid annual growth of the detergent market could be considered a strength.
Weaknesses include distribution of Unilever brands–Northeasterners do not frequently visit larger stores, and the current distribution system means that Unilever brands are not represented at about 75,000 small outlets. Consumer expectations would be another weakness–Campiero, Unilevers current low price product does not have the right mix of characteristics to fully appeal to the low income consumer. Also, pricing could be a weakness for Unilever, especially as they try to expand into lower income markets.
Opportunities include the growing purchasing power of the low income consumer, rapid growth in the detergent market, a large population, and a large demand for laundry detergent.
Threats include local laundry detergent/soap producers, large socio-cultural differences between the Northeast and Southeast regions, and a lack of relationship with distributors to smaller retailers.
Is the LINE consumer different from other Unilever consumers? If so, what are the differences?
The other major difference between the LINE consumer and their Southeastern counterparts relate to how each segment views the task of doing laundry. The LINE consumer tends to see laundry as a social event–the women gather at the river, wash their clothes, and catch up. Most of their gossip focuses on household cleanliness, and they take great pride in the fact that they are able to keep their family spotlessly clean, despite a lower level of income. They view clean clothes as a sign of a mothers dedication to her family, and clean clothes are viewed as a status symbol. To an extent, the complete opposite is true in the Southeast; women there view laundry as a chore, primarily because they use in-home washing machines, which does not lend itself to socializing. Because it is easier for Southeastern homes to clean clothes, the task does not carry the same social implications for them as it does in the Northeast.
If Unilever were to launch a product for this segment, what should be the value proposition? Should it be different from existing brands in the Unilever portfolio?
Because Unilever would be targeting the LINE consumer with an extension of the Minerva line, the value proposition would need to be slightly different than the existing products offered to help prevent cannibalization. The value proposition for the new product should stress the features the LINE consumer values, while still remaining price conscious. Omo focuses mostly on the quality of the product, where Minerva and Campiero focus more on the price aspect. As a result, the line extension of Minerva, called Minerva Basic, will be positioned between Minerva and Campiero. The new detergent will carry some of the characteristics that Northeasterners desire; a strong, pleasant scent, and cleaning power, as demonstrated by the amount of foam–it is important that the formula be similar to Minerva so that the new label does not get grouped in the same category as Campiero. Packaging should be kept similar to other