Tuesday, September 17, 2019
Unilever in Brazil
The Importance for cleanliness and to make clothes smell good has lead to growing penetration of the detergent powder portrays a cultural influence on the consumers buying behavior. The various reasons that the consumers mentioned for using detergent powder is described in Exhibit . Attribute Importance, Brand Positioning, And Consumer Expectations In the North East Exhibit 1 Source: Ã¢â¬â Milliner Research Cleanliness which has a 24% Importance helps to determine the motivation of the consumers; they believe that cleanliness Is part of their social status; It also caters to heir need for being part of the society.Only 28% household own a washing machine and the rest 72% householdÃ¢â¬ s washing attitude (behavior) is to scrub the clothes with laundry soap and then add bleach to remove tough stains and only add a little detergent powder at the end to make the clothes smell good. So their perception about detergent powder Is that It Is only for good smell. In the EN, people consid er washing clothes as more of a leisure activity because the activity is generally taken up outdoors (physical environment), in the nearby ponds where people can socialize amongst each other.This is an Important aspect of the culture of EN, which differentiates it from the people of SE. As the social needs (MoscowÃ¢â¬ s hierarchy of needs theory) of the people are reflected in cloth-washing activity. The influences of mother in the decision making process is substantial in the case of detergents(FMC). Moreover the frequency of washing clothes is higher as they believe that cleanliness of clothes reflect on the responsibility taking behavior of the mother. Low income consumers were attached to boxes and regarded anything else as good for only second-rate products.Mom is positioned specifically to be used in gashing machine which shows that it is targeted for the people belonging to a higher social class. Southeast Region: The lifestyle of people of this region is better than EN whi ch is evident from the 67% of households owning a washing machine. The washing attitude Is more using a machine than hand wash. Hence the consumption of detergent powder Is more as against EN. Their learning from the washing experience is that hard stains are not cleaned in a washing machine in spite of using the most expensive Ana Test product. So teen need to use laundry soaps Tort cleaning ten tough stains on collars.This behavior has led to an 88. % penetration of laundry soaps. Players and brands in Brazil and their strategy: Milliner is the leading player in the detergents industry with a market share of 81%, with the detergent division in the cash-cow phase (as outlined in the BCC growth-market share matrix), helping the company generate funds to fuel the growth of its upcoming segments of home-care and personal-care products, which were still at a nascent stage. The market structure could be considered as a duopoly, with Milliner and P&G as the major players in the organized market.The market has been broadly categorized into the detergent odder and the laundry soap segments. The former is predominantly used in the SE part, while people in the EN used it in little quantity to make the fabric smell good. Hence, the growth of this segment was comparatively higher (stood at 17% against 6% for laundry soaps). The entry barriers were quite high for the detergent powder segment because of high investment in terms of the capital outlay, as sophisticated processes and machines were used in the manufacturing process.At 75%, MillinerÃ¢â¬ s share of the EN detergent market is below its national average as against P&Gs market share which is slightly above its sectional average. The local brands make up for only 8% of the share. A detailed breakup of the market share of each of the brands is shown in exhibit 2. Market Share and Wholesale Price of Major Brands in the Laundry Soap and Detergent powder categories in Northeast in 1996 senses Detergent Powder 70. 00% 60. 00% 50. 00% 40. 00% 30. 00% 20. 00% 10. 00% 0. 0% Laundry Shop Exhibit 2 Source: Ã¢â¬â Nielsen On the other hand, the laundry soap segment had low entry barriers because of the ease of the manufacturing process for soaps, as it could be produced relatively easily using animal fats and oils. The water in EN is soft as compared to SE region. Thus the amount of foam created is more leading to a higher usage and also appealing the consumers. Milliner faced competition in this segment from other established local players, like AS whose brand BEMA-tee-vi had an market share. SOOT ANALYSIS Strengths: 1.Milliner is leading the detergent powder category with 81% market share achieved with mainly three brands; Mom one of BrazilÃ¢â¬ s favorite brands across all categories; Minerva the only brand to be sold as both detergent powder and laundry soap; and Campfire, MillinerÃ¢â¬ s cheapest brand. . Brand Recognition: a. Milliner brands have a good market position as it was a pioneer of the consumer goods industry in Brazil. As against the other brands in the market, Milliner products have the higher % of brand knowledge, market penetration and top-of-mind awareness.Weakness: 1 . Distribution: Milliner is lacking the expertise in distribution of its products among the small outlets. In approximately 75,000 small outlets it is hard to find any of the Milliner products. Local distribution is important as the low-income consumers rarely shop in large supermarkets like Wall-mart. . Price: EN is a price sensitive region. For such consumers price = quality. So MillinerÃ¢â¬ s premium brand, Mom is perceived as a high quality at a premium position, while the other Milliner brands are considered to be of inferior quality. . Mom is regarded as the best product while the others are hardly able to satisfy the customersÃ¢â¬ expectations. 4. No prior knowledge or experience of dealing with low-income consumers. Opportunities: 1 . The EN market has good scope for growth. The re is a big possibility of better business with respect to the low-income consumers. 2. P&G has not entered into the laundry soap market. So Milliner only has a few local competitors. And since the usage of laundry soap is the maximum in EN, Milliner can capture the market for laundry soap. 3.The purchasing power of the low-income consumer has grown by 27% during 1995-96 which will probably lead to an increase in the usage of detergent. 4. The EN is 48 million predominantly low-income consumers whose consumption is 42,000 tons of detergent and 81 ,250 tons of laundry soap which is a big number. 5. Brazilian government is providing tax incentives to encourage investments in EN. 6. EN women wash frequently (5 times per week). Cleanliness is part of their culture. Also the symbolic value they attach to cleanliness is of high regard. . 28% of EN has washing machines. 8. Popularity of laundry soaps is higher in EN region due to the softness of the water in this region. Threat 1 . Brazil (EN) has illiteracy rate of 40% which can lead to unemployment. Such factors can have an adverse effect on the purchasing power. 2. P&G is a strong competitor in detergent powder market with Ace ranking third in the market share. 3. The R&D of P&G as a whole is far advanced than Milliner. Strategy for Milliner in Brazil Marketing communications strategy options (Chris Fill, 2005, Peg. 32) Strategy Pull Push Profile Target audience Consumers End-user bib customers Channel intermediaries All relevant stakeholders Message focus Product/ service Product/service The organization Communication goal Purchase Purchase Developing relationships and distribution network Building reputation The push strategy is aimed at pushing the product through the channel intermediaries and then finally to the end users. Whereas a pull strategy is aimed at pulling the consumers to retailers.A successful marketing involves a mixture of push through the trade and pull from consumers and thus the two areas are not mutually exclusive. , Peg unlived can Implement ten Tooling strategies: 1 . Push Strategy (Promotional Strategy) (Chris Fill, 2005) Manufacturer Wholesaler or Distributor Direction of Communication Retailer or value-added reseller Consumer or buyer The consumers in Brazil have a strong brand knowledge and top of mind awareness for the Milliner products. Mom is regarded as one of the premium products and does not have a close competitor.But this product is beyond the budget of the low- income consumers and hence the people of this particular sector cannot afford this brand. But by taking the advantage of the brand success, there are two options that Milliner can adopt: 1 . Launch a completely new product under the brand name of Mom with different detergent formulae. 2. Use one of the brands that satisfy the requirements of the low-consumer of a detergent from its existing portfolio. There is a disadvantage with the 1st option; the cost involved in the R&D in formulating a deterg ent from the scratch would be an additional expense in the budget.In option 2 t is not certain if the launch of an existing brand from the portfolio will be interpreted the way it is expected. The risk involved in the 2nd option is higher than the price factor in option 1. Thus option 1 although involves more time is a much wiser decision. Hence under the brand extension, launch a new product under the Mom brand (family) umbrella. Therefore the marketing mix (4 AS) for this strategy would be: Product: Package the product in different quantities of games, games and 1 keg so that it is affordable for people having either a weekly or a monthly budget.Like every other product of Milliner let this new product also be distributed in boxes as the low-income consumers consider anything other than a box to be inferior. At the same time design the packaging in such a way that it protects the contents from humidity and also very attractive to pull the attention of the buyers. Include pictures of popular parties like Carnival so that people can relate it to their rich cultural background. Price: Keep the price of this new product definitely less than Mom but almost of the same range as Campfire since for the low-income consumers price= (is equal to) quality.Hence lesser the price, the more it is vulnerable to be perceived as a low standard product. The wholesale price of Campfire is 1. 7/keg so the pricing for the new product could be between 1. 5 and 1. 7 per keg. Promotion: Promotions in this case rules out some of the forms like personal selling as the targeted market is very large, also television marketing as most of the people are low-income families, even magazine ads as most of them are illiterate.So the forms that will make an impact on the consumers are: direct marketing, buzz, word of mouth, banners with simple messages relating to the cultural and religious history EN has. Concentrate on visibility of the products in small stores so that when customers enter t he store they should realize that there is a new product which is catering to their needs, this way create an Montreal Impact on ten minas AT ten consumers Tort Tanat product. Place: Milliner lacks the distribution skill in EN.More than 75,000 small outlets donÃ¢â¬ t have any of the Milliner products. So the first step towards placing the new product is to make sure Milliner does a strategic distribution among the small outlets as the consumers in EN usually shop at a nearby store instead of going to large stores. Also considering the fact that 21% of consumers in SE are in the social class E, the new product should be carefully placed among the small outlets even in the SE region. 2.Pull Strategy(Selling Strategy) (Chris Fill, 2005) Communication Flow Originator or manufacturer Wholesaler Flow of goods and services Retailer Customer The consumption of laundry soap in Brazil is (6. 8+20. 4) keg and the detergent consumption is (12. 9+11. 4) keg. These figures reveal a very importa nt fact that many of the consumers are still tied to laundry soap and so by using the Ã¢â¬Å"pullÃ¢â¬ strategy, Milliner should attract these laundry soap consumers towards detergent powder. The pull strategy is successful when people have brand awareness and go to the shop to buy a particular product.So considering the washing habit (detergent powder in a very small quantity only for good smell), one of the ways of pulling the customers towards the detergent usage is by giving a small sachet of the new product for free with every purchase of a laundry soap(Minerva). By doing this the consumers would be forced to use the product and if the performance of the new product is convincing to them then the chances of people switching to detergent is tie high, which in turn will increase the brand recognition of the new product and as a result it would be a success of the pull strategy.Also once the consumers start buying the new product reward them by putting some coupons inside the pa ckaging so that the consumers are motivated to buy it the next time. Moreover, certain freebies like a container to store the detergent, a spoon to measure the quantity of detergent to be used in a given amount of water, can be deployed during the initial phases of launch of the product.One more way to increase the brand awareness of the new product is to vive a demonstration of the new product in and around the small outlets or at places most visited by the targeted consumers. Refill packs should be produced, and the product should be made available across all locations, because of the very nature of the product which is that it is a low-involvement one, and people would not travel long distances to buy the product.Since the product is targeted to a low-income and price sensitive segment, the company should make sure that it optimizes the distribution network and save on the logistics cost so as to transfer the benefits to he end consumer. While the product is gaining more brand lo yalty, the producer/ manufacturer should make sure that the new product is available on all the shelves (small stores, large malls) Tanat consumers can possibly reach out to. 0 encourage this give suitable incentives/rewards to the dealers. Thus convince the retailers to stock up in response to the demand created for the new product. The success of the new product can be achieved by striking a perfect balance between the push and pull strategies. So push or launch the product into the market and create awareness or the same and through the pull strategy create a strong affinity for the new product thus converting the laundry soap users to detergent powder.