Case Study Unilever in Brazil After three successful years in the Personal Care division of Unilever in Pakistan, Laercio Cardoso was contemplating an attractive leadership position in China when he received a phone call from the head of Unilevers Home Care division in Brazil, his native country. Robert Davidson was looking for someone to explore growth opportunities in the marketing of detergents to low-income consumers living in the Northeast of Brazil. The first phase of the project involved extensive field studies to understand the lifestyle, aspirations, shopping and laundry habits of low-income consumers. It was during one of these trips that Laercio met Maria Conceio, in her home in Fortaleza, where she lived with her daughter, Elizangela, 19, and her four children. Like almost everyone in Brazil, Maria told Laercio that although she would love to buy Omo, Unilevers flagship brand, her tight budget meant that she could only afford cheaper local brands. Increasing detergent usage by Maria and the other 48 million predominantly low-income consumers in Brazils Northeast was crucial for Unilever, given that the company already had an 81% share of the detergent powder category. Deciding to target low-income consumers in the Northeast would throw up some more difficult questions: Should Unilever change its current marketing and branding strategy? For example, could Unilever extend or reposition its existing cheaper brands, Minerva and Campeiro, or would a new brand be necessary? What would be the ideal positioning and marketing communication campaign of a Unilever brand targeted at low-income consumers? Finding the answers would not be easy as few at Unilever (or other multinational firms) had any knowledge of low-income consumers or first-hand experience of the kind of marketing strategy that would work for this segment. Brazil Brazil is by far the largest country in Latin America. It covers 8.5 million km (almost as big as the US and 35 times bigger than the UK) stretching 4,345km from North to South and 4,330km from East to West. Its 170 million people live predominantly in two clusters on the Atlantic coast: one concentrated in the Southeast, home to Brazils two largest cities, So Paulo and Rio de Janeiro, and the other in the Northeast, whose main cities are Salvador, Recife and Fortaleza. Around 40% of the population in the Northeast (NE) are illiterate, a level comparable to India (52%), whereas only 15% are illiterate in the Southeast (SE). 53% of the population in the Northeast lives on less than two minimum wages vs. 21% in the Southeast. During the 1990s, federal and local governments started providing tax incentives to companies investing in the NE region, yet the economy in the NE was predominantly rural and remained heavily dependent on agriculture. The Northeastern states of Brazil also have a distinct culture and history. It was the first region of Brazil to be colonized by Europeans, who brought large numbers of West Africans to work as slaves on sugar cane and cocoa plantations as early as the sixteenth century. In 1996, 65% of the population in the NE was of mixed African and European origins (vs. 30% in the SE). Lifestyle, culture and religion all share African influences. Music and humour are key 2 elements of their culture and many of Brazils best-known artists come from the region. Popular parties like Carnival, Forr Festivals and Maracatu bring millions of people onto the streets and are major events in the region. Washing clothes in Brazil In Recife (NE), only 28% of households own a washing machine and 73% of women think that bleach is necessary to remove fat stains. In general, women in the Northeast scrub clothes using bars of laundry soap, a process which requires intense and sustained effort. They then add bleach to remove tough stains and only add a little detergent powder at the end, primarily to make the clothes smell good. As a result, the penetration of detergent powder and laundry soap is quite high in the NE of Brazil, but they use a lot more soap and less powder than Southeasterners. Clothes are also washed more frequently in the NE than the SE (5 times a week in Recife versus 3.9 in So Paulo). This is because low-income consumers own fewer clothes and have more free time (because fewer women work outside the home) than higher-income consumers. Interestingly, many women in the NE view washing clothes as one of the more pleasurable activities of their week. This is because they often do their washing in a public laundry, river or pond where they meet and chat with their friends. In the SE, in contrast, most women wash clothes at home alone. They perceive doing laundry as a chore and are primarily interested in ways to make the task easier. People in the NE and SE differ in the symbolic value they attach to cleanliness. Many poor Northeasterners are proud of the fact that they keep themselves and their families spotlessly clean despite their low income. Because it is so labour intensive, many women see the cleanliness of clothes as an indication of the dedication of the mother to her family. Personal and home cleanliness is a main subject of gossip. In the Southeast, where most women own a washing machine, it is much less important for self-esteem and social status. Along with price, the primarily low-income consumers of the Northeast evaluate detergents on six key attributes. The most important attribute is the perceived power of the detergent (its ability to clean and whiten clothes with a small quantity of product), which is often judged by the quantity of foam it produces. Second is the smell of the detergent: consumers often associate a strong, pleasant smell with softening power and gentleness to fabric and hands. Third is the ability to remove stains without the need for laundry soap and bleach. Next is the ease with which the powder dissolves in water and the absence of residue on the fabric after rinsing, two elements that are evaluated by the consistency and granularity of the powder. Packaging comes next: low-income consumers (who are often barely literate) prefer distinctive, simple and easyto-recognize packages that are also easy to open and protect against humidity. Impact on colours (fading) is the least important attribute for these consumers. Key industry players in Brazil - Unilever Unilever is a US$56 billion company, headquartered in London (UK) and Rotterdam (Netherlands). Unilever is a pioneer of the consumer goods industry in Brazil. Lever Brothers started operations in Brazil in 1929 and opened their first plant in So Paulo in 1930 to manufacture Sunlight soap. Omo, Unilevers most successful brand, was launched in 1957 and 3 was the first detergent powder in the country. In 1996 it operated with three divisions: Lever for home care, Elida Gibbs for personal care, and Van den Bergh for foods. Yet detergents remain the cash cow of Unilever Brazil, providing fuel for growth in the food and personal care categories. In 1996, Unilever was a clear leader in the detergent powder category in Brazil, with an 81% market share achieved with three brands: Omo (one of Brazils favorite brands across all categories), Minerva (the only brand to be sold as both detergent powder and laundry soap), and Campeiro (Unilevers cheapest brand). Market Structure The Brazilian fabric wash market consists of two categories: detergent powder and laundry soap. Detergent Powder: In 1996, detergent powder was a $106 million (42,000 tons) market in the Northeast, growing at the remarkable annual rate of 17% thanks to the economic upturn of the Plano Real. The barriers to entry in this market are high because the manufacturing process is capital intensive. Detergent designed for hand washing is cheaper to produce but performs very poorly when used in a washing machine. At 75%, Unilevers share of the NE detergent market is below its national average. Omo, its dominant brand, has a 52% share and is sold to retailers at $3 per kg. Minerva has a 17% share and its retail price is 82% that of Omo. Campeiro has 6% of the market and is sold at 57% of Omos price. Laundry Soap: In 1996, the NE market for laundry soap bars was as large as the detergent powder market ($102 million for 81,250 tons), but growing at a slower rate (6%). The barriers to entry were lower in the laundry soap market than in the detergent powder market because soap is relatively easy to produce from fats and oil. In fact, the animal fat that is a primary component of soap is produced in large quantities by slaughterhouses and meat processing plants. One of the limitations of laundry soaps is that animal fat tends to leave the clothes yellow. They are also difficult to perfume because the base has a very strong smell. Laundry soap was sold at a much lower price than laundry detergent powders (average revenues of $1,250 per ton vs. $2,520 per ton for detergent powder). Brand positioning Omo is the clear leader among detergent brands in the NE in 1996 in terms of top-of-mind brand awareness (70%), brand knowledge (100%) and brand penetration (95%)1 while Minerva comes in second. Campeiro has much lower top-of-mind brand awareness and market penetration. Omos success is partly due to consumer perceptions of it as high quality relative to its price. It is seen as a market pioneer that creates technology-oriented detergents that have strong stain removal powers even when using a low quantity of product. One advertisement in 1996 used the message New Omo with Blue Powder. Removes stains on pockets, cuffs and collars. Minerva is perceived as medium quality as well as medium price. Minerva focuses on the emotional appeal of softness and delivers a pleasant perfume to clothes. Their key communication message 1 Top-of-mind awareness is the percentage of consumers citing the brand first. Brand knowledge is the percentage of consumers declaring knowing the brand. Market penetration is the percentage of consumers having bought at least one unit of the brand in the past year. 4 was Get yourself comfortable. New Minerva. Irresistible comfort, incomparable softness. Campeiro, the cheapest brand is seen as relatively low in both quality and price. Decision-making Time Brand Strategy Could Unilever deliver the desired value proposition with one of its three existing brands, or with a brand extension? Would Unilever really have to develop a new brand from scratch? This was a thorny issue, especially considering the rumor coming from headquarters that Unilever was about to embark on a large-scale effort to reduce its brand portfolio. Product Unilever could produce a product comparable to Campeiro, its cheapest product, but would it deliver the benefits that low-income consumers wanted? Alternatively, Unilever could use Minervas formulation, but it might be too expensive for low-income consumers. Unilevers scientists could develop a third formula priced half-way between Minerva and Campeiro if they could eliminate some ingredients. It could create a laundry soap or a detergent. The question was to determine which attributes could be eliminated, which should be retained, and which, if any, would actually need to be improved relative to both existing brands. Promotion What would be the objective of the communication? What should be the key message? Low income consumers might be reluctant to buy a product advertised for low-income people, especially as products with that kind of message were typically of inferior quality. On the other hand, using the classic aspirational communication of most Brazilian brands could confuse consumers and lead to unwanted cannibalization. What about packaging and point-of purchase displays? Should they use the same slogan as the television commercial? Finally, what should Unilever tell the owners of the small stores where most low-income consumers shopped? Getting buy-in from small store owners would be crucial because low-income consumers relied on them for advice and for financing (which is widely used in Brazil, even for inexpensive consumer goods). They rarely shopped in large supermarkets like Wal-Mart or Carrefour. In regular detergent markets Unilever had established that the most effective allocation of communication expenditure was 70% above-the-line (media advertising) and 30% below-the line (trade promotions, events, point-of-purchase marketing). The advantages of using primarily media advertising were its low cost-per-contact and high reach because almost all Brazilians, irrespective of income, are avid television watchers. One alternative would be to use 70% below-the-line communication. This plan would require only one third of the cost of a traditional Unilever communication plan. On the other hand, it would lower the reach and increase the cost-per-contact.

Question 1: What brand positioning do Unilevers three current brands have? (3*2 = 6)

Question 2: Unilever decides to enter the North-East Brazil market.

Explain whether they should: (a) develop a new brand, or (b) reposition one of their existing brands, or (c) launch a brand extension from one of their existing brands? (6)

Question 3a: Write a positioning statement for your brand in 2 above (2).

Question 3b: Create 2 brand elements for your brand and assess how memorable, adaptable, and meaningful each element is (2*3 = 6).

Question 4a: Design an integrated marketing communication campaign for your brand in North-East Brazil (4).

Question 4b: Evaluate your campaign using 3 criteria for assessing IMCs.