Marketing Management

Case Analysis

Unilever in Brazil
Contents
Executive Summary...............................................................................................................................3

Introduction...........................................................................................................................................3

Brazil......................................................................................................................................................3

North East Marked Attractiveness.........................................................................................................3

Brand Portfolio.......................................................................................................................................3

Options..................................................................................................................................................3

Ansoof’s Matrix..................................................................................................................................3

Issues to be Addressed..........................................................................................................................3

Go/No Go Decision............................................................................................................................3

Marketing Mix..................................................................................................................................3

Brand and Marketing Decisions.........................................................................................................3

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 Executive Summary

The case centres on the decision of Unilever in Brazil as to whether to introduce a new low cost
washing powder in a market where it already holds the predominant share of washing powders. It is
about Unilever´s highly ambitious “Everyman” project of the mid-90s which began with extensive
field studies to help determine whether it was in the corporation´s interests to enter the lower end
of the domestic market. This case deals with Unilever home care division and in specific the
detergent brands in the two major regions in Brazil: The North East and the South East. Major
differences exist between these two regions in terms of wealth, culture and needs that influence the
performances and sales of Unilever detergent brands available in the Brazilian market.

Laercio Cardoso was called to lead the project whose mission was to explore the growth
opportunities in the marketing of detergents to low income consumers in the North East of Brazil.
Cardoso became increasingly convinced over time that, in light of its massive market dominance,
pursuing the lower end of the detergents market was Unilever´s only clear opportunity for domestic
growth. He was extremely wary of seeing the company lose out to cheaper local brands, as had
recently been the case in India and in Pakistan, from where he had just transferred. Cardoso soon
faced stiff resistance from many colleagues, who felt that the premium brands Unilever already
offered were the reason behind its enviable domestic position.

The case cites the major marketing challenges that entry into such a market will near-inevitably
present. The months spent living in the favelas slums with low-income consumers had taught
Unilever that the attitudes and behaviour of this segment of consumers were very different from
what they were used to.

The rivals had quite different statures within Brazil at the time. Unilever had achieved a quite
remarkable 81% market share in the washing powder sector and was a consumer goods pioneer in
the country. P&G was a very distant second and had entered the local market far later. However, it
had a much-envied R&D unit as well as extensive marketing experience worldwide. Its potential long-
term threat to Unilever was obvious.

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Introduction
Unilever have a long and profitable history in Brazil. After setting up in Brazil in 1929, Unilever
set up their first plant in 1930 to manufacture Sunlight Soap. In 1957 OMO, the countries first
detergent, was launched and grew to be Unilever’s most successful brand commanding 52% of
the market share. Completing the detergent portfolio are Minerva, which is sold as both soap
and detergent powder and Campeiro, their price based brand. Together the Unilever portfolio
commands 81% of the market.

Upon review of the company’s strategic options positive economic forces in Brazil have
presented Unilever with the viable option of pursuing the low income consumer market.
Currently their price based brand Campeiro is priced affordably but does not meet low income
needs for perceived product attributes and as such only retains 6% of the market. Management
are concerned this presents a chink in Unilever’s armour presenting an opportunity for Proctor
and Gamble to attack and grow in this segment. Unilever had fallen victim to this strategy in
India whereby a low priced detergent “Nirma” was developed and targeted at low income
consumers and quickly gained 48% of the market.

Brazil
Brazil is a country with a population of approximately 170m. It’s predominately split into two regions,
the northeast with a population of 48m and the southeast with a population of 73m. The northeast
and the southeast regions vary greatly with regards to a number of issues related to the detergent
and soap markets. Firstly income and education levels vary, as do cultural values and norms.

A Pest analysis of the North East can highlight some of the implications of these differences.

 Political – N/A
 Economic – Brazil is said to have experienced cycles of recessions and recoveries over the
past 30 years. The country made a significant economic leap with the Plano Real which saw
the introduction of a new currency, the Reais which controlled inflation leading to a boom
that particularly benefitted low income consumers boosting their purchasing power by 27%.
However, while Brazil’s per capita income was €4420, this was significantly lower in North
Eastern Brazil at €2250 reflecting the developmental and economic divide between North
and South.
 Socio-Cultural – The illiteracy levels in North Eastern Brazil are high above the national
average at 40% which will impact communication and promotional strategies. <<something
about high context,
 Technological - 72% of NE Brazilians don’t own a washing machine compared to 33% who
don’t have one in the South East.

Countries can be classified by their characteristics of culture. From examining the contextual
continuum of differing cultures, left, we can see that Brazil has a high context culture. This something
a company should be careful about as high context cultures “use and interpret more of the elements
surrounding a message to develop their understanding of that message”

Low Income Consumer Behaviour in Northeast Brazil

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NE Brazilians view issues relating to laundry very differently when compared to the South East.
Firstly, low income consumers wash their clothes more frequently in the NE (5 times versus 3.9 times
a week) as LIC’s own fewer clothes and have more free time. This poses the opportunity of a 48
million consumer market that consumes a significant weekly amount of detergent/ laundry soap.

Secondly, NE women view washing clothes as a social and enjoyable experience as opposed to SE
women who view laundry as a chore. There is an opportunity for Unilever to exploit the social aspect
of clothes washing in North East Brazil.

Thirdly, and most importantly, NE and SE differ in the symbolic value they attach to cleanliness. Poor
North easterners pride themselves in the level of cleanliness they can sustain despite their low
income. Cleanliness, due to the labour intensiveness, is worn like a badge of honour and is seen as a
dedication of the mother to her family. Alternatively, cleanliness, or lack thereof, can often be the
source of gossip in the community. If marketed and branded appropriately, the team assert that
Unilever can offer a brand to LIC’s that validate those consumers’ life-theme as good mothers

North East Marked Attractiveness

An analysis of the Northeast versus the Southeast of Brazil can highlight the attractiveness of the
region for Unilever.

Min Percentage Population # of Monthly Yearly MW Yearly MW

Monthly of Figure Monthly MW in $ 1996 in 1995
Wages Population MW's
(MMW)
Income 100% 48,000,000 $70.00
Class
E- 33% 15,840,000 1 $70.00 $840.00 $661.42

E+ 20% 9,600,000 1.5 $105.00 $1,260.00

D 30% 14,400,000 3.5 $245.00 $2,940.00

C 9% 4,320,000 7.5 $525.00 $6,300.00

B 5% 2,400,000 15 $1,050.00 $12,600.00

A 3% 1,440,000 20 $1,400.00 $16,800.00

The above table highlights some the variances in income levels across Northeast Brazil. As the
case states, income among the lowest 10% of the population is up 27%. This equates to an
increase in minimum yearly wage from $661.42 in 1995 to $840 in 1996; a real dollar increase
of $178.58. This highlights the additional spending power available to the lowest income
consumers.

Yearly Wage 1996 Detergent @ Yearly Wage 1995 Detergent @ $1.70

$1.70 as % of as % of income
income

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$840.00 2.31% $661.42 2.93%

The above table illustrates the percentage saving for the lowest income consumers that result
from the 27% income rise. Note the decrease in yearly spending on detergent and soap as a
percentage of overall income. This further emphasises the better value of detergent and soap in
low income consumer’s eyes.

Brand Portfolio

Brand Market Type Brand Market Mind Price

Share Knowledge Penetration Awareness Per/Kg
OMO .52 Detergent 100% 97% 72% 3.00
Detergent/Soa
Minerva .17 p 100% 91% 16% 2.40
Campeiro .06 Detergent 99% 66% 4% 1.70

If we examine Unilever’s brand portfolio we can see that they have three healthy operating
brands in the market; OMO, Minerva and Campeiro. Cumulatively they make up 73% of the
Detergent Market share. Each brand is very well developed and has over 95% brand knowledge
among customers. Both OMO and Minerva have achieved relatively high penetration rates with
97% and 91% respectively but there is still room for more penetration for Campeiro.
Interestingly in a consumer top mind awareness survey, OMO is the most recognised detergent
brand in the northeast with 72% way ahead of any other brand in the market. This is a key
indicator of the strength of the OMO brand. Campeiro despite of being a established brand, has
been recognized for being price competitive. This indicates to Unilever that any change in
market share will be difficult to achieve for this brand as price is the competing variable and not
quality.

Options

There are three options open to Unilever.

 Brand Extension
 Brand Repositioning
 New Brand

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Ansoof’s Matrix

Brand Extension

A well planned and well implemented extension of one of their three brands could offer Unilever
a number of advantages. As Unilever is targeting the low income segment and OMO, Minerva are
higher priced, it would be foolish to tamper with those. Extending those to a lower cost
consumer would only damage the original. Therefore if any extension were to take place it
would have to take place with Campeiro.

Advantages of using an extension could be:

 Facilitate new product acceptance

 Reduce risk perceived by customer
 Increase efficiency in promotional expenditures
 Reduce costs of introductory market programmes
 Avoid cost of developing a new brand
 Packaging efficiencies
 Permit customer variety seeking

Disadvantages of using an extension be:

 Confuse and frustrate consumers

 Damage existing brand image
 Cannibalize parent brand
 Damage image of parent brand
 Dilute brand meaning
 Cause Unilever forgoe chance to develop new brand

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Brand Repositioning

Unilever have the option to reposition a current brand in order to gain these low cost customers. In
order to do this effectively they will need to establish more compelling points of difference. As OMO
and Minerva already have strong points of difference it is therefore Campeiro that would be
repositioned. Unilever can reposition in order to:

 Increasing relevance to the consumer

 Increasing occasions for use
 Making the brand more serious
 Improve falling sales
 Bringing in new customers
 Differentiate from other brands

However having acknowledged the Campeiro brand’s existing knowledge within the market amongst
consumers we feel it would be very difficult to reposition as they are already known as the price
competing brand with low quality and that perception would be difficult to change. We also back this
up as even a successful reposition may not yield significant returns over another strategic option i.e.
New Brand.

New Brand - Brancura

Another strategy for breaking into the low cost market segment is to launch a new brand. We
propose Brancura (Portuguese meaning of Whiteness). At present Unilever low income brand
Campeiro is not providing the attributes e.g. quality, that is demanded by the low income consumers.
It is part of Unilever’s mission statement to add vitality to life through their products so by bringing
more to the customers is a fit with their overall strategy. Consumers have stated that they want
cleanliness, whitening, productivity, Smell, softness, ability to remove stains according to surveys in
exhibit 5 of the case.

While Campeiro is positioned solely as a cut price brand the new brand Brancura will be positioned
as a higher quality low cost detergent. It will be positioned as a middle ground to Campeiro and
Minerva. It will deliver the demanded attributes at low cost to low cost consumers whilst maintaining
a reasonable margin. Rather than be positioned on price or cost it will be sold on the quality of the
product. We feel that positioning the product on quality and just below Minerva can avoid
cannibalization of Minerva, gain market share from competitors below Campeiro, defend Unilever’s
position to outside competitor’s and all whilst growing overall market share in the Brazilian market.
The foreseeable future is that it will replace Campeiro.

Costing breakdown of all the three options discussed above is given below-

Current Margin OMO Minerva Campeiro In-between

FC $1.65 $1.40 $0.90 $1.15
PKC $0.35 $0.35 $0.35 $0.35
PC $0.35 $0.30 $0.20 $0.25
Total Cost $2.35 $2.05 $1.45 $1.75
Wholesale Price $3.00 $2.40 $1.70 $2.10
Margin per KG $0.65 $0.35 $0.25 $0.35

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Brand Extension
Incremental PC - $0.05 $0.05 $0.05
Distribution - $0.05 $0.05 $0.05
New Cost - $2.15 $1.55 $1.85
New Margin per KG $0.25 $0.15 $0.25
Year 1 Sales in KG 1,965,600 1,965,600 1,965,600
Yearly Profit $491,400.00 $294,840.00 $491,400.00
Brand Reposition
Incremental PC - $0.00 $0.00 $0.00
Distribution - $0.05 $0.05 $0.05
New Cost - $2.10 $1.50 $1.80
New Margin per KG $0.30 $0.20 $0.30
Year 1 Sales in KG 1,965,600 1,965,600 1,965,600
Yearly Profit $589,680.00 $393,120.00 $589,680.00
New Brand
Brancura
Incremental PC - $0.10 $0.10 $0.10
Distribution - $0.05 $0.05 $0.05
New Cost - $2.20 $1.60 $1.90
New Margin per KG - $0.20 $0.10 $0.20
Year 1 Sales in KG 1,965,600 1,965,600 1,965,600
Yearly Profit $393,120.00 $196,560.00 $393,120.00

Pricing and Brand Profit Margin Analysis for Soap Market is given below-

Soap Margin Minerva New Formula

FC $1.00 $0.82
PKC $0.15 $0.15
PC $0.25 $0.25
Total Cost $1.40 $1.22
Wholesale Price(WP) $1.70 $1.40
Margin per KG $0.30 $0.18
Brand Extension
Incremental PC $0.05
Distribution $0.05
New Cost $1.50
New Margin per KG $0.20
Year 1 Sales in KG 3,445,000
Yearly Profit $689,000
Brand Reposition
Incremental PC $0.00
Distribution $0.05
New Cost $1.45
New Margin per KG $0.25
Year 1 Sales in KG 3,445,000
Yearly Profit $861,250

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New Brand
Incremental PC - $0.10
Distribution - $0.05
New Cost $1.40 $1.37
New Margin per KG $0.30 $0.03
Year 1 Sales in KG 15,437,500 3,445,000
Yearly Profit $4,631,250 $98,428.57

The formulation price of $0.82 is derived from calculating the percentage difference in Formulation
cost for the Minerva brand ($1.40) and the new formula for Brancura ($1.15) and taking this
percentage of the formulation cost for Minerva Soap ($1). Incremental promotion costs and
distribution costs put the margin for a new brand at $0.03. The profit resulting from this can be seen
as $98,428.57 a sum which due to the low growth rate of 6% in the soap market does not increase at
a satisfactory level and is tiny in comparison to the profits generated by the Minerva brand of soap.

Issues to be Addressed

Go/No Go Decision
Issue -At what cannibalization rate (percentage of new sales coming from other Unilever
brands) would Unilever start losing money? Whether, Unilever had the right skills and
organization to compete in this market?
In the long run, what exactly would Unilever gain and what would it risk if things went
wrong?

Response -The detergent and soap markets in the northeast are valued at $106m and $102m
respectively. In the southeast the values are different, with estimates attained of $123m and 46m
respectively, the reason for such variation is down to regional differences in laundry habits.

Forecast 1996 1997 1998 1999

Detergent Market 42,000 49,140 57,494 67,268
(volume in tones)
Detergent Market $ $106,000,000 $124,020,000 $145,103,400 $169,770,978
Value
Growth Rate 17%
Soap Market (volume 81,250 86,125 91,293 96,770
in tones)
Soap Market $ Value 102,000,000 108,120,000 114,607,200 121,483,632
Growth rate 6%
Table- Market Size forecast

The above tables show the estimated increase in size of the detergent and soap markets over the
next three years assuming the growth rates remain constant. This presents Unilever with a major
opportunity for increased revenue. However, if we apply the same forecasts applied to all of the
existing brands in the Unilever portfolio; we find the relatively poor performance of Campeiro brand

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which as of 1996 only contributes $630,000 in profits to Unilever and is expected to contribute a
little over $1m within three years.

Forecast 1996 1997 1998 1999

Campeiro Selling $1.70

Price
Campeiro Market 6%
Share
Campeiro (volume in 2,520 2,948 3,450 4,036
tones)
Margin per KG $0.25
Campeiro Profit after $630,000 $737,100 $862,407 $1,009,016
Costs
Table – Campeiro Sales Forecast

A potential reason for this poor performance from Campeiro may be down to the fact that consumer
expectations of their performance are low, as indicated by Exhibit 5 in the case. Based on the above
analysis Unilever should target the low-income segment of consumers in the Northeast. Unilever
currently hold a market share of 75% here, below the national average of 81%. Both markets of
detergent and soap are growing in the NE and the lowest income consumers are experiencing an
increase in purchasing power. The economic boom that has hit the country is at its most powerful in
this region and represents a substantial opportunity for Unilever to take advantage of. Additionally
there is a risk that if Unilever do not target this market that another company may do so, resulting in
a similar situation to that in India.

However, their current low income brand Campeiro is performing poorly as indicated in Campeiro
Sales Forecast analysis. Moreover, Exhibit 5 of the case has indicated that, Campeiro is perceived as a
below adequate in terms of performance on the six major categories of expectations.

For this reason it is intended to launch a new brand when targeting the detergent market of the
northeast. Group recommends the Unilever to launch the new brand Brancura, with the suggested
positioning, discussed in different available options section. In that case, Price would be set at $2.10
with a margin of $0.20. Market share is expected to grow from 4% in the first year, to 11% in year 3.
This market share will be taken from the competitors Pop, Invicto as well as cannibalizing sales from
Campeiro.

Financial analysis has ruled out the possibility of targeting the soap market in addition to the
detergent market with the new brand. Using similar pricing logic it is impossible to keep costs down
to an acceptable level and if wholesale price is to be kept at a price competitive enough to challenge
for market share in the low income consumer market it would result in too small of a margin.

Short Term Financial Results

At this price point the forecast profits over the next three years can be seen below for the detergent
market. The table below also highlights the expected cannibalization rate of the Campeiro brand
whose sales will continue for the next three years

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Detergent Market 1996 1997 1998 1999

New Brand – 0 $393,120 $919,900 $1,479,890

Brancura Profit
Market Share 0% 4% 8% 11%
Campeiro Market Share 6% 4% 2% 0%
(including new brand
-Brancura)
% Decrease from 0% 33% 66% 100%
Cannibalization
Profit (including new $630,000 $493,857 $293,218 $0
brand- Brancura)
Profit (not including $630,000 $737,100 $862,407 $1,009,016
new brand-Brancura)
Profit level of $630,000 $886,977 $1,213,119 $1,479,890
Campeiro and New
Brand

The financials to be taken from this table are that for the first two years Unilever will benefit from
the two brands income, shown in the bottom row of cells. From the initial year of launch the
financial output from targeting the low income market in this way is greater than leaving Campeiro to
continue in the market. In the short term, 1997 combined profit from both brands will be equal to
$886,997 as opposed to $737,100 from just Campeiro if left alone. This increase in profits rises year
on year as can be seen from the table. Over the period of three years the financial input will shift
from Campeiro to the new brand - Brancura and eventually all income from the low income
consumer market will be as a result of the new brand.

Long Term Financial Results

Strategically, Unilever will be replacing the Campeiro brand that exists in the low income market at
the moment. The reasons for this are due to the fact that the brand is underperforming and is
viewed as poor by the consumers. The new brand will be better quality and in turn fit in with
Unilever’s mission and vision of delivering consumer led products. The company are pre-empting any
potential move from a competitor to target the market. This will secure the longer term future of
Unilever and allow them to continue operating in the market.

As calculated above, there is long term financial growth in the strategy with the new brand –
Brancura, generating a higher amount of revenue than the existing short term brand Campeiro.

The move will also result in higher market share on behalf of Unilever with the company holding 11%
share by 1999 equalling a total market share of 80% in the Northeast. This figure has the potential to
be even higher should the purchasing power of low income consumers increase even further.

Once Brancura has made successful wins in the North East Detergent and Soap market Unilever
would then be in a prominent position to launch into the SE Market which is valued at $123m for
detergent and $46m for soap. Not only does the North East LIC market financially make sense, it also
has significantly positive strategic implications. Firstly, by growing their market share in the LIC

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segment, Unilever will aggressively defend against a competitor growing and presenting a credible
threat as was seen with Nirma in India. The team propose that Brancura can successfully secure the
LIC segment forming a barrier to entry for any potential new entrant or current competitor. Secondly,
the team concur with Laercio’s assertion that NE Brazil Detergent market presents Unilever with the
opportunity to perfect the art of marketing to LIC’s. This capability could become a Unilever core
competency which could be translated firstly to the Brazilian market beyond Detergent and Soap and
into the Homecare, Personal Care and Food markets.

Organization Capabilities - In order to analyze –“whether, Unilever had the right skills and
organization to compete in this market”; let us analyze the major strengths and weakness of Unilever
-

Strengths-
 Leadership position – Unilever brands are enjoying leadership positions in the Detergent
powder segment: With 75 % of the market, Unilever brands (Omo, Minerva and Campeiro
are ranked first, second and fourth respective in terms of Market Share)
 Brand Recognition: Unilever brands are well known and perceived by Brazilians. Most of
Brazilian have either seen or tried one of Unilever brands in this segment.
 Experience and skill set in Detergents- Unilever is a US $56 billion company with a portfolio
of 1,600 brands worldwide, including 45 key detergent brands. Two of their brands are
already enjoying first and second rank in terms of market share.

Weaknesses-
 Distribution -Unilever is facing a big Distribution issue in the NE; Unilever detergent SKUS,
are not present on shelves in approximately 75,000 small outlets. Knowing that
Northeasterns are not fund on going to big accounts such as Wal mart, Carrefour or Tesco,
but prefer going to small stores, the lack of Distribution is an extremely serious issue
 Consumer Expectations - Excluding Omo, other Unilever SKUS have problems in perception,
and are depasse by P&G brands (Ace and Bold)
 Lack of experience in LIC segment – Unilever don’t have much experience in LIC detergent
segment. Unilever was already experience failure in this, where a low priced detergent
“Nirma” had gained 48% of market.

In our opinion, distribution will, going to be one of the major challenges for Unilever. LIC’s do
rarely shop in large supermarkets such as Walmart or Carrefour. This means the chosen
distribution strategy must include 75,000 small outlet stores spread over the NE. However,
Unilever do not have the ability to distribute to these stores which suggests a partnership could
be the most economical way forward.

What if things went wrong – In case the things went wrong – it can hit the market share and brand
value of Minerva, Campeiro as well the new brand Brancura. In case, Brancura is placed wrongly – it
will not only cannibalize Campeiro, but can eat the market share of Minerva as well. However, in this
complete process, all this will not create any monetary benefit for the firm.

We have proposed, new brand Brancura to be positioned as a middle ground to Campeiro and
Minerva. It will deliver the demanded attributes at low cost to low cost consumers whilst maintaining
a reasonable margin. Rather than be positioned on price or cost it will be sold on the quality of the
product.

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We feel that in case the quality of the product is at par with Minerva, it will cannibalize Minerva, as
well as Campeiro. Despite of, increase in volumes this positioning will not going to be, financially
beneficial for Unilever. In case the price of the product is below Campeiro, it will again perceived as
low quality product and will not going to succeed defend Unilever’s position. In the same way, if the
new brand is priced above Minerva with low quality, no market share will be gained. Moreover, a
long delay in the process, will invite P&G and other competitors to tap the market and again, the
result will be similar to India.

Marketing Mix
Issue - 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 mix of a Unilever brand
targeted at low-income consumers?

Response -If we examine Unilever’s brand portfolio we can see that they have three healthy
operating brands in the market; OMO, Minerva and Campeiro. Cumulatively they make up 73% of
the Detergent Market share. Each brand is very well developed and has over 95% brand knowledge
among customers. Both OMO and Minerva have achieved relatively high penetration rates with 97%
and 91% respectively but there is still room for more penetration for Campeiro. Interestingly in a
consumer top mind awareness survey, OMO is the most recognised detergent brand in the northeast
with 72% way ahead of any other brand in the market. This is a key indicator of the strength of the
OMO brand. However, the mind awareness of Minerva and Campeiro is just 4% whereas market
penetration is only 66%. All this, indicates Campeiro a struggling brand , that has been recognized for
being price competitive. Further, it is mentioned in the case that Campeiro is perceived as low quality
product by consumers and hence, indicates, the failure of marketing and branding strategy in case of
this particular brand.

As discussed earlier, three options open to Unilever –

 Brand Extension
 Brand Repositioning
 New Brand

The team recommend that Unilever should enter the North East Brazil market to target LIC’s with a
new brand Brancura. Brancura would be formulated and available in both Detergent and Laundry
Soap granting access to two growing markets with one branding strategy. The primary benefits of
Brancura will be in line with Attributes that are most important to NE consumers.

 Cleanliness, whitening, Productivity

 Smell, softness
 Ability to remove stains

With this in mind Unilever’s formula for Brancura will be priced half way between Minerva and
Campiero. To avoid cannibalisation of Minerva, Brancura would omit lesser demanded attributes
such as Dissolving Power and Harm to Colours which will be decreased to an acceptable level. We
contend that Brancura, if marketed and executed correctly could earn $1,479,890 at the end of first
year. The ideal positioning statement and marketing mix for Brancura are discussed below-

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Positioning Statement

“For the women, who gives highest priority to quality. Brancura is a detergent powder which gives
you a better cleaning power with much less effort than the similar priced competitors”

Packaging

While Brancura is pursuing a low cost strategy, the long term strategic aim is to dominate the LIC
market share. Therefore, it is critical the perceived quality of the product is higher than that of Pop
and Invito. With this in mind, Brancura will forego the 30% saving that would accompany a plastic
sachet package as LIC’s regard anything not in a cardboard package to be second rate.
Considerations have also been made for the weekly budget of the LIC and consequently Brancura will
be sold in 1kg and 500g cardboard packaging.

Place

Distributing to NE Brazil does not come without its challenges. We are told that LIC’s do rarely shop
in large supermarkets such as Walmart or Carrefour. This means the chosen distribution strategy
must include 75,000 small outlet stores spread over the NE. However, Unilever do not have the
ability to distribute to these stores which suggests a partnership could be the most economical way
forward.

The team suggest contracting with Specialised Dealers who would have the necessary focused reach
to distribute Brancura to LIC’s. The benefits include 24-40 SKU’s as opposed to hundreds which are
available in Generalist Wholesalers meaning more favourable shelf space, category management,
merchandising and extensive point of purchase activity. With the basis of the distribution
relationship being that of a partnership, a free flow of information would be available increasing
Unilever’s knowledge of marketing to and accessing LIC’s which is an attractive learning outcome of
developing the LIC brand.

Developing this marketing strategy has the potential to become a core competency of Unilever
that could be leveraged in other markets. While the cost of a specialised dealership is 5c per kg
lower than a Generalist Wholesaler distribution agreement, there is a distribution exclusivity
clause for negotiation in the contract. This would be reviewed with the core issue of protecting
the distribution network of Unilever’s primary brands OMO and Minerva. If this distribution
agreement threatened the market share of these brands then the company would have no
choice but to pursue distribution through General Wholesaler which would have a less focused
strategy and would cost an additional 10c per kg.

Promotion

As mentioned in the case, the key message of the promotional strategy would need to take into
consideration that marketing a brand that is overtly communicating “low-income product” would
almost certainly communicate “low-quality product”.

With this in mind, the team propose that the promotional strategy instead focus on the positive
lifestyle of LIC’s in regards to washing clothes as opposed to being price based. As stated in the LIC
behaviour analysis, washing clothes is seen as a social and pleasurable task. Brancura would seek

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 to emphasise this in the promotional strategy in an extremely positive message: “ Brancura , Vida
Parece Brillhante”, ( Brancura , Life looks bright). The team assert that the tagline would imply
wholesome, positive energy resulting in a clean bright washing.

The promotional campaign will rely heavily on imagery to communicate the key messages to
overcome the challenges posed by the NE’s high illiteracy rates of 40%. The chosen imagery used
would feature mothers talking and laughing while using Brancura . The imagery would
communicate health, happiness and pride in a job, reiterating that Brancura is the perfect brand
partner in the pursuit of resolving the life theme of dedicated mother.

Also, as discussed earlier new brand introductions will cost an additional $0.10 per kg in
incremental marketing costs. This will practice Unilever’s established communication plan of 70%
above the line and 30% below the line marketing expenditure. The 70% above the line advertising
will rely on television segmented towards female LIC’s and image intense billboard and print
advertising. The 30% below-the-line will include point-of-purchase marketing and on-trade
promotions facilitated by the Specialised Distributor partnership. The team feel that the closest
the product can get to the consumer is on the shop floor where the critical first purchase can be
won by introductory promotion and category management.

Price

Current Margin In-between

Formulation Costs $1.15
Packaging Costs per KG $0.35
Promotional Costs per KG $0.25
Total Cost $1.75
Wholesale Price (WP) $2.10
Margin per KG $0.35
New Brand Brancura
Incremental Promotional $0.10
Costs per KG
Distribution Costs per KG $0.05
New Cost $1.90
New Margin per KG $0.20

The formulation cost is derived from ingredients providing a product that is in-between Campeiro
and Minerva in terms of Quality. Packaging costs are the same as all products

Promotional costs are the same, but because of the need for additional marketing for a new brand
there is an incremental cost calculated at $0.10 per KG. Distribution costs are at $0.05 per KG due to
selecting specialized distributors.

The margin of $0.20 was decided upon after profit level analysis. This is the margin required to
obtain the profits shown, Financial Results of Targeting NE with New Brand

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The cost was set at $2.10 in order to facilitate this margin as well as take advantage of the increasing
purchasing power of the low income consumers in the Northeast. Although higher than competitors
who charge a wholesale price of $1.70 the price of $2.10 still represents value for money for the
Northeasters.

Issue - Unilever could produce a product comparable to Campeiro, its cheapest product, but would
it deliver the benefits that low-income consumers wanted?

Response- Upon financial investigation of the Unilever portfolio, we have found that the Campeiro
brand is not delivering on capturing value for the consumer and not creating value for Unilever. We
recommend that Unilever should enter the NE Brazil market to target LIC’s with a new brand
Brancura (Portuguese meaning of Whiteness). At present Unilever low income brand Campeiro is not
providing the attributes e.g. quality, that is demanded by the low income consumers. It is part of
Unilever’s mission statement to add vitality to life through their products so by bringing more to the
customers is a fit with their overall strategy. Consumers have stated that they want cleanliness,
whitening, productivity, Smell, softness, ability to remove stains according to surveys in exhibit 5 of
the case.

While Campeiro is positioned solely as a cut price brand the new brand Brancura will be positioned
as a higher quality low cost detergent. It will be positioned as a middle ground to Campeiro and
Minerva. It will deliver the demanded attributes at low cost to low cost consumers whilst maintaining
a reasonable margin. Rather than be positioned on price or cost it will be sold on the quality of the
product. We feel that positioning the product on quality and just below Minerva can avoid
cannibalization of Minerva, gain market share from competitors below Campeiro, defend Unilever’s
position to outside competitor’s and all whilst growing overall market share in the Brazilian market.
The foreseeable future is that it will replace Campeiro.

Issue -Should Unilever use coupons or other means to reduce the cost of the product for low
income consumers? Should it change the price of Omo, Minerva and Campeiro?

Response- We recommends that, Unilever should not use coupons or other means to reduce the cost
for low income consumers – as cutting down the price can signal the poor quality of product.
Moreover, Omo and Minerva are already market leader in their segment and there is no need to
disturb the equilibrium. However, their current low income brand Campeiro is not performing well.

Currently the price of Campeiro is in the purchasing range of poor North Easters however, it does not
meet LIC segment needs for perceived product attributes and as such only retains 6% of the market.
Further cutting down the price of this product will not help as along with price, primarily low-income
consumers of the Northeast evaluate detergents on six key attributes. The most important attribute
is the perceived power of the detergent followed by smell and ability to remove stains. Many poor
North Easterners 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.

We recommend that Unilever should enter the NE Brazil market to target LIC’s with a new brand
Brancura. While Campeiro is positioned solely as a cut price brand the new brand Brancura will be

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positioned as a higher quality low cost detergent. It will be positioned as a middle ground to
Campeiro and Minerva. It will deliver the demanded attributes at low cost to low cost consumers
whilst maintaining a reasonable margin. Rather than be positioned on price or cost it will be sold on
the quality of the product.

Issue -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?

Response-

Brand and Marketing Decisions

Issue -Was there something wrong with the existing positioning of Unilever’s three detergent
brands? Would it be really necessary to develop a new value proposition? If so, what should it be?

Response—Competitive positioning of Unilever detergent portfolio is give below-

Positioning Unilever Products

Omo Minerva Campeiro
Importance High perceived Good perceived Low price
quality quality
Superior Removes stains with Delivers a pleasant Cost reduction across
low quantity of perfume and softness all dimensions valued
product to your clothes by consumers

If we examine Unilever’s brand portfolio, we can see that they have three healthy operating brands in
the market; OMO, Minerva and Campeiro. Cumulatively they make up 73% of the Detergent Market
share. Each brand is very well developed and has over 95% brand knowledge among customers. Both
OMO and Minerva have achieved relatively high penetration rates with 97% and 91% respectively
but there is still room for more penetration for Campeiro. Interestingly in a consumer top mind
awareness survey, OMO is the most recognised detergent brand in the northeast with 72% way
ahead of any other brand in the market. This is a key indicator of the strength of the OMO brand.
However, the mind awareness of Campeiro is just 4% whereas market penetration is only 66%. All
this, indicates Campeiro a struggling brand that has been recognized for being price competitive.
Further, it is mentioned in the case that Campeiro is perceived as low quality product by consumers
and hence, indicates, the failure of marketing and branding strategy in case of this particular brand.
Also, upon financial investigation of the Unilever portfolio, the team have found that the Campeiro
brand is not delivering on capturing value for the consumer and not creating value for Unilever. All
this indicates the failure of marketing positioning of Campeiro brand.

Unilever currently hold a market share of 75% here, below the national average of 81%. Both
markets of detergent and soap are growing in the NE and the lowest income consumers are
experiencing an increase in purchasing power. The economic boom that has hit the country is at its
most powerful in this region and represents a substantial opportunity for Unilever to take advantage
of. Additionally there is a risk that if Unilever do not target this market that another company may do
so, resulting in a similar situation to that in India.

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In this scenario, as discussed earlier, three options open to Unilever –

 Brand Extension
 Brand Repositioning
 New Brand

Out of above mentioned options, our team recommends that Unilever should target North Eastern
LIC segment with a new brand Brancura . In the short term Brancura will make $393,120 and will
combine with Campeiro to generate $886,977. This is equal to a 20% increase in profits for the first
year. The team contend that Brancura , if marketed and executed correctly could earn $1,479,890 at
the end of first year.

Issue -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? Could it
use a brand from its large international portfolio?

Response – As discussed earlier, in the option section, three options are open to Unilever

 Brand Extension
 Brand Repositioning
 New Brand

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