Case Study Unilever

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Unilever in Brazil (1997-2007):
Marketing Strategies for Low-Income Consumers

Overall winner of the 2008 European Case Clearing House Awards Winner of a 2007 European Case Clearing House Award in the category “Marketing” Winner of the European Foundation for Management Development Case of the Year Award 2004 in the category “Marketing”

04/2008-5188 This case was prepared by Pedro Pacheco Guimaraes, INSEAD MBA 2003, and Pierre Chandon, Associate Professor of Marketing at INSEAD, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. We thank Laercio Cardoso and Robert Davidson from Unilever Brazil for making this case possible. We also thank Fernando Machado (INSEAD MBA 2003), Mauricio Mittelman (INSEAD PhD Student), Weima Bezarra (RB distributors, Ceara, Brazil), and Luca Lattanzi (INSEAD Executive MBA 2004) for their comments. Copyright © 2007 INSEAD N.B.: TO ORDER COPIES OF INSEAD CASES, SEE DETAILS ON BACK COVER. COPIES MAY NOT BE MADE WITHOUT PERMISSION.

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 Unilever’s 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. An alumnus of INSEAD’s Advanced Management Programme, Laercio had joined Unilever in 1986 after graduating in business administration from Fundação Getulio Vargas in São Paulo. He thus had the seniority and marketing skills that were necessary for the project. More importantly, he had never been involved in the traditional approach to marketing detergents and, having witnessed the success of Nirma1 in India, he was acutely aware of the threat posed by local brands targeted at low-income consumers. For this project, named “Everyman”, Laercio assembled an interdisciplinary team including Marcos Diniz from Sales, Antonio Conde from Finance, and Airton Sinigaglia from Manufacturing. 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 Conceição, pictured on the cover page in her home in Fortaleza, where she lived with her daughter, Elizangela, 19 (shown on the right with two of her four children). Like almost everyone in Brazil, Maria told Laercio that although she would love to buy Omo, Unilever’s flagship brand, her tight budget meant that she could only afford cheaper local brands. Back at Unilever’s headquarters in São Paulo, Laercio prepared for an important meeting with Davidson to decide whether the company should change the way it marketed its detergent brands to low-income consumers in the Northeast. Increasing detergent usage by Maria and the other 48 million predominantly low-income consumers in Brazil’s Northeast was crucial for Unilever, given that the company already had an 81% share of the detergent powder category. However, many in the company believed that a large multinational like Unilever should not fight in the lower-end of the market, where even small, local entrepreneurs with a lower cost structure struggled to break even. How could one justify diverting money from Omo to invest in a lower-margin segment? 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 mix of a Unilever brand targeted at low-income consumers? Finding the answers would not be easy as few at Unilever (or other...
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