Adding value assignment on Lynx

Topics: Marketing, Value added, Strategic management Pages: 17 (3703 words) Published: April 29, 2014


Table of Contents

Abstract
The following report aims to add value to a product of Unilever, Lynx. Prior to this the company, its market place and customer base will be briefly discussed with an extensive analysis on one of its products through the use of the value chain diagram. Implementation of the changes to be made, costs of the product and costs to the company will be discussed. Upon completing this the overall perceived value of the changes will be forecasted. Introduction

The Unilever Company is a worldwide company with estimated value shy of £74 billion [1]. The company is primarily a consumer goods company (third biggest in the world [2]) with over 170,000 employees [3] and a 2013 annual turnover of just over £41 billion [3]. With over 400 brands, the company has branched out into numerous marketplaces ranging from food, to domestic cleaning to personal healthcare. Some of the more well-known brands include PG tips, Persil, Lynx (known as AXE in the US), Hellmann’s and Slim-fast [4]. With such a wide variety of products the customer base depends entirely on the chosen brand and sales location and it is expected that the customer base for the company are both genders all ages and backgrounds. With relation to the Lynx product in the UK, as shown below in figure 1, the male to female ratio usage of body sprays is nearly two to one, with females exceeding the use in deodorants, most likely due to the use of perfumes in place of body sprays. It should be noted that Lynx also has a 52% of the body-spray market [5]. Additionally the use of deodorants is mostly common practice amongst people aged 25 and below, with less use in increasing age [6].

As previously mentioned Unilever is a worldwide company which turnover billions of pounds in multiple countries. The greatest increase in market over the past has been in Asia with the most turnover in terms of product being in personal care as shown in figure 3 below.

It can be seen that 40% of income is coming from Asia and that 36% of the income is from personal care. As such the product for added value will be of the personal care category with a large potential market in Asia as even small additions in value will have a major impact on the company’s growth.

Existing Product
Under personal care comes body sprays which are sold by one of Unilever’s more established and well-known brands, Lynx (AXE). Lynx’s primary product is body sprays with varying fragrances. Other products include anti-perspirants, aftershaves, shower gels, shampoos and roll-ons. The target market for the whole range consists of 15-25 year old males, with naturally lower incomes due to age range (in education as opposed to work), bachelor incentives as proposed by many of the advertisements (Figure 4 and 5), heterosexual and generally have mainstream mentality [7].

Below shows the market Lynx (AXE) has in America with potential to overtake other brands.

Value Chain analysis
This analysis is a way for businesses to determine where value can be added for the benefit of the customer and thereby for the company. There are nine sections, as shown in figure 6, each explained below with the Lynx body-spray product as a basis. Each of these nine sections undergo a simple three step process whereby activities are analysed, activates are then screened for value addition and finally evaluate the worth of said added value although the latter will omitted.

The two main ways of adding value are through cost reduction and product differentiation which has been taken into account below.

Support Activates
Infrastructure
This is the company’s structure, the planning methods, management technique, quality control mechanisms, accounts and financing (as shown in the first line of figure 6). The infrastructure of the Lynx Company sprouts from Unilever, where similar methods...
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