Unilever has experienced quite a rollercoaster of marketing success and failure over the last 5 years. Originally its new 5-year strategic plan entitled Path to Growth' had special promise and forecast for success. The primary objective of this plan was to cull Unilever's tail' brands and place extra emphasis on those which were market leaders. Niail Fitzgerald believes that too many brands often confuse the customer and thus lead to poor purchasing decisions. The paradox of choice between Unilevers' products had to be addressed. This meant a dramatic reduction of over 1200 smaller brand names, the closure of 138 production facilities and the loss of 51,800 jobs. The key financial targets of this plan were to improve sales growth of the top line brands (which accounted for 90% of their annual turnover) by 5-6% each year, achieve an operating margin of more than 16% per annum and attain a double-digit figure in annual growth in earnings per share.
Unilever wanted to change its operations and follow a more differentiated and dynamic strategy of offering a service rather than a selection of products. This follows in line with PIMS which illustrates that growth in brand sales and market share is directly related to innovation and without a complete customer focus, market share and Return on Investment performance will suffer. Unilever also believe that by adopting an innovative approach to its brands, they will experience continued sales growth.
Unilever would also restructure its organisation and seek to cut out many of its suppliers in an effort to cut costs and simplify the supply chain. This tactic accompanied with the factory and job cuts would enable them to use the additional cash on top-line brand promotion and pass cost savings onto the consumers. Another tactic was to cease advertising expenditure on its smaller brands and switch its resources and capabilities away from them. Maintenance advertising is crucial to performance of both small and large brands, yet Unilever decided to go against this proven theory. This was a clear mistake as their smaller brands still had a large consumer base and ignoring them completely in terms of promotion and effective management led to problems further down the line despite the initial rewarding cost savings.
Their financially strong platform and extensive marketing budget also meant that they could promote their products with great backing. Past experience has indicated that their advertisements are extremely weak and dull though, with a focus purely on risk management which does nothing for the consumer. It was also too process orientated, bringing in few new sales at a heavy cost.
Unilever also wanted to create a greater focus and association with their consumers through their brands and their own name. Predominantly, Unilever has focused on the food products market whereby it has promoted its products as ones which bring health and vitality to the buyers. Fitzgerald wanted to align their brand name with consumer expectations and develop an identifiable image for the company. The company invested £7m in a logo facelift which sought to bring the important facets and virtues of the business to the consumer. However, this cosmetic change has brought little credibility to Unilevers performance. It hasn't made a lasting impression on their customers and the company has suffered on its key financial target and overall brand image. It also seems that the rollout was not fully integrated. Unilevers main problem is that it has focused
on a saturated market which offers little extra room for growth. The sales growth figures have continued to fall to around 3-4% growth, and they even had a negative sales decline quarter in 2004.They have also decided to cut the remaining 300 tail brands despite the previous tactic having a clear negative effect on performance. Other financial targets have all been met however, so the plan was not a failure in any sense, more a...
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