Sara Khurshid

14-5265
MBA (A)

Unilever in Brazil
Should Unilever target the low-income segment of consumers in the Northeast?
What are the possible financial and/or strategic implications of your decision?
Unilever should target the low-income segment of consumers in the Northeast as it
serves as a very large untapped market with specific customer base.

According to area demographics,

o There are around 48 million low income consumers in the Northeast
forming one of the largest population segments.
o There is large trend among low income segment consumers to wash their
clothes frequently indicating that there is large use of laundry
soap/detergents.
o Only 28% of the Northeast families have washing machines.
o Washing is usually done at rivers and ponds and considered as

recreational activity.
There is significant growth of 17% in Northeast region in detergent market and

this market is expected to grow more in 5 years.

P&G is one of the biggest competitor globally, who has the resources to target
this segment. Therefore, Unilever has to maintain their competitive position low-

income segment should be targeted.

North East region also benefited from government program in 1995-1996 that
resulted in growth of purchasing power by 27% than last year and helped to
increase prosperity in the region. Due to which average monthly budget of the Ecategory people have changed from $2.48 in 1995 to $3.15. This makes this
segment feasible option for Minerva selling at $2.5/kg and Camperio $1.7/kg to
target but they both dont full fill the perceived product attributes.

In Northeast Unilever market share is 6% lower than overall national share which
means Unilever has not tapped in to this region completely.

According to Exhibit 3 in the case study, there is high penetration of 96.6% of

consumers buying laundry soap at least once per year and the consumption is
20.4kg per year per buyer. These results are comparably higher than Southeast
region. Whereas for detergent powder, 11.4 kg consumption per year per year

and the penetration is 97.2%.

By successfully targeting the Northeast region, it has potential to bring 30 million
dollars for the company.

By targeting the low-income Northeast region, it will also help to flourish other food and
personal care businesses. Therefore, it is critical for the future of Unilever to tap into this
market as it has done in India by introducing Nirma detergent and can benefit from that
experience as well.

Question No. 02
Current Brand Portfolio
Brand
OMO (Premium)
Minerva (Relatively

Type

Market Share

Detergent
Detergent/Soap

0.52
0.17

cheap)
Camperio (Cheap)

Detergent

0.06

Available Options

Launching new brand

Repositioning strategy
Launching Brand extension

What Unilever should do?

Launching a new product will increase the expenses and thus decreasing overall
company revenues. Whereas repositioning Minerva and Camperio but the customer
perception about Camperio is as a low quality product will affect the overall image
whereas Minerva has strong emotional attributes that could cause confusion for
consumers. Moreover, Minerva is high priced making it unsuitable for low-income
Northeast region consumers.
So, the only option that is feasible for Unilever is to go for brand extension of Camperio
as:

It will easily help to facilitate new product acceptance

Reduce costs of introducing new product
Promotion expenditure will be low
Low risk is associated in case product fails, parent product will not be affected
The price of the product will be little higher than the parent product which will
help to communicate the better quality of the product as well.

Question No. 3
Product
The new product should be:

Available in different packaging ranging from 250g to 2kg

The packing material should be for small quantities should be sachets instead

boxes in order to reduce the price.

The formula of product should include more of bleaching agent in order to
become more attractive for Northeast region for making their clothes white and
stainless. Moreover, it should have pleasant smell.

Price
As Unilever is targeting low-income socio class E, therefore price should be kept in
between Camperios i.e. $1.7/kg and Minerva $2.5/kg in order to make the new product
more accessible to low-income consumers.
Distribution
Unilever currently have issues with distribution channels confined only to big stores.
Therefore, there should be extensive distribution of this new product to small stores in
Northeast who are being targeted through this product. Unilever has to reach 83% of
the people in Northeast; therefore they should ensure that their product is available on
every single store in that region. For this purpose, specialized distributors who have the
knowledge and access to this segment can be helpful.
Promotion
The promotion of the product can be done through a tag line like Better quality within
your budget. Here Unilever has to make sure that this product is targeting low-income
consumers so it should not be communicated as low quality product as well for the
consumers. Other than that Unilever should focus on having instore promotions in small
stores of Northeast making it realize to the consumers that they can also afford their
version of premium brand like Omo and they can also get better quality in low price.