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Unilever Brazil Case Submission

Go/No Go Decision

 Should Unilever target the new market?

Yes.

Reasons to Believe

1. The lower-income segment (E+ & E- from Exhibit 2) constitutes 53% (25.38mn) of the
entire population (47.9mn) of the Northeast
2. The economic boom of 1995-96 led to the growth of purchasing power of the poorest
10% by 27% per year
3. With Unilever reaching a stage of saturation with its market share of 81% of the
detergent category, this new market promises newer avenues of sales and growth

 Cannibalization Rate

For calculating cannibalization rate at which the strategy would make loses, we have tried three
approaches based on different calculation of unit contribution of cannibalized units.

o One is the average unit contribution of the existing brands and second is the weighted
average unit contribution of existing brands. The cannibalization rate at which the
strategy would make loses comes out to be 42.5% and 33.9% for the two approaches.
However these numbers assume average or proportional cannibalization of the existing
brands.
o Based on the new approach, there should be minimal cannibalization of brands other
than Campeiro (since it commands the lowest share amongst all three Unilever brands).
So assuming only Campeiro is cannibalized and hence considering only Campeiro’s unit
contribution, the loss making cannibalization rate comes out to be 66%.

For detailed review and analysis, refer Pricing Table in the Marketing Mix:Price Section.

 Does Unilever has the right skill and organization to compete in the market?

Yes.

Reasons to Believe

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1. Market leader in the segment

2. Huge legacy and excellent track-record of delivering quality and trust
3. A strong distribution channel

 What would Unilever gain or risk in the long run?

Venturing the market with the right strategy, Unilever stands to gain a considerable pie of the
NE detergent market thus adding significantly to its overall market share of 81%. Also, the move
would impart Unilever with the expertise to operate in the low-income consumer segment,
which could be further applied to its other categories and products.

In the case of failure of the new strategy, Unilever would risk losing a part of its sale to other
competitors in the low-detergent segment.

Brand and Marketing Strategy

 Value Proposition

While Omo’s and Minerva’s existing proposition meet customers’ expectations and needs,
Campeiro falls drastically low on the consumer expectations range (Source: Exhibit 5). This
necessitates the need for a new value proposition. Here the point to be kept in mind while
devising a new proposition is that only 28% of households own washing machine, thus making
laundry soap indispensable to the cleaning process. Also the use of bleach increases another
step (and efforts) to the process.

New Value Proposition

Easy removal of tough/fat stains by complementing the laundry soap, thus reducing the use of
bleach and adding to the joy and pride of cleaning.

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PoP: Affordable Cost

PoD: Easy washing that complements laundry soap and removes tough stains without bleach.

This value proposition introduces a whole new concept of cleaning where in the detergent
works in tandem with the laundry soap thus catering to the indispensability of the laundry soap
and the low presence of washing machines in the households. The point would be further
elaborated in the coming sections.

 Brand Strategy

The existing 3 brands of Unilever would not be able to cater to the proposed value proposition.
Launching a new brand from scratch would not only demand huge production expenses but also
add significantly to the overall cost of marketing components. Also, a whole new product would
further clutter the market, adding to the choice paradox of the consumers. Introducing a brand
from the international portfolio in Brazil would have the same effect as launching a new one. In
such a scenario, a brand extension fits the bill.

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The proposed brand extension would provide the low-income segment with a product that
offers not just affordability but also, unlike other players in the low-cost detergent segment,
supreme quality and efficiency, creating a unique place for the brand.

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Marketing Mix

 Product

Introducing Campeiro Super. A detergent mid-way between Minerva and Campeiro in terms of
quality and price.

Attributes Minerva Campeiro

Eliminated/Reduced Strength of formulation Low perceived value vis-a-vis
reduced the cost
Retained Pleasant smell and softness Affordability
Improved Stain removal ability and Formulation strength
whitening

Packaging

500gm cardboard box package, keeping in mind the weekly/monthly budget range of
consumers.

30/50gm sachets for quick one-time use and easy mobility. This helps to capture consumers
with lower-weekly dispensable income, providing them with a convenient option to buy
quantities of detergent as and when required. The sachets would be marketed a easy to store.

Distribution of packaging – 60% cardboard boxes and 40% sachets of the total production (by
volume)

Cost of packaging

500gm Cardboard Box – $0.175

30/50gm Sachet - $.00525

Avg Price (60:40) – $0.252 per kg

 Price

Campeiro Super aims at providing a good quality product at affordable cost to low income
consumers. In terms of product formulation, it is placed in between Campeiro and Minerva. So
there is a marginal increase in product formulation cost. We have assumed this cost to be
midway between those of Campeiro and Minerva, and it comes out to be $1.15 per kg. Also
packaging cost, planning for 60% product volume in cardboard box and 40 % in sachets, comes
out to be $0.252 per kg. As per calculations in the table below, the total product cost comes out
to be $1.652 per kg.

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As per its positioning, logically Campeiro Super’s price must be between those of Campeiro and
Minerva. We would want to keep the price below $2 per kg. This way the product is placed in
the affordable segment. Also we can minimize cannibalization of Minerva as Campeiro Super
would be placed both perceptually and cost wise away from Minerva.

We would want to portray Campeiro Super to be superior to the original Campeiro. So it must
command a premium over the original Campeiro. Pricing it too close to the original Campeiro
might cause heavy cannibalization of the original Campeiro.

Considering the above factors, we have priced the product at $1.95 per kg. Besides limiting
cannibalization, this also earns a healthy margin of $0.248 per kg.

As Campeiro, Invicto and Pop have similar positioning and pricing, we can assume that
Campeiro Super would draw its market share from these brands (proportional to their existing
market share) and from the new low income consumers who begin using detergent. So the
fraction of Campeiro Super’s market share drawn from Campeiro can never be as high as 66%.
So this strategy must turn profits for the company post cannibalization. Also on the long run, as
Campeiro Super picks pace, the company can divert it’s funds and resources towards the new
brand; gradually withdrawing the under-performing brand Campeiro from the market.

Price Table

Costs (per kg)

Packaging (at 60 % cardboard box 0.252

and 40 % sachets)

Marketing 0.15

Brand extension 0.05

Distribution 0.05

Formulation cost 1.15

Total Costs 1.652

Selling price per kg 1.95

Profit per kg 0.298

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Cannibalization

Avg unit contribution 0.7

Cannibalization rate for zero 0.43

profit

Weighted Avg unit contribution 0.88

Cannibalization rate for zero 0.34

profit

Campeiro’s unit contribution 0.45

Cannibalization rate for zero 0.66

profit

 Promotion

Communication Objective: To leverage upon the remarkable brand knowledge (Source: Exhibit
8) of Campeiro and alter its poor perceived quality index and brand perception in the minds of
the consumer. The communication also intends to introduce a behavioural change amongst the
target segment.

Key Message – No tough stains. No bleach. No effort. Only supreme cleaning.

The packaging would be simple, attractive and distinguishable using vibrant pastel colours. The
back of packaging would pictorially list the instructions of using the detergent. The point of
purchase displays (comprising standees, danglers, prominent shelf stickers/strips) would
communicate the key message along with the slogan used in TV Commercial.

Communication to small-store owners would revolve around how Campeiro Super makes
tough stain removal easy without the use of bleach. The small-store owners would also be
educated regarding the specific usage of Campeiro Super – Soak the clothes in Campeiro Super
for 15 minutes before washing. The soaking would lighten the tough stains and infuse a pleasant
fragrance. Post soaking, lightly scrub the clothes using a Laundry Soap for super whiteness.

Allocation of communication expenditure

70% ATL (Media Advertising)

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30% BTL

At select mid- and small-stores where the footfall of our consumer segment has shown to be
relatively high, small manned kiosks would be setup that would demonstrate the procedure of
using and advantages of Campeiro Super.

 Distribution

Specialized Distributors Generalist Wholesaler

Pros Cons Pros Cons
Focussed area/reach Small size Wide area/reach Focus on only top 3
brands
Exclusive rights to sell Mid-sized/large Have to rely on
all Unilever secondary
detergents wholesalers thus
increasing cost
Extensive PoP activity Limited PoP activity
Lower variable cost to Higher variable cost
reach small stores to reach small stores
Partnership-based, Opportunistic
friendly relationship relationship with
with manufacturers manufacturers
Traditional retail Caters more to
stores as customers Supermarkets

Basis the analysis above, Specialized Distributors prove to be a better fit for the right
distribution channel for Campeiro Super.

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