Approach to Foreign

markets
Assignment-I
Unilever in brazil

Introduction
Unilever have a long and profitable history in Brazil. After setting up in
Brazil in 1929, Unilever set up their first plant in 1930 to manufacture
Sunlight Soap. In 1957 OMO, the countries first detergent, was launched
and grew to be Unilevers most successful brand commanding 52% of the
market share. Completing the detergent portfolio are Minerva, which is
sold as both soap and detergent powder and Campeiro, their price based
brand. Together the Unilever portfolio commands 81% of the market.
Upon review of the companys strategic options positive economic forces
in Brazil have presented Unilever with the viable option of pursuing the
low income consumer market. Currently their price based brand Campeiro
is priced affordably but does not meet low income needs for perceived
product attributes and as such only retains 6% of the market.
Management are concerned this presents a chink in Unilevers armour
presenting an opportunity for Proctor and Gamble to attack and grow in
this segment. Unilever had fallen victim to this strategy in India whereby a
low priced detergent Nirma was developed and targeted at low income
consumers and quickly gained 48% of the market.

Current Brand Portfolio

An analysis of the Northeast versus the Southeast of Brazil can
highlight the attractiveness of the region for Unilever.
If we examine Unilevers brand portfolio we can see that they have
three healthy operating brands in the market.
1. OMO
2. Minerva
3. Campeiro.

. Cumulatively they make up 73% of the Detergent Market share. Each

brand is very well developed and has over 95% brand knowledge
among customers. Both OMO and Minerva have achieved relatively
high penetration rates with 97% and 91% respectively but there is
still room for more penetration for Campeiro.
. Interestingly in a consumer top mind awareness survey, OMO is the
most recognised detergent brand in the northeast with 72% way
ahead of any other brand in the market. This is a key indicator of the
strength of the OMO brand.

 It is important to note that Campeiro would appear to be a

struggling brand. The brand is established however has
been recognised for being price competitive. This indicates
to Unilever that any change in market share will be difficult
to achieve for this brand as price is the competing variable
and not quality. We believe that from our research that
Campeiro will continue to struggle in growing within the
competitive environment and Unilever must act now in
order to protect its cumulative market share.
As highlighted earlier Campeiro is yielding a small return
and given the nature of the competing variable, price, it is
hard to see where they will pick up ground if or maintain if
new entrants come in with a better offer at low price. As
OMO and Minerva are competing in higher segments they
are sustainable and do not need to alter their product.
So we came with new brand and came up with Perfeito

Marketing Mix
Product: Perfeito, Portuguese term
for Perfect.
Perfeito would be formulated and
available in both Detergent and
Laundry Soap granting access to two
growing markets with one branding
strategy.

 The primary benefits of Perfeito will be in line with

Attributes that are most important to NE consumers:
1) Cleanliness, whitening, Productivity
2) Smell, softness
3) Ability to remove stains
With this in mind Unilevers formula for Perfeito will
be priced half way between Minerva and Campiero.
To avoid cannibalisation of Minerva, NETO would
omit lesser demanded attributes such as Dissolving
Power and Harm to Colours which will be decreased
to an acceptable level.

Packaging
While Perfeito is pursuing a low cost strategy, the
long term strategic aim is to dominate the LIC
market share. Therefore, it is critical the perceived
quality of the product is higher than that of Pop
and Invito. With this in mind, Perfeito will forego
the 30% saving that would accompany a plastic
sachet package as LICs regard anything not in a
cardboard package to be second rate.
Considerations have also been made for the
weekly budget of the LIC and consequently
Perfeito will be sold in 1kg and 500g cardboard
packaging.

Place
Distributing to NE Brazil does not come without its challenges. We are told that LICs do rarely
shop in large supermarkets such as Walmart or Carrefour. This means the chosen distribution
strategy must include 75,000 small outlet stores spread over the NE. However, Unilever do not
have the ability to distribute to these stores which suggests a partnership could be the most
economical way forward.
The team suggest contracting with Specialised Dealers who would have the necessary focused
reach to distribute Perfeito to LICs. The benefits include 24-40 SKUs as opposed to hundreds
which are available in Generalist Wholesalers meaning more favourable shelf space, category
management, merchandising and extensive point of purchase activity. With the basis of the
distribution relationship being that of a partnership, a free flow of information would be
available increasing Unilevers knowledge of marketing to and accessing LICs which is an
attractive learning outcome of developing the LIC brand. Developing this marketing strategy
has the potential to become a core competency of Unilever that could be leveraged in other
markets.
While the cost of a specialised dealership is 5c per kg lower than a Generalist Wholesaler
distribution agreement, there is a distribution exclusivity clause for negotiation in the contract.
This would be reviewed with the core issue of protecting the distribution network of Unilevers
primary brands OMO and Minerva. If this distribution agreement threatened the market share of
these brands then the company would have no choice but to pursue distribution through
General Wholesaler which would have a less focused strategy and would cost an additional 10c
per kg.

Promotion
As mentioned in the case, the key message of the promotional strategy would need to take into
consideration that marketing a brand that is overtly communicating low-income product would almost
certainly communicate low-quality product.
With this in mind, the team propose that the promotional strategy instead focus on the positive lifestyle of
LICs in regards to washing clothes as opposed to being price based. As stated in the LIC behaviour
analysis, washing clothes is seen as a social and pleasurable task. NETO would seek to emphasise this in
the promotional strategy in an extremely positive message: NETO, Vida Parece Brillhante, (NETO, Life
looks bright). The team assert that the tagline would imply wholesome, positive energy resulting in a clean
bright washing.
The promotional campaign will rely heavily on imagery to communicate the key messages to overcome the
challenges posed by the NEs high illiteracy rates of 40%. The chosen imagery used would feature mothers
talking and laughing while using Perfeito. The imagery would communicate health, happiness and pride in
a job well done reiterating that Perfeito is the perfect brand partner in the pursuit of resolving the life
theme of dedicated mother (Fournier, 1998).
As detailed in the Price section, new brand introductions will cost an additional $0.10 per kg in incremental
marketing costs. This will practice Unilevers established communication plan of 70% above the line and
30% below the line marketing expenditure. The 70% above the line advertising will rely on television
segmented towards female LICs and image intense billboard and print advertising. The 30% below-theline will include point-of-purchase marketing and on-trade promotions facilitated by the Specialised
Distributor partnership. The team feel that the closest the product can get to the consumer is on the shop
floor where the critical first purchase can be won by introductory promotion and category management.

Price
Current Margin

In-between

Formulation Costs $1.15

Packaging Costs per KG $0.35
Promotional Costs per KG $0.25
Total Cost $1.75
Wholesale Price (WP) $2.10
Margin per KG $0.35
New Brand Perfeito
Incremental Promotional Costs per KG
Distribution Costs per KG $0.05
New Cost $1.90
New Margin per KG $0.20

$0.10