Group Case Providing Insight on Unilever's Techniques in Brazil

Cardinal & Co.

Group 5: Gracie Lewis, Brice Barnes, Joshua Cauble, Alvin Cheung, Jillian Godfrey, & Mikaela Smith

MKTG 322.504

We believe that Unilever should target the low-income segment in Northeast Brazil. There is currently a gap in that market and it would be beneficial for Unilever to capitalize on it before P&G does. Unilever had previous experience in India where they failed to target a lower-income segment, and this allowed their competitor to use that strategy against them. This ultimately decreased Unilever’s market share. P&G currently holds 17% of that gap with their Ace brand detergent, as well as a couple of other products, so attempting to close in on their market share would be highly effective. Because the poorer demographics of people living in Northeast will not create a significant source of revenue for Unilever, this plan may not seem like the most cost-effective. However, by gaining a larger share of the market, Unilever can incite more brand loyalty and build a defense against competition.

We believe that Unilever should launch a brand extension for Campeiro. People in the Northeast use more soap than they do detergent. We realize that they are likely buying local brands of soap instead of Minerva, so to address this problem and potentially pull in some of the markets that currently use our competitors’ products, we plan to add a line Campeiro soap. This soap will only be sold in a package with a 500g box of the current Campeiro detergent. The package will contain three bars of Campeiro soap that we will formulate to be slightly cheaper and of less quality than the Minerva soap.

We decided on this brand extension because there is not another product on the laundry soap and detergent market that is a bundle of the two products. This Campeiro soap and detergent bundle will meet the needs of the lower-income market of the Northeast, as this segment frequently uses both the soap and detergent together. Instead of creating a whole new product, which might push our targeted customers into choice overload, we suggest that Unilever sell the two products as one. Avoiding choice overload is imperative in this particular market, as there are multiple brands and levels of detergent already being offered. Too many variations of the same product can push consumers away from Unilever’s brand. Unilever should try to draw consumers towards their brand and away from P&G by offering them a product they did not realize they needed. This plays into competition-based positioning. Unilever’s target customers in the Northeast use both laundry soap and powder detergent. Competitors in this same market only sell these products separately, so by combining the two needs of the customer, Unilever will be able to gain control of the portion of the market that P&G currently retains.

We believe that this will create new demand for Camiero over Unilever’s competitors and also help them avoid any cannibalization of their current Minerva soap. By adding the soap in a package deal, Unilever can address two needs of the market. Compared to the price of the detergent that consumers in the Northeast would normally buy, this bundled product is only slightly more expensive. Only three bars of soap will be included instead of the standard five bars because this will help to avoid any potential losses in revenue and for the depletion of the two products to occur simultaneously.

The price of Unilever’s new product will be $1.54. This price was calculated by determining that it would cost $0.73 to make a 500g box of laundry detergent and $0.60 to make three bars of soap, making the total cost $1.33. Then, it was determined that the 1kg box was already selling at an approximate 17% markup, so the same markup will be used for the new bundled product and sell for $1.54. This price is still lower than the $1.70 that it would cost to buy a 1kg box of detergent or a pack of the Minerva soap. This would also cost less than buying a 500g box of Campeiro along with a pack of Minerva soap; this would be $2.55 total for the two separate products. We believe that a true bargain will capture the portion of the market Unilever is missing.

The point of difference of this new product is the uniqueness of the bundle. Unilever’s competitors do not offer a product that bundles soap and detergent. Unilever’s customers are accustomed to having to buy their detergent and soap separately, and the fact that they will be able to purchase them both at the same time at an affordable price will add value through convenience. Because the consumers have no experience with a bundled product like this, they will experience opportunity recognition, and their standard for soap purchasing convenience will rise, making them repeat customers. The formula of the Campeiro will stay the same, which will add to the brand recognition. Soap is relatively inexpensive to make, so the formula will be made similar to Minerva’s. To make the product slightly less expensive, all additives that are not necessary, such as special scents, will be excluded. The bundled products will be packaged in a cardboard box, avoiding the use of plastics, which is frowned upon in the area, as well as making it biodegradable and environmentally friendly. The cardboard packaging will also feature visuals that make the brand clearly recognizable and easily identifiable as to what the product is.

The Campeiro soap and detergent bundle is intentionally readily accessible to the lower-income divisions of Brazil and due to this, the product will primarily be distributed to local convenience stores in this area rather than only being sold in large grocery and general merchandising stores. The bundle will still be distributed in the larger merchandising stores, however, we believe that the best way to reach the lower-income market segment will be through local stores that are more affordable for these individuals.

When considering the promotion of this product, we suggest that Unilever launch a television commercial that will feature a group of women doing their laundry together in a river, laughing, and enjoying the presence of one another. We believe this will be an effective way to target the low-income segment because it was shown in the case that they enjoy doing their laundry with others as a social activity. This form of media will be effective because it was also stated that Brazilians watch a fair amount of television, regardless of their income level. We want the packaging to be eye-catching and also feature the women from the commercial so that it will be recognizable on the shelves.