Unilever in Brazil
Unilever in Brazil
The goal of Unilever Brazil is to target the low income consumers, in order to gain market share among this segment they should develop an extension of Minerva brand with a small packaging and a cheaper formulation that maintains a good quality.
The low income consumers are the most discerning consumers, and when spending from a limited budget they cannot afford to waste money on products they do not trust to be effective . This segment values price, effectiveness and fragrance, and wash manually, hence they prefer soap rather than powder. Unilever already sell Minerva in its soap version which is considered a medium quality product in terms of cleanliness, smell and dissolving power according to Exhibit 1.But this product is still expensive for low income consumers. Unilever should continue working with the brand Minerva and develop a new sub-product inside this brand with a cheaper formulation and a small packaging. That way the Minerva brand will contain two products with the following Portuguese names:
•Minerva Expresso. The original Minerva formula and packaging for detergent and soap targeted to middle income costumers. The usual promotion of this product should change to make customers aware about the new name. Distribution, placement and price should not change.
•Minerva Ação. A new cheaper formula of Minerva soap, maintaining a good quality and fragrance. The key to access to this market is to leverage the Minerva’s brand as a quality product. Packaging should be plastic to reduce costs by a 30% and sizes should be two types: one individual bar and three bars. Low income customers have a limited budget and usually buy consumer goods thinking on a short term. Is for that reason, that a value proposition of a cheap, good quality and fragrance product in a small package is more appealing than a bigger package which usually is more expensive. The price should be $1.40 per kg, a little higher than Bem-te-vi (the traditional laundry soap brand in Brazil) to differentiate it from low quality and cheap products, but still low enough to be attractive to low income consumers who are looking for a good quality and nice fragrance soap bar (see Exhibit 2).
There is no cannibalization of Campeiro because soap and powder customers could be considered as different markets. Promotion should be a below-the-line communication plan focusing on point-of-purchase marketing and trade promotions in those areas where the low income customers reside and buy. A global media advertising campaign shouldn’t be considered for the potential impact on Unilever reputation in other customer segments and markets. Distribution is another important key to access to the customer segment, the use of specialized distributors will ensure the delivery of the product in specific areas and will maintain the price strategy.
This strategy will help Unilever to position its product as the quality product inside the economy laundry products market (see Exhibit 3). Leveraging the Minerva brand with a low price product will help Unilever to increase sales and to gain market share among the low income customers segment. Additionally the high margin of Minerva Ação will result in substantial profits (see Exhibit 4 for product’s attributes and margin). Exhibit 1.
Attribute Importance, Brand Positioning, and Consumer Expectations in the Northeast
Source: Insead Case
Consumers who find scent/fragrance to have a high or very high amount of influence on their choices of household cleaning and laundry products
Source: Consumer and Innovation Trends in Laundry Care. DATAMONITOR Consumer, December 2012
Source: Insead Case
Products’ Attributes and Margins
AttributeMinerva ExpressoMinerva Ação
Price-Powder: $2.40 per kg
-Soap: $1.70 per kg-$1.40 per kg
Packaging-Powder: Cardboard 1kg&500g. Cost: $0.35 per kg
-Soap: Plastic pack with 5 bars of 200g. Cost: $0.15 per kg-Plasitc pack with 1 bar of 40g. Cost: $0.09 per kg -Plastic pack with 3 bars of 120g.
Cost: $0.10 per kg
Formulation-Powder: $1.40 per kg
-Soap: $1 per kg-$0.8
Promotion-Powder: $0.30 per kg
-Soap: $0.25 per kg-0.05 per kg
Distribution-Wholesaler: $0.10 per kg-Specialized Dist.: $0.05 per kg
Margin per unit