Unilever in Brazil Harvard Case Solution & Analysis

Branding and Marketing Strategy:

Segmentation:

The market segmentation done in the case is in two ways. One is by income and the other is by geography. This segmentation makes sense because low-income consumers in the Northeast are a large group with different needs and behavior: they often have no washing machines and hence use more soap and less detergent, they are more likely to wash their clothes collectively, and they look for different attributes when choosing detergents.

unilever in brazil case solution

unilever in brazil case solution

One key insight is that low-income consumers are markedly more different from high-income consumers in emerging countries than in developed countries. Low-income consumers in emerging countries are not the same as so-called low-income consumers in Europe or the US, who would be classified as moderate or even high-income by Brazilian standards. This is true in many categories. For example, high-income consumers buy fabric softeners because they own new towels with a thick texture; low-income consumers tend to have worn-out towels that need no softening.

Targeting:

The two key questions in deciding whether or not to target the LI-NE segment are: Is the segment attractive, can Unilever be competitive and make money? The answer to the first question is positive. Unilever already has 81% of the detergent powder market, detergent penetration is high (above 90%) across all regions, but usage among LI-NE is significantly lower. It should, therefore, be easier to increase the volume by raising usage among LI-NE rather than by increasing penetration or the volume or price of existing Unilever brands among higher-income consumers.

The answer to the second question is more debatable. The key is to look at this segment from a strategic perspective and not only in terms of product margin. One important element, when assessing the profitability of the new product, is to determine the likely cannibalization rate. Unfortunately, it is always difficult to predict the cannibalization rate at this stage. One solution is, therefore, to tentatively say ‘Go' based on qualitative, strategic insights and to revisit this decision by doing the cannibalization analysis once marketing mix decisions have been made.

Positioning:

The key question is whether Unilever can differentiate a product targeted at LI-NE so that 1)
it creates value for that segment and 2) it is profitable. Three positioning can be chosen:

Aspiration:

At the extreme, this is like saying "Buy the rich guys' brand!" This is the positioning of Omo. Of course, low-income consumers look at what rich people buy and would love to buy the same brands. To be credible however, this positioning has to be delivered with high-quality (product, packaging) that makes it unprofitable if priced too low or unattractive to the LI consumer segment if priced too high. In addition, it could create confusion and increase cannibalization of Omo.

Low-price:

This is the positioning of Invicto, Campeiro and all other local brands. At the extreme, this is like saying "Buy the poor guys' brand!" These brands have low brand equity because they deliver low quality (little foam, weak perfume). People don't buy Invicto; they buy its low price. As soon as they have money or a better alternative, they can switch to.

Value:

Here the idea is "Buy the brand that offers the best value for your needs!" This is the positioning that was eventually chosen. To be credible, the brand has to deliver the functional, emotional and symbolic value that LI-NE consumers want (through all 4P's, not just low price). This positioning would cannibalize Campeiro (but the brand is very weak) and would protect Omo (because Omo is for washing machines).................................

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