Target low-income segment of consumers in the

Northeast?
Unilever should target the low income market in the NE of Brazil for many reasons. In Brazil Unilever
already has a market share of 81% with their detergent ortfolio! so they have to find new ways for market
growth. "here is also an entry threat #y one of their main cometitors $%& which could take the first
mover advantage and address the segment #efore them. ' successful market strategy for the low income
market in Brazil can #e used as #est ractice to gain valua#le insights for secific market needs for other
low income markets around the world. (ast #ut not least sustaina#ility and )*+ #ecame a huge trend
during the last decade. It will attract new artners and emloyees and create synergy effects with N&,s.
-irst of all there are .8 million otential low income customers in the North East of Brazil. "he market is
#asically huge. "here are two aroaches which have to #e undertaken! in order to reach this market.
-irst #y restructuring the value chain for a rural market we have to create afforda#ility and availa#ility.
't the same time we have to tailor our offer to the individual needs of the market! develo a specific
marketing mix to create acceta#ility and awareness to finally capture that value.
Availability
+ural markets are hard to reach. NE Brazilians redominantly get their groceries from small shos. "he
new roduct could #e made availa#le through aro/imately 01.222 small stores! which are refera#ly
used #y B,$ customers. 3ere Unilever has two ossi#ilities. -irst they can take advantage of their
e/isting network of small entrereneurs and incentivize them to sell their roduct. E/isting suly chains
have either to #e used and shared! or e/tended through entirely new suly chains! which would hel to
reach even the stores in the most rural areas! to create #rand knowledge and increase sales. 3owever!
this action is cost intensive and imlies negotiations of new contracts with secialized distri#utors! which
is hard to reverse.
Affordability
"his is one of the most crucial factors when addressing the B,$ consumers. Unilever has to find out how
much income their segment effectively has availa#le to send on their roducts and how the fre4uency of
their salary and shoing looks like. 15% of the oulation have to live with less than 6 minimum wages
781.29month:"he ricing of new roducts has to #e linked to the #uying ower of the eole in the NE.
'ccording to the er caita income 786612:! #argaining ower in the NE results in a#out 8;9day. -rom
those 8; normally 695 have to #e send on food. "his leaves a#out 869day for additional shoing for the
average citizen. "hose earning the minimum wage of 78029month: have less than 86!6<9day for food and
additional shoing. 3owever! the goal here is to #e a#le to offer roducts which are afforda#le and
#eneficial even for the oorest consumers. *o it has to #e adated to their cash flow 7se4uence of
ayments: and on a day to day #asis! #y offering multile sizes for e/amle.
Acceptability
In order to sell their roduct successfully Unilever needs to meet the uni4ue needs of consumers #ut also
of the distri#utors in the NE of Brazil. 'dditionally Unilever has to understand regional! cultural! and
socioeconomic re4uirements of the B,$ users. 'frican and Euroean roots #rought rhythm! =oy and
resulted in carnival. "hose are significant sociocultural factors forming attitudes and #ehavior. ,nly a#out
a third of +ecife>s oulation owns a washing machine and #leach is regarded as highly effective for
removing stains for hand washing. ?ashing techni4ues and means also look different from western
cultures@ ?omen hand scru# clothes with soa #ars! which re4uires a lot of time and effort. Aetergent
owder however is used very little at the end for its smell. E/ 1 reveals that cleanliness is valued most
76.%:! followed #y smell9softness 762%: and the a#ility to remove stains 71;%:. *o Unilever has to focus
on those attri#utes when develoing a new roduct. 'dditionally! washing clothes is seen as a
leasura#le and social activity and as dedication invested for the family>s urity. )leanliness is
furthermore common as one of the main su#=ects for gossi. Unilever needs to resect and to understand
the maternal ride for the washing activity.
Awareness
In the NE of Brazil a#out .2% are illiterate. *o for all romotional efforts! Unilever has to #e aware that
more of a third of otential customers might not fully #e a#le to understand the ositioning statement. *o
when choosing ackaging and romotion it would #e imortant to make it selfBe/laining! easy to
recognize. -urther when #roadcasting "C ads nationwide there would #e a risk of canni#alization of highB
margin sales like ,D, with low margin ones of the new roduct. In order to resect their ride! the
offered roduct therefore cannot #e sold as a discount roduct which communicates lower 4uality.
Evaluation of nilever!s current portfolio.
's ioneer on Brazil>s consumer goods market! in 1<<; Unilever already had a market share sum of 81%.
3ere "#" is clearly the market leader with 16% market share. -urthermore there are many roduct
variations of it and it is Unilever>s highly riced remium roduct 7inde/ of 162:. Dost of the *E oulation
of Brazil uses it for washing machines! since it is regarded as highly effective and technology oriented. It
is e/ensive to roduce 7-) E 81.;19kg: and is less suited for hand washing which makes it unsuited for
the NE market! where it is #arely afforda#le. 3owever It has therefore a #rand knowledge of 122%! <0%
Darket enetration and 01% to of mind wareness in the NE. $erceived 4uality is way a#ove its rice.
'nother discount riced variation of this category would lead to canni#alization.
#inerva e/ists in owder form or as hand soa. "he owder has a market share of 10%! rovides
erfume and softness and communicates emotional aeal. "hey also have 122% #rand knowledge! <2%
market enetration and 1; % to of mind awareness. "he 4uality is still erceived higher than the rice
7medium rice inde/ of a#out <1: #ut the difference is less than with ,D,.
"he Dinerva laundry soa has a 1<% share on the soa market and Unilever was market leader since
only small local cometitors were cometing. It is suosed to leverage #rand e4uity of the owder.
-urther it is .1% cheaer than ,D,. "he erceived 4uality is also higher comared to its discount rice.
3owever since 06% in the NE do not own a washing machine! soa #ars are 4uite oular for hand
washing uroses. "he downside is that they are very hard to erfume and that animal fat might leave
yellow clothes. Aue to their soft water foam develos easily and rovides and advantage comared to
detergents. Dinerva would #e a ossi#le #rand #ut is still too highly riced and therefore out of their
reach. -urther it does rovide additional and significantly higher #enefits than )ameiro which are not as
highly valued as others 7harm to colors and ackaging:. )ameiro has a ;% share is definitely a cost
saving rice #rand #ut also valued #y consumers. Its name lays with their rural area. Aesite its discount
#rand it has << % #rand knowledge! ;1% market enetration #ut only 1 % to of mind awareness.
$erceived 4uality however is under the rice. *ince a discount roduct does cannot #e as good as the
remium ones in terms of washing ower! its accetance level would #e retty low. 'fter all this roduct is
not tailored to their needs.
*o #asically Unilever would need a new modified formula that rovides the #est #enefits of Dinerva! with
the foam ower of soa #ars and a rice a#ove #ut near )ameiro. ,n the market ositioning ma it
would #e ositioned #etween )ameiro and Dinerva in terms of 4uality and rice. But in the heads the
goal is to erceive a ercetion higher than Dinerva and to create a new standard like their own Fersonal
,D,G which was develoed esecially to meet their needs. 3owever on the internal Unilever ortfolio the
new roduct would #e ositioned close to Dinerva in "erms of 4uality.
In order to solve this dilemma! my research has shown that #y now Unilever already launched a new
roduct for the NE of Brazil.[1] $A%A& was #orn and develoed in 'rgentina in 1<;6. Unilever Brazil
decided to reBlaunch that #rand from a market with similar cultural values and adated it to the needs of
the Northeastern culture and offered it for a very favora#le rice. Aesigned for laundering #y hand! 'la did
not need the e/ensive enzymes that most washing machine detergents included for removing stains!
which made it cheaer in roduction. It is offered only in the NE in order to revent Brazilian wide
canni#alization. "hey consciously named it '(' which is also a alindrome like ,D, to draw a line
#etween the erceived 4ualities of ,D,.
'ositioning (tatement)
To the mother who is always caring about the cleanliness of her beloved family. ALA soap detergents
provide superior cleaning power for a small price. It removes the most persistent stains from your clothes
while covering them with the freshest smell of flowers. Proven and tested for you by the creators of OMO!
#arketing #ix
?hile the four '>s addressed in 4uestion 1 #asically descri#ed the current market situation! we now have
to find ways to meet those needs and conditions.
'roduct
*ormulation
3ighly imortant is the effectiveness on hand washingH this also imlies that it should #e leasant to the
skin! #ut also somewhat ecoBfriendly in order to revent harmful residuals to dissolve into the rivers.
-urther it has to address the three most imortant attri#utes 71. )leanliness! 6. *mell! 5. Bleaching:H '
high 4uantity of foam associated owerful cleaning 4ualities to remove stains. ' nice smell communicates
gentleness and softness. 'nd #y adding #leach we could finally com#ine the three most valued attri#utes
in one roduct 7*oa and Bleach! and *mell:. If the formula is taken from '(' 'rgentina it has to fulfill
those needs of the NE of Brazil. 's the icture from the cover letter shows Unilever succeeded. *ince
harm to colors and ackaging has a lower rate on the scale. "hose factors leave a larger scoe formula
reduction and cheaer ackaging.
'ackaging
Unilever decided to create a wellBdesigned ackaging similar to market leader ,D,! in order to revent a
chea discount image. -urther it is made from lastic! which is 52% cheaer to roduce than regular card
#o/es. It kees humidity outside and due to its colors it is highly distinctive and easy to recognize for
illiterates. "he ackage size should #e ket to a regular 122g! since this is currently the smallest ackage
on the market to kee roduction volume at e/isting levels. -urther it is considered that this size is most
likely according to their e/isting washing #ehavior and meets their monthly #udget.
'rice
3ere Unilever is facing the dilemma of finding the ga #etween a rice even the oorest can afford! and a
rice which does not fuel canni#alization of their remium segment. 'ssuming '(' as e/isting roduct
gets reBlaunched on the Brazilian Darket! there will #e no incremental marketing costs. 'ssuming '('
rovides a formula halfBway #etween )omeiro and Dinerva those costs would #e 81.629kg. *ince we are
romoting #elow the line we can ush romotion cost down to 82.219kg. $lastic ackaging is also cheaer
with 82.119kg. Aistri#ution costs including! new contracts with secialized distri#utors will #e 82.219kg.
-inally we would have varia#le cost at 81..19kg. *ince this ricing is value driven and tailored the rice
needs to #e located #etween )omeiro and Dinerva at a#out +,.-./kg resulting in -0 cents / 0..g .
"his aroach will Unilever still rovide with a relatively high rofit margin. *ince NE are less willing to
#uy the cheaest #rand! #ut are more willing to save u on 4uality roduct for their family>s wellB#eing.
'(' will #e ositioned with a rice inde/ of a#out 81 a erceived 4uality way a#ove the rice on the
erceived ma.
1istribution
Unilver>s e/isting network is less suited to e/ecute that strategy according to their high costs. Dost B,$
consumers don>t use hyermarkets. In order to reach the 01.222 small outlets! which are referred oints
of sale for the NE oulation! the smartest way would #e to create new contracts with secialized
distri#utors and to create entirely new suly chains. "his would also #eneficial effects on the romotion
in terms of firstBhand information a#out our oints of sale. "heir varia#le cost to reach the small stores is
half the rice er kg and their main customers are our referred oint of sale 7"raditional retails stores
with 1 or two checkouts:.
'romotion
"b2ectives 'fter we tailored our offer and created a new value chain! we have use a specific marketing
mix to create acceptability and awareness to finally capture that value. ?e therefore want to introduce
the new #rand to the market and stress the fact that it was e/clusively develoed for their needs.
$erceived 4uality needs to #e significantly a#ove the given rice. "he goal is to #uild u credi#ility and
ositive attitudes for our new #rand and to influence #uying #ehavior accordingly.
"he #essagethroughout the entire romotion has to #e aligned with our osition statementH $owerful!
"ailored! 'fforda#le. ,ur main target will #e mothers of all age.
#ix
In order to kee romotional costs comara#ly low! the focus will #e on #elow the line communication
702%: and 52% a#ove the line 7media advertising:. *ince most Brazilians watch a lot of "C the allocation
of the 52% should ut redominantly here. "he "C ad clearly targets a roud Brazilian mother! who has
leasure washing her kid>s shirts and to make it all shiny and good smelling! while still #eing a#le to
surrise her with a gift! due to the money she has saved on '('.[2] 'ccording to the high num#ers of
illiterates written rint media to educate customers a#out #enefits are less suited! e/cet they are rich in
ictures and selfBe/laining. -or the 02% #elow the line communication Unilever has many ossi#ilities
to incentivize urchases. "rial $romotions in terms of free roduct samles of a#out 12g could #e assed
on to rovide the ossi#ility of testing. -or reeat urchase Unilever could use a simle couon rogram
#y collecting marks which have to #e cut out from the original ackaging and a certain amount can #e
treated for goodies or e/tra owder to increase loyalty. Unilver could also engage in ersonal selling
activities like 'von did. By emowering housewives in romoting '(' for them the idea is to create winB
win situations. "hose women can get some e/tra work during their sare time and introduce the new
owder to friends and other families and educate them a#out #enefits.