Unilever Sri Lanka: Market Environment and Performance Analysis

This report provides a comprehensive marketing analysis of Unilever Sri Lanka, examining its internal and external market environments using SWOT and PESTEL analyses. It delves into the company's segmentation, targeting, and positioning strategies within the Sri Lankan market, highlighting how Unilever caters to diverse consumer segments. The report further assesses Unilever Sri Lanka's marketing performance, including its revenue and market share trends, and employs the Ansoff matrix to evaluate its strategic options for market development, market penetration, product development, and diversification. A detailed marketing mix analysis is presented, followed by an action plan outlining key activities to enhance Unilever's market presence and achieve its business objectives. The report concludes by emphasizing the cross-functional dependencies within Unilever Sri Lanka and the company's integrated approach to maintaining its competitive advantage in the FMCG sector. The report also includes figures showing the share index and annual net profit of Unilever Sri Lanka.

Running head: MARKETING OF UNILEVER
Marketing of Unilever Sri Lanka
Name of the Student
Name of the University
Author note

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MARKETING OF UNILEVER
Executive Summary:
Marketing activities generate revenue and are thus important to multinational companies to
hold their positions in their important markets. This makes them conduct external market
analysis and their internal analysis to re-strategise their market segmentation and positioning.
The companies align these strategies with their marketing mixes to maximise the revenue
generation and resultant share holder base. The assignment would study these aspects from
the point of view of Unilever Sri Lanka with Sri Lanka as the market of study.

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Table of Contents
Introduction:...............................................................................................................................2
1. Market environment of Unilever Sri Lanka:..........................................................................2
Internal Organizational Environment (SWOT)......................................................................2
External Market Environment (PEST)...................................................................................3
Operational Constraints..........................................................................................................4
2. Segmentation, Targeting and Positioning of Unilever Sri Lanka:.........................................4
Segmentation:.........................................................................................................................4
Targeting:...............................................................................................................................5
Positioning:............................................................................................................................5
3. Marketing Performance of Unilever Srilanka........................................................................5
4. Ansoff matrix of Unilever:.....................................................................................................7
Market development:.............................................................................................................8
Market penetration:................................................................................................................8
Product development:.............................................................................................................9
Diversification:.......................................................................................................................9
5. Marketing Mix Analysis......................................................................................................11
Development of action plan:....................................................................................................12
Activity 1: Conducting a PESTEL analysis and SWOT analysis: 6 months.......................13
Activity 2: Using market penetration (Ansoff matrix): 6 months........................................13
Activity 3: Employ a advertising service agency: 1 year.....................................................13
Activity 4: Strengthen online presence: 1 year....................................................................13
Activity 5: Acquiring local diary brands of Sri Lanka: 3 years...........................................13
Activity 6: Introduce new products: 6 months.....................................................................14
6. The cross functional dependencies of Unilever Sri Lanka...................................................14
Conclusion:..............................................................................................................................15

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References:...............................................................................................................................16
Introduction:
Marketing is a very important role which the marketing managers in the multinational
companies undertake to ensure strong businesses of the companies. The marketing activities
have several significances to the MNC companies. First, it helps them to market their
products which generate revenue. Secondly, they can channelize this revenue towards
achievement of future growth. The assignment would take into account marketing of the Sri
Lankan arm of the British Dutch company Unilever, Unilever Sri Lanka. The paper would
first delve into the external and internal market analysis of Unilever Sri Lanka through
PESTEL and SWOT respectively. Then the next section would explore the segmentation,
targeting and positioning of the multinational fast moving consumer goods manufacturing
company. The third section would explore the present market performance of Unilever Sri
Lanka to predict its future business generation (UnileverSrilanka.com 2018). The next section
would be an Ansoff matrix analysis of the company’s present and prospective product line.
The fifth section would be a marketing mix and an action plan drawing from the previous
discussions. The final section would point out how every department and branch of Unilever
operate in an integrated manner to give the company its enviable position it holds in the
FMCG market.
1. Market environment of Unilever Sri Lanka:
Internal Organizational Environment (SWOT)
The internal organizational environment of Unilever Sri Lanka can be explained in the
form of a SWOT Analysis.
STRENGTH
1. Multinational company has strong global
presence.
2. The quality of the Unilever Sri Lanka
products has its reputation.
3. Having a good distribution network
WEAKNESSES
1. Logistics charges get higher because of the
vast geographically dispersed market.
2. Lower revenue generation compared to
promotional cost adds to the cost of
production.

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universally.
4. Having a good consumer satisfaction.
5. Products must be promoted strongly with
strategies.
3. There is a down curve in the sales growth
if compared to other competitors of the
market.
4. The alternative products of the competitors
might be satisfying the customers more.
OPPORTUNITIES
1. Extension of product line is necessary.
2. The organic product line must be
strengthened.
3. The products must be down stretched.
4. Strengthening of the brands is essential.
5. Localizing the appeal of the products.
THREATS
1. The presence of the strong competitors in
almost all the markets acts as a threat. For
example, Nestle and P&G.
2. Emerging of strong local competitors in
the market.
External Market Environment (PEST)
A PEST Analysis is used to recognize the external market environment of Unilever
Sri Lanka.
POLITICAL
1. Sri Lanka is politically strong and stable
and promotes market expansions by liberal
trade policies.
2. The government determines the
operations of the corporate sectors by
forming laws and regulations.
3. Legislation is levied such as discrimination
laws and minimum wages
ECONOMIC
1. The national and global interest rate and
fiscal policies are set around the economic
conditions.
2. Organizations must respond to the
economic conditions and the behavior of the
stakeholder.
3. In developing countries, the cheap labor
affects the competitiveness of the products
from the developed countries.
SOCIAL
1. The alteration in the population of the
TECHNOLOGICAL
1. Technological advancements help in

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country has a direct impact on the corporate
sectors (Greenspan 2015).
2. Changes in the birth and death rate will result
in greater competition and decrease in the
demand.
sharing and protecting the data of the
companies.
2. Advance manufacturing technologies
enables mass production of high quality
goods and reduces the cost of production.
Operational Constraints
1. The constraints of the organization are the local competitors who are available in the
market.
2. The presence of the strong competitors in the market affects the sale and demand of the
company. Brands like Nestle and P&G are considered to be as strong brands in the market as
Unilever.
2. Segmentation, Targeting and Positioning of Unilever Sri Lanka:
The following are the segmentation, targeting and positioning of Unilever Sri Lanka
in the Sri Lankan market:
Segmentation:
Unilever uses a powerful segmentation strategy to segment its market of Sri Lanka to
sell its products. The first segmentation strategy which the company uses is geographical
segmentation. The products like Lux, especially the low price variants are sold in the rural
areas whereas the expensive products like Dove and Lakme are available mostly in cities
where customers have sufficient disposable income to buy expensive skin products. The
second segmentation category consists of segmenting market based on lifestyle. For
example, Lifebuoy promotes the healthy lifestyle habit of washing hands before having food.
Axe is meant for young and middle aged male consumers who like taking care of themselves.
Again, the main consumer segment consuming Lakme consist of modern women who
consider using cosmetics to take care of themselves. The multinational company also
segments its market based on gender (Verma, Malhotra and Halady Rao 2017). For
example, Axe targets male customers while Lakme is a flagship brand targeting modern
female consumers. This analysis shows that Unilever Sri Lanka segments its market on the
basis of geography, income, gender and lifestyle.

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Targeting:
The targeting strategy of Unilever Sri Lanka is well aligned with its segmentation
strategy. The multinational company targets consumers belonging mostly to the middle and
upper middle class society. The products of the company are priced according to their target
markets. For example, Lakme targets the upper class and middle class women. The product
line of Lakme consists of makeup, skincare, Lakme Salon and Lakme Fashion Week (LFW).
Thus the target markets of Lakme consist of end consumers, salons and fashion designers
who participate in LFW (Munasinghe and Dissanayake 2017). Again, the target consumers of
Elle 18, which is another beauty brand, owned by Unilever targets the young consumers and
its products are less expensive compared to Lakme. This analysis shows that Unilever Sri
Lanka targets both upper and middle class consumers using appropriate products and pricing
strategies.
Positioning:
Unilever Sri Lanka positions itself as a multinational company which offers its
consumers high quality products at their convenient prices. For example, Magnum is the
premium ice cream brand owned by Unilever which is expensive and targets the upper class
consumers. Again, the Kwality Walls Mango zap ice-cream is very affordable to the lower
class consumers. Unilever follows pricing strategies to suit needs of both upper and lower
class consumers using the same brand (Dissanayake 2015). For example, Lux, the beauty
soap brand the company owns is available in both low priced variants and high priced
variants. Thus, it can be inferred from the discussion that Unilever uses the products and
pricing strategies to position itself in the emerging market of Sri Lanka. The multinational
company is capable of catering to the needs of the lower, middle and the upper class
consumers.
3. Marketing Performance of Unilever Sri Lanka:
Unilever Sri Lanka is considered to be a multinational consumer product
manufacturing giant operating in over hundred countries globally.

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Figure 1: Share Index of Unilever Sri Lanka as on 22nd February, 2018 at 12:26pm
(Source: nasdaq.com 2018)
As it can be observed from the above graph, the products of Unilever Sri Lanka have
been rising consistently since 2014. Despite the threats of the competitors in the market,
Unilever Sri Lanka has maintained its position in the market and have improved as well.
Unilever Sri Lanka has four categories of products, which includes personal care, home care,
food products and water purifier (Lockrey 2015). Under all these categories, along with
Unilever Sri Lanka other there are other existing brands in the market. The sale of the
competitors has not affected the sales and profit growth and margin of Unilever Sri Lanka in
Sri Lanka. Therefore, keeping the last five years graph in mind it can be predicted that
Unilever Sri Lanka will keep rising in the coming 3 years and so will its goodwill (Geethanga
and Dissanayake 2014).

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Figure 2: Annual net profit of Unilever Sri Lanka
(Source: Unilever Srilanka.com. 2018)
Unilever Sri Lanka is a company that has developed and grown over the years as
observed above. Now by viewing the net profit sales in the above of the products of the
Unilever Sri Lanka, it can be predicted and assumed that the sales rate will also rise. It can be
determined that Unilever Sri Lanka will be consistent with its product variations and profit
margin. The existing products will be consistent in the market because of its goodwill and
will not be affected by the competitors (Grant 2016). The company is strengthening its
market position by introducing upgraded versions of its existing and new products. This
analysis clearly shows that the company is going to experience a steady growth in the coming
three years. Therefore, it can be concluded that Unilever Sri Lanka will remain constant in
the future of the market situation in Sri Lanka. Unilever Sri Lanka is known for the quality of
the brands. Unilever Sri Lanka has been in the market for a long time and can retain its
position in the Sri Lanka (Hopkins and Gross 2015).
4. Ansoff matrix of Unilever:
Ansoff matrix is a tool which Unilever Sri Lanka uses to determine its future business
strategies to strengthen its market and maximise its revenue generation. The matrix has four
quadrants namely, market development, market penetration, product development and

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diversification. The multinational FMCG company assesses the risks of both its existing and
new markets and makes appropriate marketing strategies to counteract the risks. The below
analysis would study the future marketing strategies of Unilever Sri Lanka in the coming
three years with reference to the Sri Lankan market (Callen et al. 2014).
Market development:
The market development strategies consist of expanding into new markets using
its existing products. Unilever uses niche marketing strategy to develop its markets in
different market segments within Sri Lanka. The company introduces low price variants
of products like Dove soap and Lux soap in low income areas of Sri Lanka. Again, Sunsilk
shampoo products are made available in smaller packages which are more affordable for the
low income people in towns and villages in Sri Lanka. Unilever then gradually introduces its
more expensive products like high variants of Dove in these towns as the income of the
people increases. It is this aggressive market development strategy of the company which has
made its products the leading brands in both affluent and the emerging markets within Sri
Lanka (Guillén and Capron 2016). The risk involved in this strategy revolves around
failed product launches and resultant losses from these failures.
Market penetration:
The penetration strategy consists of growing in the existing markets using existing
products. Unilever to achieve higher degree of market penetration uses two strategies. The
aims of these strategies are to counteract both international competitors like P&G and the
emerging Sri Lankan FMCG companies. Unilever conducts continuous research and
development to bring about new improved versions of its existing products. For example, the
company keeps on introducing new versions of Cornetto, the ice cream the company owns
under the brand Kwality Walls. Again, the company uses market penetration by making
similar products available for different variants to suit the needs of different consumer
segment. For example, Lakme products are available suiting the needs of both women
participating in festive occasions and corporate meetings. (Pradhan et al. 2014)
The second market penetration strategy which Unilever Sri Lanka uses to strengthen
its position in the country against its competitors is niche marketing. The company
introduces different variants of the same product to serve more specific needs of the
consumers. For example, Clear, the anti-dandruff shampoo brand owned by Unilever are
available in variants like Complete Scalp Care and Hydration Fix Shampoo. The primary

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consumer segments of the Clear brand consist of men and women who use anti-dandruff
shampoo to care for their hair (Subbaiah and Bharathi 2017). Then the company goes on to
cater to the deeper needs of these consumers. The Complete Scalp Care variant caters to the
needs of consumers who require scalp skincare alongside the basic anti-dandruff treatment.
The Hydration Fix variant caters to the needs of the consumers to hydrate their scalps. This
niche marketing strategy of Unilever has boosted its market position in the Sri Lankan market
(Anselmsson and Bondesson 2015). The risk which Unilever Sri Lank may face in market
penetration is loss due to failed niche marketing strategies. If the niche products are not
accepted in the market, the company would suffer huge losses.
Product development:
Product development is the next marketing strategy used by Unilever Sri Lanka to
maintain its market position. The product development strategy consists of introducing new
products targeting existing consumer base. Unilever in response to the changing needs of the
consumers keeps on introducing new products in its existing markets. The multinational
company introduces new products which helps it to counteract challenges from its
competitors. For example, Unilever Sri Lanka introduced Surf Excel in the country’s market
in 1993. The brand power and consumer loyalty of Surf Excel has increased in Sri Lanka.
The company can also introduce new products like Tresemme range of shampoos in the
market to cater to the needs of the female customers who seek professional care for their hair
(Benur and Bramwell 2015). The risk which Unilever Sri Lank can encounter while adopting
this strategy in the market is presence of strong competitors at both local and international
levels which sell similar products. They would eat into the market and profit generation of
these products, thus causing losses or lowering the profit of the company.
Diversification:
The diversification strategy of Unilever consists of growing market by introducing
new offerings in new markets. The company offers more products in its developed European
and American markets.

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Figure 2. A screenshot showing personal care products in the USA
(Source: unileverusa.com 2018)
The above figure shows that range of products which Unilever sells in the developed
markets like the USA and Sri Lanka. It can be pointed out that in the African market; the
company sells far less products owing to the low profitability of the market. This shows that
Unilever Sri Lanka must enter these less developed markets with new products (Hasan 2015).
This diversification strategy would lend the company stronger position globally.
One can say from the analysis of the product line of Unilever Sri Lanka that the
company has strong presence in the personal care segment and weak in the food product
segment, especially dairy products. Thus, the company must diversify towards acquiring
more food product brands as its diversification strategy. This would help Unilever Sri Lanka
improve its sales (unileverusa.com 2018). The third figure below shows that the turnover
Unilever has earned from personal care products have increased while the turnover earned
from food products shows a decrease. The refreshments and home care products show steady