Unilever Brazil: Low-Income Market Case Study Analysis

This case study analyzes Unilever's strategic challenges and opportunities in the Brazilian detergent market, specifically focusing on the low-income consumer segment. The assignment addresses three key questions: whether Unilever should invest in a lower-margin segment, if a new brand i...Read More

Assignment Name
Assignment Code
Student Name
25 Feb 2020
Identification of problem
Unilever is one of the leading producers of packaged consumer goods. In Brazil, it holds 81%
of the market share in the detergent industry by providing detergent brands like Omo,
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Campeiro, and Minerva (Whitney, 2018). Among the total population of Brazil, 28% are low-
income consumers (Golubkina, 2019)). These populations have a per capita income of $2250.
Due to the availability of more free time, they wash clothes frequently and consider it as a
pleasurable activity. However, this segment of the population is completely neglected by
Unilever, thereby losing a major portion of customers from Brazil population.
Question 1: Should Unilever divert money from its premium brands to invest in a lower-
margin segment of the market?
The Unilever company should divert its money from the premium brand to the low priced
brand. It is because the low-income segment is not occupied by any of the giant detergent
companies in Brazil, therefore, it facilitates sufficient opportunity for Unilever to expand its
business in this segment. In this context, the brand should launch new products in the market
by targeting the low-income population without curving the existing premium brands (Pant,
& Ramachandran, 2017). In this way the company is able to capture a wider range of
customer base who are able to purchase premium or low-cost detergent, according to their
income level. This approach of Unilever to deliver value to the low income what pollution
will help in growing and maintaining its market share, thereby gaining competitive
advantage. However, Unilever should consider the low-income consumer behavior for
identifying their motivation as well as the decision-making process, prior to investing in a
low priced detergent.
Question 2: Unilever already has three detergent brands with distinct positioning. Does it
need to develop a new brand with a new value proposition or can it reposition its existing
brands or use a brand extension?
In the Brazilian detergent market, Unilever has three major brands in the detergent powder
section; Omo, Minerva and Campeiro. While, the laundry soap section, Unilever possesses
only a single brand; Minerva. Therefore, it is suitable that Unilever should reposition its
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brand rather than a brand extension. Campero is considered as a suitable brand for
repositioning. This is because, among all brands, Campero is the cheapest and is suitable to
target low-income people. Repositioning of this brand will help the company to successfully
place it within the target customers. The repositioning statement for this existing for the
brand can be "Campeiro is appropriate for those who believe in cleanliness at a lesser effort
and minimum price" (Pant et al, 2017). The USP of Campeiro is described “the detergent has
maximum cleaning ability at a lesser price”. The primary target market for this product will
be the low-income group of NE Brazil. By adopting this strategy, Unilever will successfully
be able to change the perception of customers regarding Campeiro from a low-quality
product to a low priced product (Raj, & Aithal, 2018).
Question 3: What price, product, promotion, and distribution strategy would allow
Unilever to deliver value to low-income consumers without cannibalizing its own premium
brands too heavily? Is it just a matter of price?
There is approximately 48 million population residing in Northeast Brazil, out of which 40%
are illiterate (Raj et al, 2018). According to reports, only 28% of the total population of NE
Brazil own washing machines (Giuseppe, Bruno, & Alberto, 2017). Marketing mix strategy
will help Unilever for delivering effective value to the low-income customers and it is
represented as follows:
 Product - The quality of the product should be equivalent to that of the premium
brand. It should be available in packs of multiple sizes. The product should have a
pleasant smell and should form a lather when dissolved in water.
 Price - The price of the product should be according to the income level of NE Brazil.
It should be less than other premium products like Omo and Minerva.
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 Promotion - The promotional activities should be conducted but using mass media in
those areas where the target customer is present. The use of pamphlets and billboards
should be used to drive the attention of target customers.
 Distribution Strategy - The distribution strategy includes the use of highly specialized
distributors who possess knowledge regarding the location of low-income consumers.
It is to be noted that this is not just a matter of price. This approach will help in maximizing
the number of loyal customer base and increase brand awareness all over Brazil.
Recommendations
Prior to introducing the brand, Unilever should consider the major attributes along with the
price. These attributes include the foam produced, odor, the capability of removing the stain,
dissolving in water, the color of detergent and packaging. However, there is a requirement of
modifying the existing distribution channel to efficiently reach the target customers (Paine,
Costas, & Cal, 2019). Unilever should also invest sufficient funds towards the repositioning,
marketing and promotion of the brand and successfully maintain the momentum.
Conclusion
In this report, Unilever focuses on the low-income consumers of Brazil by repositioning a
detergent brand at a minimum price. In this context, the marketing mix analysis has been
conducted for evaluating the product and target market.
References
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Giuseppe, B., Bruno, B., & Alberto, M. (2017). Brand between Global Standardization and
Local Resonance: Cif in Brazil. Micro & Macro Marketing, (1), 135-158.
https://ideas.repec.org/a/mul/jyf1hn/doi10.1431-86072y2017i1p135-158.html
Golubkina, V. (2019). Ratio of direct and indirect distribution in the global FMCG sector by
the example of beauty care products of Henkel, L'Oréal and Unilever in Russia and Brazil.
http://tesi.luiss.it/24875/1/711711_GOLUBKINA_VIKTORIIA.pdf
Paine, L. S., Costas, R., & Cal, M. (2019). Mãe Terra and Unilever (B).
https://www.hbs.edu/faculty/Pages/item.aspx?num=57351
Pant, A., & Ramachandran, J. (2017). Navigating identity duality in multinational
subsidiaries: A paradox lens on identity claims at Hindustan Unilever 1959–2015. Journal
of International Business Studies, 48(6), 664-692.
https://link.springer.com/article/10.1057/s41267-017-0076-x
Raj, K., & Aithal, P. S. (2018). A ‘Desi’Multinational–A Case Study of Hindustan Unilever
Limited. International Journal of Case Studies in Business, IT and Education (IJCSBE),
2(1), 1-12.
https://mpra.ub.uni-muenchen.de/85699/1/MPRA_paper_85699.pdf
Whitney, J. (2018). Big Food, Big Problems: The Ethical Implications of Nestlé’s Impact on
Public Health in Brazil.
http://krex.k-state.edu/dspace/bitstream/handle/2097/39028/WhitneyProject.pdf?sequence=4
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