Unilever Ice Cream Defends Its Research Proposal
- Length: 10 pages
- Sources: 7
- Subject: Business
- Type: Research Proposal
- Paper: #36696453
Excerpt from Research Proposal :
5% of pre-tax profits donated to community social and environmental organizations through the Ben & Jerry's Foundation. In addition, Unilever will contribute another $5 million to the foundation and create a $5 million fund to help minority-owned businesses" (2000, 22).
Clearly, the company enjoys a wide range of product lines that can be positioned according to the cultural preferences in a given region as well as less easily defined attributes such as the "feel-good" aspects of purchasing some Chunky Monkey by Ben & Jerry's. All that would remain for savvy marketers would be to segment their various markets accordingly and position these labels where they will enjoy the best sales against their several competitors without diminishing the sales of their own other ice cream brands and these issues are discussed further below.
Unilever's competitors and how their company culture and/or strategic approach would be viewed by the strategists at Unilever.
Unilever's current competitors in the international processed and packaged goods industry (in order of total food sales) include major players such as Nestle, Kraft Foods Inc., Frito-Lay North America, Cargill, Incorporated, Tyson Foods Inc., Mars, Incorporated, ConAgra Foods, Inc., and Smithfield Foods Inc. (Unilever 2009). Of these major competitors, only Nestle is actively engaged in the ice cream industry; however, as noted above, the company faces fierce competition from store brands in its outlets around the world and these are included as generic category in the summary of Unilever's major competitors, their respective company culture/marketing strategies and the company's probably response that is presented in Table 1 below.
Unilever's major competitors' company culture/marketing strategy and Unilever's response
Company Culture/Marketing Strategy
Perception by Unilever Strategists
Nestle, manufacturer of Push-Ups and Drumstick's, has a culture that is focused on long-term performance of business units, including ice cream and views them as autonomous businesses. Willing to "weather the political storms" and remain in-country during shifts in political leadership. Solicits local and regional feedback concerning consumer preferences for ice cream products (Parsons 1999).
Nestle is likely viewed as a major threat to its market share in its European and Asian markets and may account for its ill-fated product development efforts (i.e., "Mr. Whippy") in the past. Nestle's has the resources to weather economic downturns and enjoys a loyal brand following that Unilever would want to overcome by promoting its well-known brands in competition.
Private label ice cream
The marketing strategy of private brands appears to be based on provided consumers with a viable alternative to higher price named brands such as those offered by Unilever. In fact, in many markets, house brands of ice cream dominate the market based on their lower cost and the fact that value has replaced prestige for many consumers today. As Michman and Mazze point out, despite Unilever's past successes, "None of these successes have been able to overcome the market impact of private-label store brands. Ice cream manufacturers have not been able to build strong brands to limit the market penetration of store brands. No longer is there a stigma attached to buying private labels. Ice-cream manufacturers need to reevaluate their marketing strategies and the threat of private-label brands" (62). According to Cotterill (1994), "There is a negative relationship between brand price and local market share. Pricing strategies at the brand level in differentiated markets can vary significantly among firms and possibly among products in a single firm" (109). Citing the example of one of Unilever's best-selling brands, Cotterill notes that, "Breyers, the leading national brand, sells at a premium that primarily reflects the fact that it is an all natural premium ice cream. Private label products are regular ice creams . . . Breyers' market share is considerably less sensitive to price changes than private label products" (109).
The company's response to the threat represented by lower-priced house brands appears to be based on positioning their brands where they will be more competitive based on consumer perceptions of value, with environmentally responsible Ben & Jerry's representing a good example. Indeed, Unilever's competitors certainly sat up and took notice of the acquisition of Ben & Jerry's and its effort to compete with private label ice cream brands. For instance, Michman and Mazze point out, "The ice cream wars have heated up with the sale of Kraft's ice cream division to Unilever, Borden's decline, and the increasing strength of Ben & Jerry's" (1998, 62). This analysts suggests, though, that even Ben & Jerry's may be unable to compete head-to-head in some markets because of its higher price compared to house brands and Unilever's marketing efforts might be well intention but are misguided. In this regard, Michman and Mazze conclude that, "Unilever has marshaled their forces to increase the competitive wars with private labels, wars that in the past have not been successful" (1998, 62). Rather than going head-to-head with private brands, then, the strategists at Unilever would most likely seek to position their premium-priced brands in markets where consumers can afford the price differential and market these brands based on the higher quality.
Recommendations for Unilever to take ice cream business into the future.
Based on the foregoing issues and trends, the following recommendations are provided for Unilever to grow its market share in the various countries around the world in which it competes in the future:
1. Forego efforts to develop lower-cost ice cream products with substandard ingredients (i.e., "Mr. Whippy") in the future in favor of innovating high-quality products that match the company's reputation for high standards.
2. Maintain current emphasis of keeping Ben & Jerry's just the way it was when it was acquired to ensure that the attributes that make this brand desirable are not diluted by a perception of "big business ownership" by consumers.
3. Pilot test various flavors and flavor combinations in new markets to identify consumer preferences (i.e., durians are regarded as an odious fruit and flavor by Westerners but it is a highly desirable ice cream flavor in Southeast Asia).
4. Consider marketing ice cream under various private label in markets where its brand-name product lines are languishing.
The research showed that Unilever is the third-largest corporation competing in the processed and packaged goods industry and the single largest ice cream manufacturer in the world today. Some of the better known brands of ice cream products being marketed by the company today include Cornetto, Ben & Jerry's, Breyers, Klondike, and Popsicle, the latter a perpetual favorite of children the world over. The research also showed that notwithstanding these marketing successes, the company has experienced some pratfalls in the past as well and remains in stiff competition with Nestle and private label brand ice creams. In the final analysis, the international marketplace represents an enormous potential for Unilever's ice cream products provided the company sticks with what it knows best and does not waste resources competing head-to-head with lower-priced brands by sacrificing quality.
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