Understanding Unilever's Success In The International Market Essay

Length: 10 pages Sources: 10 Subject: Business Type: Essay Paper: #10211463 Related Topics: Ecological Footprint, Skin Care, Disruptive Innovation, Success
Excerpt from Essay :

Innovative International Business Study

Global Fast Moving Consumer Goods (FMCG) atmosphere is fast modifying. Especially, the ever-improving reputation of line extensions appear to rely on benefits natural in brand leveraging. FMCG producers emphasize on R&D in order to produce items that best fulfills clients because clients have become more focused on linking themselves to a specific brand. They will also like to buy less expensive item due to current economic trend. Afuah (2009) argues that Unilever is one of the greatest FMCG companies on the globe. Unilever was established in 1930 by merging by the Lever Brother of Britain and Margarine Unie from Dutch. Today, Unilever PLC has two headquarters in London and Netherlands. Unilever's product portfolio contains some of the widely known and most preferred brands.

Figure 1: Sample items offered by Unilever

Corporate strategy

Unilever's corporate technique aims to produce high-quality products and achieve profitability and economic growth. The corporate technique can be recognized as a targeted or market niche technique based mainly on item differentiation and great quality production. Although targeted differentiation strategies target a narrower consumer section, this technique helps Unilever to gain a strong competitive advantage as it can offer customers something they understand is appealingly different from rivals. In addition to distinguishing its item from other competitors, Unilever's common technique brings together several other key elements. These are promoting an organizational reputation for social activism, creating brand loyalty and designing creative promotional campaigns (Doole & Lowe, 2008).

Product Differentiation

One approach to acquiring a competitive advantage is using differentiation to provide a better item that customers believe would be worth the premium cost. Since excellent high-quality products command more than the economy, Unilever has integrated item differentiation in its common business technique in order to control a high cost. The use of all natural, top quality components and the innovative items Unilever illustrates the strategic utility of product differentiation to acquire a competitive advantage in the market. Moreover, the emphasis on using recycled materials and unbleached paper in packaging products helps keep its costs low.

Strategic direction

In penetrating and competing in overseas marketplaces for its range of products, Unilever follows a global technique. Gelder (2005) has labeled this strategy "a think global and act global technique." The company uses the same aggressive technique in all national markets where it has existence, offers much the same products everywhere, aims to produce global brands, and organizes its activities globally (centralized).

A global technique used by the Unilever is much better than localized techniques because Unilever can quickly unite its functions and focus on developing a product picture and popularity that is consistent from nation to nation. It technique indicates to the Unilever success in building powerful personality brands such as Dove, Lux, and Rexona. Moreover, with a global technique Unilever must coordinate its operational, marketing and distribution globally.

Cooper and Edgett (2009) reveal that Unilever is increasing its initiatives to build on its long-established local footprints in developing nations. Through its well-established distribution network and an excellent ability to evolve successful international brand ideas to match local marketplaces, Unilever is in an excellent position to take advantage of the growth prediction in these areas.

To win consumer away from select opponents in national marketplaces, Unilever implements cross-market subsidization. Such an offensive technique is appropriate for Unilever, which contends in several national marketplaces with a wide range of brands. Lastly, in establishing roots in emerging country niches, Unilever uses low-cost strategies. Unilever follows this technique because customers in emerging marketplaces are often highly oriented on price. This could give low-cost local opponents the advantage unless a company can find ways to entice customers with bargain costs, as well as better items.

All techniques implemented by Unilever for competing in the global field are leading to an average 5% sales growth in 2012 -- just above industry standard. This ensures that Unilever keeps its position as third biggest player in consumer goods with a 7% share of the market (Jones, 2005). Second-positioned L'Oreal performed better, improving the gap between the two companies in partly courtesy of the Body Shop acquisition. Industry head Procter & Gamble stayed ahead of Unilever in terms of market share.

The launch

...

Most notably, the idea generation and launching are marking significant success.

Idea generation -- Unilever is extremely leveraging its relationships with retailers for feedback from clients. Most clearly, it is engaging Wal-Mart as an associate in understanding clients. It discovered that clients had changed their behavior to shifting their detergents around or outside the house a lot more and were starting to become conscious of the adverse ecological results of product packaging. Just as important as getting the feedback for Unilever was the fact that Wal-Mart is becoming an involved associate in the new product procedure and that connection would be utilized later on in testing and releasing.

Testing and Release -- With the help of Wal-Mart, Unilever prevents mistakes through its test process that is crucial. In the 1990s many organizations produced eco-friendly products only to see that clients were not prepared to shop depending on ecological aspects (Jones, 2005). Unilever withheld releasing its item for years -- such timing was important. When it seemed like the chance was maturing, key managers at Wal-Mart approached Unilever, and release of the concentrated detergent item became a phenomenal achievement.

Ongoing business restructuring may pave the way for even more valuable product development. Many industry experts recommend that real inventions need small and nimble teams with independence from a large company. Unilever has tried to provide its item development teams with added independence, leading to multitude successes. However, Unilever must organizationally foster a less restricted culture and direct resources towards smaller, quick growing brands. This is more likely to produce success in creating new businesses.

Advantages of launching a range of new products

David Taylor has labeled this tactic of launching a range of products as brand extension.

This technique of item extension is well-known because it is less dangerous and less expensive as opposed to launching a single new item. Studies point the same cost-effective advantages by showing that the financial aspects of launching new brands are forcing organizations more towards launching a range of products into new marketplaces. Overwhelmed by the large R&D expenses, and more conscious of the statistics regarding failure rates for new brands, companies are progressively taking their recognized brands into new item fields. Other advantages linked with this technique instead of single item launches are as follows:

Consumer knowledge: the powerful brand employed to "promote a new product" makes it less crucial to make "awareness and imagery." The link with the main item is already done, and the main job is conveying the particular advantages of the new advancement. Customers are today attributing the quality associations they have of the original item to the new one. Release expenses may also be decreased by using item extension. Since the recognized item name is already well-known, the process of drawing awareness of the new item is not needed. Consequently, promotional, sales, and advertising expenses are decreased. Furthermore, there is the possibility that the company may be able to leverage on scale economies of advertising as ads for the original item and the extensions strengthen each other

Customer trust and loyalty: The current well-known-strong brands signify a guarantee -- of quality and useful features for consumers. Thus, the extensions will benefit from this good opinion and fame about the item to make a powerful value proposition in new marketplaces or segments (Jansson, 2007). Moreover, customers will be more likely to try a new item from a brand they realized, unlike for a new item. The client is anticipating transferring all information from the item to the extensions. If the common opinion regarding the brand is attractive, the behavior towards the extension should be favorable as well. An effective item extension can allow getting the client commitment. A pleased client by an extension will be more willing to repurchase the same item. For example in the sports arena, a client will more likely choose a brand providing a full accessories, outfit, equipment, and shoes.

Benefits of new product development

Companies can only hope to endure when they present new items. Old items will quickly become outdated, and new items become the only source of future income. New product development provides a structure for creating new items or boosting the performance, cost, or quality of current items. The technique helps a company achieve company objectives, such as entering new markets, selling more to current customers or winning business from opponents. An effective product development technique can also increase income and productivity. Nevertheless, meticulous planning is indispensable to prevent costly errors. Other benefits associated with this strategy are discussed below.

Maintain current client base. Customer's needs keep modifying as time pass. In order to retain current clients, a Unilever must regularly adjust to meet the modifying customer needs. For example, if Unilever…

Sources Used in Documents:

References

Afuah, A. (2009). Strategic innovation: New game strategies for competitive advantage. New York: Routledge.

Cooper, R.G., & Edgett, S.J. (2009). Product innovation and technology strategy. Ancaster, Ontario: Product Development Institute.

Doole, I., & Lowe, R. (2008). International marketing strategy: Analysis, development and implementation. London: Cengage Learning.

Gelder, S.V. (2005). Global brand strategy: Unlocking brand potential across countries, cultures & markets. London [u.a.]: Kogan Page.


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