Situation Analysis, Evaluation of Options and Recommendations
Situation Analysis of the Market
The Product Positioning
Options for the company
Unilever faces a critical strategic decision concerning its attempts to increase sales in the Northeastern regions of Brazil. The aspects of marketing that the company needs to decide are the creation of a new value proposition and the brand positioning of the new product, development of brand strategy for the new product or to continue with the old strategy, the characteristics of product so that it suits the needs of the customers, the need for suitable packaging for the new detergent to be launched in the new market, and the pricing strategy of the product. Unilever is trying to market the product in a market that is predominantly composed of customers from the low-income groups. Promotional strategies and selection of the most effective distribution channel need to be selected by the company.
Unilever has decided to increase its market share in the detergent segment in the Northeastern part of Brazil and is targeting customers who belong to the low-income groups. The population of the target market is significantly large but with very different consumption and purchasing habits when compared to other parts of the country. Though the company has a market share of more than seventy percent in the present regional market, the company wants to increase its market share by entering the low cost segment (Cadogan, 2009). The primary competitor of the company in this segment is Proctor & Gamble, which has market share significantly smaller than that of Unilever. There are also some local producers manufacturing low cost and low quality detergents in the market. It is assumed that the consumption levels of detergents by the low income groups are not high as they use detergents primarily at the end of the washing process, but this is offset by the habit of washing of clothes frequently. The dilemmas the company has to navigate through are related to value proposition, branding strategy, product type ad packaging, etc.
The suggestions for the company are as below:
The new product launch needs to have a new brand positioning; significantly different form the brands of the company already present in the market.
The company needs to create a new brand for the new target market that has value for these customers (Cadogan, 2009).
A new product should be manufactured by the company that incorporates the characteristics desired by the target market in the detergent, as identified in descending order of importance.
The pricing strategy should be competitive and lower than the other established brands of the company.
Focus should be on above the line promotions with emphasis of TV commercials
The general distribution channels for the company are suggested for distribution (Upshaw, 2007)
Some senior officials at Unilever suspect that there would be cannibalism of the existing products and brands of detergents if the company delves into the new target market. There is speculation that the new product could consume into the sale and profits of the already established brands of the company.
The impediments to the new marketing proposals are:
Value Proposition: brand positioning of the existing products of the company in the market do not include the low-income groups of the target market. The solution is creating a 'value for money' proposition for the new product specific to this group.
Brand Strategy: the parent company can reduce the brand portfolio of the entire company throughout the globe. Solution is to use any of the existing brands from other foreign markets.
Product: the impediment is creating a product that meets the desires of the target group, which is very different from the primary value proposition of the existing brands of the company (Upshaw, 2007). The solution is to incorporate the needs of the target group into a new product that is cost effective. The packaging has to be easy to read and preferably in pictorial form.
Price: impediment is to ascertain the price that the customers are would be willing to pay for the value offered in the product. Solution is to fix the price based on extensive market research about the customer's ability and willingness to pay (Cadogan, 2009).
Promotion: another problem is the high costs involved in ATL promotions. One solution is to limit ATL promotions primarily to TV thus cutting down on costs and using point of sale promotions to greater extent.
Distribution: another impediment is the dependency...
Solution is to increase the profit margins for the dealers in exchange of a minimum number of sales made at their location.
3) Situation Analysis, Evaluation of Options and Recommendations
The low-income group in the Brazil market is the new target market for Unilever as the company plans to market a new detergent product specifically for this market. This market has a significantly large population, which is untapped as far as detergent is concerned. The problem facing authorities at Unilever regarding the marketing strategy for the new target market is to decide the best strategies with regards to brand positioning, the pricing of the product, the quality and characteristics of the product, the promotional strategy and the distribution chain that should be used for the new product (Iacobucci, 2013).
A comprehensive understanding the general business environment and the target market is of critical importance for the company to create effective strategies. The availability of possible competition in the same market in the future, the general political environment and the economic environment of the new market and the usage and purchasing habits of the customers is also a necessary consideration. Analysis of all these issues together would help the company formulate a comprehensive strategy for the new product in the new market.
Situation Analysis of the Market:
Analysis of the new market and the general environment can be performed by applying the 5C's theory and model of analysis to the market. These marketing tools analyze the general market competition, the customers, the competition, political and economic situations and the company's strengths.
Product Mix: there are a number of detergent brands that the company already has in the Brazilian market. The brands are comprised of both high priced brands like Ono as well as medium priced brands like Camperio. There are some laundry soap brands as well which are primarily sold in the northeastern part of the country where there is demand for these products.
Brand image in the market: delivery of quality products with price range of such products range from high to medium is the established image of the company in the market (Grewal and Levy, 2010). The company enjoys the image of being a quality provider and proposes value for money in the products it markets.
Technology and Experience: being active in Brazil since 1929 and manufacturing products in the country since 1935 has placed the company in a significant position with respect to market knowledge. The company is a very large global company and encounter worldwide competition through technological innovation (Iacobucci, 2013)
Culture & Goals: a predominantly multicultural organization, Unilever employs people from various backgrounds and cultures all across the globe. The present goal of the company is to increase its market share in the detergent segment from the present 70% in the northeastern part of Brazil.
The company products are used on a mass scale and hence the customers is huge and geographically dispersed. At present, the target customers of the company are the ones in the northeastern region of the country. The customer base is comprised of primarily people from the low-income group.
The usage patterns of detergents of customers in this region varies from that in other parts of the country. The end of the washing process is the time when the customers tend to use the detergent powders. The primary aim is to impart a good smell to clothes being washed. However, the customers also tend to use the detergents frugally. Yet the customers are in the habit of washing clothes up to 5 days a week and are have stronger notions about cleanliness than in other parts of the country (Iacobucci, n.d.).
The drivers for purchasing in decreasing order of importance are:
The cleaning ability of the detergent powder adjudged by the quantity of foam produced
The smell that the detergents leave on the clothes
The ability of the detergent to remove stains without use of laundry soaps and bleach
The packaging of the detergent that is easy to read, simple and distinctive
The condition of the color of the clothes after repeated washing
The women of the household are the ones who primarily make purchasing decision about detergent powders merely because they are the ones who use them and are responsible for the overall cleanliness of the household; including clothes.
The target market prefers to make purchases of detergents and other household items from the small local neighborhood shop as the majority…
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