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The strong economic recovery in Brazil during the 90s particularly benefited the

lowerincomeconsumers,andthepurchasingpowerofthepooresttenpercentroseby
27%peryearduringthatperiod.ThepercapitaincomerosetoUS$4,420.However
there are large differences between the regions, especially between the Northeast
(US$2,250percapitaincome)andtheSoutheast(US$6,600percapitaincome).In
generaltheBrazilianfabricwashmarketconsistsoftwomaincategories:detergent
powderandlaundrysoap.Veryfewpeopleuseliquidlaundrydetergents.
With its headquarters in London and Rotterdam Unilever is a US$56 billion
multinationalcompanyemployingabout300,000peopleinover150countriesand
marketing1,600brands,including45keydetergentbrandsworldwide.Thecompany
starteditsoperationsinBrazilin1929andopeneditsfirstproductionplantonlyone
yearlater.

UnileversclosestcompetitorisP&Gwithamarketshareofonly15%oftheBrazilian
detergentmarket.IntheNortheastofthecountry,P&Gholdsa17.5%marketshare
wherethebrandAceisthethirdhighestsellingbrandwithan11%marketshare.P&G
does not manufacture laundry soap for the Brazilian market; hence Unilever is
competingwithlocalcompaniesinthisfield.

Problem statement
Unilever is the market leader in the Brazilian detergent market. With the market
leaderpositionanditshighmarketshare,thecompanyneedstofindnewsegmentsto
beabletorealizefurthergrowth.Furthermore,therisingpurchasingpowerofthe
lowincome households opens up new opportunities to market to the lowend
segment.
Ontheotherhand,itisnotcertainthatservingthisnewsegmentwillbeprofitable,anditis
possiblethatpotentialnewsalescouldcomeattheexpenseofexistingUnileverbrands.Another
concernisthatUnileverislackingtherightmanagementskillsandorganizationtocompetein
thenewmarketsegment.

Decision 1:
ShouldUnileverenterthelowincomesegmentinBrazil?
Duetothesubstantialdifferencesbetweenthetwomajorregions(NortheastandSoutheast)they
wouldhavetobetargetedinadifferentway,whichwouldresultinadditionalcosts.Therefore,
furtherdecisionshavetobemade:
Decision 2:
ShouldUnileverenterthelowincomesegmentintheNortheast?ShouldUnileverenterthelow
incomesegmentintheSoutheast?ShouldUnileverenterbothregions?

Alternatives
Region: Northeast
InRecife,thebiggestcityintheNortheast,only28%ofhouseholdsownawashingmachineand
almostthreefourthofthewomenthinkthatbleachisnecessarytoremovefatstains.
ThemostimportantdetergentattributesforNortheasternconsumersarethepowerofthe
detergent,whichisoftenjudgedbythequantityoffoamproducedduringwashing,thesmell,the
abilitytoremovestainswithouttheneedforlaundrysoapandbleach.
TheconsumersintheNortheastvaluepackagingthatprotectstheproductfromhumidity,thatis
easytoopenandadesignthatisdistinctive,simpleandeasytorecognize.

Issues
Economic factors
Aspreviouslymentioned,Brazilhasdemonstratedsomeimpressivegrowthfigures inrecent
years,despiteitsturbulentpast.Thenewcurrencystabilizedtheeconomyandthisnewboomhas
particularly benefitted the lowerincome consumers. As such, the purchasing power of the
poorest10%ofthepopulationgrewby27%sincetheintroductionofthenewcurrency.
Local competition

Thegoalofeverycorporationisgrowthinmarketshare.InBrazil,Unileverhasan
81%marketshareinthedetergentpowdercategory,whichhasbeenachievedbythe
threebrandsOmo,MinervaandCampeiro.
FIVEFORCESANALYSIS:
Threatofnewentrants:
Thebuyingpowerofpeopleislowsothereisalwaysriskofnewentrants itis
necessarytoproceedincreatingabrandthatiscustomizedtotheneedsofthelow
incomesegment.
Bargainingpowerofsupplies:
Competitive Rivalry: For Unilever its important to remain superior to the main
competitorP&Ginthismarketandpreventanyopportunityforthemtogrow.
Conclusion:
Decision1
Bargaining power of Buyers: Considering the size of the market and the
opportunities that arise from entering the lowincome segment, such as newly
acquiredexpertiseforothercategories,itisnecessarytoproceedincreating abrand
thatiscustomizedtotheneedsofthelowincomesegment.Assuch,Unileverwillbe
abletoserviceallsegmentsineachcategory.Therefore,werecommendenteringthe
lowincomesegment.
Threatofsubstitute: LocallowcostbrandsarethreatofsubstituteforUnileverto
launchlowcostbrandforlowincomesegmentpeople.
Consideringthesizeofthemarketandtheopportunitiesthatarisefromenteringthe

lowincome segment, such as newly acquired expertise for other categories, it is


necessarytoproceedincreatingabrandthatiscustomizedtotheneedsofthelow
income segment. As such, Unilever will be able to service all segments in each
category.Therefore,werecommendenteringthelowincomesegment.
Decision II
In the Northeast, Unilevers market share is currently under its national market
averageandhasthereforeenoughspacetogrow.Itisalsoimportanttoremainsuperior
tothemaincompetitorP&G inthismarketandpreventanyopportunityforthemto
grow. The market to be catered is also larger than the SE, which presents better
economiesofscale.
Takingallpointsintocarefulconsideration,werecommendenteringsolelythelowincome
segmentintheNortheast.Therefore,thelowincomesegmentintheNortheastmustbeserviced
withaninnovativemarketingmixtoattractnewcustomersforasustainablemarketgrowth.