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Unilever Brazil Case Submission

Go/No Go Decision

Should Unilever target the new market?

Yes.
Reasons to Believe
1. The lower-income segment (E+ & E- from Exhibit 2) constitutes 53%
(25.38mn) of the entire population (47.9mn) of the Northeast
2. The economic boom of 1995-96 led to the growth of purchasing power
of the poorest 10% by 27% per year
3. With Unilever reaching a stage of saturation with its market share of
81% of the detergent category, this new market promises newer
avenues of sales and growth

Cannibalization Rate

For calculating cannibalization rate at which the strategy would make loses,
we have tried three approaches based on different calculation of unit
contribution of cannibalized units.
o One is the average unit contribution of the existing brands and second
is the weighted average unit contribution of existing brands. The
cannibalization rate at which the strategy would make loses comes out
to be 42.5% and 33.9% for the two approaches. However these
numbers assume average or proportional cannibalization of the
existing brands.
o Based on the new approach, there should be minimal cannibalization of
brands other than Campeiro (since it commands the lowest share
amongst all three Unilever brands). So assuming only Campeiro is
cannibalized and hence considering only Campeiros unit contribution,
the loss making cannibalization rate comes out to be 66%.
For detailed review and analysis, refer Pricing Table in the Marketing
Mix:Price Section.

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Does Unilever has the right skill and organization to compete in

the market?

Yes.
Reasons to Believe
1. Market leader in the segment
2. Huge legacy and excellent track-record of delivering quality and trust
3. A strong distribution channel

What would Unilever gain or risk in the long run?

Venturing the market with the right strategy, Unilever stands to gain a
considerable pie of the NE detergent market thus adding significantly to its
overall market share of 81%. Also, the move would impart Unilever with the
expertise to operate in the low-income consumer segment, which could be
further applied to its other categories and products.
In the case of failure of the new strategy, Unilever would risk losing a part of
its sale to other competitors in the low-detergent segment.

Brand and Marketing Strategy

Value Proposition

While Omos and Minervas existing proposition meet customers

expectations and needs, Campeiro falls drastically low on the consumer
expectations range (Source: Exhibit 5). This necessitates the need for a new
value proposition. Here the point to be kept in mind while devising a new
proposition is that only 28% of households own washing machine, thus
making laundry soap indispensable to the cleaning process. Also the use of
bleach increases another step (and efforts) to the process.
New Value Proposition
Easy removal of tough/fat stains by complementing the laundry soap, thus
reducing the use of bleach and adding to the joy and pride of cleaning.

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PoP: Affordable Cost

PoD: Easy washing that complements laundry soap and removes tough
stains without bleach.
This value proposition introduces a whole new concept of cleaning where in
the detergent works in tandem with the laundry soap thus catering to the
indispensability of the laundry soap and the low presence of washing
machines in the households. The point would be further elaborated in the
coming sections.

Brand Strategy

The existing 3 brands of Unilever would not be able to cater to the proposed
value proposition. Launching a new brand from scratch would not only
demand huge production expenses but also add significantly to the overall
cost of marketing components. Also, a whole new product would further
clutter the market, adding to the choice paradox of the consumers.
Introducing a brand from the international portfolio in Brazil would have the
same effect as launching a new one. In such a scenario, a brand extension
fits the bill.

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The proposed brand extension would provide the low-income segment with a
product that offers not just affordability but also, unlike other players in the
low-cost detergent segment, supreme quality and efficiency, creating a
unique place for the brand.

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Marketing Mix

Product

Introducing Campeiro Super. A detergent mid-way between Minerva and

Campeiro in terms of quality and price.

Attributes
Eliminated/Reduced
Retained
Improved

Minerva
Strength of formulation
reduced
Pleasant smell and
softness
Stain removal ability
and whitening

Campeiro
Low perceived value visa-vis the cost
Affordability
Formulation strength

Packaging
500gm cardboard box package, keeping in mind the weekly/monthly budget
range of consumers.
30/50gm sachets for quick one-time use and easy mobility. This helps to
capture consumers with lower-weekly dispensable income, providing them
with a convenient option to buy quantities of detergent as and when
required. The sachets would be marketed a easy to store.
Distribution of packaging 60% cardboard boxes and 40% sachets of the
total production (by volume)
Cost of packaging
500gm Cardboard Box $0.175
30/50gm Sachet - $.00525
Avg Price (60:40) $0.252 per kg

Price

Campeiro Super aims at providing a good quality product at affordable cost

to low income consumers. In terms of product formulation, it is placed in
between Campeiro and Minerva. So there is a marginal increase in product
formulation cost. We have assumed this cost to be midway between those of
Campeiro and Minerva, and it comes out to be $1.15 per kg. Also packaging
cost, planning for 60% product volume in cardboard box and 40 % in sachets,

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comes out to be $0.252 per kg. As per calculations in the table below, the
total product cost comes out to be $1.652 per kg.

As per its positioning, logically Campeiro Supers price must be between

those of Campeiro and Minerva. We would want to keep the price below $2
per kg. This way the product is placed in the affordable segment. Also we can
minimize cannibalization of Minerva as Campeiro Super would be placed both
perceptually and cost wise away from Minerva.
We would want to portray Campeiro Super to be superior to the original
Campeiro. So it must command a premium over the original Campeiro.
Pricing it too close to the original Campeiro might cause heavy
cannibalization of the original Campeiro.
Considering the above factors, we have priced the product at $1.95 per kg.
Besides limiting cannibalization, this also earns a healthy margin of $0.248
per kg.
As Campeiro, Invicto and Pop have similar positioning and pricing, we can
assume that Campeiro Super would draw its market share from these brands
(proportional to their existing market share) and from the new low income
consumers who begin using detergent. So the fraction of Campeiro Supers
market share drawn from Campeiro can never be as high as 66%. So this
strategy must turn profits for the company post cannibalization. Also on the
long run, as Campeiro Super picks pace, the company can divert its funds
and resources towards the new brand; gradually withdrawing the underperforming brand Campeiro from the market.
Price Table
Costs (per kg)
Packaging (at 60 %
cardboard box and 40 %
sachets)

0.252

Marketing

0.15

Brand extension

0.05

Distribution

0.05

Formulation cost

1.15

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Total Costs

1.652

Selling price per kg

1.95

Profit per kg

0.298

Cannibalization
Avg unit contribution

0.7

Cannibalization rate for

zero profit

0.43

Weighted Avg unit

contribution

0.88

Cannibalization rate for

zero profit

0.34

Campeiros unit
contribution

0.45

Cannibalization rate for

zero profit

0.66

Promotion

Communication Objective: To leverage upon the remarkable brand

knowledge (Source: Exhibit 8) of Campeiro and alter its poor perceived
quality index and brand perception in the minds of the consumer. The
communication also intends to introduce a behavioural change amongst the
target segment.

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Key Message No tough stains. No bleach. No effort. Only supreme

cleaning.
The packaging would be simple, attractive and distinguishable using vibrant
pastel colours. The back of packaging would pictorially list the instructions of
using the detergent. The point of purchase displays (comprising standees,
danglers, prominent shelf stickers/strips) would communicate the key
message along with the slogan used in TV Commercial.
Communication to small-store owners would revolve around how
Campeiro Super makes tough stain removal easy without the use of bleach.
The small-store owners would also be educated regarding the specific usage
of Campeiro Super Soak the clothes in Campeiro Super for 15 minutes
before washing. The soaking would lighten the tough stains and infuse a
pleasant fragrance. Post soaking, lightly scrub the clothes using a Laundry
Soap for super whiteness.
Allocation of communication expenditure
70% ATL (Media Advertising)
30% BTL
At select mid- and small-stores where the footfall of our consumer segment
has shown to be relatively high, small manned kiosks would be setup that
would demonstrate the procedure of using and advantages of Campeiro
Super.

Distribution

Specialized Distributors
Pros
Cons
Focussed
Small size
area/reach
Exclusive rights
to sell all Unilever
detergents
Extensive PoP
activity
Lower variable
cost to reach
small stores
Partnershipbased, friendly

Generalist Wholesaler
Pros
Cons
Wide area/reach
Focus on only top
3 brands
Mid-sized/large
Have to rely on
secondary
wholesalers thus
increasing cost
Limited PoP
activity
Higher variable
cost to reach
small stores
Opportunistic
relationship with
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relationship with
manufacturers
Traditional retail
stores as
customers

manufacturers
Caters more to
Supermarkets

Basis the analysis above, Specialized Distributors prove to be a better fit

for the right distribution channel for Campeiro Super.

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