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Pe Essay Unilever 1
Pe Essay Unilever 1
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TABLE OF CONTENTS
1. Introduction 1
1.1. Market overview 1
1.2. Historical background 1
1.3. Problem statements 3
1.4. Research objectives 3
5. References
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1. Introduction:
Unilever is a global and giant British-Dutch product maker for household consumption with over 400
brands and a historic development timeline. However, in the ever-changing economy, the organization has
to deal with a multitude of external changes and threats from other competitors, due to its former market
structure (oligopoly) and the advancement in technology being pushed to limits. There are several problems
related to the company’s current scheme amid the competition, hence more analyses need to be done on a
large scale. All of the factors, when put together, can eventually lead the company to decline or grow,
depending on which decision the company makes and how it reacts to the externality.
The fast-moving consumer goods (FMCG) industry in Vietnam has been growing fast in recent
years. As a result of the rapid economic growth of Vietnam and the average income level increase, FMCG
products consumption rate witnessed a surge in amount. New research from McKinsey showed that over the
last 20 years, GDP of Vietnam has increased at a compound annual rate of 5% in real terms, which
outperformed the global average by 1.7 times, therefore consumption is expected to increase as paid salary
arises (Delteil et al., 2022). Besides that, according to the FMCG Monitor Vietnam Report, FMCG growth is
stable at 5% in urban areas and 11% in rural areas. Additionally, the monthly FMCG expenditure in the
urban region was about 1.43 million VND while it was estimated to be 0.85 VND in the rural area. In 2025,
the amount of FMCG spending per month was predicted to hit 1.5 million VND and 1.04 million VND
respectively. (Vietnam FMCG Market Report 2020 | Market Report IO, n.d.)
Unilever, either of twin companies, Unilever PLC (based in London) and Unilever NV (based in
Rotterdam), which are the holding companies for more than 500 companies around the world mainly
produce and sell soaps, foods, and other products for household consumption. It was officially founded on 2
September 1929, by the merger of the British soapmaker Lever Brothers and the Dutch margarine producer.
Both two companies have the same vision: this merger and strong global network will increase the
opportunities to gain more profit. The name of the company is a fusion between the Dutch firm called
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Margarine Unie and the British firm called Lever Brothers. Unilever mainly produces three main products:
Foods and Refreshments, Home Care, and Beauty & Personal Care. Not too long after Unilever was formed,
they encountered a big problem which was their raw materials reduced from 30% to 40% in the first year.
Thus, Unilever responded quickly by building up an efficient system named “Special Committee” in
September of 1930 to stabilize the operation as well as an internal cabinet for the whole organization.
Timeline:
1. 1900s: Unilever’s founding company took a leap to be diversified from being a manufacturer of
products made of oils and fats and started to expand its operation from domestically to globally (especially
2. 1910s: tough economic conditions and the First World War makes it more difficult for the
3. 1920s: Unilever is formed by the agreement to merge of Lever Brothers and Margarine Union.
4. 1930s: the company starts with the Great Depression and ends with the Second World War →
5. 1940s: started working in the frozen food industry → increase investment in research and
development.
6. 1950s: new technology and the European Economic Community lead to rising standards of living
→ rapid growth.
7. 1960s: world economy expands → beginning of innovation, encountering new markets, and
8. 1970s: hard economic conditions and high inflation affects the FMCG sector as the big retailers.
9. 1980s: started to redirect the company’s strategy by selling most of its subsidiary business to focus
10. 1990s: maintained the same policy direction to achieve more stable and consolidated market
power.
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11. 2000s: adopted a social policy to promote sustainability in daily activities and in the whole
business.
12. 21st century: starts with the launch of Path to Growth and a five-year strategic plan.
The problems of Unilever derive from the purposes of the brand itself, as well as the challenges
related to its sustainability regarding the digitalization agenda, and the economy’s high inflation rate. As
a result of the post-pandemic consequences and the ongoing war in Ukraine, the global supply chain is
heavily affected, causing multiple logistics firms and harbors to close. This, in combination with the
rocketing inflation rate, leads economists to an anticipation of the upcoming recession in the UK (Carroll,
2022). About the brand purpose of Unilever, Terry Smith, a fund manager, described the business as
“ludicrous” and “obsessed” with merely showcasing its sustainability credentials (Jefferson, 2022). The
company’s performance was underwhelming, with its contribution being the second lowest in 2021 to
Smith’s fund. Moreover, the refusal of Ben & Jerry to sell its ice cream in Israel’s settlements in territory
occupied by Palestinian, along with the company’s decision to set the brand purpose’s definition for
Hellmann’s mayonnaise, are classified as “lost the plot”. By contrast, Unilever’s vice-president of global
ecommerce, Claire Hennah, said that their business’ sustainability credentials were a “real talent magnet”
(Jefferson, 2022). Regardless of the arguments, the main issue the company faces is to determine its brand
purpose in order to gain competitive advantages in the rivalry and the urgence in adopting effective
and sustainable channels, since the trends for digitalization and ecommerce were already globally
imminent among its rivals. Moreover, due to the projected recession that would pose severe damages to the
economy and to the firm as well, Unilever’s sustainability and digital strategy are key issues that are in
The research will study the practices of Unilever’s brand purposes and analyze the differentiation
between its subsidiaries to find out the analytics and proven evidences for the stated issues. Additionally, in
this report, detailed comparisons between Unilever and its rivals in the oligopolistic market (Nestle and
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Procter & Gamble), alongside proofs why Unilever is losing its market share to the other competitors. The
report will carefully demonstrate data and providing some illustrations to support the research report as well.
An oligopoly is a term used to describe the structure of a particular market, industry, or a company,
when a market is dominated by a few common firms, it can be considered to be oligopolistic or excessively
concentrated. The enterprises which are from an oligopolistic market allowing the existing companies to
operate in a market dominated by a few (CFI Team, 2022). The fast-moving consumer goods industry is
characterized by a high turnover rate, a rapid elimination rate and is highly competitive (Kenton, 2022).
Some of Unilever’s competitors are Procter & Gamble, Nestlé, Johnson & Johnson and these corporations
are all in stiff competition with Unilever for 3 main business segments: beauty and personal care; food and
beverage; and home care. Because of the high brand recognition and customer loyalty, these firms are
among the biggest competitors of Unilever. Consumer products have become a growing industry, especially
household and personal care products. It is apparent that consumer products have become a necessity, it is
said that this has been “made strong by a century of uninterrupted growth that not even economic meltdowns
The first scenario of an “oligopoly” market is that companies will aggregate into an economic union
which is also known as cartel. When oligopolists form a cartel, they will act as a single monopoly as they
have the exclusive right to determine the price of the market and buyers have to bear the price at any cost.
Oligopolists face the same down-ward sloping curve as Monopolists where Price exceeds Marginal Cost. In
the long-run, the barrier to entry allows Unilever to gain more because they can earn supernormal profits.
However, that case is just doctrinaire. In reality, this is impossible for Unilever and its union to operate as a
single monopoly because of difficulties in agreement on Quantity each product and the restriction of
antitrust laws. A more likely scenario, all the companies will compete fiercely in the oligopolistic market
equilibrium where buyers are benefited most To win in the competition of oligopolistic companies, Unilever
should have some strategies to set itself apart from major competitors: reduce product prices, free shipping
a. Existing rivals:
There are several existing competitors in the market which are competing for the same set of
customers. The first competitor is Unilever, a Swiss milk-food manufacturing business, which is the largest
multinational FMCG company in the world, measured by revenues and other metrics. It was founded in
1905 by Henri Nestlé and includes baby food, medical food, breakfast cereals, dairy products, and so on.
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Their biggest brands include Nescafé, KitKat, Nespresso, Maggi, Toll House, and Milo (Nestle Global).
More importantly, Nestle opened its first office in Vietnam in 1912. With a total investment of more than
600 million USD, Nestlé is currently running 6 factories with close to 2,300 employees in VietNam
(VnExpress, 2019). Furthermore, Unilever and Procter and Gamble have been each other’s arch-rivals for
decades. Both of the companies have tried various tactics as well as business strategies with the aim of
maximizing their market share in the FMCG market. Some of their biggest brands comprise Head &
Shoulders, Pampers, Tide, Ariel, and Downy (Investopedia, 2022). In 1995, P&G Vietnam was one of the
first American companies to invest there and they are maintaining two sizable manufacturing facilities in
- Competitors analysis:
- Product:
Nestlé now has some of the best water brands in the world. Nestle Water is the best because water is
their specialty. It must ensure that its water supplies are consistent and of high quality, resulting in resource
management that is sustainable. Water consumption for Nestlé Pure Life is strictly controlled and monitored
on a regular basis. Nestlé Pure Life uses water from a deeper aquifer. The Nestlé Pure Life deep well is
outfitted with instrumentation that allows for the monitoring of key hydrodynamic parameters (flow rate,
water level). Nestlé encourages its markets to adapt products locally in order to respect local, regional, and
national habits, as well as consumer tastes, cultural and religious backgrounds, and purchasing power. While
all products must meet quality standards, they differ greatly in composition, recipe, packaging, and
branding.
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P&G is the market leader in Fabric & Home Care. Unilever generates approximately 80% of total
revenue from Personal Care and Foods, while P&G generates approximately 60% of total revenue from
Beauty and Fabric & Home Care. P&G is more successful in its American and European markets. Only
North America and Western Europe account for roughly 60% of P&G's total revenue.
- Price:
Nestle’s price strategy is to use multiple pricing tactics (Simplilearn, 2022). They offer various of
packaging options with variable prices, and target different sections of the market. They aim to use multiple-
price strategies to cover a wide audience, with ranging earning margins. Products from Nestle are priced
In terms of P&G, the company’s price strategy is to apply three different pricing policies
(competitive pricing, penerating pricing and premium pricing) (MBA Skool Team, 2017) that gain market
share and generate revenue. Their products’ prices are ranged between 21.000 – 2.749.000 VND. Both have
- Distribution:
Nestle chose a multi-channel distribution network and established major distribution points in
Bardon, Leicestershire, and York, North Yorkshire. Nestle's food and beverage industry is handled by
Bardon, while Nestle's confectionery industry is handled by York. The product under consideration here is
Kit Kat, which is distributed through the York distribution center. Trucks transporting composite palettes do
the physical distribution. Nestle arranges for the transportation, which is exclusive to Nestle. York is a huge
P&G Distribution is an international consulting network that provides integrated services and
solutions to improve business performance and growth. What distinguishes P&G Distribution's know-how
has been established over many years of close collaboration with licensing companies. P&G Distribution is
the best partner for companies looking to strengthen their export activities with an innovative solution
provider because of its experience and professionalism, creative approach to business consulting, and
- Advertisement:
Sponsorships are one of Nestlé's marketing strategies. They support music festivals like the Salzburg
Festival. Nestlé also sponsors a number of sporting events, including the Tour de France. Nestlé can
promote its brand and products to a specific audience through each of these sponsorships. At the Tour de
France, for example, "Vittel," "Nesquik," "Powerbar," and "Ricore" are advertised as official drinks and
snacks of the event. Nestlé and its products are advertised on TV, in magazines, and on billboards across the
country. The variety of places where Nestlé is advertised raises public awareness of the brand. Because
Nestlé's products are so diverse, each one employs a unique strategy to capture the attention of its target
audience. For example, these Kitkat advertisements employ a variety of techniques to pique the consumer's
interest.
Another marketing strategy used by Nestlé is to improve its image. It accomplishes this by taking
part in activities that benefit both the environment and society. Examples include "rural development,"
"water conservation," and the production of healthier food products. This gives the consumer a positive
impression of the company and increases their trust in Nestlé. This leads to consumer trust in Nestlé
P&G, on the other hand, tends to put more emotion into their advertisements. P&G has produced
some of the best advertisements of the decade since the "P&G Moms" campaign. The strategic shift from
always being "better" to now being "different" is at the heart of P&G's communication. They are looking for
unique consumer insights that will help them connect with consumers rather than unique product feature
differences. The ads have evolved from simple product demonstrations to connecting with specific moments
b. Entry barriers:
Numerous difficulties when attempting to meet corporate requirements and international quality
standards. UVN demands more from its partners as the level of competition around the world rises. As a
result, partners are required to adhere to global standards for product quality, cost, and delivery
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requirements. Every local partner must make every effort to increase their capacity, become more
competitive, and adhere to various requirements and standards. A few of them, like LIXCO, have already
demonstrated their viability in this area and serve as good examples for others.
a. Service strategy:
Unilever uses broad differentiation for its competitive advantage. They apply market penetration as
their primary strategy, including increasing its sales volume to maximize revenues earned and foster the
growth of the business. Their second strategy is to concentrate on product development by coming up with
new products that match the needs of their customers (Young, 2017).
Nestle’s service strategy is to be a multifarious portfolio that aims to lower risks in the function of
the supply chain and promotes product diversification (Simplilearn, 2022). They offer a wide range of
products ranging from (but not limited to) milkshakes to beverages, seasonings, etc.
Procter & Gamble service strategy (MBA Skool Team, 2017) is to foster open innovation, to connect
and develop the relationships between the organization and the customers, as well as offering special welfare
b. Location strategy:
Unilever aims at diversifying its business by establishing new businesses in different cultures and
regions, along with acquiring other local businesses gradually to target the right customers. Nestle (and
Procter & Gamble), however, approach their business model by localizing their manufacturing process and
trying to assimilate the local favours in their products, as well as embracing local customs such as language
Nestle’s distribution strategy is to integrate localization approach “by assimilating local flavours in
Procter and Gamble (P&G) distribution strategy is to embrace a larger consumer base, as they
provide a various range of products that reach a wide audience through shops, retailers, super markets, and
c. Product lining:
Unilever has multiple product lines, namely Lifebuoy, Dove, Sunsilk, Knorr, Hellmann’s and so on.
Nestle product lines include Infant products (Cerelac), Milk and Nutrition products (Acitplus, A+
milk, etc.), Beverages (Nescafe, Nestea), Kitchen products (Maggie), Chocolates and confectionary (KitKat,
The success of Unilever has been influenced by a number of factors. Initially, the company has
significantly broadened its selection of products over time. Secondly, over the years, Unilever has made
strategic acquisitions of other businesses that have aided in its growth. Thirdly, Unilever has made
significant long-term investments in marketing and advertising. To sum up, Unilever has expanded into a
global powerhouse with operations in more than 190 nations and goods sold in more than 170 of them. As
for Vietnam, Unilever, which began operating in Vietnam in 1995, has invested more than US$300 million
in the country, creating 1.500 direct jobs and 10.000 indirect jobs that are employed by its third parties,
suppliers, and distributors through a vast network of 150 distributors and 200.000 retailers. Unilever
Vietnam has grown at a double-digit average annual rate over the past 17 years, receiving the First Labour
Medal from the State President in April 2010 in recognition of its outstanding commercial performance.
The current objective of Unilever is to be “simpler, faster and more agile, more focused in their
categories, and with greater empowerment and accountability” (Unilever PLC, 2022). They are planning to
move away from their current matrix structure and reorganize as 5 distinct Business Groups: Beauty &
Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. There are also some changes in its
leadership style, including appointing new President for each of the Business Group and assigning new roles
Despite competition from various companies, from locally distinctive modest and rustic eateries to
well-known global names, Unilever had effectively resurrected itself to still rank among the top brands in
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Vietnam following the Covid pandemic. Since Unilever has a keen understanding of the significance of
consumer sentiments regarding their brand and has worked to maximize customer happiness, they have
outperformed some brands in terms of brand success in Vietnam and has expanded into a global powerhouse
with operations in more than 190 nations and goods sold in more than 170 of them. Although they have
made great achievements, the world is always changing leading to new business problems they have to face
and there are some aspects that they can improve to push efficiency. The company should plan more
carefully in terms of purpose branding and make sure it has a clear sign of meaning to distinguish it from
other brands. They should create more promotional activities and promotional services to gain competitive
advantages in the rivalry. Moreover, they have to recalculate their current plans because of the economy’s
high inflation rate. The company also needs to adopt effective online channels and maximize its potential,
since the trends for digitalization and ecommerce are already popular and a lot of consumers nowadays buy
things online.
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