Unilever is a Multinational Company (MNC) which deals with manufacturing consumer goods (Chandler, et al. 1998). Unilever was formed in 1929 following the amalgamation of two soap and margarine companies; one from USA and the other one from Britain. Since then, the company has been ranked as the world’s leading company dealing with consumer goods. Unilever conducts business in relatively diverse industries viz. Food and beverage industry, personal care industry and home care industry. Moreover, the company has outlets in almost every region in the world.
Unilever is renowned for manufacturing products like; toothpaste, hairsprays among others that are used for personal care. It also features in the food industry by producing beverages (Luckman, 1988). Furthermore, lever produces margarines like blue band. This paper focuses on issues impacting on Unilever Company. More specifically, the paper discusses Unilever’s history, range of products dealt with by the company, marketing strategies, and target market. Issues that are relevant to any modern organization viz. price decisions, promotion decisions, distribution strategies and promotion decisions are also of utmost importance in the discussion herewith. These issues form the 4 pieces of marketing (Product, Price, Placement and Promotion). Finally, the paper will conduct a SWOT analysis of Unilever and finally give recommendations that would ensure the existence of the company in the global market.
Unilever Corporation was founded in 1930, following the amalgamation of the Margarine Unie, a Dutch Margarine Company with the British Soap maker Company Lever Brothers. The company was founded by the two brothers, William Hulme Lever and Viscount Leverhulme of Level brothers and Antonious Johannes Jurgens and Samuel van den Berg of the Margarine Unie. Both companies operated in large scale manufacturing and marketing of household products like soaps, and cooking fat, using the same major raw materials palm oil and similar distribution channels (Charles, 1990). Since both companies used the same raw materials palm oil, the merge greatly reduced production cost since palm oil could be imported more cheaply, efficiently and effectively in large quantities.
Following the merge, Unilever Company grew rapidly and launched new ventures in Africa and Latin America. Since then, the company has absorbed, purchased and merged with other companies. In 2000 Unilever purchased American business Best foods company. Today Unilever is multinational with operating and factories and companies on every continent.
Target market refers to a group segment that’s identifiable and its main role is to direct the company in terms of marketing efforts. The target market segment points out the potential areas for successful marketing. Unilever is a multinational company therefore it targets a global mass market. The company has designed its marketing mix elements to meet the particular needs of each target market around the globe.
Through products differentiation the company targets different customers for its varied products. For house care products like OMO, lifebuoy and beverages, Unilever targets over 80 percent of all household worldwide (Porter, 2006). The company has diversified these homecare products to ensure it meets the preferences of almost every home.
Unilever targets largely the female population, particularly women aged between 25 to 50 years with both its household products, beauty products and slimming products (Warren, 2005). The Unilever Company has developed an “online collaboration community” to encourage the female target group-to give their opinions on the Companies brands and hence help the company to make any necessary changes to the brands to meet the target market need. For personal care products the company targets the adult generation.
To reach the target market Unilever has established branches close to each target either through mergers with other companies or developing a new branch out of nothing and lastly the company has employed thousand of distributors to distribute its product efficiently to all the target groups.
As mentioned herewith, Unilever conducts business in different industries. The company is renowned for manufacturing personal care products like Vaseline, tooth paste, hairsprays among others. Unilever also manufactures home care products like Lux soap, OMO among others which are basically used for washing and cleaning. Recently, in 2010, Unilever conducted an extensive promotion of its soap product; lifebuoy which is meant for washing hands. The move was supported by many health agencies and this was therefore a major boost to its products. It is imperative to note that Unilever controls about 80% of the total soap market share in America. Unilever also manufactures food and beverage products and energy drinks like Lipton. It is the manufacturer of margarines like Blue band. Additionally, Unilever manufactures food products like ice creams, meat products, tea leaves and drinks (Geoffrey, 1988). The company has also ventured in the global textile industries where it produces clothe products and garments. It is also the manufacturer of food additives like royco which are meant to flavour food.
Marketing mix decisions
- Product decisions
Product decisions are indispensable for any firm wishing to exist in the global market. In fact, product design is considered as a major factor in determining the success or failure of a MNC. It has been proven that good product design actually increases sales. It is imperative to note major product decisions at Unilever entails product diversification. In soap industry for example, Unilever have products like Lux, Lifebuoy, and Rexona. Unilever also differentiates its products through market segmentation. Here, various geographical markets are analyzed especially according to the purchasing power and the appropriate product supplied. Finally, product adaptation is an utmost product decision at Unilever. The company tries a variety of strategies to ensure its products are accepted in a particular market. Unilever’s fabric softener for instance, sold in ten countries with seven dissimilar names and with dissimilar bottles. Additionally, Unilever embraces a decentralized control implying that product decisions in a particular country are handled by country managers. Finally, in modifying the existing products, Unilever’s product managers ensures that the key attributes in the original product are retained, and that Superfluous attributes are eliminated
- · Price decisions
Price decisions are also indispensable for any firm competing in the global market. Good price decisions offer a firm a good competitive advantage over its competitors. There are a variety of ways to price a product but the key thing is, the price charged must be competitive. At Unilever, major price decisions include value pricing. Here, a product’s value (based on the cost of production) is calculated, and a price set so that a reasonable margin is earned. This implies that consumers pay for attributes envisaged in a product. Unilever managers also strive to ensure that cannibalization is avoided while pricing. Re-pricing existing brands is also a major component of pricing decisions at Unilever Company.
- Distribution decisions
Distribution forms part of the 4 most important components of any marketing strategy. Unilever Company employs extensive mode of distribution whereby its products are found in many outlets worldwide. Small shops form a major medium for Unilever’s distribution strategy. Extensive distribution makes Unilever’s products familiar among the global consumer. This has offered the company an important competitive advantage, as its products move fast compared to those of its competitors. Furthermore, Unilever is shifting attention to Retail credit which is a crucial market feature delivery.
- · Promotion decisions
Promotion is another important P of marketing. A marketing strategy that satisfies other 3 P’s of marketing viz. Product, Price and Placement but fails to recognize the importance of promotion can hardly succeed. With this regard, Unilever Company has a well designed promotion strategy. Critical decisions made at Unilever regarding promotion include resource allocation, communication medium and appropriate promotion message. In 2011, Unilever resolved to use promotion strategy to market Lifebuoy; a hands washing soap.
Improving on unilever’s pricing strategy
As mentioned earlier, Unilever mainly employs value pricing mode in pricing its products. This means that consumers pay for value. The impression here is that the higher the value of a product, the higher it costs. With this regard, this has resulted to Unilever’s products selling at a higher price than those of the competitors. Though some consumers understand that higher price charged by Unilever Company is reflected in the high quality of its products. Some customers therefore go for cheaper but inferior products. Seeking for best price practices is therefore indispensable for Unilever to remain competitive. With this regard, Unilever may manufacture products that lack some additional attributes. This would make it possible for the company to match the competitors’ low price.
Another way to manage its price is by appreciating the fact that different consumers have different purchasing power. This calls for manufacturing different grades of the same product to cater for each category of consumers. This will also retain the consumers that have preferred cheaper products. Decentralization is still another option of managing Unilever’s price. Decentralization means that production activities are conducted near the market place or at the market place. This in turn reduces relevant product costs viz. distribution costs, transportation costs, among others. These are costs that inflate the price of a product. Other pricing strategies would include price deals where a product’s price is lowered for a certain period of time say an hour or a day. This results to a happy hour or a happy day. Finally, cents-off deals, price pack deals and coupons would also play an imperative role.
Challanges with marketing mix strategy
The Unilever marketing strategy has not been without challenges (Rohwedder, 1994). Making amicable product decisions requires a good understanding of the target market. However, consumer needs are very dynamic and thereby change from time to time. This problem has also faced Unilever Company as it tries to develop new products. Product differentiation has also presented Unilever with a major challenge. At one point in time, Unilever thought of standardizing some of its products. Unilever has also been faced with pricing challenges. It is important for any company to match the price of its competitors. However, matching the competitor’s price may result to losses.
Unilever charges higher prices for some products than its competitors since they possess higher value. It would be irrational for Unilever to match the price of its competitors. Value pricing therefore remains to be the sole option. However, it is usually hard for consumer to understand the rationale behind higher pricing and often prefer cheaper products. Such products are usually of inferior quality. Distribution strategy has also challenged Unilever’s marketing efforts. By employing extensive distribution chain may lead to dilution of Unilever’s brand image as different suppliers deal with its products differently. For instance the suppliers may price similar products differently and this may cause confusion among the customers. High cost of promotion has also impacted negatively on Unilever’s marketing strategy.
The foregoing discussion has demonstrated Unilever as a key global business player. Unilever is renowned as a global investor and a giant Multinational Company (Thomas, 2000). The company has commanded a significant market share in diverse industries. The company has developed good marketing strategies to remain the market leader despite the challenges that come along with marketing mixing strategy. Much remains to be done to further boost the competitiveness of Unilever. It is important for Unilever to search for new market for its products. With this regard, Unilever is considering venturing into the world’s North-Eastern market. Prior to doing this understanding this market has been considered to be of utmost importance.
Other strategies to be implemented include market segmentation. This will go a long way in serving the different needs of consumers from different niche markets. With this regard, Unilever has started segmenting Brazilian market. In this case, purchasing power and consumer habits have been used as the main criteria for differentiating. Furthermore, there is an importance to reorganize Unilever’s organizational structure so as to cope with the ever increasing competition. Unilever should also seek to exploit market advantages that are being brought about by changing in consumer tastes and preferences. For instance, the recent increase in global demand for health products presents Unilever with a good opportunity in the market. Unilever should also seek to manage its brand to avoid possible brand dilution.