Analysis of Unilever operating in Brazil

Analysis of Unilever operating in Brazil As given in the case study, Unilever in Brazil has a strong 81% market share by means of its three brands: Omo, Minerva and Campeiro. Question at hand is whether or not to market detergents to lower income consumers in North-Eastern Brazil and how to go about it. It was believed by many in the company itself that Unilever should not fight in the lower end of the market where even small local entrepreneurs with a lower cost structure struggled to break even. So is the opinion of Fernando Machado, category manager for detergents who believes that Unilever shouldn’t divert money from their premium brands and invest in a low price brand. But since the lower income segment isn’t tapped by any of the giants of the detergent industry in Brazil it provides ample opportunity to the company for growth in this segment. Also there is a need for good products matching the flagship brand Omo but something which is affordable at the same time to the Northeastern women as clearly seen by the example stated about Maria ConceiÇà £o. TREND IN BRAZIL: As per case study it is known that Northeasterners believe bleach is a must for removal of stains, they prefer scrubbing clothes; addition of bleach for stain removal is an important factor followed by a little use of detergent powder only in order to make the clothes smell good. Thereby we can see that use of detergent is restricted only to giving a favorable smell. For the Northeasterners frequency of clothes washing is more due to more time at hand and lesser number of clothes owned. Also cleanliness is perceived as important despite of their low income survival. Cleaning of clothes for them is also seen as a measure of dedication of the woman of the family. Hence Unilever faces the challenge of changing few of the age old perceptions and yet successfully making a mark in the lower income segment. For this Unilever will have to convert the laundry soap users into an Omo class user. This is a long term strategy but yet a feasible one   [ 1 ]    WHY CHOOSE LOWER INCOME GROUP: Enter lower income group segment before P&G penetrates there Detergent market in this segment will always be a cash cow Need gap analysis shows that there is an existing need for good detergents in this market IMPLICATIONS OF MOVE: SHORT TERM IMPLICATIONS: First mover advantage, shift of investment of money in low price brand from premium brands LONG TERM IMPLICATIONS: Market leader in low income detergent market, without a shift in Omo customers the new brand will be able to attract lower income customers WHAT SHOULD BE DONE? There are various options with Unilever. Namely, Launch a new product in the market targeting the lower income consumer without cannibalizing its own premium brands extensively – Reposition one of its existing brands Have a cheaper version of Omo/Minerva Carry out an extension of one of the existing brands I believe that Unilever in Brazil should carry out PRODUCT LINE EXTENSION. Hereb y they should introduce an additional item in the same product category. Unilever should have an extension of its brand Minerva named Minerva Progress (similar to Omo Progress which removes difficult stains without bleach and laundry soap). Minerva Progress should be positioned between Omo and Minerva