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Unilever: Marketing Strategy

Introduction

Marketing strategy has evolved as an important feature for the strategic development and expansion of business in economies of large scale and emerging markets (Bang and Sharad, 2008).  While the primary focus of companies remains to increase the profitability of organizations, marketing units face the challenge of converting non-customers into successful clients and users of their respective brands in order to obtain and retain their share of the market (Hamel and Prahalad 2002; Kim and Mauborgne 2005). Emerging markets of Asia and Europe offer strong growth potential to emerging market leaders like Unilever which have a range of consumer goods products from toothpaste to snacks and biscuits (Bloch, Shankar and Schaus, 2007). The power and potential of emerging markets can be gauged from the fact that they contribute to nearly fifteen percent of revenues to international brands like Unilever, a trend which is likely to continue (Bloch, Shankar and Schaus, 2007).    

Think global act local

With the aim of succeeding, companies have adopted the new mantra of ‘Think Global, Act Local’. In order to compete with local brands, not only with regard to prices, but also to taste, Unilever develops flexible marketing strategies to market and distribute its products in local remote areas of emerging markets. For instance, Unilever devised and implemented a unique strategy for the marketing of its products in Indonesia, where infrastructure is poor, with the use of motorcycles to reach remote villages in Indonesia. This strategy enables Unilever to gain higher profit margins in developing nations and reduce the costs of their premium products in economies of scale.   

Distinct Marketing Strategies in developing economies

Unilever is keenly aware of global strategies which it needs to adopt for the development and increase of local market for their brands, which could occur either through the acquisition of other companies or through joint ventures as in the case of Brazil, China and India. For instance, the demand for its detergents has been increased through the development of local brands which can be found in other markets of developing nations with immense potential Brazil where Ala is extremely popular and India which has Wheel to compete with the other cheaper brands already available in the Indian market. Unilever also has an expensive brand to cater to the more expensive segment in the Indian market popularly famous by the brand name Surf (AdAge International, 1997). In this way, Unilever increases its market segment by catering to economically diverse segments of groups in the same country or region, through the launch of distinct brands, thereby aiming to increase the exposure of its brands among a wider section of the market. This strategy of Hindustan Lever, a subsidiary of Unilever in India has enabled Unilever to create a low-cost laundry detergent line in addition to an expensive brand, which has directly resulted in successful competition to the existing brands in the Indian market. By doing so, Hindustan Lever has been victorious in acquiring a substantial share amounting to more than thirty-five percent in the laundry and detergent segment alone (Arnold and Quelch, 1998). Another example of Unilever’s innovative marketing strategy is the different marketing approach adopted by its Indian subsidiary, Hindustan Lever to create and market a low cost consumer brands in the detergent line to compete with popular domestic brand which enabled them to get a thirty-six percent in the laundry detergent segment alone (Bloch, Shankar and Schaus, 2007).

Step-by Step Marketing Strategy in diversified markets like China

An excellent example of distinct marketing approach used by Unilever in the extremely diverse Chinese market which has a low extent of consistency due to differences in the earnings according to regions, which necessitates different marketing strategies for products in the markets (Arnold and  Quelch, 1998). In this case, Unilever adopts a segmented market approach in accordance with the different Chinese markets and forms associations with local companies of China to augment the sale of consumer goods already present in the Chinese markets (Arnold and Quelch, 1998). Unilever introduces global brands only after the employing a local company to popularize the brand in a given market or segment, and this strategy has been extremely fruitful to the company in the launch of the Omo brand, in the Chinese market (Arnold and Quelch, 1998). This step-by-step marketing strategy enables Unilever to find and use local talent to their benefit because of the belief in Chinese philosophy that growth in China should be triggered by Chinese management and not Dutch or UK companies (Arnold and Quelch, 1998). The approach and novel marketing strategy increase the potential of quantity and quality of Unilever goods because consumers support goods and services from the Chinese rather than any other part of the developed world.

Direct marketing in India

Researchers indicate that through appropriate marketing strategies, companies can increase and improve the wealth of their consumers, similar to the marketing strategy adopted by Unilever to increase its consumer base (Bang and Sharad, 2008). An exceptional marketing strategy devised and implemented by Unilever is the development of its direct marketing project called ‘Shakti’ to market its products in rural India through a network of rural poor women who are engaged in the direct marketing of products (Bang and Sharad, 2008). While the company benefits tremendously by increasing its consumer base, the direct marketer also becomes a consumer of the company (Gaur 2006). This conceptual framework of direct marketing focuses on the creation of willingness and ability among non consumers and those customers who depict a low average rate of Unilever’s products.

Conclusion

Thus, Unilever comprehensively researched and well-designed marketing strategies for the distinct target markets in which it chooses to make its presence felt. The marketing approach of using strong local teams to offer market insights provide Unilever with a marketing edge which boosts its success and profitability. Unlike other multinational organization which rely on expatriates to expand their business operations, Unilever functions by empowering local teams of developing economies, and taps on emerging markets through popular local brands which help in the expansion of its reach at highly reduced marketing and operating costs.  Strategically planned marketing plans enable Unilever to increase its growth speed for entry into new markets and substantially build upon the existing base of consumers.

References

AdAge International, March 1997, p. 136.

Arnold, David J., and John A. Quelch (1998) New strategies in emerging markets. Sloan Management Review 40.n1: 7(14). 

Bang, Vasant V., and Sharad L. Joshi (2008). Conceptualization of market expansion strategies in developing economies. (Report)(Survey). Academy of Marketing Science Review 

Bloch, Nicolas, Satish Shankar, and Robert Schaus (2007). Adapting for emerging markets. (Observations)(Company overview). European Business Forum 30: 8(2).

Gaur, S. S. (2006). In Marketing and Sustainability--Emerging Opportunities for Profitable Growth. IIMB Management Review 18 (March): 69-84.

Hamel, G. and C.K. Prahalad (2002). Competing For The Future. New Delhi: Tata McGraw-Hill.

Kim, W. C. and R. Mauborgne (2005). Blue Ocean Strategy. Boston: Harvard Business School Press.