1.

Should Unilever target the low income segment of consumers in

Northeast? What are the possible financials or strategic implications of
your decision?

Targeting low income market in short term and long term:

In Short term money has to be invested and therefore diverting from premium brands to
low price brand.
Gaining momentum and first mover advantage In fast growing market.
In long term, with the right strategy , low income consumers will be ready to pay for a
new brand and Omo buyers will not move.
Becoming a leader in a low income consumer marketing.
Unilever should target the low-income segment of consumers in the Northeast. Unilever
currently hold a market share of 75% here, below the national average of 81%. Both
markets of detergent and soap are growing in the NE and the lowest income consumers
are experiencing an increase in purchasing power. The economic boom that has hit the
country is at its most powerful in this region and represents a substantial opportunity for
Unilever to take advantage of.
Market share is expected to grow in year 3. This market share will be taken from the
competitors Pop, Invicto as well as cannibalizing sales from Campeiro. Financial analysis
has ruled out the possibility of targeting the soap market in addition to the detergent
market with the new brand. Using similar pricing logic it is impossible to keep costs
down to an acceptable level and if wholesale price is to be kept at a price competitive
enough to challenge for market share in the low income consumer market it would result
in too small of a margin. Detergent market has more growth rate than soap market growth
rate.

2. Based on the current brand portfolio, is it necessary to launch a new

brand or simply launch a brand extension? What will you suggest and
why?

As campiero is not performing well in the market and is viewed as poor quality by
users, the new brand will be better quality and in turn will fit in the quality
measure of the consumers and there are more profit margins in long term if the
launch a new brand with which unilever will have its market average of 80%.
A well planned and well implemented extension of one of their three brands could
offer Unilever a number of advantages. As we are targeting the low income
segment and Omo and Minerva are higher priced it would be foolish to tamper
with those brands as they have a good audience also. Extending those to a lower
cost consumer would only damage the original. Therefore if any extension were to
take place it would have to take place with Campeiro. Advantages of using an
extension could be: Facilitate new product acceptance Reduce risk perceived by

customer. Increase efficiency in promotional expenditures. Reduce costs of

introductory market programs. Avoid cost of developing a new brand. Packaging
efficiencies. Permit customer variety seeking Disadvantages: Confuse and
frustrate consumers. Damage existing brand image. Cannibalize parent brand.
Damage image of parent brand. Dilute brand meaning.
Unilever have the option to reposition its current brand. Unilever can reposition in
order to increase relevance to consumer, increasing occasions for use, making
brand more serious, bringing new customers, change market conditions.

3. Proposed Marketing mix :

Product:
Melhor is a brazialian term for Best. Melhor will be available in both detergent soap
markets. Melhor benefits will be: productivity, whitening, cleanliness, softness, smell
good and ability to remove stains.
Pricing:
The cost of Melhor will be set at $2.10 in order to have margins and get benefit from
growing purchasing power in northeast. Higher than the competitors but in between
manivera and campeiro.
Distribution:
Distributing to North East Brazil does not come without its challenges. We are told that
they rarely shop in large supermarkets such as Walmart or Carrefour. This means the
chosen distribution strategy must include 75,000 small outlet stores spread over the NE.
However,Unilever do not have the ability to distribute to these stores which suggests a
partnership could be the most economical way forward, contracting with Specialized
Dealers who would have the necessary focused reach to distribute Melhor. Cost of
specialized dealership is lower than generalist wholesalers.
Promotion:
Promotional strategy instead focus on the positive lifestyle of low income consumers in
regards to washing clothes as opposed to being price based. As stated in the low income
behavior analysis, washing clothes is seen as a social and pleasurable task. Melhor would
seek to emphasize this in the promotional strategy in an extremely positive message:
Melhor, vida fez melhor, (Melhor, Life made best). The team assert that the tagline
would imply wholesome, positive energy resulting in a clean bright washing. The
promotional campaign will rely heavily on imagery to communicate the key messages to
overcome the challenges posed by the NEs high illiteracy rates of 40%.