Posted at 12.12.2018
Consumer behaviour is a process where individuals or groups go through to choose, purchase, use and get rid of goods, services, ideas or experience to meet their desires and needs (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009). The major question for just about any company: Just how do consumers respond to various marketing work the business might use? The next diagram shows that the marketing and stimuli enter the consumers 'Black color Container' (consumer's mind) and produce certain reactions.
Fig 1: Stimulus response style of buyer behaviour
Consumer behaviours are inspired strongly by cultural, public, personal and emotional characteristics as shown below:
Fig 2: Factors influencing consumer behaviour
(Source: Philip Kotler, Gary Armstrong, Veronica Wong & John Saunders, Concepts of Marketing, 1999)
Culture is the standard value of someone's wants and behaviour. In Unilever case at Brazil, the clothes are washed more frequently in NE than SE approx. 5 times a week against 3. 9 times. Most of the women at NE are housewives plus they required this activity of washing clothes as enjoyable activities. There exists yet another reason that the ladies at NE generally do their cleaning in a public laundry, river or lake because it offers them an chance to become cultural, meet their friends where at SE mostly women do their cleansing at home together. The individuals at NE also attach the cleanliness as a symbolic value to their status.
Due to the cultural differences and washing methods, the laundry cleaning soap intake at NE per buyer is 20. 4 kg against only 6. 8 kg of SE. Around the contrast, there is very less difference between the ingestion of detergent powders between NE and SE, only one 1. 5 kg per buyer. (refer to exhibit 3)
Social classes are society's relatively everlasting and ordered divisions whose member talk about similar values, pursuits and behaviours. In Brazil there are 5 cultural classes predicated on the income as: A, B, C, D and E (E+ & E-). As per exhibit 2, only 21% inhabitants of SE is E class compared to 53% of NE. So the most of the population at NE are low income consumers.
Generally the low social school people are usually more culture-bound which shows their behaviour of buying detergents.
Family associates can strongly impact buyer behavior. The buyer's spouse and children has a direct influence on everyday buying behavior.
In case of Brazil, most NE women start to see the sanitation of clothes as a sign of the commitment of the mother to her family regardless of washing through laundry soap requires an intensive labour. This fact influences the consumer to buy the different detergents largely laundry soaps at Brazil. A lot of the families with washing machine would prefer to buy detergent natural powder (there only 28% household own the washer at NE) instead of laundry soap.
A person's economic situation will influence product choice which is evidently obvious at Brazil. The reduced income consumers of NE wish to buy Omo, the best brand of the marketplace but their tight budget leads those to buy cheaper local brands from the nearby small retailers.
In Brazil, the consumers (mainly low income) evaluate the detergent contrary to the six key characteristics as shown in exhibit 6 along with price. Since Campeiro scored very low on all the capabilities and resulted with only 6% of market show. The consumers of NE are very particular about the many characteristics of detergents like electric power of the detergent (its capacity to clean and whiten clothes with a tiny level of product) judged by the amount of foam it produced. The reduced income consumers are also very much attached with bins and regarded other things as good for only second-rate products.
The major factors which affect the consumer behaviour are reviewed above. Most large companies also research consumer buying decisions which are closely related with the factors of consumer behavior. An average buyer decision process can be shown as below:
Fig:3 Buyer Decision Process Model
(Source: Philip Kotler, Gary Armstrong, Veronica Wong & John Saunders, Key points of Marketing, 1999)
In the given case, the purchase of detergent is a normal purchase for just about any family. Because the most of the families managed a washer at SE, so they are simply much focussed to choose the detergent powder. At NE only 28% homes own the washing machine. The important simple fact here's that both the consumers of NE and SE are well aware about the brand and recognises Omo as the best detergent powder on the market. But at NE, approx 53% consumers can't manage to choose the Omo because of their low-income. The Northeasterns are also not fond of shopping at big retails like Wal-Mart, rather than they would prefer to choose the detergent from the in close proximity to buy shops. As per the facts provided in the event, it appears that the Unilever brand is not available in 75000 small store of NE where in fact the products of their competitors are available. In this example, the consumers have limited option to buy.
At within the NE detergent market, there are just two major players- Unilever and Procter & Gamble. There are a few local players are also available for sale but mostly they are in the laundry soap market.
Unilever is a US$56 billion company, headquartered in London (UK) with 300, 000 employees in more than 150 countries. Unilever began its procedure in 1929 and today become a pioneer of the consumer goods industry in Brazil. Unilever launched the first detergent natural powder as Omo in the Brazilian market. As stated in the event, Unilever is market leader in the detergent powder category, having 81% of market tell three brands:
Omo (one of the Brazil's most liked brand)
Minerva (Only brand sold as both detergent natural powder and laundry soap)
Campeiro (Unilever's cheapest brand)
Omo is reduced product with 52% of market talk about at a cost of $3/kg. The primary USP of Omo is the high potential to remove stains. Minerva is relatively cheaper brand as compare to Omo with 17% talk about in the detergent natural powder at a price of $2. 4/kg. Minerva is the only real Unilever brand which is contending with local brands in laundry soap market and is the market head. Inside the laundry cleaning soap market Minerva have 19% talk about at a price of $1. 7/kg.
On the other side, Procter & Gamble is a US$40 billion company, headquartered in Cincinnati (All of us) with 98, 000 employees in 80 countries. P&G joined in the Brazilian market in 1988 and received the detergent business of an Brazilian company called as Bombril and its three brands:
Quonto (migrated as Ace)
Odd Fases (migrated as Bold)
Pop (low-price brand)
P&G is the second player with 15% talk about of the Brazilian detergent market.
Ace is the primary brand of P&G and competitor to Unilever products (Omo and Minerva) with 11% share in the detergent powder market at a price of $2. 4/kg. The other products of P&G have only 6% show of the market at a cost of $2. 3/kg. P&G didn't manufacture laundry cleaning soap.
At present the NE detergent natural powder market value of US$106 million keeps growing with a impressive gross annual rate of 17%. Because the developing process is very capital intensive, so the access barrier is very high in this market. On the contrary, the laundry soap market price of US$102 a huge number keeps growing at a slower total annual rate of 6%. Since the production of cleaning soap is really cheap, thus there are low barriers to entry.
Currently P&G are concentrating on to the low-income consumers of the NE market. P&G sketching on worldwide R&D and marketing skills is concluding up and will attack to this segment. There were also threats of small local brands targeted at low-income consumers. Unilever is also looking to explore the growth opportunities in the detergent market to low-income consumers of NE. But Unilever is facing some inside resistance from Mr. Fernanda Machado (Category Supervisor for detergents).
With the data available in the case study, the Unilever SWOT examination is as below:
Table :1 SWOT Analysis
Unilever would follow the Target ONLINE MARKETING STRATEGY (Segmentation, Targeting and Placement) technique for the low-income consumers in Brazil. The following diagram explains the many steps engaged Target- marketing process:
Source: Solomon, Marshall, Stuart, Barnes and Mitchell Marketing: Real People, Real Decisions 1st Western Editions
Fig: 4 Steps in the Targeting Marketing Strategy
The detergent market at Brazil has already been segmented into two parts:
High Income consumers living at Southeast
Low income consumers living at Northeast
The Northeast market could be categorised under "Geodemography" portion due to the majority of the consumers have low income and talk about similar characteristics.
Detergent Market segment is registering a 17% annual development in Brazil and there is a major potential market in NE with 48 M of Low Income consumers. The Purchasing ability of the reduced income consumers has increased by 27%.
Here Unilever had to develop a strategy for the target segment with a product that meets the consumers' need and prospects.
Based on the existing situation as mentioned in the case, Personally i think that the Unilever gets the pursuing options to penetrate the low income consumers at Brazil:
Option 1- Unilever could reposition the Minerva further down market with regards to Omo Brand
Option 2- Unilever could re-launch of the Campeiro as a low-cost brand
Option 3- Unilever could develop a cheaper version of the Omo brand
Option 4- Unilever can create a new Brand or launch a new brand from its profile in Brazil.
Option 1 will be less expensive option to use by Unilever since Minerva brand is already present in the mind of Brazilian consumers. But Personally i think that it was not well situated in the market. Minerva is something target to the middle income consumers and there was no details pointed out in the event about them. Thus repositioning Minerva to further down for low income consumers will certainly reduce its market talk about from 17% (refer Show 7) to even lower therefore it will create a new chance of other competitors on the market.
Option 2 will become costly and ineffective for Unilever because already Campeiro is recognized as a low cost and poor product (with ref. to demonstrate 8). Hence changing the image of Campeiro in consumers (low income) head will take a very long time to attain.
Option 3 cannot be executed by Unilever because Omo is a superior quality and high price product (ref. to exhibit 5, 7, 8 & 9). It would also create distress between your two version of Omo (Top quality and the cheaper version) in the detergent powder market. Gleam possibility that the consumers of Southeast also start eating the cheaper version on Omo and it will lead into the reduced sales of High quality Omo. So Unilever should not attempt to develop a cheaper version of Omo.
Option 4 based on the SWOT examination (refer stand 1, Web page no. 7); Unilever could intend to develop a new product for the reduced income consumers. Since Unilever is having a very vast range of detergent brands. So rather than investing to develop a fresh product, Unilever may also choose a product from its Latin America portfolio, a brand which satisfies the needs of low income consumers with in Brazil.
Unilever may use either of Yank or Press strategy to be able to penetrate the reduced income consumer market of Northeast Brazil.
There was without doubt that the best detergent available on the Brazilian market is Omo. With ref to the display 7, Unilever haven't any competitor for his or her Omo brand being the costliest product in the detergent powder market.
As per option4, Unilever should introduce the extension of Minerva Brand instead of developing a new brand. The expansion of Minerva brand as Minerva Blue 10/10; with more cleaning electric power while keeping the fragrance and less focus on softness; packed in the cardboard containers.
Now the next Marketing Combination should be applied to permeate the Northeast market:
Minerva Blue's target groups are the low income consumers who buy local brands and detergents from the tiny stores positioned in Northeast.
The Marketing Mixture for Press strategy is really as below:
The Minerva Blue would be packed in two sizes 1 Kg and 500 g. The Minerva Blue would be designed attractively so the even illiterate consumers can identify it very easily. The packaging should be designed so that it would be easy to open and also protect the natural powder from humidity.
The price of Minerva Blue should be cheaper than Campeiro. Unilever have to recognize a cheaper packaging formula so that it can reduce the whole deal price of Minerva Blue below than Campeiro. Unilever might use the following method of price the Minerva Blue:
Formulation cost: $ 1. 00
Packaging cost: $ 0. 30
Promotional cost: $ 0. 30
Distribution cost: $ 0. 05
Total cost: $ 1. 65
As per the details stated in the given case, Northeasterns are not in favor to shop from big outlets, they prefer to shop from small stores. The top issue is the fact that Unilever detergents are absent from 75, 000 stores in Northeast where the products of other rivals like P&G and as well as local brands are available. Distribution of the merchandise in Northeast is the major weakness of Unilever.
In order to cover all the 75, 000 small stores of Northeast, Unilever must have to introduce its products of vans, going to every single store endeavoring to list all Unilever detergent brands.
Unilever could also distribute its Minerva Blue brand in SE, according to display 2, approx 21% of the populace of Southeast is school "E".
Since the consumers of Northeast are buying from the near by small stores. Thus Unilever should focus to have deals and visibility of their products in those stores. The campaign should be in such a way that when a consumer joined into a little store must realize that the Unilever experienced created a brand Minerva Blue only for him, his own version of Omo. Unilever could follow the conventional ways of advertising ATL (Above the Series) campaign to provide the right subject matter to the reduced income consumers through mass media such as tv, radio, printing and banners to market its brand. As per the given details, the Brazilians are avid television watchers irrespective of their income. Unilever may possibly also promote their product in popular parties of Northeast like Carnival, "Forro Festivals" and "Maracatu".
The low income consumers might be unwilling to buy something marketed as "FOR LOW INCOME PEOPLE", since it gives a communication of second-rate quality product. So Unilever shouldn't use in an ATL communication the word of "FOR LOW INCOME PEOPLE ".
With ref. to the truth, there are total 7 products in the detergent natural powder market where 75% of market talk about captured by Unilever through its 3 products all merged: Omo, Minerva and Campeiro (ref. to demonstrate 7). Thus launch of a fresh product from its collection will create cannibalization for Unilever. The identical concern is also brought up by Mr. Fernanda.
So rather than introducing a fresh brand on the market, Unilever should concentrate to develop its detergent powder market share with the addition of new consumers. This can be achieved only by pushing the reduced income consumers to buy Unilever products. In other words, upgrade the laundry soap consumers to detergent natural powder consumers.
The marketing Combine for Draw strategy is really as below:
Unilever had to market their all 3 brands: Omo, Minerva and Campeiro in the tiny stores of Northeast.
The promotion strategy would stay same as Force strategy. In addition in store offers are very important. Unilever could offer a very attractive offer to the reduced income consumer which insist the NE human population to buy the Unilever products like Buy 1 Campeiro and get one free or can earn some things which could lead them to get a free of charge Omo etc.
The above strategy will catch the attention of new consumers for detergent powders. Together Unilever may possibly also signup business contracts to promote the Unilever products with the Washing machine dealers. So whenever any consumer purchases a new washing machine the dealer would suggest them to only use the Unilever Brand detergent powders.
The circulation strategy may be the same as stated in the Yank Strategy.
In addition to that, Unilever should ensure that in any small store their all 3 brands must be accessible at any moment with different SKU gives an chance to the suitable consumers to upgrade themselves for high price detergents. Unilever also needs to ensure that if the small store owners/managers can offer a special section of Unilever products where only Unilever products can be found. So in such case consumer don't have any options to buy every other detergent.
Currently Campeiro is the only brand centered to low income consumers which is designed for $ 1. 70 to stores compare to its real cost $ 1. 45. Thus at low cost price Unilever can hold the margin of around 17%. Hence Unilever could reduce its margin by redefining the method of Campeiro which could add some more attribute according to the need of NE consumers like clean and whiten clothes with a little variety with good level of foam, add some perfume etc.
Being the reduced income consumers doesn't affect their brand mindful. These consumers are always looking once and for all and reliable quality product at a good price. These consumers might not be able to afford the best make of the market, nonetheless they do start to see the high price of such products as a sign of value. Over three-quarters of the global human population is low income, and most of them have been historically beyond the reach of organized retailers.
In the given case study of Brazilian Fabric Wash Market, the population of Northeast is well aware about the Unilever Brand: Omo but credited to high price they can not afford it.
To serve low-income consumers effectively, Unilever must first take into account their lower purchasing vitality. To penetrate the reduced income market, Unilever might use the concept of 4 A's as below:
Promote offering through mix of outlets
Reduce Cost to serve
Shorten Source Chain
Select and support retailers
Reduce packaging size for low price per unit
Focus development on customers
Employ impressive thinking to meet
Fig: 4A's Diagram Sources: Jame Andereson, World wide web Blog "Offering the world's Negative, Innovation at the bottom of Economic Pyramid"
Based on these discussion of Thrust and Draw strategies, PULL strategy would give the result in an extended term but the Thrust strategy would give the result immediately. So I would recommend Force strategy as the Best Strategy for Unilever in Brazil.
In the short term, Money need to be invested and for that reason diverted from high grade brands to good deal brand. It gives Unilever a momentum and edge in a fast growing market. With the right strategy, low income consumers will be ready to pay for a fresh brand and Omo buyers won't move which will make Unilever a head in low-income consumer marketing.