Advertising Theory Employed by Unilever - Case Study Example

Advertising At Unilever Contents Introduction 3 2.Advertising Theory Employed by Unilever 4 3.Unilever - Advertising and Media Agencies 5 a.Assessing and Paying the Ad and Media Agencies 6 4.Ethical and Regulatory Issues 7 5.Functional Aspects of the Advertising Campaigns 7 6.Advertising Objectives and Analysis 9 7.Advertisement Pre-testing and Measuring Its Effectiveness 9 8.Recommendations 10 9.References 11 Clift, S. (2009). Building Marketing Capabilities. Available: http://www.unilever.com/ images/ir_1.3_building_marketing_capability_clift_tcm13-86716.pdf. Last accessed 21st May 2012. 11 Dubbink, W. (2011). A Question of Involvement. In: Liedekerke, L.; Dubbink, W. and Luijk, H. European Business Ethics Casebook: The Morality of Corporate Decision Making. Heidelberg: Springer. p113-120. 11 Foster, S. (2011) ‘Unilever chief Polman’s ambitious growth target means ad bonanza for agencies’, More About Advertising, 13 June. Retrieved from http://www.moreaboutadvertising.com/2011/06/unilever-chief-polmans-ambitious-growth-target-means-ad-bonanza-for-agencies/. Last accessed 21st May 2012. 11 Initiative Media. (2011) Thought Leadership. Available: http://www.initiative.com/english/ thought-leadership. Last accessed 21st May 2012. 11 Katzenholtz, J.; Young, C. and Kerr, G.. (2004). Does day-after recall produce vanilla advertising?. Admap. June (1), p34-36. 11 Lamb, C. and Dunne, P. (2011) Theoretical Developments in Marketing. Arizona: Marketing Classics Press. p120-128. 11 1. Introduction The seeds of origin for Unilever were sown in UK and Netherlands, by Hesketh Lever back in late 1890s with the idea of Sunlight soap, though the actual company formed in 1930. From the modest beginning, today it has grown into a consumer product giant with 400 brands. Their product portfolio includes those related to personal care, home care, food, hygiene, nutrition, health and beauty. These are used in more than 190 countries around the world, with dual headquarters in UK and Netherlands. Driven by strong and futuristic principles, the company registered a turnover of £44.3 billion in 2010, the net profit being £4.6 billion. It has 12 power brands that drive annual sales of more than £1 billion. Unilever is a workplace for around 170,000 employees. The company’s success is hugely attributable to its belief in maintaining high standards of corporate behavior, be it at the consumer, stakeholder or community participation levels (Unilever, 2011). The sustenance of a brand in consumer product sector is dependent on its promotion, which is again largely shouldered by advertising. This is because of the competition in the industry and the need to reach out even to the remote population, in order to tap some extra space in the market pie. The pull effect caused by advertising in the consumer product range far exceeds that resulting from other methods of promotion, mainly because of its reachability, influence on consumer preferences and buying decision (Lamb & Dunne, 2010). Unilever also abides by this mode of promotion, due to the widespread nature of its operations and multiplicity of products. It sees advertising as a medium to explain the benefits of Unilever’s products, while actively engaging the consumers in improving not only the company’s products, but their own lives. The advertising and promotional expenses of the company amounted to 5.6 billion euros in 2010 (Unilever, 2011). Ad Age Digital reports that this advertising budget of Unilever is ranked second highest investment by various companies in the function, after Procter & Gamble. 2. Advertising Theory Employed by Unilever Advertising and promotional aspects of Unilever are driven by an ethical code of conduct that helps them act responsibly. They strive for clear and correct communication regarding the products, rather than make false promises and spread biased information. All the advertisements are regulated by their ‘legal, decent and honest’ test criteria. The company also obliges to World Federation of Advertisers’ guidelines. It has separate guiding principles for internet-based advertising (Unilever, 2012). In case of promoting foods and beverages, Unilever has developed norms in 2003. These standards are revised in a timely manner and special code is developed for advertising kids foods. Membership in ‘Pledge Programme’ also regulates the advertising ethics of Unilever for children (Unilever, 2012). The primary emphasis all the advertising attempts is to sell a single idea that would directly impact the consumer perceptions, taking competitors into consideration. A linking bond is established between the idea and the product. Advertising agencies bear the responsibility until the phase of providing a copy of the advertisement on what is to be communicated, i.e., the concept and message. Copy testing might be conducted, if the company doubts the agency’s product. Unilever finalizes the copy and then, hands it over to media agencies to decide on how to communicate the message to the consumers. The most feasible medium to propagate and communicate the idea is selected by the media agencies, bearing the company’s budget in mind. Unilever believes that ‘medium is the message’. This message would create an urge in the consumer to buy the product. The advertising theory followed by Unilever spells out its idea to stimulate the thought process of consumers. For hygiene, sanitary and health care products, Unilever uses consumer testimonials and competitive product comparison, as the concept of promotion. For personal care and beauty products, the company uses celebrity endorsements and testimonials to advertise their products. Problem-solution and comparative advertising are used in case of detergent and home care products. Unilever is also known to use humoristic and provocative forms of advertising for some products like food brands. Cohesive alternative model of advertising is used in case of Axe, where the product is highlighted as compared to other similar brands from other popular companies (Morgan, 2004). Emotional engagement of customers is aimed at by the advertising theory practiced in case of detergents such as Omo(‘Dirt is Good’ campaign). The company uses an assortment of media in its advertising communication, ranging from its product labels, mass media, print, online and mobile media. It uses a judicious mix of traditional, innovative and digital media to propagate the messages regarding the products. The latter is allotted a budget of almost 13 percent in 2012. This shows the increasing emphasis on digital mode of advertising. However, it has put aside the prospects of social media advertising after failing to associate the advertising expenses on facebook ads with sales income (Unilever, 2011). 3. Unilever - Advertising and Media Agencies Emphasis on advertising besides dealing with the challenges thrown by the competition and market is not an easy task to juggle for a multinational company such as Unilever. Further, advertising is a very creative discipline, which can be handled better by professionals. The promotional campaigns must be planned in an objective manner, taking the consumer perspective rather than that of the manufacturer. Once the themes and campaigns are strategized, it becomes essential to plan out the marketing communication mix, which is again an expert’s domain. So, Unilever employs a number of advertising and media agencies for this task. Lowe, Lowe@Alfred, O&M, McCann Erickson, PHD, Initiative Media and Mindshare are some of the companies that manage the advertising and media campaigns of Unilever (Unilever, 2010). Lowe and partners is a congregation of various agencies and is known for ‘Populist Creativity’. The company campaigns for Surf Excel, Wheel, Fair & Lovely, Pureit, Axe, Lifebuoy, CloseUp, Pepsodent, Vim, Clear, Hamam, Breeze, Sure, Knorr, Sunlight, Cif and Kwality Walls. Mindshare is a multinational network integrated by its team spirit. Dove, Axe, Rexona, Degree for Men, Omo etc. Dirt is Good campaign for Omo brand in Netherlands is its most popular contribution. Lynx, Rexona and Dove are some of the brands of Unilever, for which Initiative Media designs the advertising campaigns. It is a media company that believes in creativity that is driven by performance (Initiative Media, 2011). PHD is a worldwide network which has spelt success to Unilever in China. The company is backed up by its creativity and innovation. McCann Erickson borrows its creativity to Unilever for advertising its food and nutrition products, mainly butter and margarine. O&M works for several products of Unilever. It has developed the concept for the famous Hellman’s Vignettes. a. Assessing and Paying the Ad and Media Agencies Previously, Unilever used to pay the advertising agencies a commission of flat 10 to 12 percent on advertising budget. Further, a bonus is paid if the performance of the advertised product was superlative during a particular period. This was fixed with the idea that good income at the disposal of the agencies meant good amount available to be spent on creative talent and best services. However, due to the economic crisis and the falling market share in cosmetic and toiletries range led the company to review its payment mode. Unilever has conducted two global media reviews in the last two years, in order to revamp their ad agency focus and commissions. They switched to a performance-based package in 2009. The commission was brought down to 5 percent of the profit margins and the payment period is extended from one month to two and three months. The agencies were asked to revise the rates charged per hour and urged to take a consumer perspective to bring out the most creative concepts (Foster, 2011). 4. Ethical and Regulatory Issues Unilever is one of the companies that emphasizes on ethical marketing and advertising practices. The company believes the fact that ethical advertising is a means of building a positive brand image in the minds of consumers. This is true, given the new generation of ethically and environmentally conscious consumers and socially responsible competitors. Unilever sees its media and advertising agencies are aligned along its principles and philosophies It has been named the most ethical company in 2009 by Covalent group. Dove’s Real Beauty campaign of 2005 gave the necessary impetus to ethical advertising. It highlighted the fact that real women with varying body sizes constitute real beauty. The company does not rely on stick-thin models to endorse their products. This is a vital indicator when the merchandise advertised are cosmetics, beauty and body care products, as women directly relate to these models and products (Patterson and Wilkins, 2010). Unilever is indulging in marketing the cause and brand in a parallel manner. However, the causes that it endorses generally relate to the brand, rather than popular causes that do not speak for the brand. Its corporate sustainability advertising plan is in the pipeline. 5. Functional Aspects of the Advertising Campaigns The origin of Unilever itself happened with the idea of spreading personal hygiene through Sunlight soap, by its founder Mr. Lever. The company has spent huge sums on advertising, but there has been a mixed response to its campaigns thereafter (Unilever, 2011). The Real beauty campaign for Dove in Britain in 2005 and Evolution in 2006 were runaway successes. It brought forth the intentions of real women to change the projection of their real beauty by media. ‘Dirt is Good’ campaign which was started in 2007 in Netherlands and was spread to the other counterparts after its success. This made the consumers ponder over the necessity of outdoor games for kids (Mindshare, 2011). A campaign on Vaseline intensive care was planned along the health care networks in four phases in 2010. It highlighted the improved moisturizing capacity of the lotion among the professionals, who are regarded experts in creating trust to the wider audience in this aspect. The chocolate temptation and other campaigns of Axe are considered to be the most provocative ads ever produced and were huge hits, but for the high pitched voices of feminists against them. Sunsilk keratinology campaign that shows how experts’ inputs enrich Unilever’s hair care product attracted the consumers too. Hellman’s vignettes, released in 2010, was used to endorse 6 different brands of Unilever, in collaboration with AMC’s ‘Mad Men’. It is considered to be an innovative method of advertising and became popular, even online. Unilever has seen some pitfalls as the humor it has incorporated into its food products and Pot Noodles advertisements tickled the unwanted nerves of consumers. They felt the campaigns to be mocking and sarcastic, and opposed them. The company is abused of promoting lighter skin as the standard through its fairness products that are primarily advertised in India (Dubbink, 2011). It is also accused for its thinning diet products ads in Asia and children-based detergent advertising in Sri Lanka. The real beauty recommended by Dove is negated by provocative Axe advertisements. These contradictory messages exposed the hypocrisy of Unilever. 6. Advertising Objectives and Analysis The company aims to primarily promote creativity and risk-taking among its advertising partners, so that their objective of designing thought-provoking ads is attained. Along with this, the company brought customer focus along the various functional areas and levels of hierarchy, so that marketing and advertising becomes a responsibility of all the domains of the organisation. ‘Consumer Nation’ campaign urged all the work force to think like the consumers and borrow their ideas to the advertising team (Clift, 2009). The company aims to produce ads which depict close proximity to the lives and habits of consumers. Catering to the latest interests of consumers, Unilever also aims to use digital communication media. The company aspires to streamline its products and range of brands, in order to concentrate on successful brands. Unilever has been effective in all these endeavors, which can be deduced from the successful promotional campaigns that are resultant of these advertising objectives of the organisation. The customer engagement and influence on their buying behaviour is also reflected in sales figures, especially in beauty and personal care products which segment has seen a growth of 6 percent in 2010 (Unilever, 2011). 7. Advertisement Pre-testing and Measuring Its Effectiveness For television advertisements, Unilever used day-after recall test until recent times. This helped them understand the components of the ad that has influenced the consumers the most. Attention factor helped in the pre-testing, i.e., in deducing whether the core idea of the advertisement has been successful in grabbing the attention of the consumers or does it need a modification. Recall component helped in testing the effectiveness of the ad. Unilever used this mode of testing until 2003, after which the effectiveness of this test came under scanner by various research studies (Katzenholtz, Young and Kerr, 2004). For print advertisements, surveys on brand image are run before and after the ads are released. This helped them in assessing their effectiveness. 8. Recommendations The name of the company that has innovated more than 400 popular brands needs due recognition and exposure. So, Unilever must promote the name and logo along with their brands in the advertisements. This helps in establishing a quality perception of the brand Unilever among the consumers. The health drinks that Unilever produces, like Lipton Tea and Red Bull could be advertised by highlighting their health benefits and showing the consumers how these are better than the aerated drinks. This attempt grabs the attention of health conscious youth. The sustainability initiatives can be incorporated into advertising. For example, the company has reduced the weight of packaging used for personal care products like Dove in 2012. This can be used to influence the buying behavior of eco-conscious consumers. Rather than joining the competitive advertising rat race in case of detergents and shampoos, the company can highlight the attributes and benefits of the product. This helps in creating a decent brand image among consumers. Multinational advertising and media campaigns might be planned using the scale of resources available with Unilever. Unilever can cash in on their power brands, by making them the focus of advertising, more so in developing countries and emerging markets. 9. References Clift, S. (2009). Building Marketing Capabilities. Available: http://www.unilever.com/ images/ir_1.3_building_marketing_capability_clift_tcm13-86716.pdf. Last accessed 21st May 2012. Dubbink, W. (2011). A Question of Involvement. In: Liedekerke, L.; Dubbink, W. and Luijk, H. European Business Ethics Casebook: The Morality of Corporate Decision Making. Heidelberg: Springer. p113-120. Foster, S. (2011) ‘Unilever chief Polman’s ambitious growth target means ad bonanza for agencies’, More About Advertising, 13 June. Retrieved from http://www.moreaboutadvertising.com/2011/06/unilever-chief-polmans-ambitious-growth-target-means-ad-bonanza-for-agencies/. Last accessed 21st May 2012. Initiative Media. (2011) Thought Leadership. Available: http://www.initiative.com/english/ thought-leadership. Last accessed 21st May 2012. Katzenholtz, J.; Young, C. and Kerr, G.. (2004). Does day-after recall produce vanilla advertising?. Admap. June (1), p34-36. Lamb, C. and Dunne, P. (2011) Theoretical Developments in Marketing. Arizona: Marketing Classics Press. p120-128. Mindshare. (2011) Who We Are. Available: http://www.mindshareworld.com/what-we-do/case-studies/?topic=&topic=topic308&x=6&y=0&topic=&topic=&topic=&year=. Last accessed 21st May 2012. Morgan, A (2004). The Pirate Inside. West Sussex: John Wiley & Sons.  Patterson, P. and Wilkins, L. (2010) Media Ethics Issues & Cases. 6th ed. New York: Tata McGrawHill Publications. p97-102. Unilever. (2010) Unilever realigns portfolio of media agencies. Available: http://www.unilever.com/mediacentre/pressreleases/2010/Unileverrealignsportfolioofmediaagencies.aspx. Last accessed 21st May 2012. Unilever (2011) Introduction to Unilever- March 2011. London: Unilever- Investor Relations Team. Unilever. (2012) Advertising and Marketing. Available: http://www.unilever.com/ sustainable-living/consumer/marketing/. Last accessed 21st May 2012. Read More