Brand Awareness: Unilever - Case Study Example

Case Study – Unilever Submitted by: XXXXXXXX Number: XXXXXXXX of XXXXXXXXX XXXXXXXX XXXXXXXX XXXXXXX Date of Submission: XX – XX – 2010 Introduction: One of the world’s largest and most well known companies is Unilever. The company has grown over the years and has built a world of their products. This paper aims at discussing the performance of Unilever since 2006 and to analyze of the company’s initiatives and the strategic planning has been successful. The paper will also discuss the initiatives taken by the company to develop a brand image and awareness and the steps that the company has taken to create awareness among the customers in the UK. The paper will discuss the steps that Unilever has taken to build its brand in the markets and has been able to build its brand awareness among the customers. The paper will move on to discuss the possible future strategy for Unilever to be able to sustain the current market position and to develop the business based on the changes that are present in the environment. The paper will discuss the recommendations for the company and will provide an overall strategy to be able to retain its position in the international markets. The main aim of this paper is to understand the current positioning of the company and to use this to build a future strategy for the company. About Unilever: Unilever was started way back in 1930 as a result of a merger between the Lever Brothers and Margarine Unie. The company has grown over the years and currently the company employs as many as 163,000 people around over 100 countries worldwide. The company has a worldwide turnover of almost €39.8 billion (Unilever, 2010). The company has spread the reach of its products to almost over 170 countries across the world and a number of these countries not only sell the products but also manufacture them. Almost 75% of the sales of the company is from the 25 top brands that the company has as a part of their portfolio. Unilever has been recognized to be the global leaders in the foods sector and it includes various foods like savory, dressings, tea, ice creams, and also spreads. The company has also been recognized to be leaders in the Mass Skin Care and Deodorants and has also created a mark in the Home and personal care sectors (Unilever, 2010). The company spends a lot of money on the research and development and has been noted to have spent as much as €891 million in 2009. Unilever has worked towards building its manufacturing units across over 264 sites worldwide and the company aims at ‘for improved performance on safety, efficiency, quality and environmental impacts, working to global Unilever standards and management systems’ (Unilever, 2010). Unilever has also been actively participating in the community and has invested as much as €89 million in the community projects for the financial year 2009 – 2010. Unilever has been able to develop a company with loads of innovativeness and dedication and has been able to get recognized as a global company with a very strong brand portfolio and with excellent relationship with the retailers. The company has also been able to reach the economies of scale which in turn has been a major benefit for the company as it helps in the costs management. Unilever has been able to become the word leaders in a number of products and sectors. As seen in the presentation by Cole, et.al., the company has faced major competition from P&G, Kraft and Nestle. The picture below provides an insight into the comparison of these competitors. Figure: Competitor Comparison (Cole, et.al, 2003) The above table clearly shows the position of the company along with a clear indication of the position of the company in the markets. Unilever has been known for the principles and values based on which the company operates. The company’s corporate purpose states, ‘to succeed requires the highest standards of corporate behaviour towards our employees, consumers and the societies and world in which we live’ (Unilever 1, 2010). The company also operates on the following values and this is clear from the overall performance. The values include, ‘a) Always working with integrity, b) Positive impact c) Continuous commitment d) Setting out our aspirations e) Working with others’ (Unilever 1, 2010). The current Chief Executive Officer of the company is Paul Polman, who was appointed in October 2008 and took up the post on 1st January 2009. He has been the first outside candidate that has been chosen for the role of the CEO of Unilever. The next section will detail the performance of the company since 2006, and an attempt has been made to critically analyze the operations and processes of the company. The next section also details the success and failures that the company has seen in terms of the strategies used. The main aim is to learn the position and performance of the organization in the past 4 years. Unilever’s Performance since 2006: The past four years have been incredible years for Unilever and the performance of the company. Before moving into the analytical evaluation of the growth of the company, it is necessary to get a brief overview of the various decisions and steps that the company has taken. The year 2006 has been very eventful for Unilever when the company’s chairman Antony Burgmans stepped down after being with the company for 35 years and Michael Treschow took control of the company and acted as the independent Chairman of the Boards of Unilever. This was a major change for the company however was received well. The company took a major step, and introduced a new technology where they created a Small and Mighty. This product and innovation was a super concentrated liquid laundry detergent which was developed and was very useful as it uses one third of the packaging, water and also the transportation of the dilute liquids (Unilever, 2010). The following year brought about the acquisition of the Buavita vitality drinks, a major drinks brand in Indonesia and Inmarko, which was a major business and leading ice cream business in Russia. The year brought about small and big expansions and also intense improvements and initiatives in the ethical living. The company took on a major step, as the website explains, ‘Unilever commits to source all of its tea from sustainable, ethical sources, asking the Rainforest Alliance to start auditing its tea suppliers with immediate effect. The company aim is to have all Lipton Yellow Label and PG Tips tea bags sold in Western Europe certified by 2010 and all Lipton tea bags sold globally by 2015’ (Unilever, 2010). This is a major step and it traces the company’s footsteps towards a more environmental friendly product and environmentally safe world. The following year, i.e. 2008, has also been very eventful and has seen the retirement of the Chief Executive Officer Patrick Cescau post the 35 years of service to the company. He was succeeded by the Paul Polman who took on the post on 1st January 2009. Again this was quite different from the rest as Polman was the only external person who took up this position. In terms of the home and personal care and foods section, the company has created this to become one single category structure. Also in terms of the areas, Central and Eastern Europe were clubbed together with Asia and Africa and these now fall into a single category. The Western region of Europe however falls into a separate region all by itself. The company had also used this year as a time to sell off a number of its businesses which includes the laundry business, edible oil business in Côte dIvoire along with the oil palm plantation ideas of Palmci and PHCI as well. The other businesses also include the Bertolli olive oil business and the vinegar business with Grupo SOS, which were also sold off (Unilever, 2010). Unilever also committed to move the sustainable palm oil sourcing by 2015. The company also took the initiative by buying the first batch of the certified palm oil in November that year. Unilever has also broken all records and has been the only company to achieve the ten years in a row food sector leader in the Dow Jones Sustainability index. Unilever has developed its strategies based on the two five year plans that the company has developed. These plans have basically been aimed at the improvement of the sales growth and also the improvements in margins and the future earnings growth. The first of these five year plans was developed in 2004 and was referred to as the ‘Path to Growth’ which has been used for brand overhaul. The company has also been noted to have spent as much as €30bn on buying excellent brands like Slim – Fast and Hellmann’s as well as reducing their brand as discussed above to a great extent. The company has also reduced the number of brands from 1,660 to almost 400 brands within a short span. However the company has not seen the level of achievements and the success as expected from such changes and improvements. The revenues of Unilever have seen to be at a decline and have been falling to a great extent although large amounts of money have been spent on the sales and the promotions. As explained in The Economist, ‘This slump has continued into 2005, with profits undermined by the heavy advertising and marketing spend needed to maintain sales growth in slow Western markets, as well as by high fuel and raw material costs’ (The Economist, 2005). One of the main reasons is that the Western food markets are mature and the food business is one of the main components of Unilever and accounts for a major proportion of the revenue stream. All the above mentioned activities have a major impact on the overall strategy of the company. The company has clearly seen immense growth and improvements over these years. There have been extremely successful strategies to sell away a number of the companies and brands. Also the green initiatives by the company have contributed to the society to a great extent and have allowed an increase in the overall recognition of the business as well. The next section will deal with the steps that the company has undertaken to improve the brand image and the brand awareness within the markets. Brand Awareness: Brand Awareness has been defined as, ‘the level of brand recognition that consumers have of a particular brand and its specific product category. Brand awareness examines three levels of recognition: whether the brand name is the first to come to mind when a consumer is questioned about a particular product category; whether the brand name is one of several that come to mind when a consumer is questioned about a particular product category; and whether or not a consumer has heard of a particular brand name’ (BNET, 2010). Unilever has been conducting a number of events and a number of steps to help improve the brand awareness among the customers. It is clear that the company has been taking a number of measures to improve and develop their brand awareness and to beat the competition as well. One of the best examples of this includes the recent method used by the company to team up with Tesco and to bring out a 17 page ‘flip – cover mini magazine’. This has become a bi – monthly customer magazine and was developed as an initiative to promote the Unilevers Dove Men + Care range (Whipp, 2010). The company has spent quite a lot on the awareness of their brand and has set a contract for a year with Tesco Magazine with a wide range of magazines including titles like, ‘Dad of the year competition’ (Whipp, 2010). Unilever has been seen to take a number of such initiatives to help develop and improve the brands and the brand image of all its products. The company has been clearly concentrating on the promotions to a great extent and has also been more aware of the customer’s brand awareness. There have been a number of such initiatives to help improve the overall brand awareness of the various brands in the UK. Unilever has spent high amounts of funds on the improvements and the brand awareness and this has definitely had a major impact on the business and the ability to sustain itself for the past few years. UK is a very big market for the company and contributes to a major part of the sales. Unilever in the Future: Unilever has a number of possibilities for the future. The company can work on improvements of customer needs by learning more about the customer preferences and also learning more about needs and desires of the customers. The company however requires having a few adjustments and improvements to the overall business across all the locations worldwide. Unilever has launched a new five year plan named Unilever 2010, as its strategy for continuing its Path to Growth. In this five year plan, Unilever will continue to focus on improving the core brands of the company (The Economist, 2005). However there is a significant improvement in this five year plan. Under the Unilever 2010 program, the company will not have any short term financial goals to be achieved. This will remove the hurdles in the previous five year plans and the company will have the freedom of movement. This move is a clear indication of Unilever’s objective to create innovative products under the core brands and acquire more market share by differentiation and brand extension. Unilever 2010 redirects its focus on the shareholders by increasing its total shareholder returns and dividends. Unilever also has promised a sustained growth of 3 – 5 %, though it has not set any annual targets for the year 2010 (The Economist, 2005). The change in strategy direction is mainly due to the current global economic crisis. Moreover the company’s food business is located mainly in mature markets. Unilever has adapted to the changing times over the last 8 decades and has emerged successfully. Though the current economic slowdown has had an effect on the company’s revenues and income, Unilever has remained flexible and focused on improving the core brands and continued its investments on Research and Development. It is evident that the company is focusing on its long term success rather than short term financial gains. The company has to continue its Path to Growth from 2010 and continue its aggressive expansion strategies. This is the best strategy direction to be followed for a company of such a scale and market share. Conclusions: From the above discussion it is clear that Unilever has taken a number of initiatives to help improve its business and has also worked on the improvement of its strategies in the past few years. The company has clearly concentrated on improving their promotional activities and has also worked on the development of strategies to help build awareness among the customers in the UK. The company has over twenty five brands in the food sector alone, apart from the nine brands in the personal care sector, four brands in the home care brands that it has in the UK alone. The company clearly has been able to build and sustain its brand image and has been able to provide the country with a wide range of excellent products. Unilever has a high potential to improve in the future and to develop and sustain the current level in the markets as against the competition. The next five year plan that is available will also provide to be very beneficial for the company and will prove to help the company improve in its overall performance as well. Unilever has been able to sustain and be the top brand for several years now and will also continue to be so in the future if the strategies are well thought out and care is taken while dealing with the overall business. Bibliography BNET, 2010, ‘Business Definition for: Brand Awareness’, Accessed on 26th March 2010, Retrieved from http://dictionary.bnet.com/definition/brand+awareness.html Cole, B; Green, R., McClinton, K., Richardson, S., Webster, D., 2003, ‘Unilever’s Path to Growth Strategy: Is It Working?’, Accessed on 24th March 2010, Retrieved from http://www.scribd.com/doc/2074712/Unilever-Strategy The Economist, 2005, ‘World food: Key player – Unilever’, 3rd November 2005, Accessed on 24th March 2010, retrieved from http://www.eiu.com/index.asp?layout=IWArticleVW3&article_id=749548460&refm=iwIndustry&industry_id=290000029&rf=0 Unilever 1, 2010, ‘Purpose & principles’, Accessed on 25th March 2010, Retrieved from http://www.unilever.co.uk/aboutus/purposeandprinciples/ Unilever, 2010, ‘Key Facts’, Accessed on 25th March 2010, Retrieved from http://www.unilever.com/aboutus/introductiontounilever/unileverataglance/?WT.LHNAV=Unilever_at_a_glance Whipp, M, 2010, ‘Unilever and Tesco tie up for mini magazine Dove promotion’, 9th March 2010, Accessed on 26th March 2010, Retrieved from http://www.printweek.com/printbuying/news/989184/Unilever-Tesco-tie-mini-magazine-Dove-promotion/ Read More