Principles of Marketing - Essay Example

A Marketing Essay Company Background Unilever is a multinational consumer goods organization. It is headquartered in London and is one of the largestconsumer goods manufacturers across the globe. The organisation owns more than 400 brands and about 25 of its brands account for over 70 percent of its total sales (Unilever, 2013a). The products of Unilever include beverages, foods, personal care as well as cleaning agents. Few of its highest selling brands are Dove, Avaince, Axe, Knorr, Lipton, Tresemme, Hearband and PG Tips (Unilever, 2013b). It was founded in the year 1930 through a merger between Lever Brothers and Margarine Unie. The organization is listed in London Stock Exchange. The company has established factories and branches in every continent, except Antarctica. The subsidiaries extend to more than 100 countries. The biggest subsidiary is Hindustan Unilever, where Unilever holds 67 percent of the controlling share. Unilever is also known for its advertising and aggressive marketing strategy and is one of the largest media buyers across the globe. Major competitors of Unilever include Proctor & Gamble and Nestle. It also faces competition from local brands and smaller companies, dominating niche segments in consumer products categories. At present, the company employs around 173, 000 workers in various departments and functions. Unique Selling Proposition Unilever is one of the largest sellers of consumer products worldwide. It offers products to consumers of almost every demographics, including age, gender, class, social status and ethnicity. Thus, making the products available for every category, class and demographics, as well as in every corner of the market, is the most difficult process for the organization. However, from its achievement, in terms of penetration and market reach, it can be easily said that distribution is the biggest USP of Unilever. Products are sold through a complex network consisting of distribution centres, wholesalers, retailers, co-operative and independent grocery accounts, institutions and other food services. These are closely monitored and inspected at regular intervals. In countries where the company has a huge market share, it has established factories and manufacturing sites in order to enhance operations and distribution process. An optimised strategy for sourcing is selected for countries, where manufacturing operations are not established, taking into account factors such as, quality, innovation, cost, flexibility and service (Unilever, 2013c). Current Marketing Strategies At first, Unilever concentrated on expanding in Europe. However, after diversification and penetration, the European Market saturated. Current strategies of Unilever include worldwide expansion in selected product categories, disposal of all activities which no longer are profitable as well as considered core. It also planned to launch its business in various emerging countries so that its high dependence on Europe and South America is reduced and evenly distributed. In the year 1999, Unilever had declared that it will focus on few strong brands in order to promote quicker and faster growth. For this, the company would shred its brands to 400 from 1600. The latest marketing strategy involves concentrating on brand development and innovation of the focussed brands. The objective is to accelerate growth of the top line brands and increase the overall margin of improvement within a specified time (Balmer and Gray, 2003). Marketing activities also include a series of initiatives aligned with the organisational goals. The first marketing strategy includes revival of the top management with change in designation and roles. The company has been divided into two major sections; one is home and food and another is personal care. Any subsidiary businesses which make profits, that are less than required average, are being shelved off. According to the company, decentralising has been a useful strategy which helps in monitoring the profit levels and ensuring profit maximisation (Kotler, et al., 2002). It also implies various cost cutting measures, which are reflected in minimalistic pay for workers and lower level staffs. Another critical component included in the latest marketing strategy of Unilever is e-commerce. The current objective is to improve marketing and brand communication, online selling as well as simplifying the corporate and business-to-business transactions. The company has started investing heavily in digital marketing and capturing online media space. The company has made many recent deals with IT firms such as, IBM, Compaq and Microsoft, with the objective of enabling faster technological adoptions and opportunities for global e-commerce. In the year 2000, Unilever planned to shed an enormous amount of 130 million Euros for various initiatives in the e-business and digital advertising department, with the aim to create an online platform which never closes (Sophia and Zyl, 2009). Another profit maximisation strategy followed by Unilever in recent times is disposal of unprofitable businesses. The company has sold many of its acquisitions and mergers which are currently unprofitable, including Benedicta and European Bakery, amongst others (Corporate Watch, 2013). Apart from consolidation and cost-cutting strategies, the company has also established policies for outsourcing in order to assure that they only appoint the best third-party vendors and business partners. Branding is being given more attention, apart from distribution which has topped the priority list, since the inception of Unilever. Besides the major functions such as, sales, the company also focuses on capital efficiency through indirect restructuring and overheads management. In order to protect itself from local brands and duplicate products, the company has been following aggressive marketing with informational messages, enlightening consumers about fake branding and persuading them to use original Unilever brands only, for good quality results (Haberberg and Rieple, 2008). Firm Future United Kingdom, one of the most developed nations across Europe, is a powerful nation in terms of political and economic environment. The literacy rate is very high and people are highly orientated towards modernised activities and technology. More than 50 percent of the population is between the age group of 15-50 years. Dominated by a younger population, it is imperative for the organisation to use latest advertising and marketing strategies such as, social media and personal selling, in order to woo these people. Though the company has been involved in various cost-cutting and profit optimising activities, yet it has garnered negative-publicity and criticism from various media, press as well as investors. The changing buyer behaviour suggests that customers are looking for products with multifunctional properties. As mentioned earlier, United Kingdom lies in the category of developed nations and consumers are willing to pay premium prices for better quality products. Thus, focus should be on research and innovation as well as launching of products with better qualities and features compared to its closest competitors (Marieke, 2004). Apart from focussing on research and development practices, the company should also stress on innovative marketing and brand building activities. Contemporary consumers are quite informative and intelligent and seek something more than just a product or service. So, engaging consumers in various activities and campaigns and providing them with benefits in order to enhance their everyday life, should be one of the key priorities for the organisation’s marketing strategy (Ferrell and Hartline, 2010). The company’s sales and overall growth rose 35 percent in the year 2001, when the first restructuring process had begun. However, the company has seen fluctuating growth trends in the past few years (Unilever, 2013d). This can be attributed to frequent changes in consumer demands as well as low brand loyalty and higher switching among products. Hence, the company needs to focus on marketing as well as brand building activities in order to revive customer loyalty and trust for the brand as well as establish long-term relationships with them. Market Research Activities These include collection of primary and secondary data, which would help in analysing the current situation and predicting future strategies and recommendations for the organisation. For instance, annual reports on company websites suggest that it reaches almost 150 million customers on a daily basis. The organisation’s target segment ranges from kids, adults, professionals, middle ages and senior citizens. Other market research activities may include conducting surveys on brand awareness as well as brand recognition. Focus group surveys can be conducted to understand brand equity and brand loyalty (Blaxter, Hughes and Tight, 2006). SWOT Analysis Strengths Market Size- Unilever is one of the market leaders in consumer products and food segments, capturing around 40 percent of total consumer products market (Schultz and Kitchen, 2000). Brand Recognition- Unilever’s brand recognition is extremely high, even better than its closest competitor, P&G. Even when consumers are not aware of the company, Unilever brands (like, Dove) have become household names across the globe. It is also said that consumers come in contact with Unilever brands at least once a day (Johnston and Bate, 2003). Portfolio- The company’s high and vast brand portfolio establishes a strong position and exerts a brand statement unmatched by its competitors. At present, the company has 400 profitable brands, capturing almost every retail and distribution format. Weakness Organisational Structure- The hierarchal structure of Unilever is extremely complex. Top management is divided into various smaller divisions, which has resulted in confusions and mis-interpretations with respect to job responsibility, roles and assigned territories. Poor Performance- Over the past five years, the company has recorded fluctuating growth and marginal profits, owning to the volatile economy, changes in consumer perception and intensified competition. The company’s strategies and management policies are not giving expected results. Opportunities Urbanisation and Globalisation- There is a huge opportunity in many emerging markets such as, Middle-East, Africa and Latin American nations, where the penetration is still sparse. Few of the high and common needs such as, instant food, can be easily generated and launched in these nations (Williams and Cutis, 2012). Economic Liberalisation and Trade Agreement- Economic liberalisation will help Unilever to enter nations, which could not be reached due to strict economic and trade policies. Thus, the company can reach new markets and even establish products which are dying out in various saturated market (Stuart and Dubitsky, 1996). Threats Competition- Competition is regarded as one of the major threats for the organisation. The company not only fights big brands such as, P&G and Nestle, but is also challenged by smaller niche brands as well as duplicates. Substitutes of various products are among other threats which eat away smaller chunks of market share. Non-marketing activities Apart from focussing on marketing and advertising strategies, Unilever can also focus on non-marketing activities such as, HR, finance and operations. Integrating the finance and operations departments with sales and advertising will not only fasten the overall process of strategy implementation, but will also help in improving coordination and faster flow of information among various departments. Effective recruitment and selection will ensure that appropriate talents are hired, who are able to successfully implement the various decisions taken by the top management. Other HR activities such as, performance management, training and development of employees, will ensure productivity and positive motivation among employees (Wright, et al., 2005). Future Assumptions Looking at the current situation, changing pace of consumer and industry, increasing competition as well as level of resources available, it is imperative to conclude that tough times are not yet over for the consumer products giant. With the increasing prices of raw materials, intensified competition and ever-changing consumer demands, Unilever will have to constantly innovate and launch winning products in every category (Pettigrew, Whittington and Thomas, 2006). Over the last five years, the company has actively established various standards and strategies in order to revive its falling market and enhance efficiencies. The results suggest that the company has been able to pull off its marketing plan in a successful manner. Nevertheless, future threats may come in the form of technology as well as diversified and intensive competition. The company has also been criticised for its cost-cutting measures which have negatively impacted the employees and workers. The above status demands an urgent and effective marketing plan with a 360 degree approach. Proper monitoring and coordination of various departments as well as building better and more intensive relationship with the consumers should top the list while making any strategy or action plan in future. Reference List Balmer, J.M.T. and Gray, E.R., 2003. Corporate brands: what are they? What of them? European Journal of Marketing, 37(8), pp. 972–97. Blaxter, L., Hughes, C. and Tight, M., 2006. How to Research. 3rd ed. New York: McGraw-Hill International. Corporate Watch, 2013. Industry Area: Branded and packaged goods including foods and home and personal care products. [online] Available at < http://www.corporatewatch.org/?lid=257> [Accessed 10 January 2014]. Ferrell, O. C., and Hartline, M. D., 2010. Marketing strategy. 5th ed. Connecticut: Cengage Learning. Haberberg, A. and Rieple, A., 2008. Strategic Management. Oxford University Press, New York. Johnston, R.E. and Bate, J.D., 2003. The Power of Strategy Innovation: A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities. American Management Association, New York Kotler, P., Armstrong, G., Saunders, J. and Wong, V., 2002. Principles of marketing. Harlow: Financial Times Prentice Hall. Marieke, D., 2004. Consumer behaviour and culture: Consequences for global marketing and advertising. Thousand Oaks, CA: Sage Publications. Pettigrew, A. M., Whittington, R. and Thomas, H., 2006. Handbook of strategy and management. California: SAGE. Schultz, D. and Kitchen, P., 2000. Communicating Globally: An Integrated Marketing Approach. Chicago, Illinois: NTC Business Books. Sophia, A. and Zyl, V., 2009. The impact of Social Networking 2.0 on organisations. The Electronic Library, 27(6), pp. 906 - 918. Stuart, A. and Dubitsky, T. M., 1996. Changing Needs For Brands. Journal of Advertising Research, 1, pp. 21-29. Unilever, 2013a. Introduction to Unilever. 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