Case Study: “Unilever in Brazil: Marketing Strategies for Low-income Countries”

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[Inicio del Case Study]

 

El siguiente es un estudio de caso sobre las estrategias de penetración de Procter & Gable por un lado y Unilever por el otro, en el segmento de “muy bajos recursos” de Brasil con su producto: “polvo para lavarropas”. Este artículo está basado en una investigación realizada por los señores Chandon y Guimares, del INSEAD; su autor es el Lic. Jorge A. Aimaretti y se publicó en el Management Herald, Año 3, Número 35 de Junio de 2005.

El artículo original de la web del INSEAD se encuentra aquí.

South American Soap Opera

Unilever in Brazil: Marketing Strategies for Low-income Countries

Pierre CHANDON, Pedro Pacheco Guimaraes

INSEAD Case Study: South American Soap Opera

Copyright: INSEAD 2004

The biggest emerging markets are obviously very appealing to multinationals. But even the global players with the most sophisticated R&D departments or the longest experience in the developing world have seen their best efforts to reach the lower income consumers go astray. The most popular brands that have succeded in developed countries are typically far too expensive. But lower prices mean both lower margins and increased risks of cannibalising the profits of higher-priced brands. 

Assistant Professor of Marketing Pierre Chandon and INSEAD Alumnus Pedro Pacheco Guimares study the recent experiences of the two biggest global players in the detergent industry – Unilever and Procter & Gable – in trying to market washing powders to the tens of millions of poorer consumers in
Brazil. The authors focus on Unilever´s highly ambitious “Everyman” project of the mid-90s. This began with extensive field studies to help determine wheter it was in the corporation´s interests to enter the lower end of the domestic market.

The rivals had quite different statures within Brazil at the time. Unilever had achieved a quite remarkable 81% market share in the washing powder sector and was a consumer goods pioneer in the country. P&G was a very distant second and had entered the local market far later. However, it had a much-envied R&D unit as well as extensive marketing experinece worldwide. Its potential long-term threat to Unilver was obvious. 

Chandon and Guimares relate the experiences of the head of Unilever´s Home Care division in Brazil, Laercio Cardoso, an alumnus of INSEAD´s Advanced Management Program. Cardoso became increasingly convinced over time that, in light of its massive market dominance, pursuing the lower end of the detergents market was Unilever´s only clear opportunity for domestic growth. He was extremely wary of seeing the company lose out to cheaper local brands, as had recently been the case in India and in
Pakistan, from where he had just transferred. Cardoso soon faced stiff resistance from many colleagues, who felt that the premium brands Unilever already offered were the reason behind its enviable domestic position.
 

The author also cites the mayor marketing challenges that entry into such a market will near-inevitably present. The months spent living in the favelas slums with low-income consumers had taught Unilever that the attitudes and behaviour of this segment of consumers were very different from what they were used to. 

Instead of using washing machines, mother washed clothes by hand, using washboards, bars of laundry soap, and just a sprinkle of detergent to add perfume and whiteness. To them, washing was a major social event when they would come together and gossip by the river, taking pride in their hand-washing effort. Thought many owned televisions, fewer were literate and it would be difficult to convince them to change their traditional washing habits with a few 30-second TV commercials. Deciding how to pitch the advertising would also be tricky, as the poor tended to associate cheaper products overtly targerting them with bad quailty. Last but no teast, low-income consumers overwhelmingly only shopped at tlocal “mom-and-pop” stores, which are very difficult to reach through conventional wholesalers. 

In short, this EFMD 2004 case competition winner explores how a world leader in a given industry can best adjust the fundamental rules of marketing it develops over decades in far richer countries to a ver different environment. In the end, the case study and CD-ROM shows that marketing to low-income consumers is not a form of charity, and can be quite profitable, provided that one follows the types of rules that Chandon and Guimaraes relate in detail.

 

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