Samia Billah, Tin Dai, Andy Martinez, Rosalyn Thomas

IMS 3310: International Business

Professor Nguyen
August 7, 2014
Unilever - Tapping into the Market Comprising of the Extreme Poor for Growth
And for Doing the Greater Good
Executive summary
Unilever is an established multinational company, and is ranked the third-leading
consumer goods company in the world, right after Procter & Gamble and Nestle. Unilever has
two headquarters - in Rotterdam, Netherlands and in London, England. The Rotterdam
headquarters is responsible for food related products, while the headquarters in London, England
is responsible for household items and personal care products. Unilever possesses more than 400
brands, but their main revenue comes from a core of 14 brands responsible for sales of over 1
billion euros. The goal of Unilever to double its size does not only entail them being financially
successful, but it also means that they should be the top consumer goods company in the world.
Their main products arent premium luxury goods, and they have been most effective at selling
basic everyday items to a large audience. Our paper tries to investigate how Unilever can tap into
the previously underserved population of those earning less than $1.25 a day to continue to grow
in the light of stiff competition it faces from other multinational companies. There is currently 3
billion people who are earning less than $1.25 a day, and selling personal care products to them
will help to improve their hygiene. This can help to increase their sales considerably, while
keeping in touch with their principle of doing greater good worldwide.

Introduction
Unilever is a large multinational company based in Rotterdam, the Netherlands and
London, England. Its products are sold in over 190 countries to over 2 billion consumers
(Unilever Facts, 2014). It produces a wide range of products, from food to personal care and
household care products. In total, it has about 400 brands, and 14 of them have revenue of over
one billion euros a year (Introduction to Unilever, 2014). Recently, Unilever modified its
vision to promote sustainable living, which looks at doubling the size of its business and also
concurrently increasing social impact and reducing environmental footprint (Our Vision,
2014). It prides itself on having a mission statement that emphasizes on the greater good rather
than pure profits. The company understands that its health is prosperous, strong, and sustainable.
It follows a global strategy known as the think-global and act-global strategy which gives them
the opportunity to enter markets that they are not in yet with their four strongest brands of Dove,
Sunsilk, Rexona and Lux (Unilever 2014). The company works tirelessly on improving the
quality of life of people while increasing the size of their company. It is also aware about the
environment and they ensure that their environmental impact is low as they continue to grow.
However, Unilever faces some tough competition from other multinational companies,
such as Proctor & Gamble (P&G) in its personal care business and Nestle in its food business.
The personal-care business of Unilever has sales of over 20 billion Euros, and it is its most
profitable segment (Dave Lewis sets out Unilever Personal Care Ambition, 2014). However,
P&G has 25 brands that generate more than a billion dollars in revenue (Leadership Brands,
2014), which is double the number of Unilever. P&G has 84 billion dollars in sales in 2013, most
of it coming from its personal care business (Proctor & Gamble, 2013). In order to fulfill its

vision, and reach the goal of doubling its revenues (Our Vision, 2014), Unilever must outcompete P&G and grow much larger in size.
Research Question
We investigate how Unilever can continue to grow its business. We look at a previously
underserved market to see how Unilever can tap into that market for growth in the light of stiff
competition it faces from other multinational companies. We propose that Unilever market their
products to those who earn less than $1.25 a day. There are currently 1.3 billion people who are
earning less than this amount (A fall to cheer, 2012), and selling personal care products to
them will help to improve their hygiene and health by preventing the occurrence of different
infectious diseases. This can help to increase their sales considerably, while keeping in touch
with their principle of doing greater good worldwide. Our question thus looks into how Unilever
can tap into this large underserved market comprising those who are earning less than $1.25 a
day.
Strengths of Unilever
With sales of about 20 billion Euros in 2013, the personal-care business of Unilever is not
only the most profitable, but also one of the worlds fastest-growing business in that segment
(Dave Lewis sets out Unilever Personal Care Ambition, 2014). The personal care department
of Unilever generated about 45 percent of the sales of Unilever (The Legacy that got Left in the
Shelf, 2008), and almost 60 percent of the sales in the personal care unit of Unilever comes
from emerging markets (Dave Lewis sets out Unilever Personal Care Ambition, 2014). This
shows that emerging markets is a key region for the continued growth of Unilevers business.
There is a lot of room for growth in this market; for example, only 7 percent of Asians used a
deodorant in 2008 (The Legacy that got Left in the Shelf, 2008). With rising personal incomes

in emerging markets, demand for personal care products will definitely increase, and this can
generate a lot more profits for Unilever. However the firm faces some tough competition from
other multinationals who are also operating in emerging markets, such as Proctor and Gamble
(Industry Peers: UL, 2014). They also have to compete against other local personal-care
producers in each region where they sell their products. In order to stay ahead in the competition,
Unilever has adapted their personal-care products to suit the local needs of the regions where
they sell them. They dont sell the same uniform product to all the countries. They have adapted
the local culture to increase sales and gain local acceptance without losing their global status, and
this has helped the company to become a very successful brand (Unilever Cleaning up in
Africa, 2014).
Unilever fine-tunes certain products that meets the cultural needs of the land. It sells the
same product under various names in different countries so that the name can be easily
pronounced by the locals (Barbu, 2011). For example, the Lux soap brand is sold in many
countries such as India, China and Bangladesh, but in the US, it is sold as Caress (Madden, N,
2010). Similarly, Unilever sells Brut deodorant in the United Kingdom, but Axe Body Spray in
Spain (Product Information, 2014). Although the detergents Surf and Omo are almost
identical, Omo is sold in certain countries while Surf is sold in other countries, and in places
where both are stocked in the shelves of supermarkets, customers believe that they are two
different products (Unilever: Product and Projects, 2014). For example, in Bangladesh,
Unilever sells both Axe and Rexona deodorants for men, which is a strategy that makes
consumers think that they are two different products (View our Brands, 2014).
Unilever has also changed the contents of its products to suit local needs. For example,
Indian women generally put oil in their hair before washing it, something which western

shampoos could not remove when the hair was shampooed. To solve this problem, Unilever
changed the contents in its shampoos so that it could remove oil from hair and discarded
conditioners from the Indian Market (The Legacy that got Left in the Shelf, 2008). This made
Unilevers shampoos an attractive product in the Indian market. It also adapted its products to
market them to consumers in different socioeconomic groups. In the detergent business, it
markets Surf Excel to the wealthy, Rin to the middle-class and Wheel to the poor of India (The
Legacy that got Left in the Shelf, 2008).
It also markets completely different products in different countries. In the US, it markets
Dove soap with the tagline Campaign for Real Beauty that showed ordinary women, instead of
models, using the product, (The Legacy that got Left in the Shelf, 2008), whereas, in Asia, it
markets a skin-whitening cream to women called Fair and Lovely (Fair and Lovely, 2014).
This shows how the advertising campaign is suited to the local tastes in the US it is looking to
sell a product that provides confidence about underlying beauty of a person, and Unilever has a
Dove self-esteem fund that encourages girls all across the world to have a more positive image
of themselves (The Legacy that got Left in the Shelf, 2008). On the other hand, in the Middle
East and Asia, it sells a product that supposedly enhances the beauty of a person by making the
skin lighter (lighter skin color is considered to be beautiful in Asian countries, and darker skin is
considered to be beautiful (Kepnes, M, 2008)).
Another big marketing move by Unilever was to sell personal-care products in small
sachets in emerging markets. The Indian subsidiary of Unilever called Hindustan Unilever began
selling personal-care products like shampoos in small sachets that cost a few cents and these
products were marketed to the poor (The Legacy that got Left in the Shelf, 2008). These
sachets may be uneconomical for the middle-class, but they are more affordable to the poor, and

this helped Unilever to sell its personal-care products to the poorest segments of society (The
Legacy that got Left in the Shelf, 2008). This has been replicated in other emerging countries of
the world, like Tanzania (Unilever: Products and Projects, 2014). In Ghana, Unilever sells
small packets of Close-up toothpaste so that the poor can afford it (Unilever Cleaning up in
Africa, 2014).
Such strategies have helped Unilever to grow its personal-care business in different
countries of the world. At the end of 2009, they restructured their entire business model for a
more global perspective. These changes included maintaining a global scale combined with
strong local roots, global categories that led innovation and advertising, more global R&D
centers for disruptive technologies, and a transition to regional supply chain networks (Lawrence
2009). These new changes helped grow Unilever to increase their opportunities to become a
company with 50% of its sales in D&E markets, global market leadership in 7 of its 11
categories, and 9 its 13 categories achieve share gains. They have also developed long lasting
relationships with large customers including Walmart, Tesco, Costco, CVS, Walgreens, Target,
and so many more popular firms across the world.
Competition from Other Multinationals
Unilever faces a myriad of competitors. In every country where it operates, there are a
number of local personal-care product manufacturers that compete with Unilever directly. On top
of that, Unilever faces some tough competition from other multinational companies, such as
Proctor & Gamble (P&G) and Colgate-Palmolive.
Starting in 2000, both P&G had very ambitious goals for their next decade of business.
P&G wanted to add 1 billion customers by the year 2015 and Unilever wanted to double its
revenue by 2020. P&G expects developing markets to contribute 37% of its total revenues this

year, up from 34% in 2010 (and 23% in 2005). For Unilever, the share from developing markets
is already up to 56% of sales, from 53% in 2010 (The Legacy that got Left in the Shelf,
2008). Even though they had such ambitious goals, Unilever continues to remain always a step
behind in sales due to P&G being much larger in the developed markets.
In January of this year, the CEO of Unilever Paul Polman discussed their competition
with beauty and hair care products with P&G and said, The reality is that because of this
enormous promotional pressure by some of our competitive set, there is limited value being
created (Evans, P., 2014). Hair care has become very competitive especially in the US and
Western Europe, to the point where Polman said that P&G was irrational to build market share
with its many buy one get one deals (Evans, P., 2014). While Unilever accuses P&G with many
claims, P&G continues to increase its revenue in Personal and Beauty care grossing $425.7
billion dollars. As mentioned before, Unilever is always a step behind P&G sales because their
lack of innovation in categories such as personal and beauty care has caused slippage in market
share. Unilever continues to face other weaknesses when competing with P&G due to their
innovation time cycles that need improvement and their consolidation of facilities which has
been causing disorder with their employees and daily operations. P&G has been able to improve
their time cycles by reducing the idle time of their inventory. Neil Lewis, Global Microbiology
Leader of P&G discussed this issue briefly when he said, We were able to go from holding
product for two, three or four days to 24 hours. This has a direct impact on costs and cash
availability. It minimizes the inventory we have to hold, and it gives us a responsiveness to our
customers. (A Conversation with Proctor & Gambles Neil Lewis on Rapid Microbial
Methods). Unilever on the other hand, hold inventory for a longer time while waiting for the
results from quality testing, and this can accumulate multiple days of idle time which can add

cost to the production process (LeCoque, J., 2012) This can have a huge effect on profit margins.
If Unilever wants to be more profitable, it must streamline its supply chain by making it leaner. It
also needs to focus heavily on innovation in personal-care products in order to keep customers
happy in the market.
Unilever SWOT Graph

Recommendations
Unilever can promote healthy living across the world using the concept of healthy living
in developing countries. In doing so Unilever has a chance to tap into the world biggest global
market, not China or India, but rather people who are living under the $1.25 poverty line. Nearly
1.3 billion of the world's population lives in poverty (A Fall to Cheer, 2012), according to the
World Bank, who are scattered all across the developing world and are neglected by most
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companies. Unilever can promote sales among those in poverty which will help to mitigate the
global crisis of sanitation. It will also generate a large volume of profit.
Such an idea is not new. The Nobel Laureate Professor Muhammed Yunus has been
promoting the concept of Social Business where companies focus on serving the poor (What is
Social Business? 2014). Unilever could try this model to sell their products to the poorest
population. Basic essentials such as toothpaste, shampoo, soap, and other personal care products
could be sold at an affordable price and in small quantities to reach the goal of improving living
conditions across the world while increasing profit and value for the company. As mentioned
before, the subsidiary of Unilever in India (Hindustan Unilever) pioneered the idea of selling
personal care products in small sachets to those who found buying larger quantities unaffordable.
This model can be replicated to other countries of the world where most of the poor resides. This
works perfectly in tandem with the mission statement of Unilever of serving the greater good. It
can also help to increase the volume of sales of Unilever and can make the company become the
largest consumer-goods manufacturing company in the world.
In order for Unilever to make such products affordable the profit margin for each product
would have to be relatively low. The goal is to sell any given product in massive amounts. This
accomplishes two things, products are affordable enough to be bought by people and profits
increase proportionate to the number of people buying said products. For example, in theory one
billion those in extreme poverty buys one specific bar of soap per month with a contribution
margin of 1cents per soap bar, profits would amount to roughly 10 million dollars per month on
one product alone. If Unilever creates 5-10 products geared specifically to serve the hygiene
needs of the poorest, then it can look at an extra revenue of 50-100 million dollars a month from
this underserved population.

The low profit margin and high levels of purchases leads to benefits of not just the
company but society as well. This makes it possible for people in developing countries to
maintain a healthy lifestyle through personal care leads to a decrease in diseases cause by low
hygiene (Sanitation and Hygiene, 2014). About 2.5 billion individuals do not have access to
improved sanitation (Global WASH Fast Facts, 2014). If Unilever can provide the poor with
affordable personal care products like soap and shampoo, it can help to reduce the problems of
low sanitation among the poor by a large extent. Such things as lice, gingivitis, water-borne
diseases, and many more would be drastically lowered by these basic but essential products
offered by Unilever.
Unilever can use the services of non-profit organizations, local religious groups and
teachers to spread their products to all. These organizations can help to teach the poor why
personal-care products are important for hygiene and for staying healthy. Unilever could also
recruit some unemployed men/women in each locality and have them sell Unilever products
from door-to-door, similar to the concept of the Avon Lady we see in the US. This can help
Unilever reach consumers who may not have an easy access to markets. It can also serve an
important corporate social responsibility by providing employment to hundreds, if not thousands
of poor youth in the rural areas.
Such a move can help to improve the standard of living among the poorest of the world.
It can also increase brand equity of Unilever as well. Unilever's products and the company's
contributions could be seen as performing an important corporate social responsibility by
engaging in social business as advocated by Professor Yunus. This increases brand equity and
brings a positive outlook of the company in the public eye on a global scale. Implementation of
this plan could be easily put forth in Unilever's current system of customizing products

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depending to target regions. However, Unilever needs to heavily invest on streamlining supply
chain to ensure that the goods reach the hands of the poor consumer in the cheapest possible
way.
Conclusion and Learning Outcomes
Unilever is on a mission to double its sales by 2020, according to their mission. Doing so
will require rapid increase in marketing of their products. With the developed world saturated,
most of the growth can come from the developing world. In our paper, we propose that Unilever
market their products in small sachets to the poorest segment of the worlds population. There
are about 1.4 billion people who earn less than $1.25 a day, and many of them do not have the
ability to buy personal care products needed to maintain a healthy hygiene. By selling products
in small sachets and at very low profit margins, Unilever can provide a much needed service to
this under-served population. The large volume Unilever will sell will ensure that Unilever will
earn a lot of profits a one cent profit margin of a product sold to 1 billion of the poor once each
month will generate 10 million per month. If 5-10 products are marketed like this to the poor, it
can generate 50-100 million dollars of profit to Unilever per month. Unilever can make the
supply chain leaner by using the concept of Avon Lady and sell directly to the consumers
through individual agents in remote rural areas.
From this project, we learned that even though a company may be large and successful,
there is still room for improvement, especially when we compare the company with its industry
peers. We also learned how large companies can engage in Social Business to help the poor.
About 1.3 billion people lack the things in life we consider basic, like access to soap, shampoo
and other personal care products. Many of them do not have proper sanitation facilities, and
companies like Unilever can make products that can help the poor lead a sanitary lifestyle. We

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learned that many of the solutions already exist around us (like Social business), we just need
to look for them and use them in the existing production process to help the poor.

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Chapin, J., Danielle Pedi Sanitation Supply Chains and Business Models: How can we improve
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http://www.unilever.com/aboutus/introductiontounilever/
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