Unilever in Brazil Circumstance
November 18, 2011
Unilever in Brazil Case Write-up
Unilever is actually a $56 billion company that sells numerous consumer merchandise. One of their most well-known goods is powder detergent. At the time this article was written, Unilever operated in over 150 countries throughout the world. One of the countries that they have experienced particular success in was Brazil, in which they manipulated 81% in the market. The challenge was that they were having trouble taking the entire marketplace, as the rest of the market was purchasing a lower priced detergent.
I recommend that Unilever must not create a fresh detergent so that you can capture many lower-end of the market. In my opinion that their best course of action for capturing the lower-income segment should be to decrease the selling price of their most affordable detergent, Campeiro.
Basis for Suggestion:
The key reason why I believe Unilever should not offer a new laundry detergent focus on to the lower-income market part is because of the risk of cannibalization. At the moment, Unilever offers 81% of the market share in Brazil, of course, if they were to introduce a new detergent for less money, they would be losing revenue to themselves. The remaining potential market share i think is not really large enough to risk the possibility of losing product sales to your own fewer profitable company. If Unilever were to expose a new detergent to appeal to the lowest income segment, chances are they would be stealing product sales from Campeiro. But , simply by lowering the buying price of Campeiro, they will incorporate the 2 segments and effectively catch them both. Furthermore, by reducing the price of this detergent, they can also cut back the quality of the detergent on its own, which can help all of them keep the selling price down.
Alternatives, Risks, and Assumptions:
The main presumption that I manufactured in creating my recommendation is that people's demand for detergent can be solely based on price. I did not consider advertising or company recognition during my...