Consumer behaviour in Brazil

Consumer behaviour in Brazil Brazil is the largest country in Latin America. The total population of Brazil is 170 million. The south east part of Brazil has the highest population and then comes the north east region. The GDP and per capita of the south east is more than that of the north east of Brazil. CONSUMER BEHAVIOUR The consumer behaviour in brazil to the detergent market is different in the north east and the south east of Brazil and is depended on many influences. One of the influence is the social influence. Social Influences North East Brazil South East Brazil Culture and sub culture 65% of the population are a mix of African and European origins and their lifestyles, rituals and values share an African influence. Music and humour are the key elements of their culture. Only 35% of the population share an African influence whereas the rest are the migrants from Europe. This part is the financial and the political hub of Brazil. Social class More than half of the population fall in the low income category .The economy is heavily dependent on agriculture. It is more labour intrinsic type of job. Most of the women in the family are housewives. Only 21% of the entire population fall in the low income category and most of the women are from the working class. Group Membership Most of the women meet and wash their clothes in public laundry or pond in a group. Cleanliness being an issue of gossip, every woman tend to keep their family clean to please the group. Most women own a washing machine so self esteem and social status is given less importance. The purchase behaviour of a customer depends on various factors as shown in the diagram below. The social influences are the subjective norms. Apart from price of the detergent, the important attributes for the north east customers as per the rankings are Power of detergent Its fragrance The ability to remove stains without the need of soap and bleach The dissolving power with the water Packaging Impact on colours Whereas the south eastern customers are habitual decision makers. They would prefer to use the same detergents that they are using unless they dont get any flaws. BRAND PLAYERS AND THEIR STRATEGIES UNILEVER: TOP BRANDS: Omo is the top brand of the portfolio and is considered as a high quality at a premium position which is for the high end market. Omo has more than half percentage of the total market share in Brazil .Minerva is a medium quality product with low brand awareness and second in market share. Campeiro is a well-known cheapest product but with a low top of the mind penetration. The target customers of Unilever were the high income segment. The highest profit margin that Unilever generates is from the sales of Omo. STRATEGY USED: With the help of brands like Omo Unilever was the market pioneer in Brazil and hence got the first mover advantage in the detergent sector. Unilever is the LEADER in the market. It followed the strategy whereby it created the most desirable market space in the minds of the consumers as seen by the Top-of-Mind-Awareness results. (Exhibit 8) Their main strategy is to advertise and increase the sales especially of Omo as the profits generated from their detergents proves a backbone for their expansion in food and personal care categories. Unilevers main line of promotion was through the media advertising. This is cost effective and irrespective of the income, Brazilians are avid television watchers. POSITIONING: The various products of Unilever are positioned as per the product and its appeal. Its positioning ranges from removal of stain by eliminating the need of bleach (Omo) to delivering pleasant smell and softness (Minerva) to cost reduction (Campeiro) DISTRIBUTION: Unilever had the daunting task of distributing to 75,000 small outlets in the Northeast. For this it relied on its existing network of generalist wholesalers and sometimes also on secondary, smaller local wholesalers. This however increased their cost. It also had the option of contracting with the specialized distributors. PROCTER GAMBLE: TOP BRANDS: Ace is of the superior quality and is still sold at a lower price than its second brand. Through research and development, their strategy would be to improve the price and the perceived quality of Bold and Ace which is in competition with Minerva and Omo respectively. STRATEGY USED: PG is a MARKET CHALLENGER which is aggressively trying to extend its market share. It has specific challenger strategies like VALUE PRICE GOODS AND SERVICES and IMPROVED SERVICES. The advertising is not very effective as the consumers dont have much knowledge or a top of the brand awareness as compared to the other brands in the market. POSITIONING: Like most of the products of Unilever their products are also positioned depending on the target customers. Two of their main products are positioned similar to Unilevers products e.g. Bold and Pop whereas Ace is positioned as a superior whiteness source. ASA ASA is a local Brazilian brand and is only popular in Northeast TOP BRANDS: Invicto which is an entry level detergent as it is a low cost detergent and valued by its customers. It is a key competitor of Campeiro and focuses on cost reduction across all dimensions. STRATEGY USED: They are the MARKET NICHERS and have been serving a special segment of the market as a whole. POSITIONING: Positioned like Campeiro i.e. as a low priced product SWOT OF UNILEVER IN BRAZIL (AS PER CASE) PRESENT SITUATION: Unilever is the pioneer of consumer goods industry in Brazil and a clear leader in the detergent powder category with an 81% market share achieved by brands like Omo, Minerva and Campeiro. The Brazilian fabric wash market consists of two categories: detergent powder and laundry soap. It faces a huge threat from PG and hence Unilever should look into tapping the niche markets before its competitors entry into them STRENGTHS: Detergent market pioneer in Brazil. Hence gained the first mover advantage which proved very favourable for its success Unilever is a strong brand in itself and has wide acceptance for its products all over the world Have a wide range of brands i.e. have a strong brand portfolio which caters to different market segments. For e.g. Omo is more technology oriented, Minerva clings to its emotional appeal and is a traditional brand, Campeiro focuses more on cost reduction They are innovative and customer centric in their approach. E.g. introduction of 4 new variants of Omo. Each of them have different properties targeted at specific needs of customers Detergents will always remain the cash cows for Unilever WEAKNESS: Difficult to make a selection with respect to cost effectiveness between the Generalist Wholesaler and Specialist Distributor since both could prove to be equally useful in its own way and once selected very hard to reverse Vast difference in distribution of social classes in the Southeast and Northeast. So similar strategies and products will not have the same result and might also vary vastly from the expected result especially in the Northeast Its brand Campeiro is perceived to be low on quality since it is also low priced High availability of substitute products OPPORTUNITY: Tap the niche market i.e. the untouched low income sector before the competitors penetrate there Change the positioning of detergents in the minds of the Northeasterners so as to increase the use quantitatively Make use of the high frequency of washing tendency in the Northeasterners which would improve product sales in this area Omo has the highest Top-of-Mind-Awareness amongst the Northeasterners (approximately 70%). This can be used as a way to generate awareness about Unilevers other brands and also for the product which needs to be directed to the lower income consumer segment (exhibit 8) Improvement in Brazils overall economic performance thereby improving the purchasing power of the natives and especially the lower income consumers Adopt appropriate strategy targeted at the lower income group so that Unilever successfully manages to tap all the classes of people Introduction of more technology based and innovative products like Omo THREATS: Rapid growth and improvement of PGs RD and marketing expertise Northeasterners manner of using detergents is different from the Southeasterners. As per this logic the use of detergents is less with the Northeasterners Preference of laundry soap over detergent powder in the Northeast. This would pose a challenge to the lower income consumer segment product which the company wishes to market Competitor brands like Bold, Pop and Invicto are direct competition to Minerva and Campeiro with regards to quality and price There is almost equal market penetration of the competitors brands with Unilevers brands. For e.g. Invicto, Ace, Campeiro (penetration in the range of 60-80%) Introduction of local products by smaller companies with better distribution Price war with other giants like PG UNILEVER IN BRAZIL As given in the case study, Unilever in Brazil has a strong 81% market share by means of its three brands: Omo, Minerva and Campeiro. Question at hand is Whether or not to market detergents to lower income consumers in Northeastern Brazil and How to go about it The lower income segment isnt tapped by any of the giants of the detergent industry hence it provides opportunity to the company for growth in this segment. Also there is a need for good products matching the flagship brand Omo combined with affordability as clearly seen by the example stated about Maria ConceiÇà £o. TREND IN BRAZIL: As per case study it is known that Northeasterners believe bleach is a must for removal of stains; detergent powder is used only to make the clothes smell good. For the Northeasterners cleanliness is perceived as important despite of their low income survival. Cleaning of clothes for them is also seen as a measure of dedication of the woman of the family. Hence the challenge is to change few age old perceptions and yet successfully make a mark in the lower income segment. For this Unilever will have to convert the laundry soap users into an Omo class user. This is a long term strategy but yet a feasible one. WHY CHOOSE LOWER INCOME GROUP: Enter lower income group segment before PG penetrates there Detergent market in this segment will always be a cash cow Need gap analysis shows that there is an existing need for good detergents in this market IMPLICATIONS OF MOVE: SHORT TERM IMPLICATIONS: First mover advantage, shift of investment of money in low price brand from premium brands LONG TERM IMPLICATIONS: Market leader in low income detergent market, without a shift in Omo customers the new brand will be able to attract lower income customers WHAT SHOULD BE DONE? There are various options with Unilever. Namely, Launch a new product in the market targeting the lower income consumer without cannibalizing its own premium brands extensively Reposition one of its existing brands Have a cheaper version of Omo/Minerva Carry out an extension of one of the existing brands I believe that Unilever in Brazil should carry out PRODUCT LINE EXTENSION. Hereby they should introduce an additional item in the same product category. Unilever should have an extension of its brand Minerva named Minerva Progress (similar to Omo Progress which removes difficult stains without bleach and laundry soap). Minerva Progress should be positioned between Omo and Minerva PROS: The positioning of product between Omo and Minerva will help gain visibility Can promote positively using Unilevers brand name Good market penetration of Minerva as a brand  [1]   CONS: Minerva as a brand is perceived to be a medium quality brand with less Top-of-Mind-Awareness  [2]   Fierce competition with PG brands like Bold and Ace WHY EXTENSION OF MINERVA: Not possible to have a low cost product under the Omo brand since this would confuse the consumers about the original Omos credibility Launch of a new product will not be cost effective Having an extension of Campeiro might not be successful due to the original image of the brand as a cheap quality brand Repositioning of any of the top brands might confuse the consumers and Unilever might lose its loyal customers Minerva having a good market penetration can perform well if the positioning for the extended product is done appropriately. Also as per Exhibit 8 the consumers in the Northeast have good knowledge about the Minerva brand (rated second after Omo). Hence the company should capitalize on this fact and thereby build a route to tap its lower income segment by using the brand name. A MARKET RESEARCH SHOULD BE CARRIED OUT TO UNDERSTAND THE RANGE IN WHICH THE CUSTOMERS WOULD BE WILLING TO SPEND MARKETING MIX OF MINERVA PROGRESS: PRODUCT: A new formula should be produced to match the requirements of the customers and at the same time not increasing the cost Product should have attributes as per requirement of the lower income segment especially cleanliness, whitening and productivity  [3]   Along with price the product should match the six key attributes important to this segment. Formulation should have more emphasis on stain removing capability while keeping Minervas original features intact like perfume and softness The product should be made available in various sizes and types. This would be apt for customers who do not use a large quantity of product per month. This would also give a notional feeling to the customer of having spent less Use of packaging other than cardboard boxes e.g. plastic sachet PRICE: The price of the product should be affordable for the lower income consumers The company is increasing the cost on formulation and nullifying it by cutting down on packaging charges The product should be such that it is priced less than Omo and Minerva itself but a little more than Campeiro Unilever should adopt PENETRATION PRICINGfor its product whereby the profit margin for Unilever would be less but it would maximize unit sales and increase market share in this segment Adoption of penetration pricing would also discourage the competitors entry Also initially Unilever can have an INTRODUCTORY PRICE for the product which would encourage people to purchase the product SUGGESTION: Unilever can also get into backward integration to reduce its cost thereby managing to produce low priced products PLACE Unilever should sell its products at all places in the Northeast Since the big shopping malls are perceived to be expensive it should display its products at local stores Unilever should display Minerva Progress along with Omo. This is because Omo itself has a good image that even this product will be highlighted to all the customers PROMOTION Product should not be advertised as a product meant only for the low income group since this might create a negative impression about the company Medium like hoardings, radio, television should be used Above the line promotion should be emphasized on more than below the line advertising Sales promotion activities should also be carried out heavily which are directed at the customers DISTRIBUTION: Intensive distribution should be used to make the product available extensively in all the retail outlets To target the lower income segment Unilever should adopt the Specialized Distribution method as given in Exhibit 13 PUSH STRATEGY: Initially a push strategy should be used wherein the product is pushed at the customers and made widely available to them. Then depending on the demand forecasts a push-pull strategy should be used. POSITIONING: FRAME OF REFERENCE: Detergents POINT OF DIFFERENCE: Quality with affordability POSITIONING: Attribute and benefit positioning STATEMENT: THE MORE THE BETTER OR THE LESSER THE BETTER.WE GIVE YOU BOTH; MORE QUALITIES FOR LESSER PRICE! PERCEPTUAL MAP: 200 MINERVA PROGRESS OMO 200 0 100 ACE BOLD PERCEIVED QUALITY PRICE INDEX 100 CAMPEIRO POP INVICTO MINERVA = UNILEVER = PG = ASA