In the modern era, marketing plays a very important role in growth and development of organization. It can be defined as a process through which businesses increase their sales and profitability by creating brand awareness in the market. Therefore, while developing marketing strategies companies are required to be very careful in selecting tools and techniques. It has been observed that, many businesses in the present scenario seek to expand their operations in international market to increase current market share as well as profitability. In addition to this, while operating in international markets there are various factors which are required to be considered. This report is based on Unilever which is a UK based consumer good producer and supplier. Further, it includes overview of the organization along with its strategic vision, mission and competitive position. Other than this, it also reflects the product strategy which can be adopted by Unilever for its overseas markets. The factors which need to be considered while setting prices of its products in international market are also highlighted in this report. Along with this, the study also explains factors which are to be taken into account for new distribution strategy.
Overview of current organization along with its vision mission and competitive position
Unilever is a British-Dutch multinational company which deals in various kinds of consumer goods. It was founded in the year 1930 and is the third largest consumer good company in terms of revenue. Further the organization is one of the oldest multinational companies of the world which operates in more than 190 countries. Other than this, more than 400 brands are owned by the organization (About us, 2015). Its product portfolio includes soaps, shampoos, ice cream and other household care products. The vision of Unilever is to touch the heart and change life of people. On the other hand, its major mission is to add vitality to life of people with the help of providing various types of nutrition, personal and health care brands which makes life of the people good.
Competitive analysis can be defined as one of the most important part of any company's marketing plan. Further, it helps the business to determine how its products and services differ from its competitors. It is a method in which organization uses various kinds of tool and techniques to evaluate existing competition in a particular marketplace. It can be done by using tools such as Porter five forces and SWOT analysis. The competitive analysis of Unilever is provided below as:
Porter five forces analysis
Porter five forces analysis can be termed as one of the simplest yet most effective tool to understand and determine as where the power lies in market. Further, it consists of five main forces which determine the level of competition for businesses. As per the view of Porter, (2008) Unilever not only faces tough competition from market players such as P&G and Nestle but also from various kinds of regional retailers (Porter, 2008). Five force analysis of the organization is discussed below:
Buyer power- 1This force determines the power of buyers in the market and how easy it is for them to drive prices. Further, it is evaluated by total number of buyer present along with the importance of each of them to businesses. According to Narayanan, and Fahey, (2005) Unilever have buyer from all across the world as it operates in more than 190 countries (Narayanan and Fahey, 2005). In addition to this, they are not powerful enough to drive prices of company's products and services. However Grundy, (2006) argued that, even if the buyer are not capable of driving price, it is very easy for them to switch to other brands which are available in market (Grundy, 2006). Therefore, it is required by Unilever to be very careful while setting up price of its products.
Supplier power- This force highlights the power of supplier in market. In accordance with Karagiannopoulos, Georgopoulos and Nikolopoulos, (2005) Unilever has always followed the policy of manufacturing and buying locally (Karagiannopoulos, Georgopoulos and Nikolopoulos, 2005). This has helped the company to reduce power of its supplier and make them weak so that, they cannot negotiate as per their demand. On the other side Bose, (2008) stated that, Unilever has always made agreement with its supplier which highlights that, the products and services will be supplied in a particular time period at a given rate (Bose, 2008). The brand treats supplier just like its customers and always tries in increasing loyalty among them.
Competitive Rivalry- It is the factor which determines the capability and number of competitor of a company. High competition and attractive products offered by them lower down the power of businesses. As per the view point of Porter, (2008) the consumer goods market is a very potential market and Unilever faces intense competition from market players such as Nestle and P&G and Kraft (Porter, 2008). In addition to this, the products provided by these companies are very attractive in terms of price and quality.
Threat of new entry- It can be defined as the ability of new business to enter the market. Narayanan and Fahey, (2005) discussed that, Unilever operates in many markets of the world and thus the threat of new entry varies according to the market (Narayanan and Fahey, 2005). It has been also identified that, in many developed markets the company hold a strong brand image and also high degree of customer loyalty. Therefore, it is not easy for any new firm to enter the market. The cost of setting operations is also very high which discourages organizations to enter the consumer industry.
Threat of substitute- A substitute product can be termed as the one which offers similar benefits which its competitor is providing to people in a market. Threat of substitute is very high as the people in market always seek for new and unique products and services to satisfy their needs and desire. Malhotra, 2008 explained that, all the major competitor of Unilever are spending huge amount of financial resource in research and development to provide innovative products which satisfy customer wants ( Malhotra, 2008).
- Unilever has a global footprint as it operates in more than 190 countries which are scattered all across the globe.
- The company has an effective research and development department which supports in innovating new products at regular interval.
- Strong product portfolio which provides competitive advantage.
- The market in which Unilever operates is highly competitive.
- Substitute of products are easily available and thus, it is not easy to retain customers.
- The health consciousness among customer is increasing day by day thus; the company has new opportunities to develop products and services as per this market segment.
- Company has always taken care of its social and ethical responsibilities therefore, it has opportunities to be termed as a complete sustainable enterprise.
- The economic crises have lower down profits of many FMCG companies.
- Increasing substitute products has become a major threat for Unilever.
Ansoff matrix for market segment
It can be defined as a strategic tool which helps businesses to develop strategies and action plan for expansion and future growth. The Ansoff matrix model for Unilever is mentioned below:
Product development- According to this strategy new product can be developed by Unilever in its existing market. Further, the company can modify its existing products according to the need and demand of customers (Dibb, 2010). This strategy helps in increasing sales and market share in existing markets.
Market penetration- It is the tactic of selling existing products in the existing market (Armstrong and Green, 2007). Strong promotion and marketing can be carried out by Unilever to increase its brand awareness and sales in the existing market.
Market development- Unilever can also sell its existing products in new markets. This will help the company to achieve competitive advantage by exploring some new markets (Proctor, 2014).
Diversification- It is a strategy of selling new products in completely new markets. In order to expand its operations in international market the company can use this