BSB20128-7: Economics and Marketing: Marketing Pre-Seen Case Study Business School Session 2011/12 For AUGUST 2012 RESIT Postgraduate Business Programmes BSB20128-7 Economics and Marketing Pre-seen Case Study for the Marketing Class Test AUGUST 2012 RESIT Case Study: Unilever Examiners: F Moran Hand out date: July 2012 Class Test: wc 13 August 2012 Please collect your Marketing Feedback Comments Sheet for the Class Test that you sat either in January or May 2012 from the Business School Reception. BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Marketing Assessment: (66.7%) The assessment for this module is a critical evaluation of marketing management issues of a pre-seen case study in the form of a two-hour class test. Marketing - Learning Outcomes: The class test is designed to assess students’: 1. systematic understanding of the core concepts of marketing and their critical awareness of factors which give rise to the need for a more strategic approach to marketing management; 2. ability to critically evaluate the organisation’s marketing management issues in relation to their business environment and to apply marketing management concepts (tools and techniques) towards developing and formulating in-depth analysis of situations that will generate effective marketing decisions and strategies; 3. ability to assess a range of contemporary developments in marketing and to apply marketing ideas (including ethical and e-commerce) for a variety of circumstances; The class test will assess the students’ ability to critically analyse and marketing management issues and apply appropriate marketing theory. Assessment Guidelines: Your written answers must be compiled in a suitable format that must incorporate the following: • • • A clear and concise outline of the practical marketing management issues; Use of appropriate terminology that will indicate a thorough understanding of marketing management concepts; Suitable application of theory and concepts used to support arguments put forward that will indicate competence in the marketing management issues discussed; 1 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT • • Evidence to suggest a more in-depth understanding of the marketing concepts being reviewed and their practical applications; Written content and structure that will demonstrate practical benefits being derived from the module, reading lists and research required for the module. Assessment Guidelines: Level M modules require that work carried out will incorporate most of the following features: Fail: • • • • • • The answer/s will lack the structure, content and use of appropriate terminology that would be expected from a student able to conduct a disciplined analysis of marketing management issues; or make appropriate conclusions following a critical evaluation of a range of theoretical strategic options. The answer/s will not demonstrate ability for independent thought and is therefore unlikely to contain a recognisable critique of concepts although it may “list” some theories/concepts that might, or might not, apply. The answer/s will not balance academic theory and the practical application of such to a well-described marketing issue. The answers will provide little, if any, evidence of the student having "read around" the subject matter. As such the answer/s will contain few, if any, theoretical underpinnings. The answer/s may be inconsistent in approach as well as content - sometimes minor areas, or inappropriate theories, might be discussed at length while relevant or seminal theories are omitted all together. Indeed it may not be clear exactly which theoretical area or practical problem the student is critically analysing in the case study. Any conclusions to resolve the practical marketing problem discussed will probably not result from a disciplined analysis of the marketing problem or a critical evaluation of a range of theoretical strategic options available to the organisation given the prevailing market environment. Pass: • Sufficient issues are addressed in order to distinguish between the rote learning student and those students with the ability to generate a required level of independent thought processes but 2 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT • • • • which is inadequate to achieve a distinction due to inconsistency or due to insufficient understanding. Use of structure and terminology that shows an ability to undertake disciplined analysis of the issues presented. Content and structure that indicates an ability to analyse, evaluate and make logical recommendations regarding the marketing issues that encompass both practical examples and theoretical elements. Evidence that the theories behind the practical application of marketing management concepts are clearly understood but with certain aspects of the analysis being covered more extensively than others that indicates a less insightful critique of particular concepts. A good grasp of the requirements necessary to conduct an analysis of practical marketing management issues; an ability to critique marketing management strategy from the case study; and to make clear and practical recommendations to resolve the issues faced. Merit: Apart from the attributes of a PASS paper, these papers will need to encompass the following: • Evidence of critical analysis and evaluation of a wide range of issues and strategies to demonstrate extensive reading, and application of theoretical concepts. • Clear understanding of the theory related to marketing management, with a consistent level of analysis and critique applied throughout • A balanced overview of the chosen topic, incorporating practical application of marketing theory resulting in well thought out and clearly articulated recommendations. Distinction: Apart from the attributes of a MERIT paper, these papers will need to encompass the following: • Content that distinguishes it as being well rounded in both structure and content with practical and theoretical aspects of the answer/s being more balanced and with recommendations put forward based on sound theory that shows theoretical evidence. 3 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT • • • Strong evidence of having read extensively around the chosen topic with extensive application of the theories to support the recommendations proposed. Consistency in the arguments used to evaluate and critically analyse the marketing strategies and theories reviewed as well as in the utilisation of basic analytical tools. Use of a wider range of theoretical concepts than that of a PASS paper, but which clearly and methodically stays focused on the issues at hand. Source: Adapted from T Hilton, 2007 Regulations on Resits: You MUST attempt the first sit of all your assessments. If you do not do so you will not be allowed a resit in the module. If the module is core on the award you will therefore fail the award. In essence, students who fail to submit any assessment for a module will be given a Grade Point N (Fail due to nonsubmission) for that module and they will not be allowed a further attempt at that module. This regulation applies to all undergraduate and postgraduate awards and all levels. This change now means that students will only be allowed to attempt referrals once and only IF they have made an attempt at the assessment(s) on the first occasion unless a claim for Extenuating Circumstances has been successful. The regulation change has been incorporated into the University’s published academic regulations available on the website at the following links. Postgraduate awards: http://www.staffs.ac.uk/assets/postgrad_regs_tcm44-26797.pdf 4 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Academic Dishonesty and Plagiarism: Contrary to popular student belief getting caught and being punished for committing plagiarism is not a rare occurrence. The Business School typically uncovers and reports for disciplinary action between 10 and 25 postgraduate students each year for plagiarism. It is strongly recommended that you read the full document on plagiarism rules at: http://www.staffs.ac.uk/images/academic_dishonesty_tcm6812681.pdf What happens if you get caught? Examination Boards may punish offending students in a number of ways. Typically, punishments range from reducing grades, making students re-sit modules, through to failing students on a module or an entire award. The University regards this form of cheating as a serious offence. Please consider yourself warned. 5 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Marketing Class Test Feedback Comments Pre-seen Case Study: UNILEVER Student Registration No.: Examiners: F Moran Date of Class Test: AUGUST 2012 Key: 5=Outstanding, 4=Good, 3=Satisfactory, 2=Weak and 1=Very Weak Module Specific Marking Criteria 1 2 3 4 5 Comments Demonstration of knowledge, understanding and application of relevant theory – use of theory and frameworks to support answers Section A (40%) Section B (30% + 30%) Demonstrate systematic understanding of the core concepts of marketing and their critical awareness of factors which give rise to the need for a more strategic approach to marketing management; Demonstrate ability to critically evaluate the organisation’s marketing management issues in relation to their business environment and to apply marketing management concepts (tools and techniques) towards developing and formulating in-depth analysis of situations that will generate effective marketing decisions and strategies; Ability to assess a range of contemporary developments in marketing and to apply marketing ideas (including ethical and e-commerce) for a variety of circumstances; Draw appropriate recommendations to marketing-based issues in a creative manner that incorporates theoretical and practical aspects that indicate a holistic appreciation of the topic. Presentation: produce a succinct critique of academic literatures; structure; terminology and breadth of readings Please see problems with your written answer/s on the next page Areas of Strength: Areas where improvements can be made: Provisional Grade for the Marketing assessment: Distinction (70% + above) Merit (60 - 69%) Pass (50-59%) Fail (1-49%) 6 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Problems in the student’s written answers 1. Answer planning and technique 1.1 Misunderstood the question/s requirements 1.2 Failure to answer the question/s asked 1.3 Overly descriptive answers 1.4 Lacks depth/superficial 1.5.Lack of contextualisation 1.6 Irrelevant text 1.7 Lacks explanation (inadequate development) 1.8 Repeating case material 1.9 Incomplete answer/s 2. Use of the literature 2.1 Insufficient evidence of reading 2.2 Poorly integrated or applied quotations, diagrams or models 2.3 Unacceptably vague description of theory 2.4 Incorrect theory used 2.5 Poor application of theory 2.6 Theory dump 3. Clarity of answers 3.1 Lack of Coherence - Unacceptably vague answers 3.2 Poor overall quality of your written English 4. Reasoning skills 4.1 Recommendations or statements with inadequate or nonexistent supporting evidence 4.2 Recommendations or statements with irrelevant ‘supporting’ evidence (lack of justification) 4.3 Statements contradicted by the offered ‘evidence’ 4.4 Failure to discuss problems 4.5 inadequate critical evaluation/analysis Source: Adapted from John Ramsay (2006), Staffordshire University. oPlease come and see me to discuss the feedback and your poor performance. Send me an email to set the appointment. F.M.Moran@staffs.ac.uk 7 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Unilever is one of the world’s leading suppliers of fast moving consumer goods (FMCG) with strong operations in more than 100 countries and sales in 180. Consumers buy 170bn Unilever packs around the world every year, and their products are used over two billion times a day. Unilever’s portfolio includes some of the world’s best known and most loved brands including twelve €1 billion (£860 million) brands, and global leadership in many categories in which they operate. The portfolio features iconic brands such as: Knorr, Hellmann’s, Lipton, Dove, Vaseline, Persil, Cif, Marmite and Pot Noodle. Unilever has around 167,000 employees in over 100 countries, and generated annual sales of €44.3 billion (£38.5 billion) in 2010. Unilever is Food Industry Leader in the Dow Jones Sustainability World Indexes for the 13th year running. Unilever is included in the FTSE4Good Index Series and attained a top environmental score of 5, leading to inclusion in the FTSE4Good Environmental Leaders Europe 40 Index. Unilever is also ranked 7th in the Global 100 Most Sustainable Corporations in the World, a list compiled by Corporate Knights Magazine. They achieved Platinum Plus standard in the UK’s Business in the Community Corporate Responsibility Index 2009, and was named Company of the Year in 2010. (www.unilever.com) Advertising and Marketing Advertising helps inform people about the benefits of Unilever products and innovations. It is also a way for Unilever to engage with consumers on issues that matter to them. Unilever is committed to responsible marketing and have four clearly defined principles that guide their communications: 8 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT • • • • They are committed to building trust through responsible practices and through transparent communication – both directly to consumers and indirectly through other key stakeholders and thought-leaders. It is Unilever’s responsibility to ensure that its products are safe and that it provides clear information on their use and any risks that are associated with their use. Unilever fully supports a consumer's right to know what is in their products and will be transparent in terms of ingredients, nutrition values and the health and beauty properties of their products. Unilever will use a combination of channels, which includes product labels, websites, Care-line phone numbers and/or consumer leaflets to communicate openly with their consumers. (www.unilever.com) Unilever cites improved marketing efficiency for profit bump Unilever claims that a “brand first” approach to business and more efficient use of its €3 billion (£2.6 billion) marketing budget helped it post a better than expected 7.1% sales increase for the second quarter. The Flora, Dove, Lynx and Ben & Jerry’s owner says sales for the three months to 30 June grew to €11.9 billion (£10.4 billion), its best quarterly performance since 2008. For the first half, sales grew to €22.8 billion (£19.8 billion), up 5.7% on the same period last year. Operating profit increased 8% to €3.3 billion (£2.9 billion). Growth was driven by gains in emerging markets such as India and Mexico, offsetting weaker growth in “challenging” developed markets in North America and Western Europe. It also cited “a good balance” between price increases and volume growth. The volume of products sold increased 2.2% in the second quarter, while prices grew by 3.5% to offset higher commodity costs. More efficient deployment of its €3 billion (£2.6 billion) advertising and promotions budget also helped improve performance, the company adds although it cut spend by 1.5% compared to the same period a year ago, when the spend was “exceptionally high”. Paul Polman, Unilever CEO told analysts on a conference call: “Our profile of growth reflects the strategic choices we are making to concentrate spending behind brands that have the most strategic potential for growth. “Remaining more competitive is the right thing to do and we have put our brands first without compromise. We now have a much more robust business and can match the competition without undermining our brands.” He adds that its decision to restructure its business into four category based divisions “takes the organisation to the next level” by simplifying its ’go to market’ structure, while “driving faster and better innovation 9 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT and better organising around the consumer”. By developing a beauty strategy within its personal care division, he adds, Unilever can compete better with rivals such as L’Oreal, which are already organised in the same way. He adds that the restructure will become one of the companies “defining moments”. (Baker, 2011) Responsible marketing As a leading global consumer goods company, Unilever promotes the benefits of their products using many different channels of brand communication. Advertising can be a powerful force for behaviour change. Advertising helps inform people about the benefits of their products and innovations. It is also a way for Unilever to engage with consumers on issues that matter to them. For example, Dove's Campaign for Real Beauty challenges current stereotypes about beauty. At the same time, they recognise the influence of marketing and advertising on consumers and take their responsibilities seriously. This means ensuring that all claims they make have a sound scientific basis and that all such communication passes the baseline test of being 'legal, decent and honest', (www.unilever.com) Unilever restructures to speed up innovation Unilever has restructured its business categories to accelerate how quickly it rolls out new products in emerging markets. The personal care division which houses Unilever’s skincare, deodorants, hair and oral care brands such as Lynx and Dove will be led by current president of the Americas region Dave Lewis. The FMCG company has also promoted Harish Manwani the current president of its Asia, Africa and CEE region to chief operating officer to drive speed-to-market and further simplification and efficiency measures. He will take responsibility for all markets. Paul Polman, Unilever CEO, says: “Unilever now has over half its turnover in the emerging markets, where, over the last 10 years, growth has been close to double digits. We have an opportunity to better support this footprint of the business, to keep our strong momentum, with a more globally aligned country and category organisation. Over the past few years we have seen a significant step-up in our innovation success rate and our speed to roll them out across markets. The new structure will further accelerate this.” Unilever hopes to have the new structures will fully operational before the year-end (Baker, 2011) 10 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Personal Care brands Unilever personal care brands, including Axe, Dove, Lux, Pond's, Rexona and Sunsilk, are recognised and respected around the world. They help consumers to look good and feel good – and in turn get more out of life. Axe (LYNX brand in the UK) : Helping males keep a step ahead in the mating game. With its coolly seductive fragrances and packaging, the brand has established itself as the world's top male grooming brand by coming up with a constant stream of new ideas to keep guys a step ahead in the mating game. Each year, for example, Unilever launch a new deodorant fragrance. Adventurous & unconventional Unilever has also taken the brand into a number of new areas, including shower and hair gels. Their award-winning ads and marketing are equally adventurous. In Colombia, for instance, a female Axe Patrol visits bars and clubs, frisking guys and applying body spray. Unconventional media channels are also being used. First launched in France in 1983, Axe is now giving guys the edge in the mating game in more than 60 countries. It holds the number one position in several European and Latin American markets, plus has an increasingly powerful presence in Asia and the US, where it was launched in 2003. Axe is the world's most popular male grooming brand. It has excellent track record of advertising awards, including 10 Cannes Lions. Axe is also the established leaders in Europe and Latin America, developing strong positions in new markets, especially in the US and Latin America. It is sold as Lynx in the UK, Ireland and Australia. Brylcreem: Cutting edge or classic? Brylcreem was a sensation when it was launched in 1928, giving a generation of men the freedom to style their hair with confidence. Those classic Brylcreem looks are still hugely popular – but the Brylcreem of today gives men hundreds of choices when it comes to styling their hair. 11 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Its gels, waxes, creams, clays and the original paste – all formulated to include the latest in styling quality and power – give hair strength, substance and texture. All that needs to be added, is flair. England cricket star Kevin Pietersen is the latest in a line of confident men who have held the title of Brylcreem Boy. The Test, One Day International and Twenty20 legend has inspired some of our newest packaging – a cricket theme that makes its products easy to apply and looks great on the bathroom shelf. Kevin follows sporting icons like soccer star David Beckham and cricketer Denis Compton in the role, which dates back to the original Brylcreem Boys – the Royal Air Force pilots of the Second World War, whose gallantry and dash made them heroes to a whole nation. Brylcreem products are sold in North America, Europe and India. Dove: Celebrating beauty's diversity Dove provides a wide range of cleansing and personal care products that make a genuine difference to the condition and feel of your skin and hair. Now the world's top cleansing brand, Dove started its life in 1957 as a beauty soap bar that was clinically proven to be milder for dry, sensitive skin than other leading soaps: half of women have dry skin. Bringing out real inner beauty This promise remains at the heart of the brand and has been extended to a number of other products, supported by the industry's longestrunning medical programme. Since the 1980s, for example, we've launched a moisturising body-wash, deodorants, body lotions, facial cleansers and shampoos and conditioners, giving you a comprehensive range of solutions to bring out your true inner beauty. Real results for real women Unilever commitment to delivering real results is mirrored in their advertisements. Their current campaign has been featured on over 25 major TV channels and in more than 800 articles in opinion leading newspapers from El Pais to Le Parisien, from The Sun to The Times, as well as in popular women's magazines. Unilever ground-breaking campaign for their new Dove Firming lotion, which features women of all shapes and sizes, is the latest example and underlines their commitment to breaking down stereotypes and enabling customers to celebrate their beauty. 12 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Taking action Over the last few years, Dove has focused on delivering products that inspire women to enjoy their own beauty and individuality. As part of their Campaign for Real Beauty, the Dove Self-Esteem Fund (DSEF) demonstrates their commitment to the brand's mission 'to make more women feel beautiful everyday, by widening today's view of beauty and by inspiring women to take great care of themselves.' The DSEF aims to educate and inspire young girls through a series of tools and workshops which ultimately protects and nurtures Fissan: Protecting baby's skin Fissan began with the famous 'Pasta di Fissan'. The original formula was developed in 1924 to deal with irritation in the nappy area. It met with huge success in Italy and has since expanded to become a trusted ally to parents who wish to protect babies' and infants' skin and hair. Fissan's range includes shampoo, bath products, moisturisers and suncreams that protect against the effects of the sun, cold and wind, as well as giving cleansing and protection to the skin and hair. Parents have trusted Fissan for generations because of our commitment to safe, dermatologically-tested treatments, which build on the natural defences of their children's skin. Now Fissan makes ranges suited to newborns, babies, and growing children. Bath products, shampoos, moisturisers, gentle cleansers, nasal sprays, and of course a full range of products for baby - all with the same mildness for sensitive skin. Lifebuoy: Accessible hardworking soaps and liquid gels. Lifebuoy is one of Unilever's oldest brands, a brand that was truly 'global' before the term 'global brand' was invented. Lifebuoy Royal Disinfectant Soap was launched in 1894 as an affordable new product in the UK, to support people in their quest for better personal hygiene. Soon after launch, Lifebuoy soap travelled across the world, reaching 13 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT countries such as India, where even today it is still the market leading brand. Consistent in Lifebuoy's 110+ year history has been its championing of health through hygiene. The brand's core promise of protection and a commitment to support life through unbeatable protection is at the heart of the brand name itself – Lifebuoy, the guarantee of protection when you are threatened. For example, a 1930's campaign in the US was titled 'Clean hands help guard health', encouraging the use of Lifebuoy soap to kill the germs on hands that can cause health issues. A similar campaign continues today, with Lifebuoy hygiene education programmes ongoing in countries including India, Bangladesh, Pakistan, Sri Lanka, Indonesia and Vietnam. Global Handwashing Day To promote understanding of the importance of handwashing, Lifebuoy launched the first ever Global Handwashing Day in 2008, together with the United Nations and other partners. Lifebuoy brand teams in 23 countries helped raise awareness about how handwashing with soap can prevent disease. Pond's: Helping to keep the skin looking and feeling naturally beautiful. In 1955 Pond's Extract Company merged with Chesebrough Manufacturing and in 1987 Unilever purchased Chesebrough-Pond's. By this time the Pond's brand had built up a powerful international presence. By the 1990s the face care market was responding to the introduction of products delivering unmet needs. Pond's was at the forefront of colour management developments in Asia and pioneered the use of AHAs for anti-ageing in the US. Cutting-edge innovation and an understanding of women's individual needs and priorities have maintained Pond's strong position in a dynamic global arena. From one man in a tiny home-made laboratory, to today's state-of-the-art R&D facilities led from Bangkok, Mumbai, New York and Tokyo, the Pond's promise has remained the same across 58 countries: to deliver products that make a real difference to women's skin and the way they live their lives. 14 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Radox: Radox bath and shower range. Radox in first brand extension under Unilever ownership Unilever UK is launching a new line for its recently acquired home and personal care brand, Radox, backed by a £2 million marketing spend. The new line, Radox Spa, is a range of indulgent "spa inspired" products, which will be supported by a £2m marketing push, with a focus on digital activity. The activity launched this October, 2011 is the first from Unilever since it bought the brand in December 2010 as part of its £1bn cash acquisition of Sara Lee's European personal care and laundry business. It includes Radox Spa "pop up" stands at train stations and shopping centres across the UK, offering consumers a professional massage, with targeted outdoor activity planned for mid-October. Radox Spa: new range from Unilever The digital element of the campaign features a "virtual Radox spa" created on Facebook, in which consumers can take an online consultation to find out which product is best suited for them and download "ambient music tracks" to help them relax. Cassie Shuttlewood, brand manager for Radox Spa, said: "The Radox Spa range has been developed to bring all the relaxation benefits of the spa experience into peoples' homes."We have developed a programme of innovative digital and experiential marketing activity to really bring the new range to life; through sound, sight and experience, and we look forward to inviting consumers all around the UK to step into a Radox Spa." (EleftheriouSmith, 2011) 15 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Unilever’s other personal care brands: Lux: Lux offers a range of highly appealing beauty products at a price customers can afford. Rexona: Rexona gives the confidence to handle whatever the day has in store. . Signal: Protecting and enhancing oral health 24 hours a day Simple: We believe in goodness. St Ives: St. Ives: Harnessing ingredients from nature to give customers fresher, more beautiful skin. Sunsilk: provides real solutions to women's everyday hair needs everywhere. TRESemmé: Used by professionals 16 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Vaseline: To help you enjoy great, healthy skin everyday. VO5: Style and care for the hair Growth Strategy - Recent Acquisitions Unilever to acquire 82% of leading Russian beauty company Concern Kalina (14, October 2011) Unilever, one of the world’s leading consumer goods companies and Concern Kalina, the leading Russian beauty company, announced that Unilever has agreed to acquire 82% of Concern Kalina. The transaction, which is pending required regulatory approvals, values the equity of the total business at RUB 21.5 billion (€ 500 million). Successful brands enhance presence in attractive emerging market, strengthen Personal Care portfolio and create leading position in skin care in Russia. Concern Kalina is Russia’s largest local personal care player with leading positions in skin and hair care and an expected 2011 turnover of around RUB 13 billion (€ 303 million). Concern Kalina is headquartered in Ekaterinburg, where its manufacturing facility is situated. The company has a strong, extensive distribution network and sells its products primarily in Russia, Ukraine and Kazakhstan. Paul Polman, CEO of Unilever said: "We are delighted to be acquiring Concern Kalina. This will transform Unilever’s personal care business in Russia, giving us leading positions in skin care and hair care, as well as establishing a presence in oral care. It will also strengthen and re-balance Unilever’s portfolio and competitive position in Russia, an emerging market with considerable potential and one of our priority countries." The transaction fulfils a number of key criteria for Unilever. It: • • enhances Unilever’s presence in an attractive, high-growth market with a differentiated portfolio which has grown at above market rates in competitive categories; adds to Unilever’s portfolio successful, authentic Russian brands in skin care, hair care and oral care like Pure Line, Black Pearl, Silky Hands, 100 Recipes of Beauty and Forest Balm, complementing Unilever’s own brands such as Dove, Sunsilk, Timotei and Clear; 17 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT • provides Unilever with the opportunity to use its technology to take these brands to a new level. Polman continued, "Personal Care is a strategic category for Unilever and growing rapidly. Ten years ago it represented 20% of Group turnover; strong organic growth has driven it to now reach over 30%, with strong positions in many of the emerging markets. "Organic growth remains the cornerstone of our ambition to double the size of Unilever whilst reducing our overall environmental impact. Acquisitions such as Concern Kalina supplement organic growth and add powerful new brands to our portfolio." Timur Goryaev, Chairman of Concern Kalina said: "The agreement reached with Unilever will enable the brands we have built into some of Russia’s best loved and most recognised since we started in 1996 to be taken to new heights.” Alexander Petrov, CEO of Concern Kalina, added “The coming together of our company with one of the most successful and best-known global companies represents a tremendous vote of confidence in the strength of our brands, the people who have built them and the potential of the Russian market. The combination with Unilever will also provide our employees with opportunities in one of the best companies in the world." Subject to obtaining the required regulatory approvals, the acquisition is expected to complete by the end of 2011. On completion Unilever intends to launch a Mandatory Tender Offer to acquire the remaining shares that are not part of the initial agreement, at such time and on terms mandated by Russian law. Concern Kalina Today, Concern Kalina is one of the leading Russian personal care manufacturers offering a wide spread of products to its consumers in Russia and the CIS. Concern Kalina works to build the leading brands in Beauty sectors of the market. Key pillars to success of the corporate strategy have been consumer-centric marketing; focus on fastestgrowing products and growth across key categories and geographies. Concern Kalina develops strong brands in the key segments of Russian personal care market. The leading brands of the company are Black Pearl, Clean Line, 100 Recipes of Beauty and Silky Hands in skin care, and 32 and Forest Balsam in oral care (www.unilever.com) Charlie Mills at Credit Suisse said, “The deal makes little difference to Unilever's earnings or growth rates but looks a very tidy bridgehead into one of the BRIC economies where thus far the group has little presence. The portfolio is lower end, but Unilever now has the distribution platform for its own personal care brands”. Espirito Santo also liked the deal, saying that “This is exactly what you want Unilever to do with cash flow. This is the third personal care deal like this Alberto Culver and Sara Lee's brands. It underlines the strategy is sensible bolt-on, not major, acquisitions. Also anything that continues to add further weight to the 18 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT business in personal care and away from food is also a major positive. Unilever is also a major beneficiary of recent raw material price falls”. (www.guardian.com) Unilever chief executive Paul Polman said, “This deal will transform Unilever's personal care business in Russia, giving us leading positions in skin care and hair care, as well as establishing a presence in oral care. It will also strengthen and re-balance Unilever's portfolio and competitive position in Russia, an emerging market with considerable potential and one of our priority countries”. It will add what Unilever calls "authentic Russian" brands such as Black Pearl, Pure Line and Silky Hands to its existing product ranges including Dove, Sunsilk and Timotei. (www.guardian.com) Other Acquisition of Personal Care brands – Alberto Culver Company Unilever confirms Alberto Culver shareholder approval to acquire company for £23 billion (17 December 2010). Unilever confirmed that Alberto Culver Company shareholders have voted in favour of the proposed £23 billion Unilever acquisition, which was announced on September 27, 2010. The proposed acquisition includes brands such as TRESemmé, Alberto VO5, Nexxus, St. Ives and Simple. These will complement Unilever’s existing portfolio of iconic brands such as Dove, Clear and Sunsilk in hair care and Pond’s and Vaseline in skin care. Alberto Culver Company Alberto Culver Company manufactures, distributes and markets leading beauty care and other personal care brands including TRESemmé, Alberto VO5, Nexxus, St. Ives, Simple and Noxzema in the United States and internationally. It is also the second largest producer in the U.S. of products for the ethnic hair care market with leading brands including Motions and Soft & Beautiful. For more information visit: www.alberto.com http://www.unilever.com/mediacentre/pressreleases/2010/UnileverconfirmsAlb ertoCulvershareholderapprovaltoacquirecompanyfor37billion.aspx Unilever launches Facebook rewards programme Unilever is launching a consumer engagement programme that uses Facebook to encourage consumers to interact with 11 of its biggest brands, including PG Tips, Persil and Magnum. 19 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT The Unilever VIP application invites consumers to give the company feedback on brand initiatives such as advertising campaigns and promotions, branding and packaging. In return, members will also be offered rewards and incentives such as access to new products, moneyoff coupons for their Unilever brands and invites to VIP events. Unilever will use the feedback from consumers to inform its future decision making. Consumers can join the Unilever VIP to give feedback on the latest TV ad for Surf or new packaging for Carte D’Or ice cream. Rachel Bristow, Unilever UK media director says: “Unilever VIP is being piloted to help us get even closer to our consumers in the UK. To meet our challenging growth ambitions for the company, it’s imperative that we understand and engage with consumers in a new, interactive and relevant way. The Facebook page includes surveys, prizes available and a scoreboard of members that have collected the most points by participating (Baker, 2011) 20 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT Appendix 1: Recent media articles Unilever and Sainsbury's predict sustainable lifestyles by 2020 Unilever and Sainsbury's have launched a joint report that predicts the consumer goods industry will have sustainable products and services by 2020. Consumer Futures 2020: Sainsbury's and Unilever team up The Consumer Futures 2020 report, published today (10 October), has been created in conjunction with Forum for the Future, a non-profit global organisation that works with businesses and governments. It aims to act as a "practical tool" to help retailers, brands and manufacturers in the global consumer goods industry "plan for the future". The creation of the report is the result of an 18-month long partnership between Unilever and Sainsbury's, which builds on Forum for the Future’s 2007 Retail Futures report. The report explores four scenarios, labeled "My way", "Sell it to me", "From me to you", and "I'm in your hands", to explain the possible ways for sustainable consumer consumption to become mainstream by 2020. Justin King, chief executive of Sainsbury's, said: "Sustainability will continue to rise higher up the agenda over the coming years, so it is key that brands work to ensure they can respond to consumer demand. Being a sustainable company is not about box ticking, it's about futureproofing your business and building trust and brand loyalty that will last for years to come." Unilever and Sainsbury's are two of more that 170 brands to have backed the Government's "responsibility deal", which intends to improve public health through a series of measures such as reducing the amount of salt in food and ramping up activity to promote responsible drinking. Both King and Amanda Sourry, Unilever's chairman UK and Ireland, are due to speak at a joint launch for the report this week. Sourry noted: "The old model of ever greater consumption, with growth at any price, is 21 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT broken. Companies that succeed in the future will be those that reduce their environmental impact, whilst increasing their social and economic impacts." (Eleftheriou-Smith, 2011) Interest rate in male beauty brands rises 15 September 2011 | By MaryLou Costa Brands that invest in grooming products exclusively for the men’s market stand to increase spending levels in this underdeveloped but fast-growing sector, according to research seen by Marketing Week. Cult ITV2 programme The Only Way Is Essex has not only put fake tan and big hair on the grooming agenda for women, but it has brought men’s beauty routines into the spotlight as well. Its male stars are no strangers to fake tan, a wax or even a manicure. Research exclusive to Marketing Week shows that men having a ’beauty regime’ is becoming the norm, as an increasing number use more products and treatments to keep them looking good. In the survey of 1,000 UK men aged between 18 and 64, conducted by SPA Future Thinking, 53% say grooming is expected of them. Meanwhile, 34% say having a beauty routine would improve their love lives and 25% agree it would enhance their careers. SPA Future Thinking research director Will Ullstein says this is good news for marketers in the industry: “The survey shows there is a latent demand for products and new ways for men to be marketed to. “Men want to shop and do take pride in their appearance. Manufacturers and retailers should meet that need. Some are doing a great job but others need to raise their game.” Adidas, Gillette and Hugo Boss are the most recognised men’s grooming brands, with a respective awareness of 93%, 85% and 83%. But while these are the most well-known brands, they are not the most used. Adidas falls to third place in terms of brands used most often, coming behind Lynx (26%) and Gillette (18%). Hugo Boss and Boots own-brand 22 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT products make up the bottom of the top 10 most used brands, at just 2% each. “The likes of Adidas and Hugo Boss aren’t known for beauty products specifically, while Lynx is out and out male and has fantastic advertising campaigns,” reasons Ullstein. The most popular products men use are shampoo, body spray, shower gel and fragrances, with more than two-thirds of those surveyed using these regularly. Meanwhile, half of those surveyed say they have used hand cream, 42% moisturiser, a third have tried lip balm and 23% hair spray. More than 40% use some kind of skin care product and of these, 27% claim they actually have a skincare regime. Younger men spend more per month than their older counterparts, with 18to 34-year-olds parting with £14.60, compared with £10.50 for 55to 64-year-olds. “This doesn’t surprise me because older men are perhaps more settled in their relationships and in the tried and tested products they use in their repertoire,” comments Ullstein. That shopping behaviour includes the fact that 63% of men admit they buy their grooming products at the supermarket, but 47% say they would be interested in a dedicated “manshop” an outlet selling only male grooming products. If, as the survey suggests, 86% of men buy their grooming products at the same time as grocery shopping, it may indicate that the manshop idea might be best executed within a supermarket environment. And with just 44% of men acknowledging that they have a skincare regime, it could be the development of supermarket ranges that firmly places male beauty brands into the mainstream. http://www.marketingweek.co.uk/trends/interest-rate-in-male-beauty-brandsrises/3030118.article 23 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT 24 BS20128-M: Economics an Marketing - Preseen Case Study for Marketing: UNILEVER AUGUST 2012 RESIT References: Unilever’s website: www.unilever.com Baker, R. (2011), Unilever cites improved marketing efficiency for profit bump, http://www.marketingweek.co.uk/sectors/fmcg/unilever-cites-improvedmarketing-efficiency-for-profit-bump/3029021.article - accessed 21 October 2011 Baker, R. (2011), Unilever restructures to speed up innovation, http://www.marketingweek.co.uk/sectors/food-and-drink/unilever-restructuresto-speed-up-innovation/3027825.article - accessed 21 October 2011 Baker, R. (2011), Unilever launches Facebook rewards programme http://www.marketingweek.co.uk/sectors/fmcg/unilever-launches-facebookrewards-programme/3029528.article - accessed 21 October 2011 Eleftheriou-Smith, L.M. 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