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The Persil Power Fiasco (1).pptx

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The Persil Power Fiasco (1).pptx

  1. 1. The Persil Power Fiasco How Unilever failed to research about consumer behavior Presented by:- Mutahira Dar Semester III MBA , Section ‘C’ Presidency Business School
  2. 2. Company profile:-  Anglo- Dutch multinational company.  Founded in 1933.  Headquartered in London and Rotterdam.  One of the oldest multinational companies .  Its products are available in around 190 countries.  Unilever owns over 400 brands.
  3. 3. Unilever products
  4. 4. Unilever’s main competition was from P&G
  5. 5. So, what was Persil Power and why did it attract so much flak?  The detergent powder was launched in 1994 across Europe.  It was the result of a major technological breakthrough (as per Unilever).  Product development efforts spanned a period of 10 years.  Unilever spent close to 100 million pounds.  Intention was to overtake Ariel detergent.
  6. 6. What was unique about Persil power ?  Product had - manganese catalyst (accelerator ) that could clean clothes even at lower temperatures.  Breakthrough  Unilever protected its innovative efforts by • This product – result of Unilever’s research- competitive advantage • cleaned clothes without damaging fabric color • 35 patents • Test marketing in 60000 households
  7. 7. P&G springs into action- failure of Persil  After testing, P&G found that under certain conditions, Persil powder damaged the clothes.  The catalyst could damage colored clothes at high temperatures.  A big failure for Unilever.  Negative publicity by P&G. • lost the legal battle • forced to withdraw the product • lost 300 million pounds spent in development and marketing.
  8. 8. So what went wrong?  Unilever had conducted most of its tests in Dutch households  In Northern Europe, people washed their white and colored clothes separately.  In Southern Europe, clothes were washed together in hot water.  Problem:- 1. Manganese catalyst was fine at low temperatures. 2. But it reacted with certain dyes at hot temperatures.  So, it was a niche product (cold water ,white garments)
  9. 9. In an interview, Niall Fitzgerald said, “‘Communications had evolved so fast that within seconds this wasn’t a brand issue, this was a corporate issue. So even if we had wanted to ring-fence our product, we couldn’t have.’ Unilever chairman Sir Michael Perry referred to this incident as the greatest marketing setback that Unilever had ever seen.
  10. 10. Consequences  People avoided this product with a thought that it will destroy their clothes.  The product was a flop.  Most retailers quickly took the product from their shelves.  Unilever launched a crisis management program  1995 – Persil power replaced with Persil New Generation.
  11. 11.  Great organizations learn from their failures instead of carping about it or fixing accountabilities when the damage is already done.  This experience taught Unilever to promote greater cross-functional co-ordination between R&D and marketing functions.  The company institutionalized the process of setting up dedicated innovation centers instead of adopting an ethnocentric approach.  No brand is an island.  Products have to be tested under all conditions.
  12. 12. Q1.What are the aspects of consumer behavior that Unilever missed? How did it affect their business?  Unilever only focused on one segment of market that is Northern Europe where people washed clothes separately and in low temperatures. (NICHE PRODUCT) but sold product in other geographies.  Failed to test product in all conditions.  Lagged behind in research of usage norms in different geographies.  Effects on business:- • product was withdrawn • negative publicity by P&G • loss of 300 million pounds
  13. 13. Q2.Does this case study highlight the importance of understanding consumer behavior before a business decides to innovate a product?  Yes, because it helps to understand Difference in consumer behaviors in different geographies Varied expectations of consumers Reasons why consumers buy a product Likes and dislikes of consumers Impact of brand failure on corporate reputation
  14. 14. The significant risk for Unilever was… • If one product encounters a problem the image of other products could be damaged • Dent in brand reputation • Loss in customer’s trust and confidence in the brand
  15. 15. Thank you…

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