GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS

Dịch vụ viết thuê luận án tiến sĩ, luận văn thạc sĩ, chuyên đề khóa
luận
Sdt/zalo 0967 538 624/0886 091 915 https://lamluanvan.net/
1
TABLE OF CONTENTS
I. INTRODUCTION.........................................................................................................2
II. BASIC CONCEPTS OF GROWTH STRATEGY................................................................4
III. GENERAL INFORMATION OF UNILEVER....................................................................5
IV. PROSPECTS OF EMERGING MARKETS FOR FAST MOVING CONSUMER GOODS
INDUSTRY.........................................................................................................................7
V. ANALYSIS OF GROWTH STRATEGIES OF UNILEVER IN EMERGING MARKETS ........11
VI. STRATEGY RECOMMENDATIONS AND CONCLUDING REMARKS ...........................13
REFERENCES...................................................................................................................15

luận
2
GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS
I. INTRODUCTION
Unilever has been known as one of the world’s leading fast-moving consumer
goods companies for many years. The company provides the consumers with various
products from personal care, food, refreshment to home care. It owns some of the
best-known and best loved brands, ranging from long established names like
Sunlight, Dove, Lipton and Knorr to new innovations such as Pureit, a unique in-home
water purifier. Unilever’s products are currently being sold in more than 190
countries and on any given day, there are about 2 billion consumers using them.
Like other big FMCG companies, in the past, the majority of Unilever’s
turnover came from the developed countries such as US, United Kingdom, Japan and
Eastern Europe. In contrast, emerging markets used to account for a small portion of
the total revenues. However, this situation has been changing in recent years. Due to
serious influences of the world economic crisis in 2008, many developed countries
have shown a rapid decline in aggregate demand in general and in consumption
spending in particular. As a result, Unilever’s revenues from the mature markets have
decreased significantly. Meanwhile, the emerging markets, especially China, India,
Turkey and Indonesia have displayed a positive growth in consumer spending over
year. By 2013, the sales of Unilever form emerging markets grew by 8.7% and
accounted for 57% of its business. Developed markets reported negative underlying
sales growth for the year of 1.3%, with Europe down 1.1% and North America 1.5%.
Based on predictions of the world’s growth in GDP and consumer spending along
with the trend analysis in the consumer goods industry made by the world’s leading
research and analysis organizations, emerging markets are expected to be become
strategic markets for FMCG companies. Because of having many-year experience in
emerging markets, Unilever has early implemented the growth strategies to capture
market share. In the scope of my report, I will focus on analyzing how Unilever’s

luận
3
growth strategies operate to help it gain strong footprint in these markets and
propose some recommendations for its further growth in the future.

luận
4
II. BASIC CONCEPTS OF GROWTH STRATEGY
Growth strategy refers to a strategic plan that is created and undertaken to
expand a firm’s business activities. A firm may strive to redefine the business,
penetrate into new markets, enter new business fields which involve or does not
involve its main businesses or diversify its product portfolio. The firm can have a large
number of choices to do these things by changing product categories, target markets
and its functions. Hence, the growth can be accomplished internally or externally.
The objective of internal growth is to gain growth in assets, revenues and
profits. A business may implement internal growth due to the increase in operations
globally and domestically. In practice, internal growth strategy can be undertaken by
expansion, modernization and diversification. To grow internally, the business will
put an emphasis on making the effective use of its strengths and resources in order
to produce growth and high annual returns on its invested capital.
External growth is formulated for the same targets as internal growth.
However, it is done through acquisitions, mergers and strategic alliance for the
purpose of obtaining market share, increasing brand awareness on the global and
enhancing competitive advantages. Providing that the external growth strategy is
properly executed, the firm can maximize growth potentials at the right pace,
especially when its growth opportunities are limited by financing or other constraints
or are not the best choice in terms of strategic opportunities and shareholder
purposes (Lucky, D. 2007).
Growth strategies play a vital role in the existence and development of all
companies whatever industry or sector they operate in. Since the business
environment of the firms is typically dynamic and highly competitive, the firms are
required to grow to survive. A growth strategy helps the company to expand its sales
and market share as well as gain more efficient management experience. As the firm
increase in size, it will take advantage of economy of scale and control its costs more

luận
5
efficiently. In addition, growth strategies allow the firm to have closer access to
consumers and markets and respond quickly to changes in market demands.
Therefore, a firm that fails to move ahead may fall behind in the competitive race and
lose its market share to the competitors.
III. GENERAL INFORMATION OF UNILEVER
Unilever is a multinational corporation providing a variety of consumer goods.
The corporation is known as a giant in the world’s fast moving consumer goods
market. It owns more than 400 brands including 14 “billion euro brands”, which each
earns annual revenues in excess of € 1 billion. Its portfolio ranges from nutritionally
balanced foods to indulgent ice creams, affordable soaps, luxurious shampoos and
daily household care products. It produces many world-leading brands, namely Omo,
Knorr, Dove, Lipton, Axe and Hellmann’s, alongside trusted local names such as Blue
Band, Pureit and Suave.
Nowadays, there are about 2 billion consumers worldwide using a Unilever
product on any given day. Its products are being sold in more than 190 countries
across the world. In addition, with more than 50 years experience in Brazil, China,
India and Indonesia, Unilever has become one of the corporations that have the
longest footprint in the emerging markets. It is important to note that it is strongly
positioned in almost every market where its products present (see the figure below).

luận
6
As of 2013, Unilever achieved the revenues of €49.8 billion, in which the sales
from emerging markets and developed markets account for 57% and 43%
respectively.
Unilever’s vision, strategy and objectives in the future
From its inception, Unilever has always believed that success of a firm mainly
derives from its actions in accordance with the highest standards of corporate
behavior towards its employees, consumers and the society and our living
environment. This belief has been remained and developed over time and helped
Unilever to gain a balance between profit and corporate social responsibility. It has

luận
7
been communicated by CEOs through the corporations’ strategy and goals in each
time period.
Unilever’s vision is to help people to look good, feel good and get more out of
life, which clearly reflects the corporation’s deep understanding on the consumers’
demands as well as its care on people’s lives. In 2009, Unilever formulated an actual
ongoing strategy under the name “The Compass” for sustainable growth. Accordingly,
Unilever will develop new ways of doing business that enable it to double the
company’s size whilst reducing its environmental footprint and increasing it positive
social influences. Based on its strategic direction, Unilever sets three big objectives
that by 2020 will allow it to: (1) help more than a billion people to improve their
health and well-being; (2) reduce by a half the environmental impacts of its products;
(3) source 100% of its agricultural raw material sustainably and enhance the living
quality of people across its value chain.
IV. PROSPECTS OF EMERGING MARKETS FOR FAST MOVING CONSUMER GOODS
INDUSTRY
Fast Moving Consumer Goods (FMCG) can be defined as packed goods that are
consumed or sold at regular and small intervals. In general, the prices of the fast
moving consumer goods are relatively low. Due to a small profit margin, the firms in
this industry can increase profit only by stimulating the sales volume. In many recent
years, the emerging markets have become a more and more attractive pie for FMCG
companies since these markets are characterized by specific local needs and high
price sensitivity (Prahalad and Lieberthal 1998). Moreover, the demographic features
like age, gender… are the favorable factors for the consumption of such goods.
Representing approximately 70% of the world’s population, consumption
spending the emerging markets accounts for only 35% of the world’s GDP; however,

luận
8
this situation is changing. According to McKinsey Analysis in 2011, by 2012, the
collective GDP of the emerging markets, namely Asia (excluding Singapore and
Japan), Latin America, Eastern Europe, Middle East (excluding Isarael) and Africa, will
overtake that of developed countries for the first time. Additionally, it is worth noting
that growth in consumer spending will be driven by emerging markets. For instance,
consumer spending in skin-care category, over the next decade, is expected to
increase to nearly $84 billion from $44 billion in the previous decade. Meanwhile,
emerging markets are likely to contribute $60 billion, accounting for approximately
70% of that total growth. Consumption expenditure in these markets, over the next
10 years, is predicted to rise three times faster than that of developed economies,
reaching a total of $6 trillion and represent about 50% of the world’s consumer
spending by 2020. It is clear that these forecasts open a bright picture for potential
growth opportunities for FMCG categories.
The findings from Global Growth database of McKinsey analysis also reveal
that among emerging markets, BRIC, namely Brazil, Russia, India and China, will
continue to play a dominant role, bring out nearly 50% of expected growth in
consumption spending. It is also important to note that approximately 15% of the
total growth in emerging market consumption expenditure will derive from the next
10 largest emerging markets, including Poland, Turkey, Mexico, Argentina, Iran, South
Korea, Ukraine, Thailand, Indonesia and South Africa.

luận
9
(Source: Global Growth Compass database, McKinsey analysis)
Exhibit 1: the next 10 countries after BRC will also drive significant growth
While the world’s developed economies are still addressing the troubles
deriving from the banking crisis of 2008, several emerging markets have achieved a
significant rise in incomes, which brings FMCG companies with appealing growth
opportunity to enter the new markets and expand market share. According to a
report made by The Economist Intelligence Unit (the world’s leading resource for
economic and business research, forecasting and analysis) and Mintel (a leading
global supplier of consumer, product and media intelligence) published in January
2013, consumption expenditure in the emerging markets, namely China, India,
Mexico, Turkey and South Africa is expected to rise between 7.7% and 15.2% per
annum between 2013 and 2016. Meanwhile, the spending growth of the United
States will average 4.5% and that of the United Kingdom will just 3.6%. Based on both
the micro and macroeconomic trends, the market researchers are able to provide
scenario-based forecasts of relatively high accuracy level and reveal attractive
information for enterprises which desire to enter and explore emerging markets for

luận
10
their products. Specifically, China is likely to see the fastest growth in prepared food,
approximately 21% annually for the period 2013-2016. This market also will continue
achieve a rapid growth in laundry detergents thanks to dramatic growth in washing
machine from 1% of rural household in 2000 to 16% in 2010. Mexico is expected to
generate a highest growth rate in beverages, nearly 16.9% per annum from 2013 to
2016. During this time period, household products in South Africa and India will grow
by nearly 12% and 21% respectively. In addition, the countries in South African are
acquiring more expensive tastes in drinks and coffee is predicted to rise 8.8%
annually. Turkey is forecasted to see the fastest growth in beauty products, nearly
20% annually per annum. Besides, the sun cream product on this market is
experiencing a rapid growth since cultural changes cause more and more people
willing to sunbathe in public.
Furthermore, emerging cities have been playing an important part in the
consumer spending growth of emerging markets. McKinsey analysis indicates that
40% of the total growth in global consumption expenditure will be come from the top
300 emerging cities. Among these cities, Shanghai, Beijing and Chongqing in China,
Sao Paolo in Brazil, Istanbul in Turkey and Mexico City in Mexico are six leading cities
in consumption growth for the time period 2010-2020. Hence, the FMCG companies
need to pay close attention to choosing target markets and specific demands of
particular markets to formulate an appropriate strategy for successful penetration
and further expansion in the future. An important fact is that in some categories,
aiming at the emerging cities might result in better outcomes than targeting the
whole countries. For instance, for confectionery category, Istanbul and Beijing will
generate a higher growth than Greece and Singapore.

luận
11
(Source: Global Growth Compass database, McKinsey analysis)
V. ANALYSIS OF GROWTH STRATEGIES OF UNILEVER IN EMERGING MARKETS
With more than 50 year experience in Brazil, China, Indonesia and India,
Unilever has become familiar to the emerging markets. In spite of difficulties coming
from the banking crisis of 2008, the growth strategies of Unilever seems to work well.
First and foremost, as a part of its growth plan, Unilever has implemented
market development strategy to expand market for its existing products. This
strategy relates to the introduction of current products into new markets to capture
the growth as well as compensate for sales reduction in developed economies. A
remarkable instance is that Unilever gained success in launching its Magnum ice
creams in the Philippines and Malaysia in 2012 while the brand continued to operate

luận
12
well in the US and Indonesia. Besides, in 2013, laundry brands like Surf and Omo were
successfully launched in Morocco and the Philippines respectively. Moreover, the
expansion of the soap brand of Unilever, Lifebuoy also proves the success of its
market development strategy. Initially, this brand was launched in India by Unilever
during epidemics as a powerful germicidal and a disinfectant. Until now, the brand
has presented in many emerging markets like China, Vietnam and Indonesia and
become one of the important products in the daily life there. In practice, Unilever has
undertaken three ways for developing market for its categories: (1) increase market
penetration; (2) increase consumption and (3) encourage the consumers to buy
higher value products. Putting market development into practice requires a rigorous
consistent approach in all Unilever categories. Therefore, during 2009, its global
category development teams made every effort to create market development
model for every category. These models serve as a basis of plans for particular local
markets and contribute significant to excellent results that Unilever has obtained
from the markets in which it operates. Thanks to its market development strategy,
Unilever has continued to roll out many strong brands, namely Clear, Cif, Dove,
Magnum, Knorr Jelly and Axe to a large number of new markets. More specifically,
the shampoo brands like Clear and Dove have had presence in over 40 and 60
countries
Secondly, Unilever has employed the penetration market strategy for many
years to increase its share on the existing market, reinforcing its strong footprint in
the FMCG categories. This strategy is implemented by Unilever through a various
ways from volume discount, lower prices to aggressive marketing and advertising.
Since the emerging-market consumers are characterized by limited purchasing power
and high price-elasticity, Unilever determines the middle class as its main target
customer. To attract this group of customers, the company has provided the smaller
and cheaper versions of products that consumers can actually afford. For instance,
aggressive marketing activities and 10 million free samples are main reasons for a
very successful introduction of Tresemme shampoo in Brazil. Another example is that

luận
13
the firm offers discounts to shop owners in places like Indonesia and China to put its
products right up front and sends sales representatives to even the smallest stores to
check that things are always in stock and neatly displayed. It is worth noting that in
recent years, many brands of Unilever, namely Omo, Lifebuoy and Comfort has
invested intensively in marketing campaigns and advertising to capture the dominant
share in the emerging economies. As an ongoing step in its market penetration
strategy, recently, Unilever has initiated a new mobile marketing platform that
enable the company to build a long term one-to-one relationships with consumers,
especially in emerging markets, namely India, China and Indonesia. According to Keith
Weed, Unilever Chief Marketing Officer, more than half Unilever’s turnover derives
from emerging markets and marketing on mobile phones is extremely significant for
its brands’ growth since mobile supplies a direct means of engagement with almost
every consumer in these markets. The new marketing tool will allow the marketers to
run mobile campaigns on the fly by segmenting users based on their buying habits
and demographic. By using this tool as a central part of the mobile marketing,
Unilever are trying to build firm relationships with its consumers and increase
convenience for customers in purchasing process, which clearly helps the company to
increase both purchases and brand loyalty.
The last but not least, the turnover growth of Unilever in emerging markets
comes from its product development strategy. From its inception until now, brands
and product development have been at the heart of its overall operations. Thanks to
great effort made by more than 6000 professional in its R&D function, Unilever has
improved and developed a variety of products to meet the changes in consumer
lifestyles and appeal to more customers at all income levels. For instance, in 2008, to
meet the requirements of India markets on skincare products, Unilever launched a
product range of antipollution cream called Pure Defense.
VI. STRATEGY RECOMMENDATIONS AND CONCLUDING REMARKS

luận
14
In conclusion, thanks to growth strategies like market penetration, market
development and product development strategy, Unilever has appealed more and
more customers, increased brand awareness and reinforced its strong position in
FMCG categories in emerging markets. These strategies are actually efficient tools for
the company to capture the growth in these dynamic markets. With market
development strategy, Unilever has strived to widen market for its existing products.
As a result, several famous brands have had wide presence in a number of developing
markets. Additionally, by implementing market penetration strategies, the FMCG
giant are making the most of purchasing power of consumers in these markets, which
leads to the sales growth in its categories over time. Furthermore, due to product
development strategy, the company has provided its customers with the highest
quality products and smart innovations, which contribute significantly to improve the
consumer’s health as well as reduce negative impacts of its products on environment.
Unilever’s great efforts to improve people’s life quality have actually increased the
consumers’ loyalty in its brand names. Therefore, despite facing with many troubles
coming from the economic downturn and high competition, Unilever still generates
good results in sales, profits as well as returns for its shareholder. In my opinion, this
is a reward that Unilever deserves to achieve since it has always tried to gain balance
between profit and corporate responsibility towards community and society during
its development process.

luận
15
REFERENCES
BRIEN, R. (2013) Emerging market sales lift Unilever shares to new high. Reuters.
[Online]. 23rd January. Available from:
http://www.reuters.com/article/2013/01/23/us-unilever-idUSBRE90M09V20130123
[Accessed: 25th September 2014]
BRENNAN, J., KELLY, G. & MARTINEZ, A. (2013) Tough choices for consumer
companies. McKinsey & Company. [Online]. 12th
December. Available from:
http://www.mckinsey.com/insights/consumer_and_retail/tough_choices_for_consu
mer_goods_companies [Accessed: 25th
September 2014]
CHATTERJEE, I. (2013) The decade ahead: Trends that will shape the consumer goods
industry. McKinsey & Company. [Online]. Available from: [Accessed: 25th
September
2014],
HIROSE, R., MARTINEZ, A. & MOULIK, S. (2013) Go beyond the usual suspects to find
growth in emerging markets. Forbes. [Online]. 22nd
January. Available from:
http://www.forbes.com/sites/mckinsey/2013/01/22/go-beyond-the-usual-suspects-
to-find-growth-in-emerging-markets/ [Accessed: 25th
September 2014]
GELLER, M. (2014) Unilever sticks with emerging markets as sales rebound. Reuters.
[Online]. 21st
January. Available from: http://uk.reuters.com/article/2014/01/21/uk-
unilever-results-idUKBREA0K09A20140121. [Accessed: 25th September 2014]
NISEN, M. (2013) How Unilever Is Using Incredibly Simple Strategies To Win In
Emerging Markets. Business Insider. [Online]. 3rd
http://www.businessinsider.com/how-unilever-is-winning-emerging-markets-2013-
1#ixzz3EOl1JwTA [Accessed: 25th
September 2014]
NAGARAJAN, G. & SHERIFF, J. K. (2013) Emerging challenges and prospects of FMCG
product development in India. International Journal of Marketing. [Online] 2 (1).

luận
16
Available from: http://indianresearchjournals.com/pdf/IJMFSMR/2013/January/5.pdf
[Accessed: 25th
September 2014]
SEVERIN, C. B. et al. (2011) Global Growth Compass: Locating consumer-industry
growth opportunities in emerging markets. McKinsey on Marketing & Sales. [Online].
Available from:
http://mckinseyonmarketingandsales.com/sites/default/files/pdf/Finding%20profits
%20and%20growth%20in%20emerging%20markets.pdf"http://mckinseyonmarketingand
sales.com/sites/default/files/pdf/ [Accessed: 25th September 2014]
The Guardian. (2014) Unilever boosted by emerging market growth. [Online]21st
http://www.theguardian.com/business/2014/jan/21/unilever-emerging-markets-
sales-profits [Accessed: 25th September 2014]

GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS

Recommended

Recommended

More Related Content

Similar to GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS

Similar to GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS (15)

More from lamluanvan.net Viết thuê luận văn

More from lamluanvan.net Viết thuê luận văn (20)

Recently uploaded

Recently uploaded (20)

GROWTH STRATEGY OF UNILEVER IN EMERGING MARKETS