UNILEVER
«REDISCOVERING MARKET SEGMENTATION»
CONTENTS This case study was prepared by Changellenge>> for Unilever solely to use for educational purposes in the framework of Changellenge National Case Study League >>. The authors do not intend to illustrate effective or ineffective management. Certain names in this case study, together with other identification data might have been altered for confidentiality purposes. Case study data might not be valid or accurate, and also might have been altered to comply with commercial confidentiality policy. All rights reserved, unauthorized use is prohibited. In order to purchase the case and for distribution purposes please contact us: info@changellenge.com. In this case you will have to develop a marketing plan concept for Dove - one of Unilever’s leading brands Millions of women worldwide choose Dove personal care products. In Russia Dove has been one of the market leaders for over ten years. But Dove brand has set an agressive sales growth target of 30 % for the upcoming year. Solution of the case should include a proposal on the brand’s target audience revision that would enforce sales increase and probably discover new market segments.
/3 INTRODUCTION
/4 UNILEVER • Company Background • Unilever Today
/7 DOVE • Advertisment Campaign in Russia • Dove’s Target Audience
/13 MARKET OF PERSONAL CARE PRODUCTS • Market Description • Dove Brand Position in Individual Market Segments • Features of Russian Consumers • How Consumer Selects and Buys a Product
/22 APPENDICES
2
UNILEVER CASE - CONTENTS
INTRODUCTION
In the middle of the day a senior brand manager at Dove called Alina dropped over for a lunch to Prostye Veshchi, a gastronomic pub. Heading to her usual table near the window facing Moscow zoo, she smiled when remembered her visit there last weekend with the daughters. “Until it gets too cold, we must go there once again,” she promised to herself. Yet, the thoughts about the work were quick to regain. The day before, Alina got the new important task from her marketing director. Annual meetings on brand development target and strategies were getting on, and Alina was to make a presentation on Dove annual marketing plan promptly. The 2014 target set by the superiors was to augment the product sales by one third. For that moment it was already clear that such a goal will require not just a couple of good marketing strokes. Alina was aware that to raise sales significantly the target audience of the brand should be reconsidered, and then either a new access to the current audience found, or so far untapped segments converted.
Another marketing strategy will require answering anew all the key questions, such as which segments have to be targeted at and, in relation to that, what the expected penetration1 of Dove will be on its product markets (face cleansing products, skin care, antiperspirants and hair care.) Alina made the order to the waiter at once without even checking for the menu, and in the meantime started examining the visitors. An old lady sitting at the opposite table had an expensive mineral water. The impeccable styling, manicure and golden jewelry all indicated that she was obviously looking after herself. At the same time, she looked constrained, as if she was afraid of messing up her hair or spoiling the makeup. Alina took thought about which beauty care products the lady used and whether she could be interested in Dove. By the opposite window, a pair of young ladies was discussing something amusedly. One of them was pretty, wearing red hair and apparently trying to hide the freckles under a thick layer of foundation. Her friend was boasting of lighting-up her hair and keeping the ends
from damage. “Poor things, they are trying to meet the imposed beauty standards so hard that they forget completely of how beautiful they are with all their sunspots, natural hair color, age and weight,” thought Alina. Could Dove suit them? Over the past two years, marketing strategy of Dove has been mostly targeted at the promotion of the “pure beauty” idea and at inspiring the more women to care for themselves to feel beautiful irrespective of their age, weigh, hair color and complexion. Btu how such a simple idea can reach them? How to assure that Dove products help them to keep beauty daily? Where to find new, still-to-be covered customer categories? Alina fell to thinking, being almost sure that a prospective buyer can be found in the yet unexplored segments. She supported the idea of the marketing director to expand the target audience and possibly enter new market segments… Before the lunch arrived, Alina decided to put a full stop in her thoughts. She opened her notebook and summarized her reasoning into the clear goal for the upcoming week:
«To make an offer of how to change the Dove target audience (for female product category only) and to prove that implementing of adjustments offered will trigger the growth of Dove accumulated sales by 35% in 2014 in monetary equivalent and by 30% in quantity. To clarify, who/what will be the trigger for sales growth, and why the entrance to the new segments is worth from the point of long-term development of the brand.» 1
Penetration – % of households of a specific market segment purchasing the product of this brand. E.g., «90%-penetration of Dove shower gel among Russian women between 20 and 30 years old» means that 90% of women within this category purchase this product.
3
UNILEVER CASE - INTRODUCTION
UNILEVER
Day by day we are working to create a better future. We help people feel better, look better and get more from life due to friendly products and services. We shall inspire people for small daily actions that will help us to make great advances. We shall develop new ways of managing the business, which will give us the opportunity to double its volumes, at a time decreasing environmental impact.
2
The multinational Anglo-Dutch company was established in England in 1880, and its contemporary name appeared when Dutch Margarine Uni and Lever Brothers (British soap manufacturing company) merged in 1930. The reasons for merger were the multiple benefits gained in purchasing of raw materials – oils and fats required in manufacturing of both products. Thus the company started with larger merger, and throughout the history of Unilever development M&A2 transactions played a significant role. The current state of the company and the strategy of its development has been affected by a range of characteristic historical background features. First years of the company business coincided with the Great Depression in 1930s. These years were a period of trial for both Unilever and the entire world. The unfavorable economic conditions made the freshly united enterprise adapt and streamline as fast as possible. In the following years this furthered the creation of corporate methods of quick adaptation to the global changes and external economic factors. World War II became the second trial for the transnational company. Unilever was fragmented during the years of war. German and Japanese enterprises were located on occupied territories and any connections to London and Rotterdam were completely severed. This resulted in development of the distinct corporate culture: local Unilever
companies started to operate with high level of independence and focused on particularities of local markets. The trait kept up till nowadays: group operational management is split based on location of enterprises, and different brands are promoted on different markets. Geographical diversification of business makes it possible to acquire local companies and brands that are successful in the markets of Unilever presence (this strategy is impossible for many FMCG companies as their development strategies allow acquisition of global players and businesses only). The postwar European prosperity and growth of wealth stimulated with the European Community take-off resulting in consumer demand boom and growing living standards, which also influenced new Unilever strategy. The company starts to pay additional attention to perfection of process solutions and establishes R&D units. Eventually, Unilever expands and the products of the company gain in variety; innovations are implemented and new acquisitions are effected. Advertising units also evolve, as do affiliated marketing research and packing companies. By the beginning of 1980s Unilever becomes 26th largest company in the world. The company businesses included tropical plantations, cargo forwarding, manufacturing of plastics, packing materials, and a wide range of food, personal, care and household maintenance products.
In 1990s the company changed the strategy abruptly: the strategy of brand portfolio diversification was replaced with the strategy of focusing on key products and best selling markets with high growth potential. By the end of 20th century Unilever decreased the number of marketed product categories from 50 to 13. At the same time, the company launched first environmental efficiency programs. Unilever welcomed XXI century with the Path to Growth program. This new five-years strategy is aimed to further development of leading brands, improvement of production, and speeding up the company growth. Sweeping changes were introduced to the group range of marketable products: the company sold 140 various brands and focused on leading brands. Unilever Health Institute was established in the beginning of the century. The Institute is dedicated to R&D in food, health, and life energy. In 2004, Unilever adopted a new corporate mission. Its essence is formulated in just one word – Vitality. The new corporate mission statement is Add Vitality to Life. In November 2010 the company changes its global vision. New Unilever Sustainable Living Plan becomes the cornerstone of the corporate strategic management. The 10 years Plan outlines the most important environmental, economic and social goals that form the long term development strategy of the company and guide all employees in their activities.
Mergers and acquisitions
4
UNILEVER CASE - UNILEVER
UNILEVER TODAY Today, Unilever is one of the world leaders in production of FMCG goods. The company products are sold to more than 190 countries with 170 million purchase units worldwide using a Unilever product, and on any given day over two billion customers enjoy the company brands. At the moment, Unilever employs around 191Â 000 people worldwide (around 8Â 000 of them work in Russia). The turnover of the company totaled 51.3 billion EUR in 2012. The range of products offered by the company (food products, refreshment, tea and ice-cream, cosmetics and household chemical products) comprises some of the most popular brands in the world, including 14 brands priced at over 1 billion EUR each. Unilever holds first place globally in many market segments of corporate brands presence. Unilever makes considerable investments into R&D and innovations in order to ensure that company products better meet consumer expectations. 14 international and 37 regional (including Moscow) Unilever R&D centres are relentlessly working on improving the company products quality. Total volume of
5
annual investments into R&D is around 1 billion EUR. Unilever strives to double up its business while reducing the negative impact on the natural environment and improving the positive social returns. Thus, the company set the goals to decrease the ecological harm from production by 50% at all stages (including raw materials extraction, manufacturing, ready products stocking and transportation, final consumption and waste disposal), to help over 1 billion people worldwide improve their health conditions with Unilever brands, and to ensure that 100% of all agricultural raw materials come from renewable source by 2020. All those goals are listed as part of 50 initiatives comprising the Unilever Plan for Sustainable Living published in November 2010.
VARIOUS BUSINESS SEGMENTS IN OVERALL UNILEVER TURNOVER, 2012
30 %
FOODS
33 %
PERSONAL CARE
19 %
REFRESHMENT
18 %
HOMECARE
UNILEVER CASE - UNILEVER
Personal care segment is both the biggest and the fastest growing in Unilever business: in 2012 it showcased a 4.2% growth (compare with 2.2% growth of homecare segment, 1.2% growth of foods segment, and 1.4% of refreshment segment). Personal care segment scooped in 35% of the total company sales, with the turnover hitting the mark of 11.1 billion EUR. The growth of this segment is mainly attributable to emerging markets that demonstrate a considerable pace of personal care products market penetration. One of such emerging markets is Russia. Russia is a priority for Unilever international company as it is a market with high potential for further growth. In 2012 the company celebrated its 20th anniversary of presence in Russian market. Unilever’s range of brands offered in Russia includes such well known food brands as Calve sauces, Hellmann’s, Baltimor, Rama spreads, Crème Bonjour, Pyshka baking margarine, Knorr soups and hot dish bases, as well as Carte D’Or, Cornetto, Ekzo,
6
Golden Standard and Magnate ice-cream brands. Furthermore, the company also sells Beseda, Brooke Bond, and Lipton teas, and a variety of popular personal care and homecare products: Dove cosmetics, Chernyi Zhemchug, Chistaya Linija, Barkhatnye Ruchki, Sto Receptov Krasoty; Clear vita ABE, Dove, Sunsilk, Timotei, and TIGI hair care product; Axe, Dove, Rexona, and Chistaya Linija deodorants; Lesnoy Balsam and 32 mouth care products; Cif, Domestos and Glorix cleaning and disinfection products; Sun dishwasher detergents. Unilever goods in Russia are produced at four major manufacturing clusters: food and ice-cream cluster in Tula Region, tea, cosmetics and homecare cluster in St. Petersburg, cosmetic products cluster in Yekaterinburg, and ice-cream cluster in Omsk. The company production capacity is ever-growing in order to meet the growing demand of Russian consumers for Unilever products. Moreover, cosmetic products produced at the company’s St. Petersburg plant are exported to the
majority of European countries, such as Austria, Belgium, United Kingdom, Hungary, Germany, CIS countries, etc. Total amount of the corporate investments into the Russian economy currently exceeds 2 billion EUR. In 2011, the Unilever group of companies declared the closing of purchase of the leading Russian cosmetics manufacturer – Kalina concern. Thus, the company upgraded its brand portfolio with Chernyi Zhemchug, Chistaya Linija, Barkhatnye Ruchki and other popular trademarks. In 2011, Unilever received an award for contribution in the field of international investments in Russia. The award was adjudged and handed over by Alfa-Bank, one of the biggest and most influential Russian banks, together with Oxford Said Business School.
UNILEVER CASE - UNILEVER
DOVE
7
CREATING AN INNOVATIVE PRODUCT The brand Dove first appeared in the USA soon after the second world war. The history of the brand began with the invention of an innovative product “the soap by one forth consisting of moisturizing cream”. The product was presented in the market in 1957 and was positioned as a cleanser which did not dry up the skin. Technically it was not ordinary soap as the formula of the first product Dove occurred as the result of realization of the military order to create and develop anew product for cleansing the skin of patients with burn injuries. The obtained product contained a big number of moisturizing components and dermatologists declared that it dried the skin far less than ordinary soap. Such a product started to be promoted in the mass consumer market. Ogilvy@Mather, one of the worldwide best-known advertising agencies, was the first company to develop the advertising campaign for Dove. The campaign slogan “ the soap which does not dry up your skin because by one forth it consists of moisturizing cream” appeared on TV, in mass media and outdoor advertisements. By 1960 Dove became one of the most recognizable brands in the category of goods for personal hygiene in the US.
COMMON IDEA FOR UMBRELLA BRAND In February 2000 Dove radically changed its strategy. They now begin to produce new self-care goods under the same brand - deodorants, shower gels, shampoos and conditioners. Thus, dove goes into the category of umbrella brands. Such an extension in the range of goods by Dove required a principally new approach to positioning the brand products in the market. There was a great need to establish a marketing company and develop a new idea which would be acceptable for all women, the company that could transmit Dove’s products all over the world. To find the solution Unilever did marketing research which resulted in a simple fact – 2% of all women only consider themselves beautiful and only 13% of them are satisfied with their physical state. Traditional advertising companies introduce to the world the image of a beautiful woman who is described with the help of the four key features “young, pale-complexioned, fair-haired, slim”. Nevertheless, more than 90% of all women do not correspond to such strict standards of beauty. Dove marketing analysts who had discovered that fundamental discrepancy took it as a basis for their new advertising campaign which was called afterwards “real beauty’.
In order to go ahead with their challenging idea Dove brand-managers used average women as models in their ads. Their photos were placed in posters and on billboards and viewers were asked to vote whether they considered those women beautiful. All over the world people were asked a question if a plump woman or an aged one or a lady with freckles or problematic skin could look attractive. Ads were shown on TV, published in magazines and were widely spread in Internet. So during the global campaign more than 40 local promo-sites for women were founded all over the world , everywhere from Canada to Uruguay and Vietnam. In each country Dove adapted their advertisements to local consumers’ preferences by choosing women from the same area as models for their ads. Apart from this the Dove team would arrange forums, photo exhibitions and actions, as well as releasing leaflets containing recommendations for mothers how to talk to daughters about their appearances. All these activities had the single aim –to attract public attention to the problem of women’s low self-rating as the result of imposed stereotypes of attractiveness and beauty.
UNILEVER CASE - DOVE
Dove dared to try and find a solution to a really complicated problem – to change people’s mind concerning real beauty and to give a chance to millions of women all over the world to feel pretty. Such a bold campaign had a contradictory effect. On the one hand, it provoked vivid agiotage. The result of this “unfair game” exceeded brand-managers’ expectations. Users started to widely transmit the adv. Slogans of the campaign, there were numerous discussions about real beauty in mass media, show-business stars began talking about this topic. Some of them would seriously discuss the matter of beauty while the others would parody Dove commercials. Unilever received a considerable positive appraisal – women at last could see different and truthful advertisement. On the other hand, the top-managenent of the company would not approve the new positioning of Dove, thinking it was non-functional. Unilever kept spending tremendous means on the advertisement while the latter did not provide direct sales of Dove’s goods but fought against solidly established stereotypes in the society. The unilever management doubted of the success of such a bold marketing strategy. Trying to get the company management on their side the Dove brand-managers team suggested that they released a number of short films about their own daughters. Thus there was a series of short commercials demonstrating little girls who were ashamed of their freckles, dreamt about being blonde-haired and suffered
8
from their imaginary plumpness. Despite the considerable positive response with the audience the Unilever top-managers who had agreed to let their children play roles in the commercials, still kept on doubting. Nowadays Dove still develop their idea upon promoting real beauty. The latest video by Dove won a prize at the festival “Cannes Lions” of 2013. A court artist who had been specialized in making people’s portraits was especially invited for the film. He made aurally two portraits of the same woman: one portrait was made according to the woman’s own description and the other one was painted according to the description by a random stranger. The women hid behind the curtain and gave the artist detailed descriptions of their faces, hair, skin and other features of their appearances. After the experiment the women could make sure that they see themselves less attractive than the others could see them. The video film has become the most frequently seen commercial according to YouTube version. For the last few years Dove has strengthened in its mission to help women feel beautiful day-after-day breaking stereotyped views on beauty and inspire them to take cautious care of themselves. The key elements of positioning the brabd are Beauty, Care and Happiness. The brand is addressed to those women who want to be good-looking and well-groomed every day. It proves the idea that the real beauty is found in streets, offices, shops and parks and not on pages of glamorous magazines.
EXAMPLES FROM THE DOVE CAMPAIGN “REAL BEAUTY”
EXAMPLE OF VISUAL IMAGES FROM DOVE AD CAMPAIGN
UNILEVER CASE - DOVE
ADVERTISMENT CAMPAIGN IN RUSSIA Dove entered Russia in 2001 with three products at once: cleansing cream soap, shower gel, and bath foam. Since at this time the “Real Beauty” ad program was only under development in the USA, Dove positioned itself traditionally in Russia. The message was that Dove products contain 25% of soothing cream and do not wither the skin. A bit later, Dove brand team adapted the worldwide concept for Russian ladies and started to promote the natural beauty. In Russia “Real Beauty” ad campaign was somewhat toned down, as the poll results showed that Russian women are very conservative and are not ready to accept advertisement featuring stout models or models aged 60 plus. Yet, even a milder version instigated a fiery reaction
9
in both offline mass media and the Internet, producing over 160 publications discussing beauty stereotypes and multiple forum discussions. Today, the main message of Dove to Russian consumers is the following: “Real women inspire Dove. Everything that we do, and what we believe in, is dedicated to real women because we know that every woman can be beautiful. Through our ideas we speak out that Dove help real women to find and feel their best part” Current brand goals in the Russian market are: 1. To improve and secure Dove position as trusted brand No.1 2. To create brand awareness of Dove caring about women beauty 3. To expand brand conception: Dove is not just soap, Dove is a brand “personally for me”
DOVE’S PORTFOLIO IN RUSSIA Dove’s portfolio in Russia consists of a variety of personal care products divided into 4 main categories: skin cleansers, skin care, antiperspirants, hair care. There is also a limited product line for men (Dove Nen@ Care). In the category of Antiperspirants there are 7 different types of products , each in 3 alternative forms of producing: a stick, a roll and a spray. The main positioning of Dove antiperspirants is that they do not only prevent from sweat but they also take care of the beauty of the armpit skin. Antiperspirants Dove have a unique formula that helps the armpit skin to get repaired after shaving within 7 days. Besides, antipers. Dove prevent from sweat and unpleasant smell for 48 hours.
UNILEVER CASE - DOVE
The dove category for hair care includes 5 main types of products: shampoo, hair-conditioner, intensive hair masque, conditioner with the masque effect and night hair cream. All the products are produced by Dove for the 6 main product lines – nutritive care, volume and repair , intensive repair, hair loss control, colour shine, essential care. Dove also represents two more hair care products – hair therapy hair loss control serum and 2-staged hair treatment Hair Therapy Intensive repair. Such a wide range of products is due to the brand target in the segment of hair care products. The objective by Dove is to inform women that only using shampoo to repair damaged hair is not enough. The complex approach to repairing hair that includes using after wash products such as conditioners, masks, hair creams will make your hair look healthy and strong indeed.
10
UNILEVER CASE - DOVE
The Dove category of skin cleansers includes 3 types of products: shower gels, soap bars and liquid soap. The first Dove product to appear in the Russian market was the cream – soap. This is why for many consumers the production by Dove is still associated with “the soap by one forth consisting of moisturizing cream”. The soaps are represented in several flavors and are packed in boxes of different sizes. The most sold sizes are 135 and 75 gr. Besides soap bars Dove also offers a line of shower gels and liquid soaps with the same flavours. The assortment has grown in order to represent the full scaled line of day-today care products for all types of skin.
11
In the category of skin care products Dove represents body lotions and hand creams. All the products have the similar positioning which is connected with the main concept. All the products offer consumers care and nutrition. There are several sorts of products in the range suitable for different types of skin.
UNILEVER CASE - DOVE
DOVE’S TARGET AUDIENCE Dove’s target audience in the Russian market includes women at the age of 25 to 45 who do not strive after model-like appearance. They appreciate natural beauty
and health, take care of themselves and their family. They understand that their appearance is far from ideal. They care more about how they feel and perceive themselves rather than about their appearance.
Social Problems is one of the main interest for most part of audiences with cooking is on the second place. The youngest target audience likes Movies, Music and Fashion while the oldest likes Gardening, History and Art.
DOVE’S TARGET AUDIENCE BROKEN DOWN BY INTERESTS DEPENDING ON AGE:
Mary, age 22 Occupation: student Hobby: travelling, mountain skiing Motto: never stop smiling because even when you feel sad somebody may fall in love with your smile. Key features of a young lady: sense of humor and fidelity Favorite Dove products: Dove Hair Therapy Intensive Repair dual-action formula
Angelina, age 28 Occupation: sales manager Hobby: yoga, horse riding Motto: no failures happen if you move forward Key features of a young lady: zest for life and cooking skills Favorite Dove products: Go Fresh Antiperspirant and Summer Glow Body Lotion
Helen, age 42 Occupation: housewife Hobby: gastronomy, diving Motto: whatever happens happens for the best Key features of a lady: sense of proportion Favorite Dove products: Soft Peeling beauty cream bar and overnight hair cream
12
UNILEVER CASE - DOVE
MARKET OF PERSONAL CARE PRODUCTS
MARKET DESCRIPTION Traditionally the market of personal care products is a large market continuing its dynamic development. In 2012, the global market of personal care products equaled 426 billion dollars. The Russian market – the largest market in the Eastern Europe – is the eighth largest market in the world in monetary terms. In 2012, it equaled 9.6 billion euros, and grew by 6.9% compared with 2011. The Russian market is now fast moving to restore its volumes after the downswing resulting from the global financial crisis. For the first quarter of 2013 it grew by 9.1% in monetary terms and by 5.9% in physical terms compared with the first quarter of 2012. All commodity categories are growing, while the most dynamic growth is demonstrated by shower gels (12.7% in monetary terms and 11.5% in physical terms) and deodorants (9.8% in monetary terms and 9.1% in physical terms). The market of personal care products is characterized by significant segmentation. Major players’ products are represented simultaneously in several categories in the cosmetics market: shampoos, hair treatment, hair styling, skin care products, deodorants and shower gels. The Russian market is characterized by the high level of concentration: five largest companies – Unilever, HENKEL®, L’OREAL, Procter&Gamble and Beiersdorf – account for 70% of products. Other international companies which have smaller market shares in Russia – Colgate
Palmolive, Johnson&Johnson, Reckitt Benckiser, etc. – may be included in the group of leaders in certain market segments. The remainder is divided between mid-market Russian companies. Shampoos represent the largest market segment (26.4 billion rubles). Unilever is the leader in this segment (23.2% of the market), closely followed by its competitors Procter&Gamble (21.2%), Henkel (17.2%) and L’Oreal. Skin care (17.8 billion rubles) and hair treatment (over 20 billion rubles) products as well as deodorants and antiperspirants also represent large market segments. Market segmentation by sales channels is of interest: 51.4% of products are sold in specialized makeup stores, 30.8% - in supermarkets and hypermarkets, 4% - in superettes3, 7.6% - in drugstores, and 6.2% - at open-air markets. As for regional development, the Central Region of Russia, Siberia and Urals demonstrate the biggest rates of growth: the Central Region accounts for 39% of cosmetics sales, the Volga Region accounts for 12.2%, Siberia – 15.2%, the Northwest Region – 10.5%, the Southern Region of Russia – 7.9%, Urals – 11.5%, and the Far East – 3.7%. The consumer-wise market segmentation shows that women account for 85% of the market while men account for 15%. Women are proactive consumers of face and body care and hair treatment products, deodorants and shower gels. On the whole, Russian consumers like makeup,
appreciate product variety (13 thousand SKUs4 fall on face care products, over five thousand SKUs fall on hair treatment products and shampoos), and willing to buy cosmetics as gifts. There are practically no prospects of growth via increased penetration of personal care products for women in various consumer segments. In 2012, penetration of shampoos in Russia equaled 99%, face care products – 85%, deodorants – 81%, shower gels – 72%, hair treatment products – 60%, hair color products – 55%, and hair styling products – 47%. The key market grow sources include opening of new territories in the existing categories (professional cosmetics for the mass market, represented by such brands as Syoss, Wella Pro, Prelest Pro, is a good example of the above) and amplification of the commodity range (mousses in hair color products, thermal water, serum in skin care products). Of note, new areas are developing both in premium and regular segments. The main market growth areas include new brands, new categories for existing brands and activation of local players. High media investments are another important feature of the Russian market of cosmetics and personal care products. In Russia this market is the leader in terms of media investments, while banks and telecommunications companies are the leaders in this field in the developed countries. Unilever is one of the biggest media investors in Russia.
3
Superette – a small self-service food store with a broad range of goods. 4
SKU (Stock Keeping Unit) — a commodity item identifier, a stockkeeping unit, a stock number used in trade to track statistics in terms of goods/services sold.
13
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
DOVE BRAND POSITION IN INDIVIDUAL MARKET SEGMENTS In terms of the well-established market segments, commodities under the Dove brand are represented in Russia in the market of deodorants and antiperspirants, shower gels, soap bars, liquid soap, shampoos, hair treatment and skin care products. Dove products compete in all categories both with products of other Unilever brands and with competitors. Over 12 years of its presence in the Russian market, Dove brand has achieved a high awareness level and managed to ensure consumers’ loyalty. Comparing with similar competing top brands of personal care products, Dove has a medium awareness level – 24%, and a medium loyalty level – 9% (according to a focus group survey). The highest level of awareness among Russians was demonstrated by Barkhatnye Ruchki, Head&Shoulders, Nivea and Rexona brands. Russian brands are characterized by the highest levels of consumer loyalty.
5
Positions of Dove and its main competitors in various segments of the market differ significantly. Dove covers 4.2% of the market of deodorants and antiperspirants for women6. Another Unilever’s brand – Rexona – is a runaway brand in this category (15%). In addition, Nivea and Garnier have strong positions in this category. However, despite the breakaway of the competitors, Dove has demonstrated the fastest growth (21% compared with the similar period of 2012). Over the last two years Dove has been developing its range of products in this category. In May 2011, Dove Beauty Finish Deodorant entered the market, and followed by another deodorant with a new flavor – Dove Natural Touch – in a year (in May 2012). Dove shampoos account for 3.5% of the
market, however they showed the fastest growth in the first quarter of 2013 compared with its immediate competitors (by 12%). However Dove brand is significantly behind the market leader – Head&Shoulders – in terms of sales (the share of the latter is 18.1%). The list of other main competitors accounting for considerable market shares include Pantene (9.1%) and Chistaya Liniya (9.7%). Pantene, Fructis, Timotei and Nivea brands are loosing their market shares. The nearest competitors of Dove shampoos in terms of perceived product quality are Clear Vita Abe, Head&Shoulders, Gliss Kur, Pantene and Elseve. All above shampoos are characterized by similar price positioning (Clear Vita Abe is slightly more expensive than others), and according to consumers the quality of these shampoos is at the same level.
The same brands compete in the hair care category as practically all players produce complementary products: conditioners, masks, oils, etc. The share of Dove in the hair care segment is 4.2%. Currently Chistaya Liniya is the leader in this segment, followed by Pantene and Fructis. Palmolive is the leader in the segment of shower gels for women (7.7%). In addition to the above, the list of major players includes Nivea, Timotei and Fa. The entry of a new brand – Le Petit Marseillais – into the market two years ago was an important change: though its share is insignificant, it has demonstrated fast growth after the launch. Dove’s market share is 3%, and it continues to develop its product line: a new flavor – Dove Purely Pampering Body Wash – entered the market in April 2012.
LEVELS OF AWARENESS AND LOYALTY OF DOVE COMPETITORS IN VARIOUS SEGMENTS OF THE MARKET OF PERSONAL CARE PRODUCTS (FOR 2012)5
Source – Unilever survey for 2012.
6
The section hereinafter refers to average shares of brands for the first quarter of 2013 in monetary terms; data on shares of brands by months are presented in Appendix 2.
14
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
Dove is one of recognized leaders in the soap bars market – its average share in the first quarter of 2013 amounted to 12.2%, and comparing with the similar period of the last year its share increased by 17.7%. The nearest competitor of Dove soap bars is Palmolive (17.8% of the market segment), and its share increased in 2013 by 11.5%. Chistaya Liniya is another strong player in this segment with a stable share of 2.2%. Barkhatnye Ruchki brand has significantly strengthened its position in the market – its growth was over 20%, though its share is low. Timotei soap bars are losing their share. Barkhatnye Ruchki (20.2% of the market segment), Palmolive (14.5%) and Chistaya Liniya (11.1%) are the leaders in the liquid soap category. Dove’s share in this market category is 4.9% . Dove’s share in the skin care category is 4.2%, and it has grown compared with the previous year. Barkhatnye Ruchki cream, Nivea and Garnier products are its main competitors.
MARKET SHARES OF KEY BRANDS IN VARIOUS PERSONAL CARE SEGMENTS IN MONETARY TERMS (FOR THE FIRST QUARTER OF 2013)7
Deodorants and antiperspirants
Shower gels
Soap bars
Liquid soap Chistaya Linia
Shampoos
Hair care
Skin care
Barkhatnye Ruchki
DOVE CROSS-CONSUMPTION MAP (% OF RESPONDENTS WHO CONFIRMED THAT THEY USED PRODUCTS OF THIS BRAND)
7
Each specific bar segment of the diagram reflects shares only of the main market segment players. If a brand’s share is insignificant, then it is not reflected in the diagram bars.
15
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
FEATURES OF RUSSIAN CONSUMERS Russia saw an increase in consumption of cosmetic personal care products. Facial skin care products become more and more popular in this country: the number of women using facial skin washing and cleaning products has increased significantly (from 21% to 50% and from 52% to 67% respectively). In addition, the use of eye contour treatment products and facial masks has increased (from 25% to 40% and from 36% to 47% respectively). Body lotions have gained popularity as well. In addition to personal care at home, more and more women aged 18 to 55 use services of professionals: since 2000 the number of women using services of beauty shops minimum once per month has shown a tenfold increase – from 4% to 40%. In 2012, Unilever conducted a major survey among women to review needs and preferences of ladies aged 20 or older. As per the survey methodology, ladies had to agree or disagree with statements suggested. The survey resulted in development of profiles of ladies younger than 30 and older than 30.
CONSUMER CHARACTERISTICS OF THE GROUP AGED 20 TO 25 AND 25 TO 30 (WOMEN SURVEY RESULTS)8
I prefer to be connected with my family and friends wherever I am
I believe, that Russian products can be good and with high quality
I easily change my mind under influence of others
Celebrities opinion influences my decision of buying a product
8
Before buying product I’d like to touch it, feel the shape, the smell
THEY DO...
THEY DON’T...
I spend a lot of money on cosmetics and other skin care products
If I need an information, I use Internet first
People have to accept me as I am
I often go to cinema
I often buy new products to know what is it
As per results of Unilever’s survey in Russia in 2012.
16
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
A more aged audience has already established preferences. In contrast to young ladies who like to experiment, women older than 30 prefer stability and comfort. At the same time, older women (the same way as young ladies) would like to look well and be in good shape.
CONSUMER CHARACTERISTIC OF THE GROUP OLDER THAN 30 (WOMEN SURVEY RESULTS)9
I prefer to take holidays off the beaten track
It is silly to spend money on luxury goods even if you have lots of money
I try to keep up with the latest fashion trends
I’m the first among my friends to know news
9
Russia should ban import of the majority of products/goods
THEY DO...
THEY DON’T...
I want to be among first adopters of new technologies
Main purpose of advertising should be information on where to buy less expensive products
I prefer simple technology as the most robust
I often go shopping to make myself feel better
I like the opportunity to cope with unforeseen and difficult situations
As per results of Unilever’s survey in Russia in 2012.
17
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
As for preferences in the field of personal care products, Fructis is the most preferable brand for the younger target group (aged 20 to 25); its share is approximately 36%. Slightly older consumers more loyal to Timotei brand (37%). More older consumers prefers Chistaya Liniya brand cosmetics which is more affordable pricewise. Dove is an unambiguous leader among consumers aged 30 to 35 years when women consciously choose high quality and reputable personal care products. Older consumers are more loyal to all brands giving no clear preference to any single pronounced brand.
BREAKDOWN OF BRAND CONSUMER GROUPS BY AGE (% OF THE ENTIRE BRAND AUDIENCE COVERING WOMEN OF THIS AGE CATEGORY)10
Barhatnie ruchki Shauma Fructis Pantene Head & Shoulders Palmolive Timotei Garnier Chistaya Liniya Rexona Nivea Dove
20-25
10
25-30
30-35
35-45
45-55
55+
Source – Unilever’s survey in Russia in 2012.
18
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
According to a survey conducted by Global TGI11 in 2012 in Russia, the use of facial skin and body care products has been increasing steadily among women since 2000; a growing number of Russian women use services of beauty shops. In Russia women notably try to be attractive for men and to look young. As for brand consumers breakdown by their income level, Dove is more interesting for women with comfortable income preferring to act as knowledgeable buyers who avoid spending extra money on luxurious goods and expensive personal care products.
BREAKDOWN OF BRAND CONSUMER GROUPS BY THEIR INCOME LEVEL12
Barhatnie ruchki Shauma Fructis Pantene Head & Shoulders Palmolive Timotei Garnier Chistaya Liniya Rexona Nivea Dove
Don’t have enough money for food Enough for food, but not for clothes Enough for food and clothing, but not expensive things Can buy expensive things, but not all they want Full wealth
11
Global Target Group Index ( Global TGI ) — международное синдикативное исследование потребления товаров и услуг в 67 странах мира, в том числе в России (http://www.tns-global.ru/). 12
Source – Unilever’s survey for 2012.
19
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
Consumers’ concerns related to maintenance of skin beauty and health have become a global trend. Life expectancy increases, population ages, consumers’ awareness about risks for skin health related to long sunlight influence has increased – according to a survey conducted by Nielsen13 all above factors increase demand for skin care products. The share of aged population continues to grow in the majority of the world regions, and this factor promotes development of particular categories of commodities. Aged consumers strive to maintain habitual life quality prolonging their youthfulness and do not hurry to give up good self-care habits. Anti-aging products support growth of such global categories as face and eyelid moisturizers, sun screening products, hand/ body moisturizers. Of note, nowadays moisturizers and sun screening products for face and body have become irreplaceable for women of all ages and different social statuses. As for consumers’ social status, the mass market of personal care products covers people of all groups and occupations. The bulk of women’s products are consumed by housewives, students and working women. Housewives account for one third of sales of Shauma, Chistaya Liniya and Rexona brands. Students prefer Garnier and Fructis brands. Working women are primary consumers of Head&Shoulders and Pantene brands.
13
http://www.acnielsen.ru/
14
Source – Unilever’s survey for 2012.
20
BREAKDOWN OF BRAND CONSUMERS BY THEIR SOCIAL STATUS14
Barhatnie ruchki Shauma Fructis
unemployed
Pantene Head & Shoulders Palmolive Timotei Garnier Chistaya Liniya Rexona Nivea
housewives students workers pensioners others
Dove
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
HOW CONSUMER SELECTS AND BUYS A PRODUCT Consumers select brands based on different characteristics which are important for them. However in order to understand the consumers’ decision-making process Unilever conducted a number of repeated surveys aiming to identify factors important for female consumers at the moment of buying personal care products. Female consumers of different ages and occupations were surveyed in each quarter of the year. Importance of fragrance is mostly repeating trend for brand importance and is still the leading factor. For mostly all women of different age fragrance is the leader followed by importance of brand. The “odor” of the product (cream, shower gel, soap) has been the leading selection factor over five years – more than 25% of women listed it as an important factor. Then product brand, model and price follow (with practically similar importance). The packaging design proved to be the least important characteristic. V and Outdoor are the coverage media for all groups according to media consumption Main media for 20-30 and 30-35 is Internet, for 35-45 are Internet and Print, for older women is Print. The youngest audience is the most trustful – they trust to drug stores and to sellers, though they don’t trust to POS and digital indoor. The level of trust visually decreases with increase in the age of target audience. Thus older women trust for all media is about 80%, more for beauty salons, less for drug stores and POS with rather low level of trust to advertising. Group 55+ has the lowest level of trust. They trust to rout taxies placements and to sellers, but don’t believe to internet16.
15
Young ladies aged 20 to 30 years were used as an example.
16
According to data of the Unilever’ survey in Russia for 2012.
21
PERSONAL CARE PRODUCTS SELECTION FACTORS – FACTORS IMPORTANCE DYNAMICS15
packaging design
fragrance
brand
manufacturing country
model
price
UNILEVER CASE - MARKET OF PERSONAL CARE PRODUCTS
Appendices
APPENDIX 1. VOLUME SHARES OF BRANDS IN VARIOUS MARKET SEGMENTS
SKIN CARE (LOTIONS, CREAMS)
DEODORANTS AND ANTIPERSPIRANTS
23
UNILEVER CASE - APPENDICES
SHOWER GEL
SHAMPOOS
24
UNILEVER CASE - APPENDICES
LIQUID SOAP
HAIR CARE PRODUCTS
SOAP BARS
25
UNILEVER CASE - APPENDICES
APPENDIX 2. VALUE SHARES OF BRANDS IN VARIOUS MARKET SEGMENTS
SHAMPOOS
SKIN CARE (LOTIONS, CREAMS)
26
UNILEVER CASE - APPENDICES
DEODORANTS AND ANTIPERSPIRANTS
SHOWER GEL
27
UNILEVER CASE - APPENDICES
SOAP BARS
LIQUID SOAP
28
UNILEVER CASE - APPENDICES
HAIR CARE PRODUCTS (CONDITIONERS, MASKS AND OTHER)
29
UNILEVER CASE - APPENDICES
This case study was prepared by Changellenge>> the leading case organisation in Russia www.changellenge.com info@changellenge.com vk.com/changellengeglobal facebook.com/changellenge
This case study was written for Unilever Russia www.unilever.ru