Unilever is a multinational consumer goods company that operates in about 190 countries in the world, with over 400 products in it portfolio. The company has four divisions in which its products are organized, and they are; the consumer foods division, the refreshments division, the home care products division and the personal care products division.
For such a huge company as Unilever, with concerns in numerous industries and over 400 products, careful planning of operations is critical to maintain profitability. With the greatly diversified system of operations, a common strategy is established by the head office, from which other executives in subsidiaries, divisions and geographical locations are to adhere to. Regional markets are given freedom to choose on various aspects of strategy for operations, under the established structure of the company.
Transactional Vs Relationship Marketing
Transactional marketing is a strategy of marketing used by companies worldwide to reach their customers, and it focuses on of maximization of sales, acquiring new customers and keeping operations at the most effective level achievable. On the other hand, relationship marketing focuses on building a rapport with the customers in words and in deed, by ensuring that products sufficiently meet the needs of consumers. It is hinged on cooperation, trust and rapport between the business and other businesses, with the customer being the target beneficiary.
The table below illustrates the difference between the two strategies:
|Transactional Marketing|| |
Focuses on obtaining new customers
|Focuses on retaining the existing customers|
The service/product is the main focus of the company
|Focuses on benefits the customer gets from the product/service|
Little attention to customer service
|High emphasis on customer service|
Limited commitment to the customer
|Committed fully to the customer|
Little contact with customers
|Seeks maximum contact with customers|
Little concern with quality
|Seeks the highest quality for the customers|
Transactional marketing focuses on expansion of the market share by acquiring new customers, with all its other features being hinged upon this principle. Marketing activities target unexplored markets, and is crafted in such a way that it leads to sales. Market battles are common in this strategy, with competitors striving for the widest share of the market possible. Price wars are common when majority of players in an industry operate under transactional orientation as customers tend to be more sensitive to the prices of products in making their purchasing decisions.
The strategy is also short-termed in nature, with little attention to longer term concerns such as customer satisfaction and return purchase. With the strategy being somewhat of a hit-and-run operation, little attention is paid to customer satisfaction or complaints from customers. Studies are conducted to gather data on market trends rather than relying on feedback given. This poses a risk of becoming detached to customer needs, as market reports are subject to errors which may have serious implications for business.
Relationship marketing, on the other hand, focuses on retaining the customers who have already interacted with the product for return purchases. The strongest suit for this strategy is the eager to impress principle with which products are developed and presented to the customers, with innovations and improvements being a constant feature. The company, on the other hand, relies on the security of established markets and brand royalty to operate, which affords it a sense of security against the competition. Relationship marketing makes it easier for companies to establish dominance in a particular market, even when their products are not the lowest priced in the market.
As a customer-centric strategy, the relationship marketing strategy aims to establish the customer as the center of focus for policies, decisions and most importantly, the product. Customer care is an important aspect of the strategy, with policies being based off complaints from existing customers to improve the value derived by customers from the product. The strategy pays off handsomely, as it transforms the customers from a price to be won and makes them part and parcel of the company. As their feedback helps the company create better products/services for them, their satisfaction with the product makes them part of the marketing; they are more likely to spread the good word of the product to friends.
Unilever has been operating under the transactional strategy for the greater part of its history, developing numerous products and marketing aggressively to raise volumes of sales. The acquisition of competing companies also helped reduce the competition its products faced, as well as encouraging a spirit of competition between different divisions within the company. The company has however incorporated the relationship strategy into its operations, making great efforts to develop a person centered approach to consumers of their products.
A customer-centric approach to business is one of the strategies that Unilever currently employs in its global operations. This has been done by improving the customer care and customer feedback channels of the company, from which new products are molded to meet the needs of customers as expressed by them. It also makes the customer an active part of product creation, as well as being the foundation for marketing campaigns to promote the products.
Products have also been made a crucial part of the marketing strategy, the company making products that meet consumer needs in the best way possible. The entry of the company into the weight loss industry by introducing new, highly effective products that fulfill the role of breaking fats for weight gain is one such indication. With the high stature of the company and its products, existing customers can trust that any new products introduced to the market is of as high quality as other products they have interacted with, boosting the success of new products.
The Unilever brand has also been promoted aggressively to build the image of the company in the eyes of the public. Promotions in which numerous products are advertised to the public raise the stature of the company, while every individual product promotion also gives the company a boost of publicity. The focus of brand promotion is to create extraordinary brand experiences for customers when they use any of the numerous Unilever products.
Impact of Macro Environments
Unilevers diversified product range and global operations make it an interesting study in terms of macro environments and their influence on the company. On the ground, the operations that take place involve individual products such as Omo, Knorr and others that fall inside the subdivisions of the divisions. Administratively, the divisions are the real operating units that contribute to the mother companys success. The overall success of the company is determined by the success of the Foods, Refreshments, Homecare and Personal care divisions.
Strategies that are made at the regional levels have the highest impact on the way the consumer interacts with the products far more than overall company policies. Ultimately, the 400 products in the Unilever portfolio perform differently in the market, and their success affects the overall success of the company.
In making a macro-environment analysis, it is these products that should be looked at to determine the fortunes of Unilever. The BCG (Boston Consulting Group) matrix is a tool that is used by multinational companies with a range of products in diverse industries to determine the potential of each product. The matrix contains four segments, each measuring a different market environment. Decisions on policies are made depending on the segment where the product in questions falls in the matrix.
Problem child is a segment that operate in low sales growth industries/geographic location, and which has a low market share. In this section, the product may be performing at above average potential, but the market does not have much opportunity for expansion. The reasons for a sub-par performance can be attributed to the existence of a dominant player, recent entry into a market or simply having a product that is not good enough, or that needs to be worked on in order to reach greater heights. Low sales growth markets are attributed to changed outlooks in industry, which makes an industry lose glamour.
In Unilever, the foods division falls under this category, as it has been posing declining yearly sales, (Kasi K, 2017) in all locations. This trend has been brought about by increased levels of competitions from established companies that focus on food products as well as rising trends that are against the food industry generally. For problem child segments, a new outlook, possibly the sale of interests in the market would be a good idea, especially if the whole industry has been in decline, to avoid future losses.
High market share in high sales growth industries are known as stars. This means that the products are dominant in markets that are performing well and have potential to perform even better, with future growth forecasted.
Personal care the most successful division of Unilever falls into this category. It has been posting consistently positive growth, and has high potential for future growth. Further investment into the division to acquire an even bigger market share will ensure that the dominance and the profitability are maintained, to great company benefit.
When a product has a high market share in a low sales growth industry, they are referred to as cash cows. These can be the products that were previously Stars during a high sales period in the market, and retained their supremacy through decline.
Two of Unilevers divisions fall under this category, namely homecare and refreshments. They are the biggest sustainers of the company due to their combined contribution to annual sales, with a strong showing even in the midst of a period of decline in their respective industries, which means that they should continue receiving support to retain their position in the industry.
These are products that have a low market share in a high sales growth market. The products that fall under this category are determined to be poor, failing to solve the human need they are made to. A company that has a product fall under this segment of the matrix should consider dispensing with them to avoid loses that might result from it. Unilever does not have any division under this segment.
Personal care Problem Child
Home care & Refreshments Dogs
Relative market share
Segmentation, Targeting and Positioning
Segmentation, Targeting and Positioning (STP) tools are guides that are used to set policies and make decisions in institution by the management, (Lavis et al, 2009). The guides offer policy makers with crucial data that is necessary to make decisions in location for businesses, for purposes of marketing, especially when there are differentiated products being offered. There exist four types of segmentation, as discussed below;
Undifferentiated marketing strategy: includes very little diversity among the market segments. It is mostly used by companies with interests in a single segment of the market in a limited geographical area. Due to the great diversity of the Unilever Company, this type of segmentation does not apply as part of its marketing strategy
Concentrated marketing; on the other hand, selects single segment of the market and develops a marketing mix for it. Marketing efforts are then directed towards that p...
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