Unilever strategic analysis report – Innovation proposal PDF

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Innovation & Entrepreneurship

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Ella Dufficy

Unilever Strategic Analysis Report

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Innovation & Entrepreneurship

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Ella Dufficy

An Innovation Proposal Ella Dufficy

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Executive summary Unilever is a global company which serves 160 millions consumers each day with a range of household, personal care, food and drink products. The company has a numerous amount of brands including Rexona, Lipton, Omo and Continental. The household and personal products industry faces a numerous amount of strong competitors. However, new competitors are unlikely as it is an expensive industry to get started in. In order for Unilever to remain competitive, they must stay innovative and offer new experiences to its consumers. This report will provide a strategic analysis of Unilever and present recommendations for innovation to stay relevant.

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Table of Contents Executive summary............................................................................................................2 External analysis................................................................................................................4 Macro-environmental analysis.....................................................................................................4 PESTEL analysis.............................................................................................................................4 Competitor analysis......................................................................................................................6 Industry profile.............................................................................................................................6 Porter’s Five Forces Analysis.........................................................................................................7 Industry market analysis...............................................................................................................9 Customer analysis......................................................................................................................10

Internal analysis...............................................................................................................11 Company Profile..........................................................................................................................11 Innovation Capabilities................................................................................................................12

Synthesis..........................................................................................................................13 SWOT analysis.............................................................................................................................13

Options for innovation.....................................................................................................14 Recommendation 1: Introducing Organic Ingredients.................................................................14 Recommendation 2: Enhanced Advertising................................................................................15

References.......................................................................................................................16 Appendix..........................................................................................................................18

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External analysis Macro-environmental analysis PESTEL analysis Political The political regulations within each country play a large role within the operations of Unilever. The multinational company relies on the stability of most countries to sell consumer goods including foods, beverages, cleaning agents and personal care products. Several political issues within the European Union hold a threat against Unilever’s ability to access their consumer in specific regions (Smithson, 2016). Whereas, the political strength in countries like the United States minimizes the challenges that Unilever may face when it comes to the opportunity to grow. Because of expanding free trade relations, especially within developing countries, Unilever has openings for global growth.

Economic

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The economic factors for each country varies when it comes to impacting Unilever’s business performance. For example, the increasing wages in developing nations allows Unilever to gain higher revenue from sales as these consumers receive higher disposable incomes. However, these increasing wages also come as a threat for the organization as manufacturing costs within countries will increase, especially as Unilever has many facilities operating in developing nations (Smithson, 2016). Nonetheless, a stable economy in developed countries reduces the risks that fall from potential threats posed to Unilever and adheres to the steady growth of the company.

Social Unilever has multiple opportunities to grow within social trends and aspects. Consumer’s increase in general health consciousness has provided a successful building block for all consumer goods. Influence on good for the body products has created an everlasting degree of business performance for brands like Unilever. Consumer interest is also prevalent with positive environmental impacts that Unilever presents. For example, the company has taken climate action into transitioning to renewable energy across their operations (Our Vision in Action, n.d.), which will attract a global market of environmentally conscious consumers. Also, by creating a gap between the wages of males and females within the business industry, Unilever can attract a wide range of women as consumers with stable incomes.

Technological The rising business automation within the industry holds both opportunity and threat to Unilever. Opportunities arise with new processing equipment that comes with technological advances which can enhance inventory monitoring and distribution (Smithson, 2016).

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However, competitor increase will pose a threat as smaller and local business will gain access to a wider target market and remove potential consumers for Unilever. These smaller businesses will also approach lower costs of transportation which comes with many technological developments and pose a threat to Unilever as they grow internationally.

Environmental Interest in environmental action across consumers allows for Unilever to expand their market reach. The company can enhance their sustainability programs through their corporate social responsibility strategy to strengthen their competitiveness against other businesses (Our Vision in Action, n.d.).

Legal Through Unilever strengthening its consumer rights laws they create an opportunity for the company to improve its customer-service quality and product quality standards (Smithson, 2016). This also improves the company’s brand image and allows for consumers to buy from a respected brand. International patent laws across developing countries also creates opportunity in which facilitates company growth.

Competitor analysis Industry profile Unilever operates in the household and personal care products industry selling consumer goods which involves foods, beverages, cleaning agents and hygiene products (network, 2010). Household and personal product companies are quickly facing greater competition as smaller brands emerge with niche markets and there is an increase for demanding

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customers (Household & Personal Products Sector, 2015). Large business operators have responded with creating more personal products and using mass merchandising, grocery stores and pharmacies to their advantage. The industry makes it difficult for admittance as it includes high input costs and small target markets. Brand image is particularly important within this industry as failure to create quality product and safety assurance will directly affect the company and manufacturer, and lead to loss of revenue and reputation.

A sizeable issue categorized within the household and personal care products is the use of unethical raw materials such as palm oil, wool pulp and cotton. These materials create a strain on consumers with large manufacturers and are linked to significant environmental and social impacts (Household & Personal Products Sector, 2015).

Household and personal care products industry had total revenue in 2010 of $717.7 billion and had a compounding annual growth rate of 3.9% from 2006-2010 (Household & Personal Products Industry Profile: Global.: EBSCOhost, n.d.). Leaders of the industry include Unilever Indonesia, Henkel and SCA and European companies tend to outperform those in other regions (Household & Personal Products Sector, 2015). Companies within this industry also tend to have low involvement in controversies, where most are involved with customer, employee and governance issues(Household & Personal Products Sector, 2015).

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Porter’s Five Forces Analysis

Figure 1: Unilever Porter’s Five Forces Analysis

Rivalry among existing competitors: There is a large number of strong firms within the consumer goods industry, many often offering the same products and are sold next to Unilever products. These products can also offer more to the customers, including more nutritional value and good for the body ingredients. When selling Unilever products in large chain stores like Woolworths and Walmart, there is also a wide range of cheaper options that will attract more consumers. Unilever products also have low switching costs, for example consumers can easily switch to other companies products.

Threat of new entrants: The ability for consumers to switch to other products out of Unilever is also a strong threat in this section of the analysis. Consumers are often looking to try new products especially within the personal care industry and can lean toward competitor firms. However, with Unilever’s strong reputations and the cost of building a high quality personal products brand being expensive, this is a weak threat for the company. Unilever also takes 8

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advantage of competitive pricing which new entrants may lack. Overall, the threat of new entrants is a minor concern.

Buyer power: With the internet being extremely accessible in today’s society, consumers can easily research and compare products on the market. The ability for consumers to also buy items online and have it shipped to their door the next day makes it hard especially for Unilever who depends on at the store consumers. Low switching costs is also a threat for Unilever as consumer often turn to competitor brands.

Market substitutes: Although it is easy for consumers to switch up on the household and personal care products, there is low substitute availability. For example, it is easier to access products from brands like Unilever at the local store rather than small businesses products. Overall, market substitutes is a low threat to Unilever based on the company’s largeness and availability.

Supplier power: The average supplier in the household and personal care products industry is moderate in size (Kissinger, 2016) and has is a moderate force in this sector of the analysis. The suppliers have a limited influence on Unilever’s large company and the overall supply adds to the benefit of the suppliers (Laursen & Andersen, 2016).

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Industry market analysis

Figure 2: Household and personal care products industry overview

Customer analysis Target Market & Customer Profile: Unilever targets its products to a broad range of demographics. Including all female and males from children to the elderly, Unilever is an allinclusive company and has products of all ranges (“The Changing Face of Unilever,” 2009). For example, Dove which is a brand from the Unilever company sells baby skin care products and body wash. For teenagers, Impulse and Rexona has many body spray products directed to teenage females and Lynx has a wide range of body products for males. As for the elderly, the house care products provided by Omo, Jif and Surf (Brands, n.d.) can be used for all ages along with Unilever’s haircare products and body care. A specific consumer profile of Unilever products is difficult to determine due to their broad range of brands and products that they offer.

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Value Proposition:

Figure 3: Value Proposition canvas

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Internal analysis Company Profile Unilever has created a successful business model which allows for 155,000 jobs for employees ranging across a total of 190 countries (Vitality in Business, n.d.). Figure 4 shows an overall company profile for Unilever including its revenue and key contact.

$50.7 Billion Euros

155,000

United Kingdom

Revenue

Number of Employees

Origin of Ownership

190 Countries Geographical Presence

Alan Jope

Key Contact

Figure 4: Unilever company profile

Innovation Capabilities Unilever is an extremely innovative company which continually works on staying up to date on new trends and products that are new to the market. Some examples of this include their new vegan ice cream range in Ben and Jerry’s as well as their new vegan Continental meals. (Vitality in Business, n.d.)

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Synthesis SWOT analysis

Figure 5: Unilever SWOT analysis

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Options for innovation As identified within the analysis, there is numerous ways Unilever can stay competitive among its rivalries. Using the various analysis techniques, some recommendations to improve Unilever’s consumer reach and advertising are mentioned.

Recommendation 1: Introducing Organic Ingredients As discussed within the external and internal analysis, Unilever is a large multinational company with brands selling household products, personal hygiene care products and food products. With the company’s main competitors being brands that can offer a more diverse range of products, Unilever should expand their range of ingredients in their personal care and food range. Having a healthier diet and taking care of the body is becoming even more popular than ever with the introduction of more research and findings. Products that include organic and rare ingredients are often selling at a higher price and by less known brands. Using this as an advantage, Unilever has the opportunity to create healthier-for-the-body products that are sold at a reasonable cost for their consumers.

Introducing oils like Jojoba, Argan and coconut oil into hair products will expand the consumer interest and broaden the target market (Carvalho et al., 2016). Also, by removing silicon based ingredients will reach specific audiences that are weary of harsh chemicals. Unilever also contains brands such as Continental and Lipton. By adding a line of products that removes preservatives and artificial colours or flavours and replacing them with all natural ingredients, it may seem more appealing to customers.

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Recommendation 2: Enhanced Advertising Large manufacturing companies like Unilever often lose focus on their advertising when it comes to new products as they are sure it will sell decently anyways (King et al., 2004). When promoting new food products from brands such as Continental, Lipton, Ben and Jerry’s, Bushells and Choysa, a strong recommendation is to set up pop up locations in major cities for people to try them. New products can often be overlooked by consumers in grocery stores as they go for what they already know they enjoy. By attracting passers on the street to a pop up stand for a complimentary drink or ice cream on a hot day will attract a new audience and expand the consumer’s reach.

Another way to enhance the advertising at Unilever is be sponsors at more events. Some benefits of being a sponsor include logo visibility in promotional materials, on-site visibility through signage and sampling opportunities (“Attract, Reward Event Sponsors With Varied Benefits,” 2019). These events can include, exhibitions, business orientated, sporting events and festivals and can attract the interest of many new consumers and householders where Unilever products may thrive.

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References Attract, Reward Event Sponsors With Varied Benefits. (2019). Special Events Galore, 19(11), 1–1. https://doi.org/10.1002/speg.31221 Brands. (n.d.). Unilever Australasia. Retrieved April 3, 2021, from https://www.unilever.com.au/brands/ Carvalho, I. T., Estevinho, B. N., & Santos, L. (2016). Application of microencapsulated essential oils in cosmetic and personal healthcare products—A review. International Journal of Cosmetic Science, 38(2), 109–119. https://doi.org/10.1111/ics.12232 Household & Personal Products Industry Profile: Global.: EBSCOhost. (n.d.). Retrieved April 2, 2021, from http://web.b.ebscohost.com.ezproxy.lib.uts.edu.au/ehost/pdfviewer/pdfviewer? vid=3&sid=3605caa3-6390-4846-9440-cf7820b41220%40pdc-v-sessmgr03 Household & Personal Products Sector: ESG Research Report Sustainalytics. (2015, February 1). https://www.sustainalytics.com/esg-research/sector-reports/personal-products/ Kissinger, D. (2016, October 21). Unilever’s Five Forces Analysis (Porter’s Model) & Recommendations. Panmore Institute. http://panmore.com/unilever-five-forcesanalysis-porters-model-recommendations Laursen, L. N., & Andersen, P. H. (2016). Supplier involvement in NPD: A quasi-experiment at Unilever. Industrial Marketing Management, 58, 162–171. https://doi.org/10.1016/j.indmarman.2016.05.023 network, F. the G. P. (2010, October 11). Company profile for Unilever. The Guardian. https://www.theguardian.com/sustainable-business/profile-unilever Our vision in action. (n.d.). Unilever Australasia. Retrieved March 30, 2021, from https://www.unilever.com.au/planet-and-society/our-vision-in-action.html 16

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Smithson, N. (2016, October 26). Unilever’s PESTEL/PESTLE Analysis & Recommendations. Panmore Institute. http://panmore.com/unilever-pestel-pestle-analysisrecommendations The changing face of Unilever: Out with the old and in with the new. (2009). Strategic Direction. https://doi.org/10.1108/02580540910952073 Vitality in business: Executing a new strategy at Unilever - ProQuest. (n.d.). Retrieved April 3, 2021, from https://search-proquestcom.ezproxy.lib.uts.edu.au/docview/202682056?pqorigsite=primo&accountid=17095

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