The Marketing Mix: Distribution Strategies
With the existence of numerous products in the market, Unilever has succeeded in gaining brand recognition and loyalty from its customers. Today, Unilever is known as one of the prominent countries in the world with its products that are already in the maturity stage. However, as the business becomes bigger, many companies appear with the hope of penetrating the market and dominating the consumer goods industry.
The supply chain management requires more strategy to be able to keep ahead of the competition or at least defend the company from the threats of intense rivalry among brands. A few decades ago, Unilever’s supply chain only focused on the distribution of products from the factory to the warehouse of the retailers. The company’s supply chain management focused on developing and manufacturing the product and let the retailers make sales. The replacement of the damaged products was done in the warehouse where the retailers picked up the goods.
Due to the constant changes in the marketplace and endless appearance of good concepts from the competitors, Unilever had found the need to improve the supply chain of the company. From raw materials to store shelves, the company had provided other solutions to make their quality products reach the market, build up a stronger relationship with the retailers, and meet the customers’ satisfaction not only through the products that are being offered to them but also through the services that are being rendered to every product brought to the customers’ door (Monahan & Nardone, 2007).
On the other hand, Procter and Gamble, one of Unilever’s competitors in the consumers’ goods industry, has used the pull marketing technique that reduced the number of supply in the market while producing more advertisements in the market (Threlkeld, 2004). While the Procter and Gamble’s supply chain focused merely on enticing the customers to buy products that are not available on the store shelves, Unilever responded by searching for more trade channels and distribution networks to make the products more available for the customers at any given time.
Unilever’s Distribution Channel Distribution process for recognized branded products would be hard for the company because of the pressure of transporting enough supplies for each market while keeping the distribution costs low. In many years of staying in the market, Unilever had developed a lot of distribution strategies to make the business grow and gain the customers’ loyalty at the same time. From manufacturing to selling of the Unilever branded products, the company had conceptualized and tried all the possible channels in order to make the products reach the market on time.
Today, Unilever has numerous factories located around the world manufacturing household, food, and beauty products for its large market. Each factory manufactures products that are necessary for the countries that are being targeted for a certain brand. Apparently, some Unilever products are distributed only to selected countries. In other words, the company had developed the products either due to demographic or geographic aspects of the target market. In other countries where Unilever operates, the company applies outsourcing as one of the distribution techniques.
Unilever hires a company that would focus on distributing the products to the target market. That certain company would serve as the bridge between the Unilever and the consumers of the products in different locations. Fast-moving products are forward deployed to the three merge-dock facilities direct from the plants, generally via full truckload shipments. The merge-dock is designed to efficiently combine the fast- and slow-moving products into a single order for delivery. The integrated distribution centers will distribute full, palletized truckloads of fast-moving product directly to customers. (Murphy, 2000)
However, the company also hires repackers that would work for the packaging of the Unilever brands. The company would ship the primary packages to these people which are still unpacked from the cases. These packages will be assembled into the specialty packs and displays with the use of materials that the company sources from the suppliers. After the long process of packaging, the specialty packs and displays will be shipped to the customers (George, 2006). The distribution strategy, however, are often based on the location of the factories, as well as the place where the products should be delivered.
Broadly speaking, Unilever has developed an extensive and effective rural distribution network, playing to the domestic appreciation of its strategic adaptation. Within the emerging markets of the Mekong river basin much of this was achieved by using squads of so-called motorcycles cowboys. These riders typically earn commission rates of 2 percent on delivery of Unilever branded product – often boxed in jumbles piled high on their box and under their arms. (Andrews et. al, 2003, p. 287) Unilever’s Competitive Advantage in Distribution Channel
The competitors of Unilever are all recognized in terms of quality products and services in the market. Kraft Foods, Nestle, and Procter and Gamble are all known in the market for their products that have already won the consumers’ loyalty. Just like Unilever, these three competitors have different distribution strategies to reach the target market on time. These companies are also operating in different countries around the world offering a wide range of consumer products and dominating the consumer goods industry.
The warehouses of these companies are located in different places to assure the accessibility of distribution to the market. The strategy of Unilever to build a strong relationship with its retailers by giving them an access to the warehouses where the products re being kept, can be considered as one of the competitive advantages of the company from its competitors. Aside from that, the company was able to build wider warehouses where the company could store more products in one shipping. Through this technique, the company will be able to lessen the distribution cost and time for product delivery.
Promotional Mix One of the factors why Unilever is prominent in the market is the persuasive and appealing advertisements that are being released by the company for every Unilever product. The company was able to gain the brand recognition because of the well-conceptualized advertisements of their brands. Unilever spends big amount of money for the campaign of their products, not only to respond to the defensive or offensive campaigns of its competitors but also to gain the awareness of the potential target markets.
However, aside from the television advertisements, the company has also been doing activities to promote brand loyalty among the customers. Unilever was able to build a free community laundry which was named after the detergent bar Omo of Unilever. That promotion led to the loyalty of the customers to the detergent product of Unilever and to the entire company as well. Unilever was able to get the large population of housewives and gain the brand loyalty of that market. Integration of Marketing Mix Unilever is known for its home care, personal care, and food brands in the market.
In fact, most of the products of the company have already reached the maturity stage and gained the consumers’ loyalty. Apparently, the company never failed to stick to their mission of adding vitality to their consumers’ lives. Every Unilever brand in the market follows the objective of the company in giving a convenient environment to the consumers through the products that are being offered to the market. The company was able to analyze the appropriate locations for their factories and build strong partnerships that enabled them to expand the business.
Today, the company operates in numerous countries around the world having thousands of factories that manufacture quality brands for their customers. However, Unilever achieved the recognition of the market not only through the advertisements and publicity that are being released by the company but also because of the affordable quality products available in the marketplace. In terms of products’ process, Unilever considers the prices of the competitors’ products and place where the brands are being distributed.
Competitive Advantage in Promotion The competitors of Unilever also use most of the marketing communication channels in order to reach the market and gain the customers’ loyalty. Kraft, Nestle, and even Procter and Gamble usually spend a large amount of money to advertise their products to the market. These promotions make it harder for Unilever to be ahead of the competition. The constant release of advertisements endorsing different products from different manufacturers gives the consumers a wide variety of choices.
Unilever, on the other hand, can highlight its strength in advertising its products. Since most of the people prefer Unilever products because of its price, Unilever often wins the customers’ recognition because of the low cost brand that the company offers to the consumers. Unilever often uses the products’ process in getting the attention of the market. In this manner, the company has gained a competitive advantage in promoting the products in terms of their brands’ unique selling proposition, as well as their prices.
Pricing Strategy Unilever has come up with the strategy of lowering the price of the products while maintaining the business’ profitability. The prices of Unilever brands were decreased in order to gain more consumers in the market. This technique was done in order to conform to the needs of the consumers from different parts of the world. The tactic was conceptualized when the company learned that Indian women sell products to their neighbors that gave the company an opportunity to penetrate those communities (Business Week).
Integration of the Marketing Mix: Pricing Strategy Apparently, Unilever uses penetration pricing strategy in order to keep the consumers satisfied with the quality of products and affordability of prices. Since the target market of the company is mostly housewives based on the categories of the product, Unilever made the products for the price conscious individuals. Moreover, maintaining their low cost brands remains as the company’s objective to make their products grow in the marketplace.
The prices of Unilever products are often based on competition and customers’ demand. Through this technique, Unilever is able to supply more products to the customers because more numbers of consumers buy the products for practicality. Competitive Advantage in Pricing Most of the markets of the consumer goods industry demand for both the quantity and quality of products. In other words, the industry of Nestle, Kraft, P & G, and even Unilever should maintain both factors in order to reach and stay in the maturity stage in the marketplace.
Apparently, Unilever has a competitive edge among its competitors because the company was able to sell the products to its customers in low costs. Since the company follows a consistent technique in pricing, Unilever could be able to retain the loyalty of the customers because of the affordable quality goods that are being offered by the company. Moreover, if the company decides to increase the price of the products, the customers would not easily look for other brands because the prices of Unilever branded products serve as the company’s tool in keeping the number of their loyal customers.
References
Andrews, T. Chompusri, N. & Baldwin, B. (2003). The Changing Face of Multinationals in Southeast Asia. New York: Routledge. Capell, K. 2009. The World’s Most Influential Companies. Business Week. Retrieved February 16, 2009, from http://images. businessweek. com/ss/08/12/1211_most_influential/3. htm George, J. (2006). How Repackers Help Unilever In Mature Markets. Contract Packaging Magazine. Retrieved February 16, 2009, from http://www. packworld. com/print. php? id=21999 Monahan, S. & Nardone, R. (2007).
How Unilever Aligned its Supply Chain and Business Strategies. Supply Chain. Retrieved February 16, 2009, from http://www. scmr. com/article/CA6504629. html Murphy, J. (2000). Outsourcing Improves Unilever’s Distribution, Gives Logistics Provider A Foothold in Brazil. Retrieved February 16, 2009, from http://www. supplychainbrain. com/archives/12. 00. regfocus. htm? adcode=90 Threkeld, T. (2004). Procter and Gamble: Delivering Goods. Baseline. Retrieved February 16, 2009, from http://www. baselinemag. com/c/a/Projects-Supply-Chain/Procter-Gamble-Delivering-Goods/
