Unilevers Global Strategy

As one of the strong and healthy companies in the world with many successful brands, Unilever has
an opportunity to expand into foreign markets that it is not yet operating in, in order to gain access to
customers around the world. Supported by strengths of its four key global brands Dove, Sunsilk,
Rexona and Lux, Unilever firstly entered in foreign market to compete internationally by entering
just one or select few foreign markets. Once successfully introduced its product in several market,
Unilever expands its success brand to many other markets and starting to compete globally.

In entering and competing in foreign markets for its cosmetics and toiletries product,
Unilever follows a global strategy, also called by a think-global and act-global strategy, The
strategy using essentially the same competitive strategy approach in all country markets where the
company has a presence (with only minimal responsive to local conditions), sells much the same
products everywhere (make minor adaption to local countries where needed to accommodate local
countries preferences), strives to build global brands, and coordinates its actions worldwide
(centralized).

A global strategy used by the Unilever is preferable to localized strategies because Unilever
can more unify its operations and focus on establishing a brand image and reputation that is uniform
from country to country. It strategy implies to the Unilever success in building strong character brand
such as Dove, Sunsilk, Rexona and Lux. Moreover, with a global strategy Unilever should
coordinated its marketing, operational and distribution worldwide.

Unilever is increasing its efforts to build on its long-established local roots in developing
regions. Through its well-established distribution network in both the traditional and modern retail
outlets and with a good ability to adapt successful global brand concepts to suit local markets,
Unilever is in a good position to be able to capitalize on the growth forecast in these regions.

Once Unilever became one of the most successful global companies in the world, it has many
profit sanctuaries. By having multiple profit sanctuaries, Unilever has strong competitive advantage
over its competitor with a single or few sanctuaries.

In the cosmetics and toiletries globally competitive industry, there are no doubt that
Unilevers major rivals over the next few years will be Procter & Gamble and LOral, both of which
give significant resources to new product development activity, and respond to changes in the market
faster than Unilever. LOral also has the benefit of being exclusively involved in cosmetics and
toiletries, unlike both Unilever and Procter & Gamble which both have cross-industry involvement,
such as in packaged food. Much the same group of rival companies competes in many different
countries. Therefore, the competition pursues the company to be more innovative in developing its
products and maintaining its brands. The following diagram shows the market performance of
Unilevers skin care and hair care market share:



To win customers and sales away from select rivals in country markets, Unilever employ
cross-market subsidization. This offensive strategy is appropriate for Unilever which is compete in
multiple county markets with multiple brands and wide variety of products. Finally in entering the
emerging-country market Unilever prepare to compete on the basis of low prices. Unilever pursued
this strategy because consumers in emerging markets are often highly focused on price, which can
give low-cost local competitors the edge unless a company can find ways to attract buyers with
bargain prices as well as better products.

All strategies executed by Unilever for competing in foreign market resulting in moderate 5%
sales growth in 2006 just above market performance ensured that Unilever kept its position as
third largest player in cosmetics and toiletries with a 7% market share. Second-placed LOral fared
a lot better, increasing the gap between the two companies in part thanks to its acquisition of The
Body Shop. Market leader Procter & Gamble remained over five percentage points ahead of
Unilevers share. In 2006, Unilever remained comfortably ahead of Colgate-Palmolive in fourth
place. Unilever decision to introduce its product on emerging market such as Asia-Pacific, Latin
America and North America implies to the high contribution of Unilever total revenue by 26%, 21%
and 16% respectively.

On January 1
st
, 2013 Unilever released its results for the fourth quarter and full year 2012
which show good quality, profitable growth ahead of our markets. This underscores the good
progress we are making in transforming Unilever into to a sustainable growth company. The past
year performance of the company was as follows:
v Turnover increased by 10.5% to 51.3 billion with a positive impact from foreign exchange of 2.2%
and acquisitions net of disposals of 1.1%
v Underlying sales growth 6.9% comprising volume growth of 3.4% and price growth of 3.3%
v Emerging markets underlying sales growth 11.4% now representing 55% of turnover
v Core operating margin up 30bps to 13.8%; gross margin up 10bps, advertising and promotions up 470
million at constant exchange rates
v Core earnings per share increased by 11% to 1.57; free cash flow of 4.3 billion

ANALYSIS

Before analyzing the Unilever strategies for competing in foreign market, its important
to identify companys resource strengths and weaknesses and its external opportunities and
threats, commonly known as SWOT analysis. This analysis provides a good overview of whether
the companys overall situation is fundamentally healthy or unhealthy. Therefore, for a
companys strategy to be well-conceived, it must be:
- Matched to its resource strengths and weaknesses
- Aimed at capturing its best market opportunities and erecting defenses against external threats
to its well-being

SWOT Analysis of Unilever Cosmetics and Toiletries




Based on the SWOT analysis we can infer that the company has very healthy and strong
condition in overall. Therefore, this condition provides high capabilities to the company and
offers wide opportunities for the company to compete in foreign market. Based on this analysis,
Unilever firstly entered foreign market in the year of 1950 by offering its product to European
community.
From the Unilever mission statement, we can conclude that the company expands into foreign
markets in order to gain access to customers around the world. Unilever recognized that its
product is commonly used for all people worldwide. The companys objective to bring their
wealth of knowledge and international expertise to the service of local consumer pursues the
company to produce many nutrition, hygiene and personal care product with successful brands.
Therefore, Unilever are moving rapidly and aggressively to extend their market reach into all
corners of the world.
For its cosmetics and toiletries product, Unilever start to compete internationally by entering just
one or select few foreign markets. Unilever launched Axe/Lynx/Ego deodorant body spray in the
US and Canada in autumn 2002 and introduced Dove initially in Italy, France and Belgium in
2002. Once successfully introduced its product in several market, Unilever expands its successful
brand to many other markets and starting to compete globally.
Through its successful growth strategy, Unilever has continued to build on the strengths of its
four key global brandsDove, Sunsilk, Rexona and Luxand by doing so, created strong
platforms for further growth in a number of cosmetics and toiletries sectors. This has been
particularly evident in deodorants, mens grooming products and bath and shower products, with
strong growth for the Axe, Dove and Rexona brands. However, competition in the cosmetics and
toiletries industry remains tough, and while the current strategy is providing results, greater
product innovation and marketing support, as well as further development of functionality in
products will be needed to keep up with the market. There are no doubt that Unilevers major
rivals over the next few years will be Procter & Gamble and LOral, both of which give
significant resources to new product development activity, and respond to changes in the market
faster than Unilever. LOral also has the benefit of being exclusively involved in cosmetics and
toiletries, unlike both Unilever and Procter & Gamble which both have cross-industry
involvement, such as in packaged food.
In a globally competitive industry faced by Unilever, much the same group of rival
companies such as Procter & Gamble and LOral competes in many different countries, but
especially so in countries where sales volumes are large and where having a competitive
presence is strategically important to building a strong global position in the industry. Therefore,
a companys competitive position in one country both affects and is affected by its position in
other countries. In this case innovation plays an important role. Thus, in a market where
innovation is often the key to growth, Unilever has invested in improving its research and
developing procedure further including speeding up the process of getting new products to
market. Through a mass-market positioning, much of the companys organic growth strategy is
to leverage the value of key brands by cross-sectoral brand extensions, thus taking advantage of
customer brand recognition and loyalty, and creating marketing efficiencies. The Dove brand is
one of the examples of a recognized soap brand being successfully extended into skin and hair
care, deodorants, baby care and mens grooming products.
Unilevers marketing strategy for competing in foreign market
For its marketing strategy Unilever combines its strategy with social project in many countries.
Educational campaigns have been important tools for raising awareness for Unilever brands such
as Close-Up and Dove. The companys partnership with the World Dental Federation has seen it
become involved in oral healthcare projects in both developed and emerging nations, including
Austria and Brazil. In 2006, Unilever developed a low-cost toothbrush, the Pepsodent Fighter,
which retails at a price equivalent to just EUR0.20 and is distributed in India and Indonesia.

The company also has more directly brand-related programs, including Close-Ups Project Smile
in Nigeria, which used small kiosk outlets to showcase both its products and oral hygiene
information, and the Dove Self-Esteem Fund, which has joined with organizations such as the
Girl Scouts of the USA and the UKs Eating Disorder Association to fund educational Body Talk
programs in schools to improve body-related self-esteem.
Less directly, a Brazilian recycling partnership with Pao de Acucar, a major Brazilian
retailer, not only helped employ more than 300 people in a local recycling co-operative, but also
gave Unilevers products greater in-store prominence as well as raising the profile of brands
including Rexona by having their logos on point-of-sale information and educational materials.
The companys successful brand innovation program is supported with a high level of marketing
and advertising activities including most media. As there are many opportunities in the foreign
markets but the tendency of threats is also same as opportunities. The powerful R&D, diversified
and differentiated product line and market analysis are all important factors that make a company
enjoy its potential and good market share in foreign market.