The Purchase Of Detergent Powder In Brazil Marketing Essay

The Purchase Of Detergent Powder In Brazil Marketing Essay Following is the consumer behaviour with respect to the purchase of detergent powder in Brazil explained through consumer decision making process. Product Choice Evaluation of options Information Search Problem Recognition Post-purchase Evaluation Problem Recognition: According to Solomon et al (2009) the problem recognition occurs when there is a gap between the desired state and actual state of a consumer. From the case inferred that, People in north-east region of Brazil wash clothes more frequently and they see cleanliness of clothes is part of their culture. They will change their detergent powder if they felt that their clothes are not clean enough. Most of the families own a washing machine in south-east region. People in this region perceive doing laundry as a duty and find ways to make process easier. They will change their detergent powder if it is not to their expectations. Information Search: Solomon et al (2009) stated that once the problem is recognised consumer will do an internal and external check to find possible solutions that might solve his problem. Women in the north east region wash their clothes in public laundry. This gives them the option of taking advice from their peer group in choosing the detergent powder, or point of purchase advice from the store owners or from their past experience apart from information through advertisements. On the contrary, Southeast consumers wash their clothes alone at home since most of them own a washing machine. Therefore, their information search is restricted to television advertisements and the advice from small store owners. Evaluation of options: Solomon et al (2009) stated that once consumers identify the possible solutions they will evaluate the alternatives using their respective convincing attributes to find the best solution which can solve their actual problem. The prominent attributes for majority of the Brazilian consumers are price, power of the detergent, brand and their past experience. Product Choice: According to Solomon et al (2009) while making the final choice on purchasing or using a product consumer is influenced by some factors. There are three main categories which will influence the consumer decision, 1. Internal influences 2. Situational influences 3. Social Influences 1. Internal influences on consumer decision From the case inferred that people in north-east region are highly sensitive to price than to the brand itself. Whereas in south-east region people are more brand conscious and go by their top-of- mind awareness. 2. Situational influences on consumer decision The Belk (1975) cited in Sydney et al (2000), has defined five situational variables which can influence the consumer purchase at a particular moment and place. They are Antecedent states, task definition, physical surroundings, temporal perspective and social surroundings. While purchasing a detergent powder, people in north-east region are influenced by the antecedent states (Brand preference and price sensitivity) where as in south-east region people are influenced by physical and social surroundings like display place of detergent powder in the store. 3. Social influences on consumer decision Solomon et al (2009) stated that consumer evaluative criteria generally vary across social class because of their variations in education, attitudes, values, income and communication style. Most of the women in north-east region are under same economy class and share a common washing practice of washing their clothes in public laundry. Therefore, their decision on purchasing detergent is directly influenced by these social groups. Post-purchase Evaluation Solomon et al (2009) stated that after purchasing the product consumer will evaluate how good a choice it was. The result of this evaluation is consumer satisfaction or dissatisfaction on the product. Table1 shows the list of attributes used by Brazilian consumers to evaluate detergent powder. Table 1 North-east Region South-east region Ability to clean and whiten clothes. Smell of a detergent powder. Ability to remove stains. Easy packaging. Ability to clean and whiten clothes with less effort. Key industry players in Brazil detergent powder market: Unilever at a glance: Unilever has started its operations in 1929 and launched its most successful brand OMO in 1957. Unilever is the leader in detergent market of Brazil with an 81% market share achieved with brands like OMO (Favourite brand of Brazil), Minerva (brand sold as detergent and laundry soap) and Campeiro (cheapest brand of Unilever). Unilever wanted to increase sales by adopting penetration strategy. For the same, they launched their favourite brand OMO with four extensions viz. OMO Multicao, OMO Progress, OMO Cores and OMO Maquina. Each brand had its unique characteristics to target the diversified consumers. Procter and Gamble at a glance: Procter and Gamble started its operations in 1988 and acquired a Brazilian company Bombril in 1996 which has brands like Quanto, Odd Fases and Pop. With his formidable RD migrated Quanto towards Ace and Odd Fases towards Bold, Ace and Bold are PGs popular global brands. Procter and Gamble is in second place of Brazilian detergent market by holding 15% of market share. Procter and Gamble strategy is to enter the market by acquiring the local firms and their distribution channels. This seemed a cost effective strategy than developing own distribution channels. Local Manufacturers: A local brand Invicto is holding a 5% of market share in Brazilian detergent market. Invicto is the cheapest brand in north-east region of Brazil. Invicto follows a concentrated marketing strategy through mainly targeting the low-income consumers. Unilever SWOT Analysis: Strengths: High Brand Recognition: Unilever brands are highly recognised in the north east part of the Brazil. Market Penetration: High percentage of consumers in north east region of Brazil bought at least one unit of OMO or MINERVA which are the brands of unilever. Top of Mind Awareness: we have best results for the top-of mind awareness for unilever brands in north east part of Brazil. Unilever is a worldwide recognised company with a portfolio of 1600 brands which includes 45 key detergent brands. As of 1996 Unilever is a leader of the detergent market sector in Brazil by holding 81% market share. Pioneer of consumer goods industry in Brazil. Weakness: The price of OMO is perceived as high than all the detergents available in north east part of Brazil. The cheaper brand of unilever Camperio is perceived as a low-quality brand in the market. Except OMO, the other brands of unilever are perceived as low quality than the main competitor brands Bold Ace. Unilever is facing a big distribution problem in distributing his brands to the approximately 75,000 small outlets spread over north east region of Brazil, which are the key shopping areas for low-income consumers. Opportunities: Federal and local governments providing tax incentives to companies investing in the north east region of Brazil. The detergent market in north east region of Brazil is growing with an annual rate of 17%. Women in north east region wash clothes more frequently and they see cleanliness of clothes is part of their culture. Strong economic recovery in 1995-1996 leads to increase the purchasing power of low income consumers by 27%. Threats: Standardization of strategies is not possible with the socio-culture differences among the two region of Brazil. Threat from local brands is higher which are cheaper than the Unilever brands. There is a high competition from porter gamble with good worldwide marketing expertise. Market Segmentation: In a study by Sally Dibb and Lyndon Simkin (1991) stated that different customers have different needs and desires. It is not possible to satisfy all customers with a single product or service. Companies are shifting from mass marketing to target marketing strategy where the focus will be on a particular group of consumers. This process of dividing market into different groups is called market segmentation. The process of segmenting the market consists of three main elements. Segmentation Targeting Positioning Segmentation: The market can be segmented in many ways. Table 2 shows the different options for marketers to identify different segments in the market. Table 2: Demographics Socioeconomics Geography Physiological and behavioural differences among consumer Age, Sex, family, race, religion. Income, occupation, education, social class. Country, region. Purchase behaviour, consumption behaviour, attitude to product, lifestyle and personality Segmenting by Socioeconomics: In north-east region the per capita income was only around 2,250$. 40% of people in north-east region are illiterate. The lifestyle, culture and religion of people in this region were influenced by African culture. In south-east region the per capita income was around 6,600$ (more than double of north-east region). Only 15% of people in south-east region are illiterate. Most of the south-east part was influenced by European culture Segmenting by Psychological and behavioural differences among consumer: 73% of women in north-east region think that bleach is necessary to remove stains and use detergent powder primarily to make the clothes smell good. Where as in south-east region only 18% of women think bleach is necessary to remove stains. Frequency of washing clothes is higher in north-east region than south-east region. North east region people of Brazil find cleanliness of clothes is part of their culture. In south-east region most women uses washing machine for cleaning clothes, for them cleanliness of clothes is less important for self-esteem and social status. In a study by Sally Dibb and Lyndon Simkin (1991) stated that segmentation definitely will help to identify the different consumer segments but slapdash implementation will leads to failure. The segmentation process must satisfy the following criteria. Segments must be identifiable, executable, stable, marketable and controllable. In this case Unilever should segment the Brazil detergent powder market in to north-east region and south-east region. Targeting: Once identified different market segments, managers has to make decisions about how many and which customer groups need to target. In a study by Sally Dibb and Lyndon Simkin (1991) stated that the decisions would be like, Concentrating on a single segment with one product/retail brand Offering one product/retail brand to a number of segments Targeting a different product/retail brand at each of a number of segments Because of socio-cultural differences among the two regions of Brazil the standardization or undifferentiated targeting strategy will not work. The tailor made and differentiated marketing strategy will give the best results. Positioning: Positioning is not about doing something to the product it is what is created in the minds of the targeted consumers. In a study by Sally Dibb and Lyndon Simkin (1991) stated that the challenge here is to translate the needs and wants of the targeted consumers into a tangible mix of product, price, promotion, distribution and service levels with maximum appeal. North-East region: Most of the people in this region are illiterate and low income people. Most of the people in this region believe cleanliness of clothes is part of their culture. To satisfy the above needs of the consumers and to achieve higher market share in this region unilever management has to position their product as low price with high quality. South-East region: Most of the people in this region use washing machine to wash their clothes, cleanliness of clothes are less important for self-esteem and social status. People in this region are not price sensitive towards detergent powder as long as it has good quality. To satisfy the above needs of the consumers and to achieve higher market share in this region unilever management has to position their product with high quality. Portfolio Analysis: BCG (Boston Consulting Group) Matrix: BCG matrix helps marketers to find the potential brands in the market. BCG matrix for Unilever detergent brands in north-east region of Brazil. Stars: Question Marks () OMO Campeiro Cash Cows: Minerva Dogs: Brilhante High Market Growth Rate Low High Low Relative Market Share Diagram Adopted from BCG Matrix (Solomon, fifth edition) Stars: OMO has a dominant market share in north-east region of Brazil. Because OMO has a potential growth, managers have to design strategies to increase market share in the competitive environment. Cash Cows: Minerva which is the only brand to sold as detergent powder and laundry soap it has a reasonable market share in north-east region. Question marks (): Camperio has a low market share in north-east region. People perceive Camperio as a low-quality product. To increase the market share Unilever has to reposition his Camperio brand in north-east region. Dogs: Brilhante has a zero market share in north-east region. Its better for Unilever to stop the marketing of this brand in north-east region. BCG matrix shows us on which brand Unilever has to invest to increase its market share in north-east region. But how and what actually we have to do to increase the market share, marketing mix will help firm to accomplish its objectives by using product, price, promotion and place decisions. Marketing Mix: Product: North-East region: Camperio is perceived as a low-quality detergent which is the cheapest brands of Unilever. Repositioning of Camperio with new packaging and with new advertising message like Improved Quality with low-price in this region will help to increase the marketing share of Unilever. Repositioning of existing brand would be easily recognised by the targeted consumers than launching the existing brand. Repositioning of existing brand would not lead to any incremental marketing costs. In this region most of the people using OMO and the results showing that consumers are well satisfy with the quality of the product. Even the low-income people like Maria would love to buy OMO, only because of their tight budget they are going for cheaper brands. Solution to the above problem is selling the detergent powder through small sachets. Price of the product can reduce due to the small quantity which will not cannibalise the existing product. All the low-income consumers will highly satisfy when they get their high quality product in low price. The idea of selling the detergent powder in small sachet will eventually help unilever to increase their market share. Packaging should be simple and distinctive and should be based on culture that is the colour selection and the graphics. South-East region: In south-east region OMO and Minerva will go well as the people in this region are not price sensitive. Price: Use Pricing Strategy to defend its strong competitors and reposition Camperio brand with more attributes than that of competitor with less price to retain and gain the market share. Promotion: The advertising message should be different for north-east region and south-east region because there is a cultural difference and variation in literacy rate within the two regions. As Brazilians are more television watchers Unilever should go with 70% of media advertising with more emphasis on product price and availability in its different packaging sizes. In south-east region advertising message should concentrate more on product benefits. In north-east region they should go for extensive media advertising emphasizing more on product price and availability of packaging sizes to wipe out the negative perception among the consumers. In north-east region most of the people are illiterate they often depends on the advice of a retailer while purchasing a product. Marketers of unilever can use a push strategy in this case to promote their product, providing some incentives on number of sales to distributors and retailers. Place: Extensive distribution is necessary in north-east region by making the product available in small stores. Unilever management should provide some employment to the women in north-east region as sales girls to sell their products which will ultimately help to increase the word of mouth among people and sustainability of marketing. In south-east region most of the people decision on detergent powder resembles as habitual decision making, in this region point-of-purchase (ex: displaying of cigarettes near cash counter) display will help to increase the sales.