Unilever Case Study PDF 1970s

Case study developed new capabilities and strengths. Unilever garbage bags Background Although this case dates back to the...

Case study developed new capabilities and strengths. Unilever garbage bags Background Although this case dates back to the During the 1960s UK government mid 1970s, it is not widely known planning had seen a huge increase and is an excellent example of in the development of high-rise strategic planning, the generation of housing. Although viewed today as business opportunities and the flawed, the idea behind the building evaluation of a business opportunity of tower blocks was to provide much with respect to the stated corporate needed inexpensive accommodation strategy on limited available land. In addition, the population explosion in the Introduction1 1960s caused many people involved with public policy to express concern Unilever plc is an Anglo-Dutch about the shortage of housing for the international brand international future. High-rise housing was seen brand management organisation as a possible solution to these specialising in the development of problems. Numerous city councils, world-wide international brands. In supported by central government, particular it focuses its activities on decided to develop housing of this the management of commodity type and the construction of high-rise products in three main areas: food tower blocks continuing into the early products, such as margarine and 1970s. tea: personal care products, such as shampoo and toothpastes; such as It was at this time that a consumer detergents and lavatory cleaners. research group at Unilever uncovered what at first seemed to be The company was formed in 1930 merely a latent consumer need. This with the merger of Lever Brothers of later turned into a multi-million pound the United Kingdom and Unie of the business opportunity. Netherlands. Lever Brothers had a long history of manufacturing soap A variety of different techniques were and soap powders and Unie had used at the time by consumer built up a portfolio of products research group to gather information around the manufacture of from housewives. (Although the use margarine. of such terms as housewife may be inappropriate today, in the mid- Since this time Unilever has built 1970s dual-income families were businesses on this heritage and rare and household cleaning was largely the preserve of the female 1 partner in a marriage. The This case has been written as a basis for class Household Cleaning Products discussion rather than to illustrate effective or ineffective managerial administrative behaviour. business within Unilever would either It has been prepared from a variety of published invite housewives into the research sources, as indicated and from observations. 1 laboratories at Port Sunlight Village, problem had not been mentioned by near Liverpool, or visit consumers at those living in more conventional home. At that time the business was single or two-storey housing largely responsible for several well-known because food waste was placed in brands including Flash floor cleaner dustbins, outside the house. and Domestos lavatory cleaner. A business opportunity A wide range of consumers from across the socio-economic spectrum Extensive exploration of this issue were involved in this research. was undertaken with consumers However, it was during discussions over the following few weeks. This with housewives in high-rise tower revealed that this was an blocks that the need was uncovered. inconvenience for many and a After several exchanges about problem for a few. One of two cleaning bathrooms and sinks, the households explained that they women expressed their frustration placed plastic carrier bags inside with having to clean food remains their kitchen wastebasket to avoid from around the toilet. This puzzled having to clean it after each use. the researcher, who for a brief They acknowledged, however, that second thought she had this was a luxury. This was due to misunderstood what had been said. the effect of the oil crisis of the early Further questioning revealed that for 1970s. Petroleum and petroleum- this woman a common cleaning derivative products, such as chore was having to clean up spilt polythene, were relatively expensive. food from around the base of the At that time the multiples (such as toilet. This was because any Sainsbury, Tesco and the Co-op) liquid/semi-liquid food that was not charged consumers for carrier bags eaten by her family had to be (equivalent to approximately 22p in disposed of down the toilet. The 2002). Most households used researcher continued to enquire cardboard boxed to carry their further about what happened with groceries home or their own solid food waste. This, replied the shopping bags, so unlike today, they women, could be dealth with in a did not have a drawer full of carrier much more satisfactory way by bags. wrapping the food in old newspaper and placing it in the kitchen The consumer research group wastebasket. presented their findings to a group of brand managers and R&D managers The researcher explore this problem in the Household Cleaning Products with other housewives in high-rise business. Enormous excitement tower blocks who expressed similar was generated as their thoughts concerns. They also showed immediately turned to a new product additional frustrations in particular idea. Potentially the market was about odours from food sitting in huge virtually every household in the kitchen wastebaskets until the country. This was because, even weekly refuse collection. This though people in single and two- 2 storey housing did not currently everyone. Around the table sat identify kitchen wastebasket liners as senior managers from the Household a need, consumer products Cleaning division, senior research companies were experienced in high and development managers and the lighting problems to consumers and new product group (NPG). The then offering solutions using initial discussions were very positive sophisticated marketing about the idea of a new business. communications. The meeting This was largely due to the agreed to set up a new product encouraging market research data group to explore the idea further. In which pointed to the enormous particular, they looked at estimates potential of such a product. of market size, manufacturing costs, technical input and marketing Discussions moved on to expected requirements. margins, that is, what were the expected costs and profits. At this Corporate strategy point doubts began to creep into the minds of a few people – not because A brief analysis of Unilever’s history the margins were unhealthy, but will reveal its consistent approach to because discussions began to focus the careful management and nurture on the manufacture of polythene, an of successful brands. Persil, area in which Unilever did not have a Domestos and PG Tips have wealth of knowledge. The NPG extremely long histories. The began to realise that if this business business has invested heavily over opportunity was to develop it would the years to build brand awareness be necessary to take the business and brand loyalty through a wide into an area of technology with which variety of promotional campaigns. it had little experience. However, as This represents, albeit simplified, several people made clear, many Unilever’s corporate strategy – to companies have diversified into build and develop international other area with great success. The brands that will enable the group to oil crisis and cost of polythene were provide added-value, long-term also mentioned. growth. The discussions around the table At the Household Cleaning Products switched to building a brand, the division this translated into a portfolio core of Unilever’s strategy and the of existing brands such as Flash, activity that is most readily Domestos and Persil. The division associated with the company. It was had to decide whether the proposed at this juncture that several doubts new product concept would fit the emerged about the ability of the strategy. business to build a brand around such a product. One marketing Evaluation of the opportunity manager argued that Bowater Scott had been able to build a brand The results of the initial market around, of all things, toilet paper research were placed in front of (Andrex). Surely Unilever could do it 3 with liners for wastebaskets. Others Eventually the meeting was closed in the group were not so certain. and the decision was taken not to One senior research and develop a new business. The NPG development manager enquired was given the opportunity to about the group’s preliminary continue with its investigations and technical investigations and in present its findings a year later. particular whether there were any Most realised, however, that over the possibilities of technical leadership. year many additional business One member of the NPG explained opportunities were likely to emerge that a research team had been and this was probably the end for established with the R&D wastebasket liners at Unilever. department to look at this issue. Initial findings revealed the following technical possibilities:  Variety of different size liners  Variety of different colour  Variety of different textures of material  Limited scope for design, but sealing the opening of the liner presented a few opportunities; and  Possibilities of incorporating fragrances within the liner. As the meeting drew to a close there were several other discussions about the enormous market potential. This final point concerned competition and most around the table agreed that it would be fast and fierce as soon as this market opportunity was discovered. The potential competitors were likely to be the chemical and polythene manufacturers and polythene product manufacturers. Walking away from a huge business opportunity It slowly began to dawn on the NPG that it was increasingly unlikely that the investment required for this new business would be forthcoming. 4