Marketing and Data Analytics Assignment
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Introduction Of Marketing and Data Analytics
Unilever Plc is a consumer goods company based in the UK, having headquarters in London. The company was founded in 1929 by margarine Unie and the Lever Brothers. The company's name was decided on the basis of the last name of its founders. Unilever deals in three major categories of products including products related to beauty and personal care, home care, and food and refreshment-related products. The company owns approximately 400 brands with which it serves in more than 190 countries across the world (Unilever 2020).
This report will be focused majorly upon the marketing and communication of Unilever. The potential risks for Unilever in this regard will be identified. The report will help to review the marketing communication model of the company and also the segmentation, targeting, and positioning. The competitive and communication strategy of Unilever will be identified as well. Also, some recommendations will be given to the company in the end section of the report.
For the financial performance analysis, past three years of financial data has been taken. Factors like liabilities, assets, operating profits, liquidity ratio, profitability ratio, stock turnover ratio
Interpretation of Financial Performance of Unilever
Interpretation on Financial Ratios of Unilever:-
Profitability ratio is used to evaluate the company’s ability to generate income as compared to its expenses and other costs associated with the generation of income during a particular period. This ratio represents the final result of the company.
Here two types of Profitability Ratios have been taken
Unilever had achieved this ratio 0.25 in 2018 but it has decreased to 0.17 in 2019 and 0.16 in 2020 due to decrease in operating profit.
- Return on Capital Employed
Unilever has its high return on capital employed in 2018 that is 1.11 in last three years, due to decrease in EBIT and Increase in Capital employed it had achieved 0.68 in 2019 and 0.56 in 2020.
This ratio is used to determine a company’s ability to pay its short term debt obligation. For Unilever we had taken two liquidity ratios.
The quick ratio is a stricter test of liquidity that the current ratio. It leaves out inventory and prepaid expenses because those are less liquid. Unilever has constantly achieved the ratio. In 2018 and 2020 its quick ratio was 0.57 and in 2019 0.58.
Unilever has a constant current ratio throughout the last three years that is 0.78 for 2018, 2019 and 2020.
It measures a company’s ability to use its assets to generate income.
1. Stock Turnover Period(STP)
This ratio shows how quickly a company can sell its inventory means the average time a company can turn its inventory into sales. Unilever has less STP in 2018 that is 52 and it has 53 STP in 2019 and 55 in 2020. STP of Unilever has increased year by year.
2. Debtor Turnover Period(DTP)
It measures the efficiency with which a company collects on its receivables or the credit it extends to customers. Unilever has highest sales in year 2019 that is Euro 51980.00 and high DTP of 58 and in 2018 it has DTP of 49 on sales of Euro 50982.00 which is in reverse of 2020 where sales was Euro 50724.00 and has DTP of 53.
Gearing Ratios. A high gearing ratio means the company has a larger proportion of debt versus equity. Unilever has high gearing ratio of 2.37 in 2018 which represents high debt and finance cost on that. And In 2019 it decreases to 2.27 due to fall in debt that is Euro 29942.00 from Euro 27392.00. In 2020 it has achieves 1.93 means Unilever gradually decreasing its debt which will increase the shareholder interest.
Interest Cover Ratio(ICR)
It measures how many times a company can cover its current interest payment with its available earnings. Unilever has ICR 3.48 in 2018, 2.14 in 2019 and 2.12 in 2020 which represents ups and downs of ICR.
It tells you how much investors are willing to pay for Euro 1 of earnings in the company. Higher the ratio, the more investors are willing to spend. Unilever has highest EPS in 2018 that is Euro 7.43. But it had gradually decreased to 4.79 in 2019 and 4.13 in 2020.
Unilever- Potential Risks
There are various factors present in the external and external environment which may create such conditions for Unilever that it may have a negative impact on the company. The factors that create potential risks for the company are as follows:
Highly competitive environment
Unilever falls under the consumer goods industry which has fierce competition. The competitors of the company create risk for the market share of Unilever and its financial performance. The risk of competition gets higher with the increasing strengths of other companies present in the same market, same industry (Kissinger 2017). The main competitors of Unilever are proctor and gamble, Nestle, L’OREAL, Johnson & Johnson, Colgate Palmolive, etc. All these competitors put pressure on Unilever. Other than these major competitors, Unilever also faces competition from small companies.
As there is high competition in the market, there is a high risk of product imitation by these competitors. To give tough competition to Unilever, the competitors make a copy of its products which increases the chances for Unilever to lose their customers. The local firms imitate the products similar to Unilever. Also, these small competitors create a risk for Unilever by selling products under their brand name. These small brands are called house brands or generic brands (Cheng 2021). For example, Walmart uses its generic brand to give a tight competition to Unilever's products.
Marketing Communication Strategy
The marketing communication strategy of Unilever will be the marketing communication model of the company which Unilever can use to achieve its marketing objectives. The marketing communication model can help the company to plan and structure its process of marketing. The marketing models can bring clarity to the marketing team of Unilever and help them to build an effective marketing communication plan to address the customers. Unilever can use Lauterborn’s 4C’s model of marketing communication which was proposed by Bob Lauterborn in 1990 (Hanlon 2016). Bob has proposed this model because he believed that the 4Ps of marketing have become obsolete and the 4Cs he has given can replace those 4Ps. This model of marketing communication for Unilever is described below:
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- Consumers' needs and wants: This C of the model suggests Unilever to produce only those goods/products which are able to satisfy customers' needs and wants. There are many products Unilever is selling and some of which do not satisfy customer wants. The company should identify that segment of product and either stop producing it or modify it so that it can meet customer expectations (Ikechi, Chinenye and Chiyem, 2017)
- Cost to satisfy: This replaces the price aspect of marketing because as per Lauterborn, it involves the other factors as well. This C of the model suggests Unilever cut down their cost firstly with the suppliers. Only, then it will be possible for the company to cut down its ultimate cost and to reduce the price for end-user. Cutting costs and lowering the price will be difficult for the company when it comes to its premium category products. There, the company would do it differently. Unilever can maintain its cost to satisfy level above than their competitors.
- Convenience to buy: The third C i.e., the convenience replaces the word Place. This suggests Unilever makes the buyers feel convenient to buy the product whenever they need it. This C of Lauterborn's model suggests not stick to the 9 to 5 shopping concept. Instead, it suggests the company be available 24*7 for its customers. The concept of convenience to buy is based upon allowing customers to buy at any place, anyhow, anytime, and at any level.
- Communication: The last C of Lauterborn’s model of marketing communication replaces the last P of marketing i.e., Promotion. It is because Lauterborn used to believe that promotion is a one-way communication which is not correct. As per him, the marketing communication should be mutual (Desai and Shah, 2019). So, he suggested a two-way marketing communication approach for Unilever and its customers. This was the approach of digital marketing.
Segmentation, Targeting, and Positioning
Unilever is a known brand across the world as its name is on the top of the FMCG (fast-moving consumer goods) market. To further examine how the organization targets and manages its products within the market the use of the STP (segmentation, targeting, and positioning) model would be done. This model not only helps to understand how the organization targets the customers but also how it achieves a competitive edge within the market through its positioning strategy.
This includes the identification of a group within the market for which various products are being launched. Such helps to see what are the needs of that group so that the product is made can satisfy them. The segmentation that is done by Unilever depends on the geographic and demographic areas. It seems that there is not too much of a specific age group that is targeted rather there the middle-class people are targeted (Carvalho 2020). The income of such people is not high due to which the prices of the products are also not that high as compared to its competition.
There are also different products launched like perfumes for men and women can be found different but toothpaste and other family products can be found together. Regarding the geographic area, the organization opens its branches where the population is most regarding that there would be a large number of families present around it. Wales and Leeds are two areas within the UK that have been targeted as there is a large amount of population present within it.
The main target is households that are present within the UK. These are mainly middle- and high-class social classes that are targeted. These are targeted because the products that are sold by the organization are mainly cosmetics. The purchasing power of the customers is not that high hence there is a wider market that is covered by the organization by using such a strategy. This strategy is known to be concentrated marketing that is done because specific products are targeted to specific groups. The shampoos like Sunsilk target both middle- and upper-class women as they can be used by both (Siddique and Sultana, 2018). But the leverage is given to the middle class as other products can be processed accordingly.
Unilever is focused more on making sure that there is a lower price that is provided for a higher quality of products. This is done because the UK market is highly competitive and in order to attract customers, it would need to make sure to capture a higher customer base. It is seen that Unilever invests highly in advertisements to make sure that there would be more customers that could be attracted to the various products. Actors are even hired from across the globe to promote various products. The positioning has been shown within the perceptual map below.
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Competitive Strategy of Unilever
Based on the generic strategy model of Michael Porter, Unilever used a Differentiation strategy for achieving competitive advantage. With this differentiation strategy, Unilever tries to achieve an advantage over its competitors by satisfying the needs and wants of customers in better and different ways. Porter's generic strategies are used by organizations to ensure the competitiveness required for the growth of the company (Hikmawati and Alamsyah, 2018). In the case of Unilever, its competitive advantage lies in itsapproaches to product development which is why the competitive strategy of Unilever is differentiation. Other than this, Unilever maintains its growth with different primary and supportive growth strategies.
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Unilever has created and maintains its competitive advantage in the consumer goods industry. Maintaining this competitive advantage allows Unilever to apply the intensive growth strategies which need to be used to achieve higher growth. The differentiation competitive strategy which Unilever uses focuses upon adding unique features and characteristics in the products to differentiate these from what competitors are offering to the customers (Danso et al, 2019). For example, Unilever provides Dove soap to customers which is relatively soft and does not make the body dry. This feature is not present in any other soap offered by the competitors of Unilever. This is why, even when the selling price of Dove is high, the customers still buy it willingly. This is how Unilever attracts its customers by keeping its products specially designed and unique.
The vision and mission of Unilever aim to support global sustainability and to enhance vitality in the lives of customers. Unilever's competitive strategy of differentiation supports the company's mission and vision very well. The company has a strategic objective of making Unilever grow by making efforts in the development of products. This objective Unilever is trying to achieve with the differentiation strategy. One of the major objectives is to stand out Unilever’s products against the offerings of the company's major products. There is one financial objective of the company which links directly with the differentiation strategy. This objective is to grow the company's revenue in other developing countries which allows Unilever to have high growth opportunities.
Unilever- Communication Strategy
The communication strategy that is adopted by Unilever is the people-centric approach. This approach has been adopted to manage the vast amount of customer segments that it withholds to. Having an adequate communication strategy is of utmost importance as it helps not only to promote one's products but also to build and a better relationship with the customers.
The organization has made sure that various media agencies are contacted. This helps Unilever not only to make sure that customers are attracted but also to understand what are the behavior of the market and the competition. Working within a volatile market it seems that being flexible and agile is necessary which can be achieved through media agencies around the world. This also involves that innovative partnership is being developed so that new ideas would be developed. This shows that communication with partners allows Unilever to understand different areas of the market so that products can be also made for that market. This involves the innovative practice along with an effective market strategy to be adopted.
Rural communication is important for Unilever because operating globally there are different areas that it would have to take into account. There were Grassroot distribution strategies were adopted within the Philippines, as there were several rural areas where the customer had to be communicated with (Mahajan 2016). This was important so that the organization could understand their buying behavior and what type of products could be sold there. The communication was done by partnering up or even buying large local stores (Mahajan, 2016). This helped to understand the market more adequately and develop a deeper understanding of how to manage the customers. This strategy has had proved to help the people-centric approach as it was focused on seeing how to develop an effective relationship with the customers.
Pragmatic trading was another method that was adopted within the approach through which the organization was able to communicate with its customers. This involved that the media gave the audience an outline of how to manage the different areas regarding the products. This showed that tailored content would be given later on when the project would be launched.
From this, it can be understood that the communication strategy of Unilever is mixed as verbal, nonverbal, and visual communication is adopted by them. It helps to highlight the point that a flexible strategy is adopted by the organization.
Recommendations to Unilever
- Use Emotionally Language: To ensure effective marketing and to communicate the mission of the organization in a better way, Unilever is recommended to use emotionally effective language to engage customers. This will also help Unilever to minimize the risk of extensive competition as well. By adapting emotional language for engaging the customers, it will be easier for Unilever to achieve success. It is because usually, the companies use mechanical language to tap the customers. In all this, reaching out to them by building an emotional connection will give them the advantage.
- Creativity and Innovation: It is suggested to Unilever to be creative and innovative in whatever the company does. While offering any product/service to the customers, giving it an innovative and creative touch will help Unilever to stand against its competitors very well. The customers will attract to the product/service due to its innovative features (Hughes et al, 2018). Being creative in what the organization does will help to achieve a competitive advantage as well.
This report concludes that Unilever has grown so much in past years as it has been reaching more countries and enhancing its customer base. The report has been focused upon the marketing and communication aspect of Unilever. Some of the major risks identified for Unilever are the highly competitive environment and product imitation by major and small competitors present in the FMCG industry. The report has identified that Unilever can use the 4Cs of Lauterborn as the company's marketing communication model in which it can focus upon 4Cs described by Lauterborn to make the company's marketing plans and process more effective. The segmentation, targeting, and positioning have been identified in the report in which it has been identified that middle- and higher-class people of society are targeted by the company. It has been identified that Unilever uses differentiation as its competitive strategy. Unilever is identified to have people-centric approach as its communication strategy. The company uses this approach to manage its customer segments. In the end section, recommendations have been given to Unilever like stick to innovation and emotional language while communicating.
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