Unilever was founded in 1930 as result of the merger of the Dutch company Margarine Unie and the English company dedicated to the manufacture of soaps, Lever Brothers. The Unilever business grew and new ventures were launched in Latin America. In April 2000 it bought both Ben & Jerry’s and Slim Fast. The company is multinational with operating companies and factories on every continent (except Antarctica) and research laboratories. The company is said to promote sustainability and started a sustainable agriculture program in 1998.
Covalence, an ethical reputation ranking agency, placed Unilever at the top of its ranking based on positive versus negative news coverage for 2007. In 2010, Unilever and EVGA announced today that they have signed an agreement under which Unilever will acquire EVGA’s ice cream brands and distribution network in Greece, for an undisclosed amount. Corporate Structure At finally of the 90’s decade, Unilever’s market position was quite similar in all the European countries in which the company was working.
In Portugal, for example, they had Ola; Walls’ was the brand owed in the United Kingdom, with Lyon’s Made (Nestle), Mars and Sainsbury as their main competitors; Miko was the company’s brand in France; in Italy they sold under Algida brand; German’s company was called Lagnesse and finally, Unilever was represented in Spain by Frigo, that also competed with Camy and Miko, owed by Nestle. During the 1980’s the group had been gradually introducing the same products and brands in most of its subsidiaries, rolling out successful introductions initially made in some of the leading markets.
International products have been growing in importance in all the subsidiaries whereas local products increasingly account for fewer turnovers. Frigo, the Spanish subsidiary. Frigo is a Spanish company dedicated to manufacture and sell ice cream, which is part of the multinational Unilever since 1973. The firm operates as a Spanish brand of Heartbrand international arm, which operates in other Spanish-speaking countries such as Holland Ice (Mexico) or Tio Rico (Venezuela). The company was founded in 1927 in El Poble Nou, a suburb of Barcelona, with the name of Food Refrigeration Industries.
This company was the first Spanish company to produce industrially frozen and later spread throughout the country as Frigo Products. In those years, not only ice cream but yogurts were produced. Under Unilever’s control, Frigo is specialized in ice cream, and also to distribute the Group’s international brands (such as Magnum, Cornetto, Calippo or Cuore) developed their own references as Frigodedo, Frigo Pie, Dracula and Twister, with which got much popularity in the years 1980 and. In those years, Frigo also adopted a mark similar to those of other companies Unilever ice cream in the rest of Europe.
In 1998 absorbed Heartbrand image, with a heart as a logo, and expanded its range of flavors. Which are the principal problems? The main problem of the company is that the brand image needed to be reinforced. They are afraid of the impact that changing the image may have on sales. The public was definitely familiar with the company products. So the big question was how to effectively introduce changes without simultaneously losing the image that Frigo had built up over the years in various countries and local markets.
They start to try changing the logotypes, because they think that this could facilitate the operation, but this requires such a tremendous change. In the end the main problem boils down to two main questions; Create a global image or not. From here you have smaller problems: change packages, brand names, logo designs, current market image, and overall marketing image. What we will attempt to do in an effort to further understand our options, will be to break apart the various options that Frigo has, analyse what can be done and discuss possible effects this will have on the market in various ections and as a whole. What are the alternatives? 1st Alternative: Ice Cream industry has no season One of the problems was that we have seen was to be a seasonal thing, mainly consumed during the summer. To alter this would be done with advertisements of people bundled up in winter clothing eating the product and would be accompanied by a slogan that communicates the following: “it’s never too cold to eat a [insert brand name]” or “there is never a better time than now” or “life is yours, grab it by the stick”.
Of course, all would be accompanied by images that seek to change the summer association. 2nd Alternative: Brand image accompanied by one language This would involve keeping everything the same between all cultures. One name, one image for everyone – much like Starbucks or McDonalds does. No matter where in the would you go you will always have the same name with the same image. 3rd Alternative: Create Global image Within this options we will examine different methods in going about this. But the basic idea will be one image on all package.
The fallowing will also be discussed in a manner that reflects not only the idea of creating a global brand but the individual problems in some markets such as dull packaging. The overall goal would be to create a brand image and place that on all the packaging. 3rd Alternative (I): Full scale launch. This would involve changing all the packaging that is perceived to be “less than dynamic and cold”, create packaging that does not communicate “out of date” feelings and brand all products with a single brand.
This would involve creating signs for impulse channels, new packaging for stores and mass advertising using the new Brand that will be appearing on all the Frigo products. The mass advertising will need to reinforce that there it’s the same great product with a new image. 3rd Alternative (II): Think Globally, act locally This option would involve the same concept; however, it would be on a country to country basic that the packaging would change – focusing on the countries that need the most reform first. A single brand would be placed on all packaging but major reform would go to those products that need the most help. rd Alternative(III) : Think Globally, act locally but progressively The main point here would be that any sort of dramatic change might confuse the buyer or even cause the buyer to believe that the product they once enjoyed is no longer being made. We would adopt the concepts from the previous options, but, slowly change the packaging over the course of months or years. The progression of the change would happen in the fallowing stages. 1. Brand with chosen Frigo brand 2. Slightly change the packaging – little things such as rounding squared edges and changing font 3. Adding images 4.
Changing colors. Each step would be implemented in such a fashion that the buyer may notice but not see any major difference, thus recognizing the product though the entire course of the package change. Changing colour would need to be last as this is more likely what they will use to identify the packaging throughout the transition period 4th Alternative: sales and promotions The options for sales and promotions during the winter can be used to break the idea of seasonal associations. A good method would be to associate ice cream with another food product that is consumed during the winter.
This can be done by offering coupons for discounted ice cream with purchase of various meats. 5th Alternative: Do Nothing Doing nothing is always an option. In some cases it is not a good idea, in others, the best. In this situation we would first look at the playing field and see what the other companies are doing. Nestles is already creating a strong brand image. Strengths Frigo comes from Unilever which is a large umbrella company which can help fuel the globalization efforts. This company is already very large operating in 80 countries and distributing to another 50 just in the ice cream industry.
Local understanding- because Frigo has already been operating in various countries. They should have a good understanding of the current markets. This will help them determine how to effectively launch each campaign, in each country or market. Money- because Frigo is a large company they can afford to invest in various markets that appears resistance to change. They can also afford to support price wars if needed. Part of the campaign might consist of changing packaging in which case Unilever will more or less be equipped to develop different packaging that appeals to the individual markets.
Market leader and Experience – Company has over 1000 brands managed by the company. Having such control in the markets and having the experience within each market should assist Unilever in the change that they will be implementing. Connections- Frigo has the experience to have the right connections and knowing the right companies to assist them. History- the company has been around since 1927 and has an image that comes with being around for such a long time. This could be used in persuading various markets that are sceptical.
This history may also allow them. Weaknesses Although Frigo had dominance in the ice cream market, the company had some flaws. The management team had identified them as weaknesses which needed to be corrected in order to stoke growth. As recognized by the Executive committee, the company’s brand image was not well known and it had too many different competitors’ brands in every country that it operated. Frigo’s competitors have already started globalizing a single brand. Economies of scale through production and advertising could not be achieved.
The company had lower market share in developed markets where take-home channels were predominant. Instead of having an image of a company which sells year-long products it was perceived as a seasonal player with less dynamic and cold images. Frigo had managed to grow and become a market leader in Spain and since the beginning of the 90’s abroad. Its strategy was successful for the time but it needs to change today. Globalization has driven many other companies to switch their focus from the local to the global market. Even though it used to be its strength 20 years ago it is its weakness today.
Today, the benefits of having a strong image are dominating the costs. Economies of scale can be achieved on many different levels.. A concentration of production centers makes it easier to produce efficiently on a larger scale, cut costs and increase profits. Moreover, advertising is becoming an increasingly important part of marketing. Since globalization has brought down physical, cultural and economical barriers, people are much more mobile today. Having a global brand can cause a spillover effect from one country to another.
For example, if a German tourist who loves eating ice cream after work is used to eating brand X in Germany will probably buy the same brand X if he goes on a vacation in Spain without any hesitation. If, however, brand X does not exist in Spain (that is, it is not a global brand) the German tourist will probably choose a random brand or might even decide not to buy ice cream at all. Thus, by not having a global brand, Unilever (Frigo) is losing important market share and is missing on the economies of scale that could be achieved in production, sales and advertising in an increasingly global market.
The ice cream market is very dynamic with constantly changing trends. In the past the impulse channel was the predominant way to sell ice cream while today the take-home channel is gaining much more significance. Moreover, seasonal demand for ice cream is being replaced by a yearlong demand. Another weakness that Frigo faces is the fact that its brands are perceived as being seasonal rather than yearlong. Since yearlong consumption is becoming more popular frigo would need to change its brand image and capture this increasingly profitable share of the market.
Opportunities The ice cream market has a great potential for growth. Frigo, having a very strong position in the ice cream market, has a good opportunity to be part of this expansion. There are several different ways in which the strengths can be used to complement the weaknesses. Being a very large, global company with significant financial strength, Unilever has the opportunity to invest heavily into creating a global brand, that mean that Unilever should put the same name for all the subsidiaries in the countries that it is operating.
The company has proven that it can achieve very good results on a local level. Their local brands are largely recognized and are generating millions of euros in revenue. The experienced teams that are managing them have proven to be very successful in their markets. Today, however, there is a shift from local to global branding. Operating on a global level brings to companies benefits like economies of scale, cost cutting and operating efficiency. Take-home channels for yearlong demand are replacing impulsive channels with seasonal demand.
Unilever has a very weak position in sales in these take-home channels and is facing tough competition. A great opportunity for Unilever would be, in our opinion, to choose one of their best performing local brands from a big ice cream market such as the US or the UK and bring on the global market. Utilizing its financial strength and stability, the new brand can rely on a lot of money and can eventually become successful abroad. Another similar option for Unilever would be to acquire another well performing brand from a well developed and successful market and to implement and expand it globally.
Another great opportunity, in our point of view, is the undeveloped Latin American and Asian market. If Unilever acts quickly and implement a brand from Europe or the US it has the potential of gaining huge future profits. The Asian and the Latin American ice cream markets are one of the fastest growing with an average annual growth of over 10%. Even though ice cream is sold mainly through the impulsive channel (due to lack of freezers in people’s homes), after a couple of decades it will probably mature and sell mainly through take home channels.
Then the already established single brand would have a great position to compete with other companies and to represent significant market share. Threats The company faces 4 major threats: competition, rejection, loss of competition and economic downturn. Economic downturn is a problem that faces all companies; However, the ice cream market will be effected first. As it is more a luxury product, meaning that at the first sight of financial problems people will be less inclined to buy ice cream. This could hurt the branding campaign and cause unexpected losses.
Loss of market share is another general problem that many companies experience on a daily basis, but, it was stated that the loss or gain of even a fraction of a percentage in any given market means the loss or gain of 1000’s of euros. This is a concern that must be addressed when choosing an option because of how easy it may be to confuse the buyer. When dealing with the product and how easy it may be to confuse the buyer, they must also take into account the packaging and the rejection that may come from not only changing the packaging but also changing the brand.
They may experience rejection of the brand itself or of the new packaging. By far there largest threat is competition. Nestle – who is their largest competition, already has an incredible brand image. Nestle could easily launch an advertising campaign to counter the campaign that Frigo is seeking to do. Choosing an Option Of all the options presented earlier, no single one will be a good idea across all the markets, but rather a combination of all would be best and here’s why: The basic idea is to keep the market shares that Unilever (Frigo) already has while creating a global brand image.
The problem with creating a global brand image is that it can work for or against you. If the image is positive, and the change is not overwhelmingly dramatic, then you are looking at a good thing. Because this is what Unilever wants to do, each market must be taken with different approaches. Thinking globally, acting locally. In some markets, such as Spain – the company Frigo already had 25% of the market share. Changing this to Heartbrand may confuse the buyer and result in lowering market share.
Thus simply adding the Heartbrand image to Frigo will help create a positive image for the Brand logo. Doing nothing is not a good idea in this case. This is because doing nothing will avoid to build their global image, with the potential of taking control of market share. Another bad idea would be to take and treat all markets the same and more so in the markets where there are issues with the packaging. Doing so could result in some of the threat discussed earlier such as loss of market share though rejection of the new image and confusion about the product.
A full scale launch in all markets would be needed in the effort to create a global image. However, as stated earlier this could be a delicate procedure in various markets and thus each market should be viewed in terms of it being a standalone market having little to nothing to do with Unilever’s other markets. In Conclusion Unilever (Frigo) should utilize its large status and already developed markets to determine how to handle each individual market, keeping in mind the possible threats of confusion, competition, rejection and economic downturns.
We also believe that Unilever (Frigo) should go through with globalizing their brand. Efforts should be taken to change the frame of minds about consumption of ice cream during the winter. This can be done in part through various types of advertisements as well as a change in packaging. The change in packaging should be a general slow progressive change as to avoid confusion to the buyer. In an effort to change the view about brands being semi-seasonal discounts and promotions can be offered during the winter.
In addition to attempting to associate ice cream with another food product often purchased during the winter, Frigo should run ads in various media promoting the idea that ice cream is not simply a summer thing. Lastly, Unilever (Frigo) should used the already developed names in the individual markets but attach their ice cream logo as to unify the brands but keep the already positive images that the individual markets have towards the individual brand names. This will insure that the Unilever (Frigo) brand image is accepted in the individual markets while simultaneously linking the different brand names that vary from country to country.