Unilever: More Than a Just a Marketing Company

U logo – “trust mark of sustainable living?”

With 14 brands with sales more than € 1billion a year and 400 brands in total, the leading Consumer Packaged Goods company, Unilever, has been known as one of the best marketing companies. The company’s big rollout of a new program in 2010 proves that Unilever wants to become more than just a Marketing company and it becomes more known for another concept – Sustainability. Unilever managed to implement the change in their business model through effective applications on their aligned operational model and create value for their customers.

Business Model – The Core Purpose

ar14_dia_biz_model_1_tcm244-419714_1

In 2010 Unilever’s CEO Paul Polman launched a new Business Model for Unilever, under the name Unilever Sustainable Living Plan:

The USLP is our key differentiator – how we will achieve sustainable growth by improving the health and well-being of more than a billion people, reducing the environmental footprint of the making and use of our products, and enhancing the livelihoods of millions of people across our value chain. [1]

By utilizing the already developed levers of the company, Unilever became very successful in the first 5 years of the launch of the new program.

 

Operating Model – Building the Levers

Brands – Product Range and Mission

Unilever has 400 brands worldwide (in more than 190 countries) that are in Food, Refreshments, Home and Personal Care categories. 10 years ago the company used to have more than 1,600 brands and this changed with their new strategy “One Unilever”. By delisting the unprofitable and not promising brands and combining them into common umbrella brands, Unilever managed to make the company more efficient and save about € 4 billion in costs.About Unilever

Most of the brands of Unilever have to deliver more than meeting the needs of the consumer. Aligned with the core value of the brand, they also bear a social mission purpose. This includes Lifebuoy’s drive to promote hygiene, Dove’s campaign for real beauty, and Domestos’ mission to help people gain improved access to toilets. The implementation of the USLP plan had to be through the brands. The CMO of the company Keith Weed explains it as: “You can’t have marketing in one corner ‘selling more stuff’ and sustainability in another trying to save the world, bring them together because they are two sides of the same coin. Let’s try and do marketing in such a way that we are addressing real social challenges. That way we’ll create a business that is much more vibrant than red bottle versus blue bottle.”

deo

 

In addition to the communication strategy the products of Unilever have been evolving within the framework of USLP. One example of that is Compressed Deodorants, which are half the size but lasts as long as the big ones. By this change, they were able to use less packaging and less gas on the inside. The impact on the environment is remarkable. With the aim to reach 1 million people switch to compressed deodorants, Unilever claims to save 696 tonnes of CO2.

 

 

People – Creating a Community

Unilever’s consumers and its employees are the biggest assets of the company along with its brands. Each employee is an advocate of the company and the company gives extra importance to employee satisfaction. This dedication reflects itself with different programs like Unilever Future Leaders Program throughout different levels of the employees.

Unilever also adapted to the changing consumer perception that evolved from ‘my world’ (personal), to ‘our world’ (local), to ‘the world’ (global). Several different programs have been launched in the aspiration to engage with the people and create a community that have the shared mission to make sustainable living commonplace. The Unilever Foundry helps startups to drive innovation in sustainable business. Unilever brightFuture is a platform that brings people together who believe that it’s possible to build a world where everyone lives well and lives sustainably. Through this community, people can share their stories, projects and share their support for others.

Operations – Efficiency and Efficacy

Unilever’s functions have been redesigned through this process as well. The most significant ones are sustainable sourcing and marketing.

Sustainable Sourcing

The company works together with the suppliers to meet the requirement for the sustainability goals. By working as a business partner, Unilever shares the tools and expertise to achieve these goals. Every year, Unilever organizes Partner to Win awards where they celebrate the partners who made a significant contribution to grow their business in a sustainable way.

Marketing

Unilever used to have local business units where brands were managed independently. However, the company moved to global from local operating model. By splitting Brand management into Brand Building and Brand Development, Unilever managed to centralize its marketing assets and leverage the expertise and knowledge across countries.

With Unilever’s strong alignment with its Business Model and Operating Model and by putting sustainability in core and every corner of the business, the company has managed to implement a long term vision.

Sources:

https://www.unilever.com/sustainable-living/

https://www.unilever.com/about/who-we-are/our-strategy/

http://www.economist.com/node/3222955

http://www.fastcocreate.com/3051498/behind-the-brand/why-unilever-is-betting-big-on-sustainability

http://www.prnewswire.com/news-releases/unilever-dry-spray-antiperspirants-change-the-game-as-most-awarded-personal-care-innovation-of-2015-300186115.html

http://www.compresseddeodorants.com/

https://brightfuture.unilever.com/

https://foundry.unilever.com/

https://www.youtube.com/watch?time_continue=31&v=2LRun7CVB6U

https://www.unilever.com/about/suppliers-centre/partner-to-win/

https://www.unilever.com/about/suppliers-centre/sustainable-sourcing-suppliers/

http://www.bain.com/publications/articles/winning-operating-models.aspx#is-your-operating-model-working

http://www.bloomberg.com/news/articles/2013-12-05/unilever-plans-to-reduce-product-range-by-further-10-in-2014

 

Previous:

Coalfire Systems

Next:

Roche Holdings AG

6 thoughts on “Unilever: More Than a Just a Marketing Company

  1. Would be great if they also looked on the sustainability side of the materials they use in packaging. Currently all those bottles and packs create tones of plastic garbage which is not recycled in most parts of the world (and will not be recycled for another couple of decades due to economic reasons).
    Unilever could expand their “sustainability” part of business model by things like using more compostable packaging, selling shampoo without a bottle and charge per oz (in a way Whole Foods sells cereals) or incentivizing customers to reuse packaging

  2. I think what Unilever is trying to do is super interesting and encouraging. If big players such as Unilever actually commit to sustainability that can actually have an impact. Paul Polman’s reaction to the cop 21 agreement reached in Paris this weekend underlines his commitment but also the fact that Unilever cannot go at it alone. His twitter read: #ParisAgreement gives biz & investors confidence to shift to net zero GHG emissions economy #ZeroBy2050.
    In order for Unilever to be able to focus on sustainability and improve on factors such as packaging, as Teti has mentioned, the company needs to work on creating a level playing field for companies that are focused on sustainability and companies that could not care less. It can do that via private-sector partnerships but should also continue to work together with governments globally to enforce regulation and initiatives that can help sustainable companies compete fairly. Unilever can help push small initiatives globally, such as implementing guidelines on compostability of packaging, bans on the use of plastic and replacement with sustainable materials etc. That Unilever does this is paramount, it has both the size and credibility to do that and with Paul Polman’s active engagement in the global climate change negotiations should also have the ears of many governments globally.

    http://www.huffingtonpost.com/paul-polman/how-can-business-make-a-difference-in-paris_b_8639154.html

  3. Sinem, it was very interesting to learn how a big CPG company has transformed itself to become a company known for its sustainability efforts. It also really compelling how this social mission is integrated into their brands and different lines of business instead of being seen as separate initiatives from the corporate social responsibility with no relation to the business.

    You mentioned the reduction of brands has helped Unilever become more efficient and led to the reduction of costs but I wonder if this initiative also helped by reducing the complexity and variability in production, distribution and planning. I assume that by consolidating their brands and products it makes it simpler for the company to plan production and distribution which can lead to better service to the customers by ensuring the inventory they need is always on the shelf.

    Also, the “sustainable sourcing” sounds like a great initiative to promote sustainability in the broader ecosystem and to become agents of change. I would be interested to learn what kind of formal procedures or processes they have designed to ensure all their suppliers meet their sustainability requirements and if the global vision is preferred here to the local vision as it is in marketing.

  4. Great post Sinem. It’s interesting hearing how large companies are putting sustainability as a #1 item on their agenda, but to change a business model is even greater. Given the scale and reach of Unilever worldwide, the impact of this decision is considerable.
    I am curious to know how the company’s manufacturing operations will change with this business model. Also, it will be interesting to see how they adapt the offering and product formulation, considering that many of its products source raw materials that have often been put under controversy (e.g. palm oil).

  5. Thanks Sinem! I would also be curious how Unilever plans to leverage this sustainability push to continue growing – are they banking on the fact that consumers will buy more of the product given the switch to sustainable packaging and production, or that they will attract new consumers? I’d also be curious what impact this initiative has on their profitability as a company. Shedding the under performing brands seems to be a step in the right direction, but in order for them to pursue sustainable growth, I presume their stockholders will also demand continued profitability. I will be very interested to see if other large CPG companies follow suit and shift their business models to mimic Unilever as well.

  6. Sinem – Great post. Like we’ve talked about, I want to intern at a large CPG company this summer. I hope to benefit from the excellent training in marketing they provide. One thing I continually “fret” over is whether some of these CPG companies are good for our world – environmentally, socially, etc. In Marketing class, we debated whether Unilever was “two-faced” for its Dove campaign considering Axe Body Spray is also owned by Unilever and sends a sexist message. However, I think the CMO’s quote that marketing and social are “two sides of the same coin” shows how Unilever is working to align its business model to its operating model. Indeed, its sustainability efforts have been a part of the products that it’s making and marketing. The deodorant example demonstrates this well.

    Thanks for sharing!

Leave a comment