Unilever company context analysis

1.0 Introduction
The purpose of this report is to provide a thorough context analysis of Unilever industry and to understand the key factors in its business and communication environment that are likely to influence a brand as well as its current long-term objectives. This report also examines Unilever previous experience which has a specific impact on the development of a strategic integrated marketing communication plan.

2.0 External Context
2.1 PESTEL framework

This section introduces the well-known PESTEL framework which analyses the broad macro-environment of Unilever organisation.

• Obey the law
• Respect human rights
• Good corporate governance
• Accept international principles Economical
• Economic downturn
• Exchange rate
• National and global interest rate
• Inflation
• Employee value
• Improving health and well-being
• Enhancing livelihoods
• Long-term partnerships
• Products sold in 190 countries Technological
• The latest science & technology
• E-business via internet
• Installation of pallet storage system
• €1 billion spent on research & development in 2012
• Environmental risk assessments
• Minimize waste
• Reduce environmental impact
• Climate change Legal
• Legal structure
• Food legislation
• Greenhouse Gas Strategy

• Political
Unilever’s political forces shape the use of marketing communication by following the law and human rights, accepting international principles when having partnership with foreign representatives. Unilever businesses are governed by laws and regulations aimed to certify that products are safely used for their intended purpose and that labelling and advertisements are honest and not misleading. Unilever is also regulated by data protection and anti-trust legislation. Important regulatory bodies in respect of Unilever’s businesses include the European Commission and the US Food and Drug Administration. Unilever makes sure that products, manufacturing processes, marketing materials and activities meet the above-mentioned laws and regulations.
• Economical
Since the financial crisis in 2009, Unilever, as well as every business organisation, faced with taught market conditions and group turnover fell 2 per cent to £9.6bn, particularly in China. (Bradshaw, 2014) Unilever showed poor food results in its first financial quarter in 2014, affected by the late timing of Easter. For example, Ben & Jerry ice cream and Knorr stock cubes announced overall food sales growth down by 1.7% and underlying volume growth down by 2%. (Robinson, 2014) Despite all these facts, Unilever seems to operate quite well in nowadays competitive environment, as value and volume growth for the company were both 1% ahead of its markets. Consequently, Unilever is gaining market share in 60% of its businesses. (Seeking Alpha, 2014)
• Social
Unilever employs 174,000 people from different parts of the world who work to create a better future for 7 billion people on our planet. By this, Unilever raises the demand of its products in the developing and emerging markets. Following the USLP goals, Unilever will help more than a billion people to improve their well-being and enhance the livelihoods as well as reduce environmental impact by 2020. The company is working hard to improve hygiene and bring a better nutrition to people in Asian and African countries.
• Technological
Unilever China is one of the largest corporate companies owning more than 400 brands such as Lipton, Wall’s, etc. Due to the higher demand every year, Unilever’s warehouse faced with storage capacity problems. The innovative installation of pallet storage system improved picking efficiency and increased number of storage space. Unilever believes that safety is an essential element of a successful and sustainable business. The SEAC (Safety and Environmental Assurance Centre) applies the latest technology and science for environmental assessments. In 2000, Unilever spent their budget on IT in order to enter e-business as well as to enrich brand and market communications through internet. Today, Hellmann’s, the mayonnaise brand owned by Unilever, launched the WhatsCook campaign in the South American countries, reaching the audience of 32million people who use WhatsApp mobile application. (WARC, 2014)
• Environmental
The Unilever Company designed Environmental Management system, based on ISO 14001, which help to meet customers’ needs from an environmental perspective via continuous improvement in manufacturing activities worldwide. (Appendix 1) Unilever provides a number of various risk assessments: consumer and occupational safety, environmental safety, non-animal testing in partnership with other scientists globally. The launch of Sustainable Living Plan in 2010 drives the delivery of the environmental impact reduction and enhanced social impact. For instance, Unilever has reduced the number of layers and the thickness of the sachet materials used for its hair products in South East Asia and planning to so the same in Pakistan, India, and Bangladesh. (Source: unilever.com) The climate change also has a specific impact on business environment. Eliminating waste is one of the main goals for Unilever. In December 2013, the company achieved zero non-hazardous waste to landfill across its factories by recycling 530,000kg of plastics.
• Legal
Unilever PLC and Unilever N.V. both have different shareholder constituencies and shareholders cannot exchange the shares of one company for shares of another. The company has a number of agreements: the foundation agreement, the equalisation agreement, and the agreement for mutual guarantees of borrowing.
2.3 Key stakeholders
External management communication is not confined to senior managers as all managers who have external-facing elements to their job communicate with stakeholders, who form images of the organisation as a result of what is said, how it is said and the impact it has on others. (Fill, 2013) Key stakeholders typically come from inside of Unilever Company and are those who have put contribution to its business activities every day. By engaging with their stakeholders, Unilever builds reputation, earn trust and develop long-term relationships what helps business to growth successfully. The key stakeholders for Unilever are governments and intergovernmental organisations (Oxfam, Save the Children), customers, suppliers (Boots & Superdrug store) and investors (Norges Bank), society organisations, employees and other individuals who create a supportive environment and face with the challenges in order to strengthen sustainability. For example, Unilever has actively put reputation right as its centre by implementing its Sustainable Living Plan what enables to take the position of the world’s most sustainable business and broaden its reputation with their stakeholders ahead of any possible concerns it may occur in the future.

3.0 Business context
3.1 Corporate & Marketing strategy and plans
Unilever itself has always been a purpose-driven business with its current strategy called “Compass strategy” (developed in 2009) which aim is to make sustainable living commonplace and, meanwhile, to double the business size, whilst decreasing environmental footprint and increasing their positive social impact. Unilever produced a business model map based on “Compass” commitments. (Appendix 3) According to the Sustainable Living diagram, Unilever values its brands and a strong connection with the customers as it has a direct impact on decision-making process. No organisation or business can operate without right people and Unilever is not an exception. They believe that company’s success also lies on skilled and motivated employees who bring the best to the business operations. Unilever corporate strategy also underpins the operation processes so that every customer in low- or middle- income country can afford a particular product for a reasonable price.
Unilever marketing strategy is “Crafting brand for life” consisting of three key pillars: firstly, Unilever values its customers and allows them be at the heart of everything. For example, Dove’s campaign for Real Beauty changed existing stereotypes about beauty. Thought the work of the Dove Self Esteem Project, Unilever/Dove and other business partners created resources for the youth to help inspire them to feel good about their appearance and to reach their potential in life. (Marketing Magazine, 2014) Secondly, Unilever brand products have a clear purpose with a clear point of view. They make sure that people are aware of intended purpose of their products and are easy in use and understood. The key to Unilever’s business is to understand what people actually do with their products. Third marketing pillar is that Unilever shares emotions and magical brand experiences across the whole customer path via collaboration, cooperation and crowdsourcing. Unilever Malawi together with governments, health agencies and others, has showed the easiest way of washing hands to 130million people worldwide by producing the emotional video. Lifebuoy “Help a Child reach 5” soap advertisement has reached 6 million views in YouTube.
By 2020, Unilever is expecting to achieve its Sustainable Living Plan goals and objectives in order to drive business growth and help the world to become better. Unilever is planning to help 1 billion people to improve their health and well-being mostly in developing countries by changing hygiene habits as well as sourcing 100% of its agricultural raw materials. The main aim for the future is to produce and deliver high quality products and services without increasing environmental impacts.

3.2 Brand Analysis
According to Dahlen et al. (2010), every organisation, in every country, in every context now has a brand-building imperative instilled into their corporate strategy and modus operandi. The brand works closely with consumers’ consciousness and has an emotional appeal to the buyer during the shopping process online or in store. Unilever brands play a significant role in helping to achieve their sustainable living goals of helping more than a billion people improve their health and well-being, halving the environmental footprint of the products and sourcing 100% of agricultural raw materials sustainably. Food, personal and home care brands that Unilever owns, shape and form the Unilever brand as a whole every day. Farr (2006), determined that the top brands are described by four factors. They are all strong in terms of innovation, clear values, great customer experience and strong sector leadership. (Fill, 2011) For instance, Unilever scientists have demonstrated the way to do ice cream healthier and tasty by adding ice structuring protein which is lower in fat, sugar and calories. The launch of Unilever/Dove beauty campaign in 2004 with seven brave women showing their natural beauty, helped to build a positive relationship and trust with their customers. Valuing the worth of brands and developing the brands’ identity and equity, Unilever earns its trust, reliability and loyalty from their customers and, meanwhile, strengthen its position within the competitive market. From the semiotics perspective, each icon within the Unilever logo represents everything they do and value in the business: clothes, ice cream, spice and flavours, a bowl of food, recycle symbol, DNA and plant signs, etc.

4.0 Internal context

4.1 Organisation Corporate Identity
Nowadays the role of the employee within the branding process, and through their interface with consumers and other stakeholders, is recognised as critically important. (Fill, 2011) Unilever successfully connects with its different audiences inside and outside of organisation. Internally, the Unilever Communication team ensures that their stakeholders stay up-to-date about the business’s day to day activities. In 2011, Unilever Australia launched the new “Head of Sustainability” campaign aimed at understanding of the company’s Sustainable Living Plan amongst employees across New Zealand and Australia Unilever’s markets. (Hart, 2011) In addition, Unilever Hindustan started to empower its employees to become more involved in marketing, innovation and distribution areas by acquiring a “consumer license” to work with its brands, which requires 50 hours of communication with buyers. (WARC, 2012) The firm also runs the “Consumer Shoes” scheme where employees can trial new products. Communication between members at Unilever, wherever they are situated geographically, is undertaken by DRIP elements: to differentiate employees/groups and be persuasive, to provide information and to reinforce internal marketing communications towards corporate goals.

4.2 Culture, Value, Beliefs
Unilever is a multinational consumer goods company which operates in 190 countries such as the United Kingdom, Egypt, Africa, the US countries, Australia and others. It recruits hundreds of valuable and skilled professionals in every country and Unilever makes sure that all behaviour standards are regulated. In a fast-changing business environment, Unilever brings the value of integrity, responsibility and respect to organisation in order to guide their staff to take actions and make decisions each day. The performance-based reward structure is a good example of how Unilever recognises those who bring the best results and value to the business. Besides, Unilever believes in their future employees and provide the “Unilever Leadership Development Program” (ULDP) for graduates. During 2013, Unilever educated over 54,000 employees in English and other 14 languages. According to USLP, Unilever will continue to expand opportunities for women in the value chain by 2015.

4.3 Financial constraints
Unilever faced with high cost of financing, distribution and operations in Nigeria what drove down the profits. The company’s performance in 2013 and 2014 shows that the results are not as good as expected due to the fact that the company battles with high operating costs to remain afloat. (This Day Live, 2014) According to RTE news (2014), emerging markets, which are the key for Unilever business, have taken a dive in recent months, with Brazil sliding into recession, China facing the worst slowdown in 24 years and Russia dealing with Western sanctions over the crisis in Ukraine.

4.4 Agency suitability
Fill (2013) suggests that the marketing communications industry consists of a number of various types of organisations whose aim is to enable clients to communicate effectively and efficiently with their target audience. WPP is one of the world’s top communication services groups which include agencies like OgilvyOne, Mindshare, Young & Rubican etc. In 2010, Unilever has decided to split between three groups of agencies: WPP, Omnicom and Interpublic. In 2014, Unilever has introduced its first corporate television and digital campaign the “Bright Future Speeches” created by Ogilvy & Mather Worldwide, part of WPP. (Source: The NY Times, 2014). A number of agencies, including PR shops Edelman, Weber Shandwick, GolinHarris and digital players such as Profero, Noise and 360i have supported social media and digital marketing for various Unilever brands like Dove, Lipton and Ben & Jerry’s. (AdAge, 2014) Having the long-term relationship with the right agency partners to serve the Unilever business, enables to engage with customers globally in effective and meaningful ways.

5.0 Customer context
5.1 Segmentation characteristics

Unilever does not segment its market according to demographic characteristics as, to a large extent, age, gender or religion are not as important as geographic segmentation. Unilever has set its business in African countries (most of which are low-income) where consumers in Ghana spend just one fifth per capita on Unilever’s products than consumers in South Africa. Unilever strategy is to meet the needs of people everywhere and provide a better livelihood especially in low-income countries. For the brands like Lifebuoy, Omo, Royco soups, Unilever established a concept known as Low Unit Packs (LUP) what made it affordable for African population. The organisation geographically segments its market by continent, country, city, region, and area. Psychographic segmentation involves the analysis of customers’ activities, interests and opinions (AIO). Unilever brands find the best possible way to meet their customers’ needs, satisfaction and ability to influence them to buy particular products. For example, the dramatic results has achieved the Unilever’s Lifebuoy campaign “Help a Child Reach 5” launched in India. Research showed that India has one of the highest rates of diseases like diarrhea what motivated Unilever to improve people’s hand washing habits. Knowing the market AIO, Unilever successfully improved decision-making process of individuals and the diseases rates dropped from 36% to 5%. Unilever also segments its market by customers’ behaviour. It investigates buyer behaviour in term of lifestyle and preferences they have in different stages in their lives. The USLP encourages people to wash their hands with soap, to do laundry at low temperatures and to brush teeth twice a day. By inspiring consumers to accept brand new sustainable products, customers’ behaviour changes according their habits. For example, the Lifebuoy brand communicates to new mothers and links washing hands process with being a good mother, what is a powerful motivation.

5.2 Awareness, Perception, Attitude

Awareness of the existence of a product or business organization is necessary before purchase behaviour can be expected. (Fill, 2013) Unilever raised awareness of Seda shampoo amongst teenagers in Brazil by communicating with them through a mobile campaign. In this situation where buyers experience high involvement and are completely aware of a product’s existence, allowed Unilever to reach their target audience. Perception is defined in terms of how individuals see and make sense of their environment. Unilever/Dove real beauty campaign illustrates how successful they changed the perception of women and force them to rethink, to discuss and discover their own natural beauty. Unilever’s Five Levers for Change approach describes how the organization wants to improve the attitude of customers towards their brands and products. According to USLP, Unilever is trying to change people’s attitude toward the use of greenhouse gas by 2020. For instance, the increasing popularity of dry shampoos (Dove, Suave, TRESemme etc.), especially in the US, encourages people to reduce their use of heated water what also includes energy, water and money.

5.3 DMU characteristics and issues
Unilever, as a large and dynamic organisation with over 400 brands, has a complexity of its decisions in the market place. A large number of people are involved in the purchase processes which are also known as the decision-making unit (DMU) or the buying centre. Webster and Wind (1972) suggested a number of people who structure the buying centre: Users, Influencers, Deciders, Buyers and Gatekeepers. (Fill, 2013) The users of Unilever organisation are both employees and customers. Influencers can be found at any stage of purchasing processes such as suppliers, investors or marketers. The decider is the player who is responsible for choosing the supplier and process management, very often the decider belongs to buyer. Gatekeepers have the ability to control the information of the business organisation, for example, the media centre of Unilever. The main issue is that DMU can vary according to the complexity of the product and the degree of risk.

5.4 Levels of involvement and types of risk
Purchase decisions made by buyers change significantly, and one of the aspects thought to be key to brand choice decisions is the level of involvement a customer has with the product or the purchase process. All the products of Unilever brands, such as Persil, Lipton, Surf or Flora, are normally seen as low involvement as there is a little risk to the consumer. During the decision-making process at a store, the customer perceives ego risk about the particular products. A highly important aspect is that customer wishes to get satisfaction and meet his/her expectations about the product.

5.5 Media usage
Unilever has a range of media activities designed to provide journalists and editors with information for consumption by their audiences. In 2014, Unilever UK advertised its corporate umbrella brand on TV, as part of a global “Project Sunlight” CSR campaign with the aim to raise awareness of hygiene, food poverty and waste. Unilever also communicates with its audience via social media: LinkedIn, Facebook, Flickr, Twitter and Instagram websites. The official company’s website provides a number of press releases since 2001 to 2014 years as well as speeches and interviews. In addition to these key activities, Unilever also use sponsorship as a form of public relations. For example, in 2013, Unilever and Manchester United signed a three year regional partnership in South East Asia (Manchester United, 2013)

6.0 Evaluation, Conclusion
Unilever is an international company which came to the stage it is today. With more than 400 brands focused on health and wellbeing, no company has an impact on many people’s lives in so many different ways as Unilever. The launch of USLP in 2010 is still helping to drive profitable growth for Unilever brands, save costs and fuel innovation. Business is making an explicit positive contribution to personal and environmental issues. The context analysis critically discussed and analysed the Unilever’s current business and communication environment by providing a deep insight into company’s overall strategy.


5 thoughts on “Unilever company context analysis

  1. The Pestel shouldn’t be focus on the company because this tool is for the entire macro-environment. That’s why it’s not giving to use the good answers that we are looking for. This error means a lot !

    1. It is important to know macro – micro- environment when establishing the business. Without knowing the environment, the business will fail. Read more IMC books and it explains you exactly the same on first 10 pages. I may disappoint you, but pestle is not an error here. This report wasn’t 100% excellent i agree, but i did get a really good grade for that.
      Good luck with your findings!

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