brand vs. brand

P&G, Unilever Vie for Developing Markets

Posted by Dale Buss on July 5, 2012 01:01 PM

One of the hottest business competitions on the globe right now is Procter & Gamble vs. Unilever. And while both CPG giants — the former headquartered in America, the latter in the Netherlands — have been penalized lately for their dependence on western markets including the United States and Europe, their most important playing field has become emerging economies around the world.

And in those arenas, The Economist says that Unilever "is on the up, whereas P&G is in trouble." For evidence, look no further than Knorr Stock Pot by Unilever. More about that later.

As part of its "Fighting for the Next Billion Shoppers" special report, the magazine's profile of the battle between the CPG giants notes that economic woes in the U.S. and Europe have hit Cincinnati-based P&G harder than Rotterdam-based Unilever because it earns a greater share of revenues in those developed markets, and P&G's more-expensive brands are likely to be the subject of cutbacks by Western consumers.

P&G has been scrambling to address obstacles caused by brand pricing that generally is on the premium side, in part by pledging to cut costs by $10 billion. Meanwhile, Unilever is making bigger gains in developing markets in part because its management is more decentralized than P&G's, The Economist said, and because its product-development process is more grass-roots, meaning it's more responsive than P&G's to opportunities "on the ground" in important new markets such as China.

Unilever also leads in "distributed innovation" of advances it nurtures in one national market and then transfers to others. For example, consumers in Britain, continental Europe and Turkey have embraced Knorr Stock Pot, a bouillon jelly developed for Chinese consumers who disliked existing packaged soup, the publication noted.

Obviously, this is not a weakness P&G leadership is oblivious about; indeed, CEO Bob McDonald has pledged for some time that the company would improve its penetration of emerging markets. One recent gambit in support of that goal was  his decision to relocate P&G's global skin, cosmetics and personal-care unit from Cincinnati to Singapore, basing the business in the fast-growing Asia beauty market.

And securities analysts have pointed out that it might be risky for anyone, including Unilever, to count on P&G being disadvantaged for long.

In any event, by 2020, Unilever expects developing markets to account for 70 percent of its total sales, up from 56 percent now, while P&G's similar target is less clear; it expects developing markets to contribute 37 percent of total revenues this year, up from 34 percent in 2010.

"If [Bob McDonald] can sort out his cost problem," the magazine said, "and free up more money for marketing and innovation, especially in the developing world, P&G can rediscover its mojo."


wamai Robert Kenya says:

I come from Kenya where Unilever is far ahead of P&G. The major difference in performance apart from the fact that Unilever has more brands is historical. Kenya was a British colony so I guess the Dutch got here first. More importantly however is the perception by many American companies of the 'risk' and small market that is Africa. P&G had a factory here but closed it and now import from Egypt. The goods e.g. Pampers are not of the same quality as we used to get when they had their own factory. Importing from Egypt does have more challenges. Now in the up market segment Huggies- which has started marketing aggressively is making in roads. For P&G to succeed in the emerging markets they have to be willing to understand the markets and take the risk as well as understand the markets. They must also not have too much control form Cincinnati. Otherwise they will continue being whipped by Unilever.

July 6, 2012 03:05 AM #

Comments are closed

elsewhere on brandchannel

1 2 3 4 5 6 7 8 9
brandcameo2014 Product Placement Awards
Apple loses its crown to a new #1
Coca-ColaIt's the Journey That Matters:
Coca-Cola Opens Up With Story-Based Web Refresh
debateJoin the Debate
Is product placement a waste of money?
Arthur Chinski and Joshua Mizrahi
Model Behavior? Brands Beware
U.S. Legal Changes Impact Use of Brand Ambassadors
paperCorporate Citizenship in Canada
Fresh thinking from Interbrand
Sheryl Connelly
Sheryl Connelly

Meet Ford's Resident Futurist
Highlighting the Present—and Future—of Branding in Latin America and Iberia