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6.8.2010 Unilever gains from advertising and innovation

Unilever, the FMCG giant, is focusing on advertising and innovation to build brand equity with consumers, reducing its reliance on low prices as a result.

The maker of Ben & Jerry's, Surf and Vaseline boosted its investment in advertising and promotions by 180 basis points in the last quarter, an approach also followed by rivals Procter & Gamble and Reckitt Benckiser.

"Despite the significant step up in competitive pressure ... A&P levels have been stepped up considerably," said its chief executive, Paul Polman.

"We've actually increased it in the absolute, despite the lower cost of media on some things ... so the increase is probably bigger than the numbers show."

Unilever's recent activity in this area has included a $300m (e227m; £189m) partnership with Time Warner covering online, print and TV, and embracing everything from traditional ads to branded content.

"The bulk of our A&P is behind the A, not the P ... so it is long-term equity building and that is paying off for us," he said. "I think we're now more or less at competitive levels [and] I don't see us going down."

While key battlegrounds like China and India demand heightened marketing budgets, an uptick in expenditure equally paid dividends in Europe, where the trading climate is particularly austere.

Innovation has proved a primary factor behind Unilever's ad spend growth, with launches like Dove for Men, Knorr Stock Pots and variants of Magnum ice cream being unveiled in at least 30 nations simultaneously.

"We will continue to focus on driving our innovations, focusing on our core brands ... The winners will be the ones that innovate smartly. And that's what we remain focused on."

The company is "renewing" around a third of its portfolio - a process which includes brands such as Timotei shampoo in the UK - in an effort to ensure it remains relevant and attractive to shoppers.

Similarly, existing offerings have been extended into countries for the first time, such as Lifebuoy soap in parts of Latin America, Cif cleaner in India and Domestos bleach in Italy.

B.L.6.8.2010