Henkel Case

WHY ARE UNILEVER AND P&G HARMONIZING THEIR BRAND PORTFOLIO?

The globalization of markets and the growth of competition on a global scale have caused companies to increasingly expand the geographic scope of their operations. With the spread of global and regional media, the development of international retailing and the vast movement of people, products and services across national borders, markets are becoming more integrated. Because of this, companies need to pay more attention to the coordination and integration of their marketing strategy across markets. Brands need to establish a rationale for harmonizing brand decisions at different levels within their organization and across different geographic locations, reevaluating their international brand architecture. Having a solid branding policy could help establish it in the marketplace, develop a solid customer base and provide a weapon to fight against the retailers’ power.

For Unilever and P&G, there were several reasons why they looked into harmonizing their brand portfolio. The first was the concentration of resources on a smaller portfolio of global power brands, thus decreasing the complexity in the portfolio as well as costs. The second was production savings accrued from the reduction of the number of SKUs that had to be handled. A third reason was that market expenditures in consumer advertising had declined from 60-45% and harmonizing the portfolio would help decrease the dilution of budgets across many brands. A fourth reason was because it was a pressure that they were receiving, especially because European retailers were consolidating. Retailers wanted to create regional listings of a limited number of strong, well-supported global brands. International accounts represented already 50% of their sales in Western Europe. This was also magnified by the economic convergence and the rise of the Euro as a shared currency across the Eurozone. This brought price harmonization and transparency...