In: Operations Management
Q2. Your consulting team has been hired by Unilever, a multinational corporation that owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Dove is a personal care brand owned by Unilever. Dove’s product lines include: antiperspirants/deodorants, body washes, beauty bars, lotions/moisturizers, hair care, and facial care products. Recently Unilever has noticed that it is losing market share in the soap product and suspects that its pricing is to blame. The company currently charges $1.20/bar for the Dove soap as opposed to $1.00/bar for the Safeguard soap charged by major competitor Procter & Gamble Co.. Should Unilever lower its price to $1.00? (MM 40)
Instead of lowering its price to increase sales, the company should invest in educating the customers and prospective customers of target groups about the inherent properties of the product which make it worthy of commanding a premium over its rivals. The effort should be to create a premium market position of the product, so that the cutomers don't mind paying a premium of $0.2 for added benefits that come along with purchase in comparison to the competitive product. This unique image and market position can be established with help of different modes of customer communication, engagement and branding exercise. Lowering of price is not advisable as it will deprive the brand "dove" of that exclusive and premier feel. Instead, the message should be " we don't compromise on the quality of our products and are committed to provide the best experince to our customers". By adopting this strategy, the company will be able to place its products a notch above competition in customers' minds. Branding and effective customer communication exercise must compelemt this effort.