Economic Crisis Brings Third World Marketing Strategies To First World

National debt has grown larger than Gross National Product. Credit ratings have fallen.

Can it happen here?

Labor force participation is at a 30-year low, and young-adult unemployment at near-record highs.

Household income is noticeably down.

So is consumer confidence.

Gasoline prices have more than doubled, and food prices, though not rising as fast, are following suit.

And the United States isn’t doing so hot either.

‘Poverty is returning to Europe’

Thanks to “continued sluggish economies and fragile consumer confidence” in developed markets, a Unilever first-half earnings statement says, European consumer shopping habits are becoming more and more like those of developing Asian nations.

Jan Zijderveld, head of Unilever’s European business, spelled it out even more starkly.

“Poverty is returning to Europe,” he declared.

Unilever is the world’s third-largest package-goods manufacturer, behind Procter & Gamble and Nestle. In addition to brands like Dove, Hellmann’s, Surf, Ben & Jerry’s, Wishbone, Knorr and Lipton, that are literally household names in the U.S., it’s a major source of consumer goods throughout both developed and developing nations.

You can’t sell profitably unless your marketing, packaging and pricing strategies fit your markets’ shopping needs, and Unilver brands have sold well and profitably in poorer Asian countries.

Now, Zijdereveld believes, it’s time to apply those strategies to Europe.

Shopping like Indonesians

“If a consumer in Spain only spends €17 when they go shopping,” he notes, “then I’m not going to be able to sell them washing powder for half their budget.”

So his company is starting to sell its European products the way they sell their Asian ones — in smaller sizes to reduce sale price while maintaining margin, and with new, low-price brands for commodities.

In Spain, for example, they started selling Surf laundry detergent in five-wash packages. In Greece it’s selling mayonnaise in small packs — along with a low-cost brand for olive oil, tea and other basics.

This directly mirrors Unilever’s developing-nation marketing model.

“In Indonesia,” says Zijderveld, “we sell individual packs of shampoo [at] 2 to 3 cents and still make decent money. We know how to do that, but in Europe we have forgotten in the years before the crisis.”

Can it happen here?

While poverty shopping patterns have traveled westward to Europe, they still haven’t crossed the Atlantic.

Here in Richmond, Virginia, USA, we’re not in crisis. Yet.

But if your business starts to run into increasing price resistance, it could pay to take a leaf from Unilever’s book, and think about breaking down your products into smaller, easier-to- afford packages, if possible.

We’re not talking about 3¢ packs of shampoo on Kroger, Food Lion or Martin’s shelves yet. But in the months ahead, contingency planning never hurts.

 

 

 

 

One Comment

  • Michael McDermott on Sep 03, 2012 Reply

    Bruce, I am still hoping that conditions won’t get so bad in the U.S. that these marketing/pricing tactics are necessary. Still, you’re on to something here that we need to pay attention to! Thanks!

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