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Unilever's Butter-Beater: Innovation for Global
In the spring of 1997, Willem ("Bill") Bordewijk, member of Unilever's management committee,
sat in his Rotterdam office reconsidering the new international approach for new product
development he had been promoting. Unilever was one of the world's largest foods manufacturers,
offering a huge variety of branded products in nearly every country in the world. Unilever was
comprised of literally hundreds of organizationally distinct operating companies, most of which had
been acquired at various points in its history. Whereas these businesses historically had pursued
product development and branding strategies independently, Bordewijk and his colleagues in "the
center" -- Unilever's corporate offices -- were anxioLls to move to a more centralized management
model. Their goal was to better leverage the company's fixed investments in brands, new product
development and manufacturing capability across multiple even global -- markets, while not
sacrificing the local responsiveness that they deemed to be a core Unilever strength.
Unilever Foods' first attempt to follow this approach, with "Krona," a new cream-spread product,
had initially seemed promising. The concept originated in the newly formed international committee
for "yellow fats" - Unilever's umbrella term for margarines and spreads. A team had then developed
and launched the product in Germany, using that country as a test market: the intent was that if the
prod LIct was successful, it would be rolled out internationally. Krona was a success in Germany:
within its first year on the market, 3,700 tons had been sold, exceeding sales forecasts. Now,
hov\"ever, after two successful years in the German market, Krona had still not been launched in other
European countries because of disappointing test results in those venues. Bordewijk was concerned
about the apparent lack of cooperation by the managers in Unilever subsidiaries, and worried that
Germany had possibly played too dominant a role during Krona's development, ignoring the input
of managers in other countries. Thus, despite a which managers across
had deemed to be whether Krona would
become an international SLlccess.
Company Background
698-017 Unilever's Butter-Beater: lnnuvation for Global Diversity
company marketed over thousand brands,
well-known names which
cosmetics, and
Vaseline-brand skin lotions, The
foods tea, ice cream,
induded such
constituted 70
,;, of food sales, UniJever was manufacturer, Its
European brands included Rama, Blue Band, North American brands
included Imperial, Promise, Country and I-Can't-Believe-It's-Not-ButteL The
North American its Van den Bergh Foods unit, had been
particularly successful, In the rapidly grovving low-fat health-oriented product segment, for
example, Unilever brands, all of which had been introduced to the market vyithin the last
occupied nearly 80% of the space allocated to that in most supermarkets.
Historical Growth by Acquisition
The foods market in Europe was mature, and total growth was definitionally limited to the rate of
population growth. Unilever's goal to illcrease profits by increasing sales and reducing costs in this
low-growth environment had led to an aggressive acquisition effort in recent years. Within the past
two years alone it had acquired 65 companies (see Exhibit 1). The result of this strategy was a
diverse portfolio of mostly local brands in different categories. In comparison with Nestle, its main
competitor in foods, most of Unilever's brands had no corporate identity, sllch as a common
"umbrella" nan1e.
Unilever often described itself as "international" rather than "global," because it did not attempt
to enter all markets with the same product. Since half of the company's business was in food, a local
view was often necessary. The belief of most UniJever executives was that only a few food products-
like tea and olive oil- could successfully cross national or regional borders. There might be a world
standard in high fashion, but not in the daily diet. They saw Unilever's deep local knowledge of local
consumers as a strongly positive heritage of its acquisitions strategy.
Unilever's local operating companies had a high degree of independence in day-tn-day
operations. The people closest to each market had power to make decisions and could therefore
respond quickly to local trends and needs. Hence, UniJever could be more responsive to local
differences than many of its more centralized competitors such as Procter & Gamble, Nestle,
Kraft/General and Kao.
Despite this local , Unilever nonetheless had a
around the to them the and npr"f1PC
a of environments. Bill
but had served stints in the
of its managers
come from in
Unilever in his native Holland,
Canada and the Netherlands.
a before
Unilever's Buller-Beater: Innovation for Global Diversity 698-017
in local economies in
could Unilcyer had
added two ne"\' institutions to its organizational structure. Business
had been set LIp in 1996. These business groups were to support the collaboration of
dealing with similar food in the same For European Unilever
whose business was ice cream or frozen to the Ice Cream and
Frozen Foods which acted as a coordinative and information-sharing In addition,
Boards" were established to support central coordination and global knowledge transfer
across different countries. Unilever's executives identified 13 significant
product categories that they felt would benefit from central coordination in new product
development. These included ice cream, yellow fats & spreads (e.g., margarine, butter, peanut
butter) and frozen foods. The Category Boards worked with Business Croups on common issues of
international relevance. These institutions created additional pathways for communication and
coordination across geographic markets and product categories.
To complement the Category Boards, Unilever had created Innovation Centers (ICs) for its foods
business in 1995 to concentrate resources for innovation and to support global development. In this
new structure of innovation centers, each country was aSSigned to specialize on a particular category
for new product development. In yellow fats, for example, three such centers were established in
Europe: The "IC Taste" in Hamburg was charged to develop new spreads that were innovatiye along
the taste dimension; the "IC Kitchen" in Rotterdam focused on spreads that be more
convenient in cooking, and the "IC Health" in Crawley, England was to develop innovative spreads
targeted at health-conscious consumers. The development teams at each IC were to collect and
synthesize inputs from each European country, so that the products they developed could be sold
with minimal local customization in each market. A central research organization in Vlaardingen,
near Rotterdam, supported the advanced technology needs of the innovation centers.
These new organizational structures forced country managers to consider both international
strategy and the diverse needs of other countries in developing and commercializing new products,
and contrasted sharply to the previous locally autonomous structure.
The arguments in favor of international coordination rested in the company's economics
particularly in manufacturing (see Exhibits 2 and 3). I30rdewijk believed that with so many local
companies and brands, Unilever's factories were sub-scale and competitively inefficient. He and
other champions for centralization of product development, manufacturing and marketing
felt that costs could be lowered by h,wing global products and higher volumes per brand.
Investments in brands and manufacturing assets were indeed substantial, and in the
absence of significant grmvth in foods markets, saw better central coordination as a
to continued improvement.
698-017 Unilever'g Butter-Bealer: Innovation for Global Diversity
Innovation Center.
One of the tenets of the rPM was "Less Is More" -- a belief that if Unilever did not
overload its development teams with too many projects, they would become much more productive.
Some development managers were frustrated that as they attempted to implement the
]PM mandate to "v,'eed out" the excess number of development projects that were clogging
their development funnels, mandates from regional management to harmonize de\'eJopment
initiatives across country borders were to the project workload. "We've cut way back on the
number of new products we're trying to develop," noted one manager in the company's Swedish
subsidiary. But we have more projects consuming the time of our people because of requests from
the Innovation Centres that vve harmonise our products with others in the region. As a result, [ think
we've become slower, not faster, in product development."
The New International COllcept for Food Products
Unilever had fewer international foods brands in its portfolio than detergents or personal care
products. This was partially due to the company's heritage, of having acquired a vast array of
companies, brands and products. There were also some genuine differences in the attitudes of
consumers towards particular types of foods, which were deeply rooted in the cultures of different
European countries (see Exhibit 4). While coping with this diversity was particularly vexing for
foods makers, even manufacturers of seemingly "standard" products such as laundry detergents had
to cope with significant habitual differences across countries (see Exhibit 5). In the past, Unilever
had addressed this diversity through local companies which had independently developed products
tailored to local traditions. The result was not only local brands but managers who had considerable
freedom in selecting which product lines to pursue and what targets to set. Occasionally this meant
that similar products were developed in parallel in different countries, however.
There seemed to be conflicting evidence about whether a globally or regionally managed foods
company would be more successful than a locally organized one. There were some food products
(mostly produced by competing firms) whose manufacturers seemed to have been able to overcome
the power of local taste and tradition in order to create relatively uniform regional or global
products and brands. Exhibit 6). Unilever's main Nestle, Procter & Gamble, Jacobs-
Kraft-Suchard and !\1ars, indeed were all more centralized in manufacturing and had strong global
such as Nescafe and Even Unilever had introduced some food
Butter-Beater: Innovation for Global Diversity
The Development of "Krona"
worsej Unilever
market To renew its the company faced two broad
which would have to grow LV11,,...,<t;;t
<:pcrrr""nr as POi5SllJle.
ny"''',,hilc. in the short term, not
that would
fats market seemed obvious.
Market surveys conducted in that fat sales were because
health consciousness was pf<Jmptjin fat. were eaten without
Although many
new less fat, attitudes towards these were rather it was
deemed not enjoyablej not essential for nourishment, and (in Germany) not "natural" -- findings that
implied an opportunity for a healthy, more natural but good-tasting product. The
management established a "Novel task force to develop internationally feasible
alternative Peter Brohmeyer, marketing director in Germany, oversaw this team, which
included marketing, market research and development managers from six different countries. This
group synthesized inputs from each of Unilever's European foods subsidiaries.
The task force developed several novel spread concepts and presented these to the category
boardj which selected five as international possibilities. One was a "butter-beater" product, called
which held the of the cornerstone of a new product ""torn",""
at Union Deutsche Lebensmittelwerke
the to
The Krona from focus group research in
were uncertain about the benefits both butter and
698-017 Unilever's Butter-Beater: Innovation for Global Diversity
made from cream rather than a and
better than low-fat butter alternatives. Yet it contained
The team
An international
meet monthly to
excited about the
butter and fit with the international
from the
to be UDL
the shortest possible time, as requested from the r;!,-pUl)n
Positioning Krona in the German Spreads Market
and tasted
in and
a real alternative to
and to do so within
In Germany, 95(h) of the population of 80 million people used butter or margarine (including low-
fat margarines) as a spread on bread; about 60% of these consumers also used alternative
such as cream cheese. Of the total spreads volume of 830,000 tons, butter represented 44(yo and
margarines 55%. While the trend for margarines and butter was declining, the smaller market for
alternative spreads, especially for "spreadable cream products" (6,600 tons in 1994) was growing fast.
In 1994, Krona was tested with different positioning approaches in existing product segments: as
ne\v alternative close to butter, to margarine, to cream-cheese, to curd, to creme fraiche, and to sweet
spreads. To test these positioning alternatives, the same product was given to different focus groups
with packaging and explanations that caused consumers to associate the product as an alternative or
derivative product within existing categories or as a new category. From this research, the approach
that attacked butter directly-the "butter beater"-was chosen. The idea was to offer an attractive
alternative to butter rather than to imitate butter. Team members referred to this as "benchbreaking"
rather than "benchmarking".
Next, a plastic tub package that emphasized the product's difference from existing butter-
alternatives was designed (see Exhibit 7); a purchase price 30% higher than butter was set; and an
advertising campaign was created. An extensive market research program followed, including
concept-product tests (quantitative), advertising previews, and a microtest
for consumer acceptance
and volume estimation. The result looked very promising. Nevertheless, results also showed that the
product's perceived uniqueness was rather low: consumers could not reallv say what was so special
about Krona. The project team felt that this could be improved the right ad\'ertising, however.
As a result of this research, the German team also decided not to position Krona as a low-fat
As Peter Brohmeyer pointed out, "Excellent taste and Imv-fat content are believed in
and manv countries to be . If we had the
benefit of people would not have believed that it tastes much better than low-fat
v\'hich \vere attacked the media because of their lack of taste and their
Vnilever's Butter-Beater: Innovation for Global Diversity 698-017
In October and the
and Before it in the German
had to be coordinated across to ensure a smooth
roll-out across the continent.
As a first the team had to reconsider the brand name. The trademark "Krona" had been
tested in but other held trademarks for that name in several other
European countries. For the first time, the team had to with the European
several names were tested but many were not internationally feasible. ";Vlorgen" was a known
Unilever brand in several countries, but tests showed that it in it was perceived to be a
cheese. In the end, the team decided that the product would have to have different local brand
names. "If there was no best solution for Europe then we should take the best solution for Germany
as the test market" recalled one member. The product would be introduced in Germanv as Krona.
Later, the name \vould be adapted in other countries as needed.
The struggle with international diversity continued in devising a common advertising concept.
The bread types on which to spread Krona were as different in each of the countries as were
spreading behaviors (the French preferred to dip their baguettes, the English liked toast, and so on).
The German team together with the advertising coordinator from the center and an international
team from an advertising agency finally created a commercial that emphasized Krona's unique taste.
The concept, "Krona changes history" \vas selected from a pool of 25 ideas because it was perceived
as a good campaign for Germany and was internationally viable as well.
The German Launch
fn September 1995, Krona was introduced in Germany \vith great fanfare and a substantial
marketing budget. The response was even more positive than forecast. "The supply could hardly
meet the demand, and commercials had to be delayed as supermarkets temporarily ran out of stock,"
a member of the German team recalled. By the end of 1995, 700 tons of Krona had been sold, and the
product was stocked in 78'/" of retail outlets. Even discounters (with their strong limits on product
line breadth) carried Krona because of its good turnover. By the end of 1996, 3,700 tons had been sold,
and sales of 7000 tons were expected in 1997 -- in line with the microtest forecast. In the small
segment of "spreadable cream products" Krona had achieved a market share of 53%. According to
market research, 46% of Krona volume came from butter, 22% had been drawn from margarine, and
11", from cream cheese. Only 1 '\, of customers had been users of other novel spreads. Even
a small share of the Krona volume seemed to have cannibalized other UDL
N",,,j',,,,,rn was reflected in a rate of 50'\,.
Krona won Unilever's Internal Innovation and the Cerman
;:'W,c.t:::,,,,. The first of the
an international
. the international roll-out
The Tortuous Transfer of Success
Members of the Cerman team, the Unilever center, felt that a
launch in several the launch of Krona in
Now the
698-017 Unilever's Butter-Be,,!er: Innovation for Global Diversity
managers in those
Van den
N noted Britta
unattractive sales and and
unenthusiastic about the
The market structure and consumer attitudes toward in the Netherlands were different
from those in Germany. Butter had a market share of only 1 3 ' ~ ) v\'hereas margarine had 87% of the
total yellow fats annual \'olume of 196,000 tons ]994), Butter 'was also perceived as very unhealthy
and full of fat: the Dutch did not share the Germans' perception that butter was more natural and
therefore more healthful. Because of these factors, VdBN's Yellow Fats development and marketing
staffs, located in Unilever's colorful, art-filled Center for Product Innovation in Rotterdam, initially
had been very enthusiastic about the Krona concept. As the formal co-development center for Krona,
they had formed their own team to shape the concept for the Dutch consumer.
It soon became clear, however, that their ideas were diverging from those of the German team,
One manager recalled, "We really believed in the project but were frustrated, But it wasn't long
before people on our team were coming into my office pulling out their hair saying, 'The Germans
are not listening to us, It 'will never work unless ~ w e get Germany to change it.'" Increasingly, it
appeared that because Krona had been developed in Germany, the Netherlands team would have to
adapt not only the product formulation, but the entire marketing mix to the unique tastes and
competitive characteristics of its market.
This rocky beginning led to even greater obstacles to launch, when microtest results conducted by
VdBN were decidedly negative, Opinions were mixed about why the concept. which initially
generated such excitement, novv seemed to have fallen so flat in the Netherlands.
"It is important to determine up front what the criteria for success and roll-out are," said Neil
Braams, general manager for VdBN's Yellow Fats business, "Some people here question whether
Krona really is a success. Based on Germany's microtest of 4,000 tonnes, I would not have launched n
totally new brand here in the Netherlands, The high investment in advertising would not make an
attractive business case, I am not sure what sort of trading contribution! the brand makes in
Germany," Because the volumes projected by the microtest were too low to justify establishing a new
brand in the Netherlands, opinions within VdBNL management began to align around integrating
the Krona concept into an brand as a line extension,
Another reason for the poor microtest results was that in the German market there was
already a reference point in butter alternatives for consumers, such as the brand
which had been in the albeit in small for some time, In the Netherlands there was
not e\en a nascent white creamy have to be
educated about \vhat Krona is and what the of sllch a new are
money/' another team clear ,vhether this
volume or vvill niche, Is the risk of
the hdd taken to establish
had been
in the most recent three years that sales had grown to meet
Unilever's Butter-Beater: Innovation for Global Diversity
consumers' needs. This
enthusiasm for Krona
innovation but f,ovn,,,,c
which then divided
and several
seemed verv volume was
declining and its managers felt pressure to near term incremental sales from
v\ Il1 " I'd sum it up this way," noted a team member in Rotterdam. "The Krona concept
just does not promise to be a big success in the short run, and there are better options available."
"vVhen the microtest was carried out, I think we probably wanted to prove that it would not
work," another team member concluded.
Despite these concerns, VdBNL marketers wzmted to continue to explore the Krona concept with a
low level of resource investment, to finalize their views about vvhether the had any chance
for sllccess in the Netherlands. If positive evidence emerged, they planned to adapt Krona to their
own situation and learn from the Germans' experience.
The British Perspective
As in the Netherlands, there was no alternative segment for cream spreads yet established in the
UK. The total market for all spreads was 480,000 tons -- with butter representing 24%, and margarine
and other spreads 76(7. .. Van den Bergh Foods' margarine brands, whose market share was 45(/:, of the
margarine category, included Flora, r Can't Believe It's Not Butter!, Stork and Olivio. Although the
use of butter and margarine was declining, UK marketers were not sure whether a significant new
product category could be establisht'Ci. As marketing manager Gillian Herrera-Heys worried, "The
trend might develop, but at the moment only 6% of consumers use alternative spreads. You haye to
get on retailers' shelves quickly, and if YOll don't succeed from the beginning they will kick YOLl out.
You need to have a strong proposition from the outset. There's little time to educate consumers
about what Krona is." Indeed, the dynamics of the UK foods market were dominated by its two
massive retail chains, Sainsbury's and Tesco. Both were devoting increasing amounts of shelf space
to their own store brands, in which they could generally earn greater margins than they could on
sales of high priced, more heavily advertised branded products.
They consequently applied
significant pricing pressure on their suppliers of branded products, and dropped SKUs
which did not meet their for profit margin per meter of shelf space.
recalled his involvement with Krona: "The IC taste idea to have a new
for the UK. An alternative
The VdBF
698-017 Unilever's Buller-Beater: Innovation for Global Diversity
tn local conditions: the
that additional salt \vas added to
taken as been in for international
markets, the UK team did no further of these concepts in focus groups; the first evaluation
was the microtest, and the results were very disappointing. The number of people attracted to buy
Vive la Vie was below average, and after a test the percentage of people who liked the
product was low. The main dislikes were the tlavor, the short refrigerator life product had to be
consumed within five after being opened), and the texture. Based on this test, sales
volume was forecast to be 590 tons in the first year, declining to 430 in ongoing vears.
Research International, which had conducted the microtest, concluded, "The product was
specifically assessed on each of the main usage factors and none of these generated a satisfactory
performance rating. \Ne feel it is therefore reasonable to conclude that, ,,>'hilst trial could be increased
via positioning/ inducement, the product would still fail to generate satisfactory adoption."
Gillian Herrera-Heys offered her interpretation: "Customers perceived no clear advantage of
Krona; they didn't understand the product's difference. It wasn't matching their expectations: they
were expecting a multi-purpose spread. Krona has to be used additionally to other spreads in the
kitchen. They already have to stock margarine in the refrigerator. :vIany also stock butter. What
reason is there for them to stock yet another product? Either it must be a multi-use product, or people
need to see a clear, particular occasion on which to use it."
"As long as we are uncertain about what kind of product Krona is, how should we expect
consumers to understand it?" noted another team member, Manfred (Fred) Dudley. But Dudley also
saw a caveat in the microtest results: "In the test you can't separate the product from the marketing
mix, or the marketing mix from the market. Maybe the results were attributable to Krona's marketing
concept being insufficiently adapted to our situation."
There was, in fact, some sentiment within Unilever that the results of a microtest could be
influenced by the energy and enthusiasm of a product's champion de\'oted to finding a flavor variant
and marketing mix that could appeal to consumers in a particular market. vVhile more effort could
have been made to find something that could work in the UK, given that the product was such a
success in Germany! the poor initial test results reduced the team's incentive to invest additional time
in Krona. Moreover, they had other priorities. It was their mission to develop internationally usable
spreads targeted at the health-conscious consumers, and they developing new healthful margarines
that would be tested first in the UK market and later rolled out internationallv.
'The lesson we have learned from which we will trv to
is to have more international im'olvement up-front in
on the and before we one team member. "For
some reason, the international the Krona team collected in the
made little difference results."
Krona vI/as launched in Austria
Unilever's Austrian was
its resources were
the Krona launch with an in-store
program. The television ads broadcast on German
television stations that could be received in Austria. sales volumes
Unilever's Butter-Beater: Innovation for Global Diversity 698-017
countries' cultures are Unilever's
the little momentum in Unilever's
French and Swedish subsidiaries.
Although Krona was a success in the German team felt that the to a
multinational product had not been met. the new with an international team
that had on the Krona concept in the beginning, the results after the development of Krona
were as national as ever before. A new nationally successful brand had been created that probably
would not gain high volumes across Europe.
Opinions about how Unilever ought to respond to these developments differed significantly.
Peter Brohmeyer, the German team leader, noted, "We realize even more now, that the diverse
cultures in the European countries lead to enormous differences in consumers' preferences. You can't
assume that if you have good results in Germany, the European potential is similar. It is still different
and we have to take this into consideration for our strategies."
Some, however, were convinced that Krona was interniltionally adaptable and could be successful
in the other countries. It was just that local managers had not wanted to cooperate: "It's the not-
invented-here syndrome, plain and simple" another posited. "The negative test results were an
excuse for not having to support a product from another country. Another German team member
was more forgiving: "It's not bad will on the part of these managers. They just have other priorities."
Another interpretation that had considerable support in Hamburg was that Unilever's budgeting
system impeded international roll-out. There was no international budget for market introductions
in the various countries. The German team had been given a higher budget for international product
development and advertising, but the financial risks of market introduction were carried by each
country on its own. High costs for advertising in the first year of launching a new brand, for
example, could significantly lower the year's profit of the local company, if sales of the product were
There was more unanimity about whether more intense involvement of other countries during the
development phase would have been a good idea. or would do it the same way again," concluded
one team member. "It is not a good idea to develop for multinational needs in the first " said
another. "Make it successful for your mvn country and then roll it out to Europe. Don't compromise
in the beginning. The is to fail in your own because then you could not
motivate other countries to follow. The that will create excitement in other countries is
success in the of first launch." concurred: "You would lose
resources, and it would more than double the time of to to the
needs in the " One also realized that some of the members of the international
team, who had to the and had meanwhile left company had been
within Unilever.
Another "'Jovv
don't can love it or lec1Ve it."
698-017 Unilever's Butter-Beater: Innovation for Global Diversity
The Future
For the first time in the Onilever Yellow
for other
on local
countries a multinational and different countries had
of it. had learned about the cultural differences
it was clear to all members that the process of
if Onilever wanted to
branding and manufacturing.
and But something was wrong
more time was needed for
with the entire process. As Bill
Bordewijk pondered the Krona he puzzled over a series of
Was the of a Europe-wide alternative product not feasible? It had been
supported by market studies showing a common opportunity gap and e\'eryone had agreed
on that in the beginning. Was successful implementation just a matter of getting the details of
the process for local adaptation right?
Was Unilever's organizational structure the main problem? Did the different countries, each
with a different focus, have no incentives to cooperate? Did the local freedom that had been
part of Unilever's history not work with an international How should the company
evolve to become a global player?
Should there have been more integration between the lead-country developing the product
and the other countries? While the general steps that Germany took were agreed in the
international team, there was no international commitment for coordination of details. Was it
a good idea to set the first milestone (microtest) at the end of the whole process? Would it
make sense to have earlier milestones where managers of the different countries have a
chance to approve issues beyond the general concept before it goes too far forward?
Is there a compelling rationale for attempting to regionalize or globalize product
de\'elopment? Would global products and brands really lower the costs of local introduction?
What was the financial leverage for developing such products?
Unilever's Butler-Beater: Innovation for Global Diversity
Exhibit 1 ,",pl:prlrpcl Unilever 1496
Unilever made
Helene Curtis
Lyons Ireland
Van Lieshout
Pittihela/Helados Unidos
in 1996, These included:
Hair Care and Deodorants
Industrial and Institutional Cleaning Products and Services
Tomatoes, Fruits and Vegetables in Chile
Tea in Ireland
Detergents and Yellow Fats in Panama
Frozen Bakery in France
Meat snacks in the Netherlands
Ice Cream in Ecuador
Ice Cream in Pakistan
Fabrics in China
Detergents and Yellow Fats in Paraguay
Detergents in Israel
Unilever made 38 acquisitions in 1995, The most important were:
British Arkady
Glidat Strauss
Industries Pacocha
Mustard, condiments and dry sauces in UK
Frozen fish in USA
Skin care and soap in China and South East Asia
Institutional detergents in USA
Bakery materials primarily in UK and Germany
Fabric softener in Argentina
Ice cream in Israel
Tea in Chile
Yellow fats, soaps and toiletries in Peru
the Netherlands
698-017 Vnilever's Butter-Beater: Innovation for Global Diversity
Exhibit 2 Cost Structure of Unilever in
Turnover 100
Cost of goods sold 55
Raw materials 33
Direct conversion (manufacturing) costs 8
Packaging costs 8
Indirect (manufacturing overhead) costs
Total cost of goods sold 55
Selling expenses 13
Advertising & promotion 11
Cost of producing advertisements 2
Costs of media buys and promotions
Total cost of advertising and promotion 11
Research and product development 2
General & Administrative
Total costs 92
Operating profit 8
Net profit after tax 5
Note: Unilever officials felt that harmonizing its products sold throughout Europe would improve
manufacturing costs. They noted, for example. that whereas the company's comparably-sized yellow
fats operation in the United States sourced product and packaging materials from three suppliers, its
combined European operations utilized 118 suppliers. ,"'Ollrce (.nilel'et' {JllIllw/jinIJncia/ reports.
Exhibit 3 Introduction Costs for Food Products (During time period from idea
market launch, in millions of dollars)
manufacturing (fixed
& promotion
be a.::commodated
New Category Product
$3 SOA
$7 S 0.2
$13 $3
2-3 years months
$ 0.05
$ 0.5
6 months
Unilever's Butter-Beater: Innuvation fur Global Diversity 698-017
Exhibit 4 Differences in Attitudes on Issues about Butter and in Selected Countries
698-017 Unilever's Butter-Beater: Innovation for Global Diversity
Exhibit 5 about Procter & Gamble's Launch of its New in
the of Procter & Gamble had to decide about the launch of "Vizir", a new
as a standardized product in At that time the market for
and "Vizir" would therefore have to establish a new
the management team, whether to launch the product as a standardized
different were diverse, Advocates of the Eurobrand cited numerous
There were nine different Dash (another detergent of P&G) formulas in Europe, Another
product was sold in nine sizes throughout Europe, To go to a single formula, standard-size
and multilingual labels could save the company millions of dollars in mold costs, line downtime for
changeovers, sourcing flexibility, and reduced inventory levels,
Country general managers, in contrast, pointed out that the could easily be offset by the
problems that standardization would create, Some of their comments were:
We hm'e to listen to the consumer, In hlind tests in my market, thaI peljiltlle cannot even aehiel'e break-el'en
The whole detergent market is in 2-kilo packs in Holland. To go to European standard of 3-kg and 5 -kg si::es
ll'ould be a disaster/or liS,
We hare ilf'O phosphate laws in Italy thai constrain 0111' prodlletformula, Alld lrejlls/ don't hare hypermarkets,
like France or Germany, 1l'here YOII can drop of pallet loadl',
There is no slieh thing as a ElirOclistomer, so it makes no sense to talk about Eurohrandl', We hare an l:'nglish
hOllselrife whose needs are different ji'om a German hau!JFall, filf'l! /1Im'e to a system that allOlrs liS to blllr our
thinking. Ire will hare hig problems,
Product stalldardi::ation sets lip pressures to meet evelybody 's l 1 e e d ~ (in If'hich casc, )'011 huild a Rolls Royce
that nobody can (dford) and c(}unterrailing pressures tojind the IOlrest-common-del1omill(JlOr product (in
which case you make a prodllct that sati,ljies Ilobody and that canNot compele ill allY market), These pressures
result in thej(ml middle compromise that is so ojfen the olilcollle ofcolllmitlee decision.
" J illS
Unilevers Butter-Beater: Innuvatiun fur Glubal
cheese 2 2.34
5,3 2.08
yogurt 2 6.6 2.00
cream cheese 2,04
butter 1.38
"Philadelphia" brand cream
cheese 5 8 8 8.8 1.11
"Nutella" brand chocolate
spread 7 3 13 9.0 1.15
desserts 1,77
cookies 2,65
7 2 7.4 1.75
10 3 7.8 1.87
6 13 9.1 1 ,21
6 18 9.5 0.92
698-017 Unilever's Bulter-Beater: Innovation for Global Diversity
Product Std. Dev.
mustard 4 9 4 6.0 2.01
mayonnaise 7 5 7.0 1.58
5 8.0 1.35
oil 2 2 8.5 1.57
Worcester sauce 2 8.9 1.60
sausages 2 2 3.6 2.09
salami 2 5.3
canned meat 3 6.0 2.38
fresh fish 6 6.6 2.33
frozen fish 5 3 7.4 2.06
frozen dinners and entrees 4 3 5 7 3 2
sauces 7 2 5 7
canned soups 4 6 5 4
soups (dry mixes) 6 2 4 5
pasta sauces 2 5 4
frozen pizza 4 5
oriental (e.g. Ramen) noodles 4 3
pasta noodles 2
canned vegetables 2 5 6 2 4 3 6.6 2.74
frozen green beans 2 3 5 9 5 8.2 1.61
bread 5 3 5 4 4 3 2 3.9 2.32
jams/preserves (specialty) 2 5 3 10 3 3 6.0 2.17
jams/preserves (basic
3 5 4 4 6 6.9 2.00
2 2 2 4 7 6 4 7.6 2.02
Un;J ever s Butter-Beater: Innovation for C loba l Di versity 698-01 7
Exhibit 7 Top Vi ew of the Krona Package Designed for the German Market

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