Strategy Standoff #8: Unilever

Unilever: Mission or Margin?

Unilever is an old margarine and soap company that grew into one of the world's largest consumer goods firms on the back of one lofty goal: to make its brands famous around the world.

But as the company embraced a bold new vision to link its brands to social and environmental purposes, it sparked both admiration and skepticism.

Now, with a new CEO at the helm, the company faces a pivotal choice.

Two paths lie ahead. One with a mission-driven heart, the other with a no-nonsense, back-to-basics approach.

In this month's Strategy Standoff, will Unilever stay the course, continuing to champion social purpose? Or will it return to its roots, focusing on the fundamentals of product, price, and performance?

In the last few years, Unilever linked all its brands to social purposes.? Under its Sustainable Living Model, they said brands attached to social purpose drove 75% of their growth.? Seven of Unilever's top ten brands, including Dove, Knorr, and Hellmann’s, were touted as examples.?

However, skeptics in the analyst community pointed to Unilever’s poor share price and total shareholder return. Meanwhile, Hellmann’s mayonnaise had a mission to inspire resourcefulness (reduce food waste).?

One scallywag suggested the purpose of mayonnaise might just be to make sandwiches taste better!

This week’s Strategy Standoff:

In 2023 Unilever hired a new CEO, Hein Schumacher. He faced a strategic decision: should Unilever maintain the purpose-first approach driving growth or should it revert to traditional brand management and keep the analysts happy?

Strategy A: Push For Purpose

Persist in attaching a social purpose to all Unilever brands.

Younger customers in rich markets care about a company's social and environmental stance.? Purpose-led brands are behind most of the sales growth at Unilever.? And the success of campaigns like Dove Real Beauty?show how purpose creates brand differentiation.

What’s not to love?? On the other hand, do Unilever's consumers in developing markets care about purpose, and does this approach neglect the basics of marketing that were the foundation of Unilever for a century?

Strategy B: Branded Basics

Branded Basics – return to 4P basics (product, packaging, price and positioning)

Unilever could refocus on product attributes (taste, quality), innovation, distribution, and price as drivers of consumer choice.? This move might quieten the analysts crowing about purpose fatigue but it might alienate consumers who prefer brands aligned with their personal values.

This approach would also mean walking away from the growth formula they discovered and a middle finger to the old executive team and CEO.

So, Which Did They Choose?

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Strategy Standoff