Unilever, the consumer goods group, is prioritising advertising and branding over promotions as it pursues a long term growth strategy, despite the challenging financial climate.
Jean-Marc Huët, Unilevers chief financial officer, argued the pressure on disposable income in Western Europe and North America, combined with rising commodity costs and intense competition in emerging markets, posed significant obstacles. However, he added the organisation would not let economic fluctuations prove a distraction from its overarching focus on innovation, new market launches and brand building.
Huët said on a conference call:
In practice, this means continuing to invest behind our brands that are so vital to our future. To be absolutely clear, we will not take short term actions that could damage the health of our brands over the long term.
As part of this process, Unilever has maintained the balance between its spending on advertising and the investment made in promotions. Huët:
I am very pleased with the trends on where we are spending our A&P. And its usually two-thirds, one-thirds and it hasnt really changed over the last 12 months. Importantly, were driving more effectiveness, so we are getting more of a bang for our buck.
Such initiatives have also helped the company avoid passing on uniform price increases to consumers, many of which may opt to trade down rather than pay more.
Elsewhere, Unilever has attempted to transform a negative environment into a positive one by closely scrutinising all aspects of its operations. As an example of this, the firm has reduced its headcount, even at the managerial level, as well as greatly cutting back on the number of reports previously used to support strategic policy-making.
With far fewer management touchpoints in the business, decision making involves fewer components than it did before, Huët said. We could not be truly agile whilst drowning in such a sea of data.
Source: Warc News.
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