Unilevers ButterBeater

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Unilevers Butter-Beater
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Managing Innovation

• Business processes
• How new products are conceived and developed.
• How strategy is formulated.
• How annual budgets and managerial incentives are
  determined.
• How career paths are defined for successful
  managers.

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Unilever

• Worlds largest food manufacturer and marketer,
  with over 50 billion in revenue Market share of
  over 70 in most of the worlds markets.
• Food products
• Must cater to unique tastes and preferences of
  each countrys culture.
• Unilever is essentially a holding company
  comprised of many autonomous regional and local
  food companies.
• Margarine consumption in Europe was declining.

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Consolidation of Manufacturing

• To reduce cost.
• Consolidation presented a dilemma because of the
  unique preferences of each countrys consumers.
• Logistical complexity.

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Coordinative Units

• The EBG (European business group), comprising of
  the country manager from each of Europes
  operating companies
• The category boards, comprising marketing
  executives who were responsible for major
  categories of products sold by the companies.

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The Yellow Fats Category Board

• For the margarine business.
• Development groups in Hamburg (Germany),
  Rotterdam (the Netherlands), and Crawley
  (England) are also responsible for developing
  pan-European products.
• The Hamburg center innovation alone the taste
  dimension,
• The Rotterdam center innovation on using
  spreads used in cooking,
• The Crawley center innovation on spreads
  targeted at health-conscious consumers.

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Krona

• Consulting with the margarine product managers in
  each major European country, the Hamburg
  innovation center defined a product concept for a
  new spread that consumers would not perceived as
  a butter product or a margarine product.
• The Hamburg innovation center executed the
  development project without much interaction with
  their counterparts in other countries.

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• Krona was launched Successful beyond expectation
  in Germany.
• But when managers from other European country
  organizations were urged to launch Krona, they
  balked.
• Negative consumer reaction?
• Divergent financial priorities (they had their
  own product innovations to push, and their own
  annual operating budgets to meet)?
• Interpersonal affronts by the German team.

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Discussion Questions
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• What is your explanation for the data presented
  in Exhibits 4, 5, and 6?
• Do these exhibits give you any insights about
  whether or what type of European development
  effort in novel spreads product might succeed?

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Evidence of Significant Differences

• However, in some product categories, consumer
  tastes are remarkably similar.
• Exhibit 4
• Not all consumers in Germany view butter as a
  healthy, natural product not all UK consumers
  view butter as a thing of the past.
• The market research appears to have been to
  identify differences. Results would have been
  different if their purpose had been to identify
  similarities in tastes and preference.

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Exhibit 6

• The closer the product is to a finished
  consumable meal, the more differences in taste
  and preference.
• Wide disagreement about whether a single product
  can be sold across Europe.
• How can Kraft sell Philadelphia brand cream
  cheese as a relatively standard product across
  Europe, whereas the category of cream cheese
  seems to need more localization?

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Strategic Decision

• To cater to local tastes?
• To offer the same good product, and help the
  consumers grow to enjoy it, through marketing
  investments. (e.g.,, Coca Cola and McDonalds in
  China).

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Discussion Questions
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What Should Borderwijk Do?
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• If the German team had done a better job of
  coordinating with its counterparts in other
  countries during the Krona development effort,
  would it have changed the outcome?
• What are the fundamental, underlying reasons why
  other country organizations did not embrace the
  Krona concept with enthusiasm?
• What evidence do you see in the case that
  supports your diagnosis of the root cause?