Mark Ritson on branding: Fewer brands means better results

take a value share of between 30% and 50%. That leaves the big
manufacturers battling each other for an ever-shrinking pool of
consumers. And they have realised that to win in this much more
competitive context, they need fewer brands and greater focus.

A decade ago the 80:20 rule applied particularly well to most FMCG
companies: 80% of their profits were derived from about 20% of their
brands. Today, bigger and more efficient retailers have forced companies
such as Unilever to question this ratio and adjust their operations
accordingly. Less has always meant more when it comes to brand
portfolios, but thanks to own-label, less means more than it used
to.

Fewer brands means less bureaucracy, which means more customer
orientation. Until recently Unilever operated as two distinct companies
with two boards of directors managing separate divisions in the
Netherlands and the UK. Outside of its head offices the inefficiency
continued, with each country split into three distinct operating
divisions, each of them managing various brands.

It is an example of the dreaded matrix of marketing inefficiency:
multiply 100 countries by three divisions by 20 categories by 1400
brands and you get a very poor result.

For Cescau, this structure created a strategic indolence that contrasted
with Unilever's streamlined retail customers. 'If you have 250 people
between the chief executive and the market, it is just like a dinosaur,'
he said. 'Somebody is biting you at the tail and by the time it goes to
your brain, half the body is gone. So we have considerably de-layered
the structure. There is now one person between the head of Brazil and
myself and one person between the head of India and myself.'

Aside from strategic focus, Unilever's brand consolidation also means
that marketing investment and innovation strategies can be devoted to
brands that will respond best.

There is no doubt that the global success of Dove in bodycare and Magnum
in ice cream confirm the potential power of brand focus for Unilever.
Both these categories were once peppered with an international
smorgasbord of Unilever brands that prevented the company from investing
significant resources in world-class marketing campaigns and then
leveraging the results across every major global market. Today you are
as likely to see the Dove 'Real Women' beaming at you from a poster in
Rio, or on Oprah, as you are on a British billboard.

Unilever has already signalled that it eventually hopes to halve the
number of categories it competes in from 20 to 10. So far it has
demonstrated impressive discipline in exiting once-invaluable categories
such as frozen foods (by selling off Birds Eye), and it is apparently
set to exit another former cash cow when it divests its US detergents
business.

Until recently, the gap between the slightly dusty, bureaucratic
Anglo-Dutch Unilever and the tight, focused retailers that it supplied
was growing ever larger. Under Cescau, the gap is closing and he sees
Unilever's path clearly: 'Now, we are trying to be as good as the best
everywhere. Always. So we are being more disciplined in the way we
work.'

30 SECONDS ON ... 'ONE UNILEVER'

- When Patrick Cescau took the helm in 2005, he quickly began to address
the challenges of a tough market and more aggressive rivals, taking out
management layers to make communication more immediate, speed up
decision-making and allow it to move out of areas where return on
investment is limited.

- The aim of the 'One Unilever' scheme is to simplify the business and
generate savings by bringing national operations together so that there
is a single management team in each country.

- Cescau believes the combination of the restructured organisation and
the 'One Unilever' programme is improving the firm's effectiveness and
allowing it to build on local strengths while exploiting its power as a
global operation.

- Unilever is now focusing on three areas of growth: developing and
emerging markets, personal care and healthy-living products.