Marketing@Unilever.com Ray Bremner SVP, Marketing Operations Foods, Asia, Africa, Middle East

Ray Bremner - CV Senior Vice President, Marketing Operations Foods Asia, Africa and Middle Previously Chairman of Unilever Mashreq Marketing Vice President of Unilever Arabia, Unilever Development Co. Lipton International, Beverages UK. Joined Unilever UK 1979 as Customer and Marketing trainee.

Scale and geographic reach

Demographics Population – Billion 6.3 4.7 75% GDP Growth Rate (PPP) 2005e World Asia AMET Share Population – Billion 6.3 4.7 75% GDP Growth Rate (PPP) 4.4 6.1 My team and I are privileged to serve over 75% of the world’s population. Given the Unilever mission of making people feel good and look good then we have huge business scope with such a vast consumer base. The other exciting aspect of our region is the GDP growth which consistently now outstrips population growth meaning that we are serving consumer with increasing spending power for our type of products. Source: OEF

Our Consumers are Diverse Affluent 300 m Aspiring 1.2b - Our region includes Western GDP/capita countries such as Japan, ANZ, Israel, Saudi Arabia and the Gulf States We talk of the D&E world as if it is one homogenous place. Nothing could be further from the truth. As I travel the region I see the differences between countries eg between Bangladesh and Saudi Arabia, between Kenya and Hong Kong. However, often the biggest differences are within the countries themselves. India has a vast number of people defined as below the poverty line but also has more middle income consumers than Germany and France combined. Nigeria has almost 100m people earning less than a $1 a day and yet has more rich consumers in total than South Africa. Our challenge is how to meet the needs of those differing consumers but within a framework which allows us to meet fully the differing local needs whilst exploiting regional scope. Let me use this pyramid concept as I go through just how we do this. Striving 3.2b

Our portfolio

Adding Vitality to life

Growth Strategy

Local Roots with Global Scale Strategic Approach Local roots Global scale Brands Cost advantage Technology Values & reputation Portfolio Affordability Availability & reach People & Community Talent Culture Insight Connection Local Roots with Global Scale Local Roots with Global Scale

Marketing Tasks in Unilever Category Planning Brand Planning Integrated Brand Communication Innovation Customer Measurement Consumer Understanding

Marketing Processes in Unilever Consumer Understanding Consumer Market & Shopper Understanding Category Planning Category Strategy Category Building Brand Planning Brand Key Vision Brand Vision Plan Brand Marketing Plan Innovation Innovation/Renovation Launch Management Event Management Integrated Brand Communication Communication Activation Just as a reminder - we asked 40 questions about Marketing Capability and grouped them around these 9 activities or areas - Consumer Insight…. To…Measurement and evaluation of performance. Customer Channel Propositions Customer,Marketing & Category Management Measurement Measure and evaluate performance

Marketing organisation Category Planning Brand Planning Integrated Brand Communication Innovation Customer Measurement Consumer Understanding

Winning in the market place Through world class brand mixes The Role of Brand Development Bought to market brilliantly The Role of Brand Building With Category & Region working seamlessly & interdependently

3 Points of Consumer Contact Communication In store In use Consumers Buyers And I want to make clear that the 6P’s – the levers of brand growth – work right across all the points of contact with buyers and consumers – in terms of communication where expectations for product and product performance are set, in-store where the purchase is made, and in use where the product is judged against those expectations.

Understanding buyer behaviour People shop on auto-pilot Shoppers are not closely involved with our brands Buyer behaviour follows certain “rules” Helps us understand how to drive market share So if those are the points I’m going to make, I want to start first with some points about shoppers’ buying behaviour. People shop on auto-pilot – it’s something we learn and then do subconsciously, like brushing your teeth or driving a car. We don’t think about the details of what we do, and in particular we have little awareness of what we see in the supermarket. This movie is an extract from a UK TV programme (apologies for video quality), where the psychologist puts cans of beer in amongst the breakfast cereals and chocolate in amongst the pet food. No-one notices, even when they are questioned about what they saw. [Film] The experiment shows that we’re blind to what we’re not expecting to see. Because shoppers’ buying decisions are driven by habit and made subconsciously, they follow certain patterns, what you might call the “rules” of the market. These “rules” help us to understand how categories and brands work, how share changes, and what drives market share.

So what are these “rules”? Market share = How many people buy our brand - Penetration X How often they buy the category - Category frequency X How often they choose us - Loyalty X How much they buy - Average pack size To split this out further – Volume share equals penetration times Loyalty times Category frequency times average pack size And all things being equal we know that if we increase penetration by a certain %, then we can calculate what the increase in share will be. So far so good.

Consumption: Category frequency Consumption: pack size The Unilever 6P’s Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

The Unilever 6Ps Model Proposition Promotion Place Pack Price Product The brand that consumers have in their heads. Promotion Promoting the brand wherever the consumer is. Place What happens wherever consumers buy the brand Pack The packaging the consumer sees and uses Price The price the consumer pays, regular or on promotion. So if these are the 6P’s Levers of Brand Growth – what I’d like to do now is to look at how each P works and how we can use it to grow the brand. Product The product or service offered.

Market dynamics & financial returns The Unilever 6P’s Model Market dynamics & financial returns Profit Turnover Price Volume Value market size Market growth Volume market size Value share Volume share Buying behaviour Penetration Loyalty Share of purchase Average pack size Purchase frequency 6P's (brand levers) TV AD Proposition Promotion Place Pack Price Product Consumer attitude Brand health 360º comms Brand investment ROI Competitor activity ROI Depth of discount Number of promotions Compliance Competitor activity Distribution Visibility Number of lines Share of shelf On shelf impact Variant diff’tiation Perceived quality Competitor impact Price elasticity Competitor pricing Value pricing Performance vs. claims Performance vs. competition

Science and Art 6 P’s Detective Tool

6Ps Detective Worksheet Surface Issue A description of the headline issue which you have observed or which has been presented to you Volume in market Is market volume growing or declining? Down to retailer level Are there shifts between brands in volume market share? Value in market Is market value growing or declining? Are there shifts between brands in value market share? Price in market Does price in-market reflect pricing strategy? Competitor pricing activity? What is the impact of price on value share? Internal financials Market volume the key measure What are the reasons for difference between internal & external trends? Market Dynamics & Financials Who? What? When? Where? Who specifically is driving changes in consumption? Who specifically is most loyal to brand? What are the sources of growth/decline?: -more/less people buying -buy more/less often -buy more/less product When specifically are consumption changes happening? -all the time -seasonally -linked to promotions Where specifically is this behaviour being observed? -at national, regional, channel or retailer level Buying Behaviour WHY? Proposition How relevant, differentiated & credible do consumers perceive the brand benefit? Price Consumer perception of brand value for money vs competition? Pack How effective is brand packaging both at point of sale & in-use? Product How well do products perform vs competition vs BVP KPIs? Promotion Are promotion activities delivering against their objectives? Place Available right place & right time when consumers might want to buy? 6P Brand Levers TV Root Issue A highly specific and insightful description of the issue you are facing, identified by interrogating and cross referencing data from the various levels of the 6P’s Growth Model Next Steps What action must you now take to help identify the relevant Job to be Done?

Case Study:

Completed 6Ps Detective Worksheet for ‘Magnum’ case study Surface Issue Magnum core variants losing share of multipacks market Volume in market Magnum volume down Market volume growing Value in market Magnum value down Dilution of category profitability Price in market Magnum at ‘Every Day Low Price’ Magnum price 25% below Choc Snack segment price ceiling Internal financials Margin hit if heavy promotions on top of EDLP Market Dynamics & Financials Who? What? When? Where? ‘Savvy seekers’ segment Switching to competitor Choc Snack brands Switching driven by competitor promotional activity All grocery retail, especially Tesco & Asda Buying Behaviour WHY? Place Holding distribution Pack No issues Price EDLP not in line with premium positioning in the market Product Superior chocolate quality in blind tasting Proposition 90% aided awareness Falling Conviction score benefit Promotion Losing promotional slots to Cadbury 6P Brand Levers Root Issue Declining loyalty to Magnum amongst Savvy Seeker group due to stronger competitor promotional activity and perceived lack of Magnum unique benefits

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Brands built on ideas that endure...

... that may provoke debate ...even social change!

…wherever they may run. Europe Latin America Asia USA

Brands that are driven by insight The success of this revitalised Sunsilk brand started in Brazil where we had drawn on the traditional Unilever strength of understanding local consumers by developing technology for variants that addressed local hairtypes in a market where other international competitors offered only classic Caucasian propositions, overlooking the fact that more than half of Brazilians have mulatto or afro hair, a result of the unique African and European racial mix. Sunsilk for mulatto hair Sunsilk for afro hair

Non-traditional Households ...and foresight... Weight Management Growth of over 50’s Hispanic & Asian Non-traditional Households 4 major consumer dynamics are informing our growth agenda in North America . . . The growth of hispanic and asian households has been prolific over the last 10 years. Hispanic, asian, and african american households represent 100% of the growth of households with kids in the US. If we don’t build our brands among these consistuents we will not have brands 20 years from now. The growth in non-traditional households has also been tremendous. 60% of marriages in the US end in divorce. 28% of households are single parent HH…. Juggling, work, kids, and their own interests. This dynamic which has been building over the years creates incredible time pressure on people . . . Some refer to it as a Time Famine. The implication for Foods Marketers is that fewer and fewer people have time to cook . . . And that simple occasional indulgences can offer consumers the escape from the realities of daily life We’ve all read the headlines on the Obesity epidemic . . . Clearly there are implications across the entire business system of this trend And finally the aging of America . . . Every 6 seconds in the US someone turns 50 . . . there are big implications to food design and positioning and flavor intensity as people’s taste buds lose sensitivity with time Example from Foods North America

Brands that deliver health.....

...hygiene...

…nutrition…

...and vitality.

Brands that make you feel good… More stretching targets for R&D. We aim in five years to deliver the effect of a laser face-lift from a daily face cream.

…Look good... Visibly whiter teeth in two weeks

…and get more out of life Flora Pro Activ: clinically proven to significantly reduce cholesterol More stretching targets for R&D. We aim in five years to deliver the effect of a laser face-lift from a daily face cream.

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Brands that talk to the head…

Brands that talk to the heart….

…. Through messages one cannot miss

… that arrive with bravado... Knorr boat party

…that stage spectaculars... Viso Washing Powder: the Guinness Book of Records longest washing line ever at 5.2 kms: Phnom Penh

Lux Super Rich : Bangkok -longest catwalk ever …with style & drama... Lux Super Rich : Bangkok -longest catwalk ever

…that break world records... Vaseline Durban - South Africa the Guinness Book of Records largest bar of soap at 12.5 tons

….across all Communications

Cornetto ‘Love’ campaign

Exploiting the lid Buy Cornetto Flip the Lid SMS Free Download

Cornetto Love Songs Website 2007

Love Songs 2007 “romantic’ press conference…

….generated record media coverage, in print…

… and On-line

Pop Concerts in major cities……..

…. a great platform to engage with our core target

> 2 million SMS’s in 2007 …. August April 5 months

Cornetto 2007 25% Growth YTD Sales Value 10,000 20,000 30,000 40,000 10,000 20,000 30,000 40,000 50,000 60,000 Jan~Mar Apr May Jun Jul Aug Sept Oct 2005 2006 2007 Sales Value +21% +48% +18% +23% +29% +20% +4% +24%

…. Its all about CONSISTENCY Flip The Lid ATL BTL Presence

Appropriate communication

BD’s & BB’s seamlessly working to bring the brands to life in the market place...

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Retail Trade Development in Asia/Africa 13% 40% 49% 60% 68% 78% 90% 99% 97% 95% 87% 60% 51% 40% 32% Asia AMET is a very diverse market - from very poor countries to the likes of Japan and Australia. AA is the region the most economic growth is occurring and with wealth comes the emerging Modern Trade Unilever will continue to build our business in the Traditional Trade while being well equipped with a portfolio, experience and capabilities to grow in the emerging Modern Trade 22% 1% 3% 5% 10% Nigeria India Iran Egypt China Turkey Indonesia S Africa Australia Philippines Traditional Modern Trade

Serve our diverse retail portfolio

Widest Coverage in Asia/Africa > 5,900 core distributors > 9 million retail outlets An estimate - 98%+ would be GT stores. We land goods in >6 million outlets through direct supply, distributors and wholesalers (this number represents about 35-40% of the outlet universe (Asia is 38%) which includes outlets that may not be suited to selling our products - e.g. mobile phone store). These numbers come from a combination of internal Unilever data from countries and external suppliers (store audits), mostly the former. Many wholesalers are customers of the distributors. AMET doesn't have good transparency centrally of the next level (from distributor to wholesaler) so we didn't guess and instead opted for "core distributors" who are generally exclusive to Unilever. If I were pushed to extrapolate Asia data out to AMET and take a considered guess then I would say we would have >13,000 distributors and wholesalers combined. I feel more comfortable with saying the >6,000 because if pushed we can back it up.

Winning in Modern Trade

... dominate the gondola... Here is another example of Knorr in Poland using the customer/retailers as a communication channel It resulted in fantastic visibility and shelf management, and improved relationship with customers.

... enliven the aisle...

...and bring powerful in-store events.

And dominate the General Trade

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Packs that leap from historic disarray... Lets look at another example of where our new capability of behaving more coherently across the globe is bringing benefits. This was Rexona. The world’s number one anti-perspirant deodorant, marketed in the UK under the name Sure. Over the years, through successive local launches and relaunches, the brand had become fragmented, with different positionings, packaging and advertising around the world. During the second half of the nineties we simplified the packaging down to .....

…. to design alignment. …... a single more attractive global design. It’s now been rolled out around the 70 odd countries where the brand is marketed.

Brands that have proprietary design We can use the world’s best designers on global Axe packaging…… …..And roll it out across the world in a year

…outstanding ergonomics... Anti-Hangover Re-load Snake Peel Boost

Toothpaste, margarine, tea, laundry powder Packs that are affordable Aspirational but unaffordable Affordable & accessible Toothpaste, margarine, tea, laundry powder Shampoo Category One Shot Usage Re-closable Sachets Sachets Only Deo Ministick Teabag 3s Mini Cubes I had mentioned earlier the critical importance of Low Unit priced packs- often packs which sell at a fixed unit of currency eg 1 egyptian pound or 5 indian rupee. BUILD UP The use of LUPs has been instrumental in our ability to develop markets. The first execution was for shampoo in Indonesia and the shampoo model rolled out across -first Asia and then Africa and then into the Middle east where there are still huge numbers of relatively poor consumers despite our perceptions of the region. From shampoo the idea moved into our offerings in skin creams, toothpaste, packet tea , margarine, oils, and of course laundry powder. In many countries these sachet style packs can account for over half of our total sales in these categories. From sachets of liquids and powders we moved to more ambitious mini packs which required new technology in packaging. Examples are Deo mini sticks selling for 30 us cents, Lipton teabags in mini packs of 3 selling at less than 10 us cents and seasoning cubes for only 3 us cent. The latest developments now take us into the re-closable sachets- super for skin creams where consumers applied only small quantities each day and worried abut the product drying out.

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Our Consumers are Diverse Affluent 300 m Aspiring 1.2b - Our region includes Western GDP/capita countries such as Japan, ANZ, Israel, Saudi Arabia and the Gulf States We talk of the D&E world as if it is one homogenous place. Nothing could be further from the truth. As I travel the region I see the differences between countries eg between Bangladesh and Saudi Arabia, between Kenya and Hong Kong. However, often the biggest differences are within the countries themselves. India has a vast number of people defined as below the poverty line but also has more middle income consumers than Germany and France combined. Nigeria has almost 100m people earning less than a $1 a day and yet has more rich consumers in total than South Africa. Our challenge is how to meet the needs of those differing consumers but within a framework which allows us to meet fully the differing local needs whilst exploiting regional scope. Let me use this pyramid concept as I go through just how we do this. Striving 3.2b

Leverage the full potential of the market Unilever - Business Approach International Competitors - Top of the pyramid Local Competitors - Bottom of the pyramid Unilever - “Work the pyramid” Leverage the full potential of the market The top of the pyramid has been the area of the most intensecompetitive activity. It is here where new entrants have sought to establish themselves. Essentially product mixes can be borrowed from Global, or should I say western, mixes and sold through top end retail aimed at the higher eschelon of society. At the very bottom of the pyramid the local players have sought to copy brand mixes but to compete on price as their market entry strategy. In Unilever our business strategy is to serve the whole consumer pyramid and to draw from our experiences from one part of the region to another depending on the needs of the consumer segment within the pyramid and the stage of evolution within the country. Such a strategy has demands on us in terms of skills and mind set.

Unilever Marketing Approach Fulfilling Aspiration 800m Affluent 1500m Aspiring $1,500-15,000 Making the aspirational affordable 4000m Striving <$1,500 Affordably priced basics Income shown at Purchasing Power Parity rates in U.S. dollars

Business Strategy: Differentiated Brand Portfolio Laundry, India Hair, Indonesia Our business strategy is founded on providing the most appealing solutions to consumer needs. The first and most visible expression of this strategy are the brands we sell. In the last couple of years we have realised the huge potential of leveraging our strengths within categories. I think we always had this, but often we had too many brands in total and also too many brands overlapping with each other. Within the course of Brand Focus the power of the category and the power of clearly positioned brands within the category has emerged very clearly. Here I have given two examples of this. In the case of laundry in India we have Wheel, Rin and Surf Excel powders. Across these three brands we cover price indices from 50 to 200. I deliberately use 50 and not 100 as the bottom index because the challenge of Wheel is not the typical brand manufacturer but the low cost local regional player with very low fixed costs and overheads. The Wheel model allows us to fight such a competitor and win. The other example is hair in Indonesia . With lifebuoy, Sunsilk and Dove we cover prices from 100 index to the market to 200. Importantly this playing of the price piano is also in harmony with the hair needs of Indonesian consumers and I will explore that idea further when I talk specifically about hair later.

Business Strategy : Research and Development Approach Superior benefits Sensory edge Packaging innovation Leverage global mixes Affluent Aspiring Increase consumption & uptrade R&D Appropriate functional benefits Aggressive cost engineering Low unit price (LUP) For the affluent consumers then our brand offerings need to be as superior as you will find anywhere in the world. As this sector has attracted the global players then the challenge to win over consumers has gone beyond just selling products fashioned in Europe. Our brands need to offer world class quality but they also need to meet the demands of local consumers. Dove shampoo must cope with the humidity of Malaysia and the cold of northern China. One formulation for all will mean no satisfaction for any. The challenge falls even more heavily when trying to create products which meet the aspirations of those who strive to improve their lives but also operate within a very fixed income. How can we make products which make them feel good about themselves whilst only being able to spend around 5 us cents? This requires mind set, as I mentioned, but also requires superb R&D which straddles not only formulations and packaging but new business systems and machinery. More about this later. Striving Drive penetration

“Reverse Engineering” Affordable Unit Price – Margin = Target Cost Business Strategy: Pricing and Cost Approach Conventional Cost + Margin = Price “Reverse Engineering” Affordable Unit Price – Margin = Target Cost Let me summarise our learning on reaching the less affluent. Conventional marketing seeks to identify a motivating benefit for the consumer, create a product which can deliver that benefit and then price the product to deliver the required margin for the business to sustain itself. For meeting the aspirations of the less affluent then a new mind set and radically different business approach is required. One which answers the question “ How do we do it” rather than poses the issue “ How is it possible” I have termed this “ reverse engineering” . By which I mean starting with the price point and the consumer benefit, understanding the return we need and then constructing a product offering which will both delight the consumer and also meet both of these criteria . In many cases it has demanded alliances with suppliers to create new low cost, high unit production machines, or new ingredients which deliver comparable benefits but with much lower cost. Critical to being able to deliver this has been an R&D network directed to meeting this “reverse engineering” challenge.

Consumption: Category frequency Consumption: pack size 6Ps Brand Growth Model Profit TO Value Value Mkt Size Value Share Market Dynamics and Financial Return Price Market growth TO Volume Volume Mkt Size Volume Share Penetration How many people buy Choice: Loyalty Consumption: Category frequency Consumption: pack size How much they buy Buyer behaviour This is the first layer of the 6Ps model which looks at Buyer Behaviour - we need to go down to a second layer to see what drives these factors. 6Ps (Brand Levers) Pack Product Proposition Promotion Price Place

Magnifying Innovations: Product quality is THE key driver of the long term success of a new launch Magnifying Innovations: Bases data suggests that only products with strong purchase intent should be launched BASES Product Purchase Intent Ranking 10 20 30 40 50 60 70 80 <20% 20-39% 40-59% 60-79% 80%+ In-Market Survival Rate BASES Success Hurdle 4 Our simulated market test partners, BASES, did a study on launch successes, and observed that products that scored ‘in-use’ in the top quintile were 7 times more likely to succeed in market than those in the bottom quintile. This should be no surprise. Our business is creating products and our consumers judge the quality of our work on whether they do what they say they will, and whether they do it better than the many alternatives from competitors. We win or lose market share consumer decision by consumer decision. 3

Demonstrably superior whites performance

…novel tastes… Larger leaf, superior infusion, bigger fruit

…superior sensories...

BIG Unilever Brands... distinctively positioned & insightful underpinned by great technology supported through great communication can be adapted to different consumer needs can be expressed with local touch surprise & delight the consumer

Made BIGGER... Via Brilliant Local Touch distinctive, insightful local positioning supported through locally-effective communication adapted to local consumer needs expressed & made relevant via local touch surprise & delight the local consumer, shopper & customer

To fulfill our Mission