An Analysis of Persil
An Analysis of Persil
Introduction
Product and Company
Unilever is a leading company in the United Kingdom dealing with a wide array of products including detergents, soaps and toothpaste. This report is structured to aid in recommendations for the improvement of one of its leading detergent products, the Persil small & mighty bio. With the diversification of the uses of detergents to cover other uses besides laundry, consumers in the UK, and indeed all over the world, are increasingly purchasing the products. In addition, the diversification of the products that Persil makes also widens the target market to include both manual washing and those with laundry machine wash.
Persil was originally manufactured by Henkel Limited, a German company but the license for the manufacture of Persil was offered to Unilever. Since its acquisition by Unilever in the UK markets, Persil has seen an increase in the number of sales owing to the improved use of technology and innovation in its manufacture. Currently, the Persil brand of products is the leading product in the UK in terms of detergent sales. In 2011, the company was worth more than 1.36 billion Euros in sales (Gardner, 2014, pp 67). In the following years, the sales of the product exceeded the target to hit 1.39 billion Euros. In fact, the Persil brand takes up about 1000 of the overall employees working for Unilever.
Figure 1: Persil’s small and mighty bio product
Key Operations
The Persil brand of products benefits from the large scale research and innovation that takes place in the Unilever Company. The company is renowned for its leading role in the innovation of new technologies in the manufacture of detergents and other leading products both in the UK and the world. The availability of a lab provides for the improvement of the product based on the requirements of the consumers and the emerging technologies in the scientific field. The lab is an important addition as it provides for the incorporation of new scientific findings to the improvement of products including the Persil small and mighty that is featured in this report.
Consumer Benefits
The use of detergents in households provides numerous advantages to the consumers. Traditionally, bar soaps were the main ingredient in the performance of laundry and other household chores (Tsoler, 2006, pp 21). One of the main benefits of using detergents in washing is the effective removal of stains that would have otherwise not been removed through normal wash. Detergents have been shown to be much more effective in removal of stains compared to the use bar soaps.
The nature of the product is also convenient to the consumers as it provides a stain eraser ball that can effectively measure the correct dosage for cleaning a certain quantity of clothes. In using the product, consumers can avoid overdoses in the use of the detergent. Moreover, the effective measurement means that the consumers can avoid wastages of the products. In addition to this, the product is readily available in all the major stores in the UK thus making its purchase effective.
The UK Market
The Detergents Market
The United Kingdom market is on an increase as is evidenced by recent entries of large detergent manufacturers. In 2015, the UK cleaning products industry was worth an approximate value of 3 billion Euros, an increase from the preceding year’s 2.68 billion Euros. Of this figure, about 1.2 billion Euros accounts for the clothes-washing detergents market (Mintel International, 2011 pp 126). The figure was a sharp increase of 12 percent perhaps pointing to the growth of the detergent market in the UK. More than 3.9 million people in the UK used detergents at least once every day pointing to the huge market that detergents have in the country. In the future, the global market for detergents is expected to grow with increases in population. The Persil brand has a global market making it an ideal candidate for success in the global market (Bahrle, 2007, pp 39). Moreover, the company is also a reputable manufacturer of quality products and is poised to gain a bigger chunk of the global market in years to come. The predicted growth of the global market means that innovation and creativity in production is an essential tool of companies that yearn for a competitive edge in the market.
Figure 2: market share (Alibaba, 2015)
Segments of the Detergent Market
In the UK, and indeed all over the world, the detergent market is divided into three segments: liquid, powder, and tablets. All the three types of detergents are effective and widely used in the cleaning of households across the United Kingdom. However, liquid detergents, to which Persil small and mighty bio falls under, are the second leading types of detergents in terms of purchases and usage. Nonetheless, all the three segments are equally effective in the removal of stains and Persil has products in each of the three classifications. In addition to the three product segments, detergents can also be sold as bars or even capsules although their usage is not as widespread as the other three.
Product Substitutes
In the UK, Persil dominates the detergent market with a share of 27% of the total purchases of detergents. In the second position is Procter & Gamble which follows closely at a market share of 21% driven by its Ariel brand. The Ariel Regular washing liquid product provides a substitute to the Persil small and mighty bio product. The product contains the same ingredients as Persil including the enzymes and chemicals used. However, each product has different formulas used in coming up with final products although the ingredients are similar. Essentially, even the concentration of these chemicals is similar if not similar to the ones in Persil. The Persil small and mighty product provides a higher value for money due to its relatively higher volume of packaging. The Persil product contains 875 ml thereby giving the consumer 25 washes while the Ariel brand has 850ml that accounts to 24 washes. However, while this seems like an advantage to the consumers, the Persil consumers are paying more than the ones using Ariel products. While the Ariel product costs 7 Euros, Persil small and mighty bio product costs 8 Euros on average. Therefore, consumers are paying much more for relatively the same benefits in purchasing the Persil brand.
Figure 3: Ariel regular liquid detergent
The biggest selling point for Persil small and mighty product is the fact that it is gentle on skin of the people when used in manual laundry. However, most of the consumers in the UK use washing machines in doing laundry thereby making the product less appealing to the consumers. Perhaps this is the reason why Ariel products are gaining more prominence across the UK over the last there years. In fact, the products from Ariel have been reducing the sales gap between Persil and Ariel by 1% every year since 2012.
Market trends
Increased use of liquid detergents
Traditionally, people considered the use of powder detergents as the best product for doing laundry because of the many enzymes that it contains. In fact, it has been argued that liquid detergents are not favored by consumers because they lack the bleaching agent found in powder detergents (Oude, 1992, pp 46). While this was true back then, it no longer is true. Today, most leading producers of detergents have the same properties in their liquid detergents as the ones in powder detergents therefore making both products effective. This development has culminated into the adoption of liquid detergents by most consumers. The main reason is that the liquid detergents are easier to measure therefore preventing instances of overdose and wastages in the course of cleaning. Many consumers have therefore turned to liquid detergents as an alternative to powder detergents that are declining in popularity across the world.
Decrease in consumption
There is a general decrease in the consumption of detergents across the UK and the larger Europe region. This is in comparison to the United States where consumption is very high. In the UK, people have the tendency of not washing their clothes on a regular basis which is in contrast with the households in the United States where laundry is done on a regular basis. In addition, most households in the United Kingdom prefer to wash their clothes at larger intervals. Even when laundry is done regularly, an entire family cleans all the clothes at once therefore meaning that less detergent is used in laundry over time. The result means that the use of detergent is on a general decline resulting to lower sales volume and revenue.
External Environment
Prices of fatty acid raw materials
Traditionally, fatty acids for use in the production of soaps and detergents were sourced either from body oils or from such plants as the coconut plant. In ancient times, the fatty acids were sourced from body oils of the sperm whale but the process was stopped owing to a reduction in the number of the whales. In similar fashion, the use of body oils from animals and from plants reduced due to the environmental issues attributed to the processes. Today, most of the fatty acids necessary in the production of detergents are synthetic and are made from chemical reactions of different raw materials. The development arises from the development of high pressure hydrogenation of oils thereby making it possible to manufacture the requisite raw materials. The current raw materials for detergent production are made from ethylene through the Alfol process.
The production of ethylene has increased over the recent past owing to a high demand from many industries dealing in the production of plastics and detergents. As the supply of the product has increased, so has its price reduced therefore making it an ideal bet for the production of many industrial products including detergents. The price one metric ton of the raw material fell from 2000 dollars in 2007 to about 1500 dollars in 2010 owing to oversupply of the material. The fall in the prices means that the production costs of making detergents have also fallen in the same period. However, it should be noted that the fall in production prices have encouraged harsh competition as is evidenced by the price battles between Persil and Ariel all over the world.
Environmental awareness
In the recent past, the detergents manufacturers are continually faced with the issue of environmental friendliness of their products. Moreover, most consumers are increasingly becoming more aware of environmental issues and demand that the products adhere to the guidelines of environmental conservation. One of the main challenges facing detergent manufacturers is the use of phosphate builders in the manufacturing process. These compounds are responsible for the filling of waterways with phosphorous compounds therefore attracting the wrath of environmentalists. In truth, the compounds are responsible for proliferation of algae therefore leading to low amounts of dissolved oxygen in the waters (Greta Britain, 1996, pp 34). The result is that these may lead to fish kills and the contamination of water.
In addition to the environmental issue of pollution, consumers are increasingly demanding for environmental certification of most products. Although the wave is not currently high in the detergents industry, it is common to find detergent products having the ‘eco’ label to show that they are environmental friendly. Moreover, detergent manufacturers may be forced to seek a mandatory ISO certification to show that they have followed all the set guidelines on environmental conservation. It is predicted that in the near future, products without the ISO certification will face rebellion from consumers. Moreover, environmental labeling is a new concept that may be seen in the detergent products soon enough.
Use of liquid detergents
Today, most leading producers of detergents have the same properties in their liquid detergents as the ones in powder detergents therefore making both products effective. This development has culminated into the adoption of liquid detergents by most consumers. The main reason is that the liquid detergents are easier to measure therefore preventing instances of overdose and wastages in the course of cleaning. Many consumers have therefore turned to liquid detergents as an alternative to powder detergents that are declining in popularity across the world.
Financial predictions
There is a predicted steady increase in the world population in the next five year. In the United Kingdom, it is expected that the population will hit the 66 million mark in the year 2018 up from the 2015 figure of 64, 938,000 people. The increase in population can be termed as a growing market for the detergent products since expenditure is deemed to increase with population. In addition, the current economic estimates in the United Kingdom predict an anticipated rise in the per capita income for the average households. With these revelations, it is expected that consumers will channel part of their increased income to the purchase of detergents and other cleaning agents. Obviously, economic predictions are set to have significant effects on the purchase of detergents in homes.
Technological Improvements
The Manufacturing Process
The Persil small and mighty bio will have to incorporate new methods of production that improve its effectiveness on cleaning. The company should bank on new technologies to improve the saponification process therefore saving on time. In essence, the soda used in making of detergents could be mixed with some small amounts of ammonia thereby improving the effect of detergents and greatly enhancing the detergent power. The development in the manufacturing process means that the company will use less amounts of ingredients while making more quantities of the products. In addition, the active ingredients in the liquid detergents will be much more therefore increasing the value that customer gets from the product.
Further changes should be made in the production stage to improve the dissolution of the active ingredients in the water solvent. To achieve this, the company should invest in the production of calcium oxide that is then to be mixed with the carbonates of soda and ammonia. The production of calcium oxide requires that the company establishes a manufacturing method and plant within its headquarters. However, the company can outsource the process of manufacturing the product in the initial part of the project. This can work as a trial period in which the company monitors the advantages of having the improvement. Upon the success of the improvements, the company can then alter the manufacturing plant to incorporate the manufacture of the new chemical within its manufacturing plant.
Development of environmental friendly packaging
The company should fully incorporate the guidelines of ISO certification in relation to environmental awareness. The aim of the improvement is to ensure that the Persil small and mighty bio is to be produced in an environmental friendly manner. The guidelines require that the company uses packaging that has minimal impacts on the environment including pollution. Most consumers agree that packaging of products should be done in disposable packagings that are easy to dispose. The rebranding of the product should be seen to have benefits to the environment both in terms of production, packaging and use.
Customized products
As the needs of customers continue to vary, there is an increasing incline towards the customization of different products based on the different customer requirements. For instance, there are customers who face allergic reactions from the use of the product because of reactivity to some of the active ingredients in the product. Companies in the UK have adopted the idea to have the products customized for different uses in the market. Persil can improve the experience by having an online portal where the consumers can dictate their preferences and the ingredients they have issues with before their products are customized. This way, the company can find substitutes for such ingredients and/or do away with the ingredients altogether.
Improved Marketing
Advertisement and marketing of new products is an essential component of improvement. Marketing determines the success or failure of new products as it influences the reach of the target market. In fact, it is only through marketing that consumers are made aware of the existence of new or improved products in the market. In these times, the company should bank on social media to help in the marketing process as it pools together people in millions. In addition, information sharing is quite fast in the social media platform and ignoring the virtual space would be disastrous for the success of the product. There is an increase in the amount of money spent on advertisement in recent years owing to the high competition in the global market. For instance, Ariel spent more than 20 million Euros on marketing in 2015 up from a meager 10 million Euros it used in 2013. It is coincidentally during this period that the company increased its turnover by 75%.The events in this period highlight the growing importance of marketing in the detergent market all over the world.
Improvement Recommendations
Customer Experience
The report concludes by asserting the role of the customer in all the improvements suggested. Indeed, all evidence collected points out to a need to improve the Persil small and mighty product to improve the customer experience. The main change in the product will be communicated through advertisements to reach consumers with different preferences in the market. To achieve this, the changes will be made, viz: overhaul of the website, rebranding of packaging and improving the ingredients.
The company further plans to improve the customer experience by stocking the product in the major stores. To start with, the product will be stocked in stores that already sell the Persil small and mighty bio product. Moreover, the product will also be introduced in new and emerging stores to improve the accessibility of the product to customers. In addition, the product will be displayed in the point of sale stand to further improve its accessibility. The supermarkets are also very important in the success of the product as they represent the highest number of sales countrywide. In this respect, therefore, the product will be availed in the supermarkets to target the shoppers in such installations.
Feedback from consumers is an essential component of measuring the satisfaction of customers and is therefore very important. The initial launch will involve a two month trial period in which aggressive marketing will be conducted. Random consumers will be selected to discuss the new aspects of the product including the packaging, price and improvements. The results of the feedback will then be analyzed for possible changes before the actual launch of the product into the market.
Figure 4: Point of sale design (Alibaba, 2015)
References
Alibaba. (2015). New design point of sale cardboard stand mock up. Available at: http:// www.alibaba.com/product-detail/new-design-point-of-salecardboard_60296784061.html (Accessed: 13 April 2016).
Bährle-Rapp, M. (2007). persil. Springer Lexikon Kosmetik Und Körperpflege, 419–419. http://doi.org/10.1007/978-3-540-71095-0_7828
GARDNER, N. (2014). A guide to United Kingdom and European Union competition policy. Houndmills, Basingstoke, Hampshire, Macmillan Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=203784.
GREAT BRITAIN. (1996). Third report of the UK Technical Committee on Detergents and the Environment: to the Department of the Environment. [London], The Committee.
MINTEL INTERNATIONAL GROUP LTD. (2011). Clothes-washing detergents in France ; Germany ; Italy ; Spain ; UK. No. 519. No. 519. London, Mintel.
OUDE, N. T. (1992). Detergents. Berlin, Heidelberg, Springer Berlin Heidelberg. http://dx.doi.org/10.1007/978-3-540-47108-0.
Tsoler, U. (2006). Handbook of detergents: Part D: Formulation. New York: M. Dekker.
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