Unilever Direct-To-Consumers Business Model

Unilever is the world’s leading consumer goods company, making and selling around 400 brands in more than 190 countries in 2022 – based on a direct-to-consumer business model. With over 60 billion euros in revenues that span personal care, home care, foods, and refreshment, Unilever is the second largest advertiser in the world. Unilever can reach millions of consumers across the world thanks to its marketing campaigns.

Table of Contents

Unilever Purpose

Unilever stated purpose is “to make a sustainable living to a commonplace. We believe this is the best way to deliver long-term sustainable growth.”

Unilever Operating segments

In 2022, Unilever operated across five categories.

Personal care is the largest segment in terms of revenues and also the most profitable regarding operating margins. It comprises brands like Axe, Dove, and Sunsilk.

Unilever Direct-To-Consumer Business Model Based On A Global Value Chain

Source: Unilever annual report for 2017

Unilever has been able to create a global value chain. This value chain is based on a direct-to-consumer business model, which requires a deep understanding of consumers and what brands they want to relate to. Therefore, Unilever leverages on massive marketing campaigns that aim at establishing a connection between consumers and those brands.

Besides its claimed value chain, for sure the strength of Unilever is based on its ability to quickly adapt to economic scenarios, to purchase or push brands that can sell well during those periods.

The critical ingredient is to structure the R&D for its product development, in a way that is coordinated with marketing activities. While the company gathers insights about consumers, used for product development. Indeed, Unilever spent over nine hundred million euros in R&D in 2017 alone.

Unilever Massive Distribution Strategy

In addition, the company can provide a proper distribution to its brands by working with thousands of suppliers across the world, with a massive supply chain that purchased over thirteen billion in ingredients and raw materials for its products and brands.

Those materials are turned into finished products, based on consumer insights, and manufactured in more than three hundred factories in sixty-nine countries. The distribution and direct access to consumers via a network of more than four hundred warehouses and twenty-five million retail stores.

Among direct-to-consumer channels, Unilever brands and products are served in:

hypermarkets
wholesalers and cash and carry
small convenience stores
other fast-growing channels such as e-commerce
out-of-home and direct-to-consumer

All those channels are critical to Unilever brands to make them properly available and displayed. A significant part of this distribution is also accompanied by massive spending in marketing campaigns, that in 2017 alone saw over seven billion euros in spending.

The company also uses digital channels to create a target and more personalized campaigns based on consumer insights. And in doing so, our value chain cycle repeats itself.

Source: Unilever annual report for 2017

To notice how among the most significant piece of the pie regarding spending the company leverages on distribution costs, brand, and marketing investments. That’s how the value chain is created.

Summary and conclusions

Unilever leverages on a direct-to-consumer business model that in 2017 made over fifty billion in revenues. The key ingredients of this value chains are consumer insights that are used in their R&D strategy, that goes back to product development. Also, the company leverages on massive branding campaigns to make those brands on top of minds of its consumers.

Key Highlights

Leading Consumer Goods Company: Unilever is a global consumer goods company that operates in over 190 countries, selling around 400 brands in categories such as personal care, home care, foods, and refreshments.
Direct-to-Consumer Model: Unilever operates on a direct-to-consumer business model, focusing on creating a strong connection between consumers and its brands through extensive marketing campaigns.
Purpose: Unilever’s stated purpose is to “make a sustainable living commonplace,” aiming for long-term sustainable growth.
Operating Segments: Unilever operates across five main categories, with personal care being the largest segment in terms of revenue and profitability. Notable brands include Axe, Dove, and Sunsilk.
Global Value Chain: Unilever’s success is attributed to its global value chain that incorporates consumer insights into product development, effectively integrating R&D and marketing activities.
Distribution Strategy: Unilever has a massive distribution strategy involving thousands of suppliers, over 300 factories, 400 warehouses, and 25 million retail stores. It utilizes various distribution channels including hypermarkets, convenience stores, e-commerce, and more.
Marketing Campaigns: The company invests heavily in marketing campaigns to establish its brands in the minds of consumers, spending over seven billion euros on marketing in a single year.
Digital Channels: Unilever uses digital channels to create targeted and personalized campaigns based on consumer insights.
Revenue and Profits: Unilever experienced significant revenue growth, with total revenue reaching 60.07 billion euros in 2022. Net profit also grew to 8.27 billion euros in the same year.
Ownership: Unilever is primarily owned by Unilever and its associates, followed by foreign portfolio investors, individuals, and others.

Business Model Recap

Element	Description
Value Proposition	Unilever offers a range of value propositions for its customers: – Sustainable Brands: Unilever’s brands, such as Dove, Ben & Jerry’s, and Lifebuoy, emphasize sustainability, social responsibility, and ethical practices. – Diverse Product Portfolio: Unilever provides a diverse portfolio of products, including food, beverages, personal care, home care, and more, catering to various consumer needs. – Quality and Innovation: Unilever is known for product quality and innovation, offering customers new and improved products that enhance their lives. – Global Presence: Unilever’s global presence ensures customers have access to its products and brands in numerous countries. – Sustainability Commitment: Unilever is committed to reducing its environmental footprint and promoting sustainable practices throughout its value chain. – Affordability: Many Unilever products are priced competitively, offering value for money to consumers.
Core Products/Services	Unilever’s core products and services include: – Personal Care Products: Unilever produces a wide range of personal care products, including skincare, haircare, deodorants, and oral care under brands like Dove, Axe, and Vaseline. – Food and Beverages: Unilever offers food and beverage products, including ice cream (e.g., Ben & Jerry’s), tea (e.g., Lipton), and sauces (e.g., Hellmann’s). – Home Care Products: The company manufactures home care products like laundry detergents (e.g., OMO), cleaning products (e.g., Cif), and air fresheners (e.g., Air Wick). – Sustainability Initiatives: Unilever is actively involved in sustainability initiatives, including efforts to reduce waste and promote responsible sourcing. – Customer Engagement: Unilever engages with customers through marketing campaigns, promotions, and brand experiences. – Innovation: Unilever continuously innovates its products and packaging to align with sustainability goals and consumer preferences.
Customer Segments	Unilever’s customer segments include: – Consumers: Individual consumers across different age groups, demographics, and geographies who purchase Unilever’s products for personal care, food, and home care needs. – Retailers: Unilever sells its products to a wide range of retailers, from small local stores to large supermarket chains. – Foodservice and Hospitality: Restaurants, cafes, hotels, and foodservice providers use Unilever’s products in their operations. – Healthcare Facilities: Healthcare facilities, including hospitals and clinics, may use Unilever’s hygiene and sanitation products. – Sustainability Partners: Unilever collaborates with sustainability partners, NGOs, and organizations to advance its sustainability goals. – Institutional Buyers: Large institutions and organizations may purchase Unilever products for their facilities and employees.
Revenue Streams	Unilever generates revenue through several revenue streams: – Product Sales: The primary source of revenue comes from the sale of personal care products, food and beverages, and home care products. – Brand Licensing: Unilever licenses its brands to other manufacturers and companies, generating revenue through brand royalties. – Sustainability Initiatives: Unilever’s sustainability efforts may lead to cost savings and increased revenue through eco-friendly product lines. – Marketing and Advertising: Unilever invests in marketing and advertising campaigns to promote its brands and products, potentially increasing sales. – Global Presence: Revenue is earned from sales in numerous countries where Unilever operates. – Innovation and Research: Revenue may result from new product innovations and research-backed improvements.
Distribution Strategy	Unilever’s distribution strategy focuses on reaching customers efficiently: – Retail Distribution: Unilever products are distributed through a wide network of retail stores, ranging from small local shops to large supermarket chains. – E-commerce: Unilever has an online presence, allowing customers to purchase products directly from the company’s website or through e-commerce platforms. – Supply Chain: Unilever maintains an efficient supply chain to ensure products are available to consumers in a timely manner. – Distribution Partnerships: The company partners with distributors and wholesalers to reach a broader customer base. – Sustainability Practices: Unilever incorporates sustainable distribution practices to reduce its carbon footprint and environmental impact. – Marketing and Promotion: Unilever invests in marketing and promotional activities to create brand awareness and drive sales through various channels.