Managers' Forum ~ Business Case Reviews

This case studies the difficulties that country managers confronted while trying to establish central direction over international / Pan European product development, positioning, and sales. It documents the rollout of a new spread alternative, "Krona", and how its strategy failed to balance cross country cultural differences and product perceptions, as well as biases of Unilever country managers.

At the time of the case, Unilever was anxious to centralize management to improve its economies of scale, leveraging fixed investments in brands, new product development and manufacturing capabilities. It positioned itself to maintain a centralized management model while not sacrificing their core strength of local responsiveness. The new organization forced country managers to be concerned with diversity of other countries' tastes and needs in developing and marketing of new products. This was a distinct contrast to the previous culture.

Coping with this diversity across countries to create a Pan European brand was difficult. Internal frustrations at Unilever created barriers of communication as country managers were frustrated by their loss of autonomy and an increased burden of international coordination of strategies.

A global approach to a new product kept development and country managers from focusing on consumer variances in consumption habits. General differences toward types of food and consumption varied greatly across Europe. For example, German consumer concerns centered on food safety, environmental impact, and natural
products, whereas French consumers valued traditional cooking, pleasure/taste, and eating well.

The end result was a conflict of cultural issues within the company and a deteriorating regard for consumer preferences externally. Results after the development of Krona were poor. Krona was a great success in Germany, where it was developed, but nowhere else. The development team had continually relied on local preferences and marketing appeal when developing it s strategy.

The lesson learned by management was to have greater international involvement in concept development, to get a broad understanding of targets, positioning, and market appeal. The lesson learned by country managers was that cultural preference and consumption habits vary greatly across countries. A product and image that appeals to one country might have a very different result in another. Country managers needed to become more aware of cultural differences and consumer preferences.

In summary, this is a good case study for evaluating cultural differences in consumption habits and how companies must adapt their strategy to appeal at a local level. Not all products can be globally positioned. It is the responsibility of the company and country managers to understand country attitudes and cultural preferences before, during, and after product development and sales implementation.
 

Christensen, Clayton M. & Zobel, Jorg; "Unilever's Butter-Beater: Innovation for Global Diversity". Harvard Business School Publishing ã1998. Case No. 9-698-017

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