BUS7B28 Creative Change and Innovation
Introduction
This report is going to highlight different aspects of the FMCG industry based on their creative change and innovation in the market and the supply chain. Therefore, it is going to focus on reflecting the context of an FMCG organisation, Unilever in the global market and analyse their consumers demand based on product range, factors affecting the consumer demand and how the change is fulfilling their overall strategic plan. However, the report will also consider a basic analysis of the technological advancement and change management of Unilever by focusing on PESTLE analysis as per the effect of the recent pandemic.
Overview of Company
Unilever PLC is a British multinational fast-moving consumer goods (FMCG) company that has its headquarters situated in London. The company has over 1,48,000 people working for their operations all around the globe based on their organisational objectives and goals (Unilever, 2022). The company is focused on a wide variety of products that focus on sustainable living for consumers from different parts of the world. However, it has been found that the company has been working with more than 400 brands in over 190 countries around the globe to provide their consumers with sustainable products (Unilever, 2022). The overall revenue of Unilever has been found to reach €52.44 billion in the year 2021 (Sabanoglu, 2022).
Analysis of Consumer Demand
Change in consumer demand and its impact on Unilever’s product range
Due to the recent COVID-19 pandemic situation, it has been noted that there has been a significant decrease in consumer demand for products and services that is witnessed by Unilever (Pandey et al. 2021). Thus, Unilever has observed a huge shift in consumer demand, with customers increasingly drawn to live in more purposeful and sustainable lifestyles, where they voluntarily assume greater responsibility for maintaining constant cleanliness and health. Although there was a significant change in consumer demand based on product preference, Unilever was able to maintain the supply of products that were in demand during the pandemic situation by their consumers. For instance, it has been reported that the turnover grew by 0.2%, with a positive contribution from acquisitions of 0.6% after deducting disposals and a negative contribution from the currency of 0.4% (Unilever, 2022). However, the changing consumer demand has significantly affected the product range that was being focused on by Unilever. Despite major difficulties, Unilever experienced positive aspects in their value chain across the local operating environment; the organisational management was also able to satisfy customer needs for good foods and hand hygiene throughout the pandemic crisis. The change in consumer demand during the pandemic situation has made Unilever witness significant growth in the sales of hygiene and in-home food products (Veselova, 2022).
Unilever has witnessed a significant fall in its financial revenue due to the change in consumer demand that has affected its product range (Sabanoglu, 2022). The Unilever Group produced roughly 50.72 billion Euros in global sales in 2020, a decline of more than 1.5 billion Euros from the level seen in 2019 (Sabanoglu, 2022). However, the company has also witnessed a significant decrease in demand for product ranges such as food service and ice cream, which have been neglected during the pandemic situation by the consumers.
Therefore, it can be stated that there has been a significant alteration in Unilever‘s product range due to the changing consumer demand caused by the COVID-19 pandemic situation (Fithry et al. 2021). Thus, Unilever is more focused on providing consumers with significant demanded products in the market such as hygiene products, sanitary pads, sanitizers, and other essential factors for the daily lives of the consumers.
The main drivers for change to satisfy the market and how has it affected Unilever’s product range
According to Tyagi and Pabalkar (2021, p.569), it has been found that there are two primary drivers for change to satisfy the market of Unilever. Thus, the two major drivers behind the change are the increasing demand for online shopping by consumers and COVID-19 pandemic situation. The majority of consumers are more attracted to sustainable and hygiene products due to COVID. The second driver behind the change is the increasing amount of consumers demanding a hybrid experience and adapting to digital technology based on their buying behaviour. According to Chowdhury (2022, p.5), the majority of the consumer in the current market are more attracted to online platforms.
It has been seen that there has been a significant increase in consumers in the digital platform. It has been noted that there are more than 2.14 billion people worldwide that are attracted to online shopping based on buying goods and services through online platforms (Coppola, 2021). However, in 2019, almost 2.05 billion individuals (21.55% of the world’s population) made purchases online (Bashir et al. 2019).
How change is affecting/fulfilling Unilever’s overall strategic plans
Unilever is focused on significant strategies such as accelerating the development of their outlets into high-growth spaces, focusing on sustainable factors and brands that are demanded by the customers and relying on developing the e-commerce market (Unilever, 2022). For example, despite the downfall of Unilever’s financial revenue in the year 2020, the company has managed to apply significant strategies and increase their financial revenue to €52.44 billion, which resulted in witnessing an increase of more than one and a half billion Euros from 2020 (Sabanoglu, 2022). According to estimates by D’Souza (2022), Unilever’s e-commerce sales have increased by 44% and contributed 13% of the company’s total revenue in 2021. Therefore, it has been found that the operating profit of Unilever group in 2021 has reached approximately €8.7 billion, which has witnessed significant growth from €8.3 billion, which was registered in the year 2020 (Sabanoglu, 2022). Apparently, it can be stated that the current strategic plan of Unilever has enabled the organisational management to respond to the huge changes in consumer demand due to the factors that have been discussed above.
Analysis of Technological Advancement & Change Management
How technology has affected Unilever’s change management
Automated technology
It has been noted that Unilever is focused on adapting to automated technology to provide superior service to more than 2.5 million people all around the globe that use their products (Unilever, 2022). The company also focuses on enhancing sustainable factors by adopting digital technology in the management units. The utilisation of automated technology has resulted in Unilever bringing better products to the market more quickly and efficiently in order to enhance performance and competitive growth.
Geolocation technology in the supply chain
Unilever has been focused on adapting geolocation technology into the supply chain to identify the individual outlets and supply chain units (Galea-Pace, 2020). As a result, it has provided a significant advantage to Unilever in order to acquire data regarding consumer demand in the current market. However, the adoption of technological factors such as geological technology has also provided significant benefits to Unilever to cope with certain changes in the market and consumer demand (Galea-Pace, 2020).
Digitalisation for R&D
As per the concept of research and development, it has been noted that Unilever has focused on investing €800 million in the research and development programmes by utilising several technological aspects (Unilever, 2022). Hence, it has provided the ability for Unilever to provide superior products and services to the end consumers while maintaining the safety and environmental assurance of their products (Unilever, 2022). Apparently, it has been noted that innovation has been the major target of Unilever and a part of the business strategy. Thus, it can be stated that technology has benefited Unilever’s change management and given them the ability to compete in the FMCG industry.
Unilever’s change management influenced by the environmental factors
Political
The political stability of the country has been influencing the overall business operations of the FMCG industry moderately (Refer to appendix). For evidence, the political stability the UK was reported at approximately 72.64% in 2020 (Trading Economics, 2022). Additionally, the growing focus of the UK Government regarding social issues, and environment sustainability also has a moderate impact on this industry. However, political factors such as the concern of the government regarding sustainability and public health during the pandemic influence FMCG companies like Unilever to utilise updated technologies in their services.
Economic
Findings reflect that the GDP of the UK was 2.71 lakh cores USD in 2020 (Data commons, 2022). Additionally, the UK has become one of the largest manufacturing sector for FMCG products as the country accounts for approximately 14% of the manufacturing of FMCG products. Moreover, the Government of the UK invested approximately USD 386 million in order to boost the manufacturing productivity of the organisation by approximately 30% during the coronavirus pandemic (Fortune Business Insights, 2021).
Social
Approximately, 400,000 people in the UK are employed by approximately 7000 FMCG companies (The sterling choice, 2022). Consumer spending in the UK averaged approximately 192206.70 GBP million from 1955 to 2022 (Trading Economics, 2022). These social factors have a high impact on FMCG companies like Unilever.
Technology
The market size of automation in the UK was approximately USD 7.93 billion in 2020 (Fortune Business Insights, 2021). Moreover, this market size is projected to grow from approximately USD 8.42 billion in 2021 to approximately USD 14.64 billion in the year 2028 (Fortune Business Insights, 2021).
The use of updated technological devices has been influencing consumers of the organisation to make online purchases of FMCG products. For evidence, E-Commerce retail sales in the UK have been increasing and it is expected to reach an estimated 13.2% by 2026 (Coppola, 2022). Increasing use of online platforms by consumers has been influencing FMCG companies to utilise updated technologies such as automation.
Legal
Acts such as “Consumer protection from unfair trading regulations 2008” (CPRs) and “Consumer Protection Act 1987” (CPA) have been impacting the UK FMCG industry in a significant manner (ICLG, 2022). Furthermore, the UK FMCG industry trades legally with countries such as Spain, France, the USA, and Germany (The sterling choice, 2022) (Refer to appendix). These factors have been impacting the industry moderately and influencing them to utilise technology for maintaining transparency while operating business.
Environmental
The focus of the UK FMCG industry on sustainability has been increasing. On the other hand, has changed consumer behaviour, which also influenced the FMCG industry to be focused on environmental factors. For evidence, the usage of single use plastic in the UK FMCG sector reduced by approximately 46% during 2018 to 2020 (Wakeham, 2022). This factor moderately impacts companies like Unilever. For evidence, Unilever has commitments to utilise only virgin plastic by 2025 (Wakeham, 2022).
Conclusions
From the overall discussion of the report, it is clear that the focus of Unilever on innovation as well as the utilisation of updated technologies has been influenced greatly by digitalisation. On the other hand, increasing changes in consumer behaviour due to the coronavirus pandemic have also influenced FMCG companies like Unilever to be focused on the utilisation of updated technologies in their overall business activities. In addition to that, changes in customers’ demand, which is significantly impacted by the pandemic, have been influencing the product range of the organisation in a significant manner. In this regard, Unilever is strongly focused on satisfying market demands by focusing on its product range. On the other hand, it is also clear that the situation of the pandemic and changes in consumer behaviour has been influencing the overall organisational plan of the company. Unilever is found to provide great importance in the context of sustainability, as consumers nowadays are more concerned about this aspect.
Apart from that, the use of updated technologies such as automated technology, geolocation technology in supply chains, and digitalization for research and development has influenced significantly the change management of the organisation. Different factors such as political and environmental have been influencing the overall business operation of Unilever. However, the organisation has been able to satisfy the demand of consumers and be sustainable in the marketplace with its effective focus on technology and innovation.
Recommendations
A few valuable recommendations have been structured below in reference to Unilever for improving their marketing as well as understanding customer performance and services.
Improvement of social media marketing
It has been identified that the marketing aspect of Unilever is not that evident; hence, it is suggested that the organisation should focus on improving its social media marketing through the support of different social media channels. The brand should specifically focus on improving its content on social media platforms such as Instagram, Facebook, Twitter, and others. This is because the use of these kinds of platforms in marketing has great potential to enhance the sales growth of a company (Nuseir, 2020). Moreover, it is also recommended that Unilever should hire a special team, which will only work on the content and the development of the social media accounts so that attracting customers can become effective as well as flexible.
Extensive focused on customer service performance metrics
It is suggested that Unilever should extensively focus on different customer services performance metrics such as “Net Promoter Score” (NPS), Churn rate, and many others by which the organisation would be able to understand their brand’s performance along with potential customer requirements and demands. This is because, through the help of efficient customer performance metrics, an organisation can be able to understand customer satisfaction and the customer experience in a positive manner (Achmad et al. 2022). This would further support in improving their position in the marketplace, which would significantly allow consumers to access the best possible products from the brand.
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Appendix: PESTLE Analysis
| Factors | Justification | Impact |
| Political | ● The political stability and absence of violence in the UK was reported at approximately 72.64% in 2020 (Trading Economics, 2022)
● Growing concerns regarding social issues environmental sustainability and public health influences governments to examine the regulation of consumer goods (Brevia, 2022) |
Moderate |
| Economic | ● GDP of the UK was 2.71 lakh cores USD in 2020 (Data commons, 2022)
● The FMCG industry in the UK worth approximately £110 billion (The sterling choice, 2022) |
High |
| Social | ● In the industry, approximately 400,000 people are employed by approximately 7000 companies (The sterling choice, 2022)
● Approximately 192206.70 GBP million from 1955 until 2022 consumer spending (Trading Economics, 2022) |
High |
| Technology | ● Automation technology market size in the UK was approximately USD 7.39 billion (Fortune Business Insights, 2021)
● Increasing use of e-commerce for purchasing FMCG products |
High |
| Legal | ● “Consumer protection from unfair trading regulations 2008” and “consumer protection act 1987” (ICLG, 2022)
● Trading partners of the UK FMCG industry include Germany, Spain, France, and USA (The sterling choice, 2022) |
Moderate |
| Environmental | ● The increasing focus on sustainability (Wakeham, 2022)
● Cut the use of single use plastics in the industry (Wakeham, 2022) |
Moderate |
Table 1: PESTLE Analysis
