Back to better basics
Radical approach opening new markets for Unilever
A vending machine that dispenses washing-up liquid into any bottle; a powder that transforms into a powerful cleaning abrasive with just a drop of water. They may sound like clever marketing gimmicks, but these cost-cutting innovations are actually part of a revolution that could see a new €100 million market opening for Unilever in the developing world.
Millions of households – 50% worldwide – do not use even the most basic cleaning products. Cost and accessibility are factors in this massive gap in the market, but so is a lack of understanding in industry of the consumers’ core needs.
Determined to fill this gap, the Unilever Home Care team adopted a radical approach called Frugal Innovation. By stripping products back to their very core, frugal innovation not only reduces costs but also adapts existing products so that they meet the very specific needs of consumers.
“The emerging markets’ development opportunity for Household Care is a challenging one as no one has really been able to break the status quo,” explains Global VP of Homecare Jean-Laurent Ingles. “But there is the opportunity to take a fresh view from the bottom up and devise new solutions. The path laid out by the Frugal Innovations team looks to the future, with both turnover and sustainability impact at its core.”
When less is more
At the heart of Frugal Innovation is the ‘foundation-mix’ approach – prioritising a product’s key ‘must-have’ and de-prioritising the ‘nice-to-haves’ like fragrances or colours.
Sunlight Dishwasher Paste offers a perfect case study. Wood, coal and kerosene are used as cooking fuels by billions of people in Asia and Africa. Unlike gas cookers, the heat generated by wood or coal creates high carbon, so food often gets burnt on the inside of cooking pots, while the outside get covered in soot.
“We needed to focus on that one big problem – tough burnt-on stains and sticky soot – and over-deliver on our one big benefit,” explains Arindam Som, Global Brand Director for Frugal Innovations in Household Care.
After extensive observation and rapid prototyping, the team created a Sunlight paste whose powerful abrasives could stick to any makeshift scrubber, be it plastic wrappers or an old cloth. To strip back costs further, all the non-essential ingredients like softeners and fragrances were removed, which together helped reduce the raw material cost by 30%.
Not only was it cheap, but the paste was also highly effective. “We got superiority in all technical and consumer tests with this new dishwashing paste, against all source of growth substitute products,” says Arindam.
But the team are not resting on their laurels. Many businesses in the developing world cannot afford expensive upfront costs, so the team have created a powder that turns into a paste when added to water. Launched in Nigeria this year, the product offers benefits such as reduced transport and production costs, since water is not transported and the powder can be produced in laundry manufacturing facilities.
Having convinced people to buy, the next hurdle is to convince them to buy regularly. Customers in these markets tend to use branded cleaning products sparingly because they perceive them as expensive.
In the case of dishwashing liquids, research showed that 35% of costs were locked in the packaging, so the easiest way to reduce price had to be getting rid of the bottle.
Thanks to new technology, the solution was found in the creation of the world’s cheapest vending machine. The Sunlight Autosave machine dispenses dishwashing liquid into any empty bottle the consumer brings from home. This cuts the price to the consumer by 25% and attracts more shoppers into stores.
Launched in in Vietnam, it is expected that the vending machines will also have a beneficial environmental impact by reducing plastic footprint and encouraging recycling.
Truly sustainable solutions will be enabled by genuine cost disruption throughout the entire supply chain system. As Arindam explains: “We have to ensure that additional cost savings pass on to every stakeholder, trade partner, Unilever, the consumer and the planet.”
Paul Polman agrees that the impact the initiative can have on the whole business could be massive: “We are excited by the work done so far by the Frugal Innovations team. They have created truly disruptive solutions and set an example for the rest of the company to follow.”