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Unilever

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Imagine you are a decision maker in Unilever or P&G, what kind of strategy would you take to prevent significant fall off in volumes or revenues when you price the product?

As a decision maker in Unilever, a multinational company involved in the production of consumer goods and services, the strategy that would be taken to prevent a significant fall in volume sold or revenue being received would be as follows:

Pricing is extremely important to any producer because depending on the type of goods, an increase in the price could lead to a lower quantity demanded as customers would reduce spending on the commodity or move to other substitutes from competitors. Unilever needs to continue to add high quality, brand name products and maintain reasonable prices; the key elements that help companies gain competitive advantage and more profits.

Unilever currently has over 400 different brands ranging from soaps to detergents and beauty products. Sales account for annual revenue of approximately $1 billion. Rather than increasing the price across all its products, the company should increase the price of those products which have inelastic demand. This would be a selective price increase on its products. Unilever's home care division, which includes detergents and cleaners, showed the highest volume growth in 2010, at over 8%. However, discounted pricing eroded almost 5%, leading to a 3% effective growth ("BloggingStocks").

Costs have resulted in an additional $2.5 billion increase recently. In order to combat increased cost of raw materials such as oil, palm oil, petrochemicals and plastics; the company could cut costs by streamlining packaging, logistics, sourcing and purchasing costs, and restructuring of various departments. Furthermore, the company could absorb some of the higher raw material costs rather than increasing prices to...

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