Reference no: EM133047083

Unilever's Butter-Beater case study: 

How did the macro environment and organizational factors impact the failure of Butter-Beater in the European markets?

What were the main reasons why Unilever's strategy of a Europe-wide alternative spread did not succeed?

Which other strategy could Unilever's Yellow Fats business have used, based on the cultural differences in European countries as an opportunity?

In the spring of 1997, Willem ("Bill") Bordewijk, a member of Unilever's management committee, sat in his Rotterdam office reconsidering the new international approach for new product development he had been promoting. Unilever was one of the world's largest foods manufacturers, offering a huge variety of branded products in nearly every country in the world. Unilever was comprised of literally hundreds of organizationally distinct operating companies, most of which had been acquired at various points in its history. Whereas these businesses historically had pursued product development and branding strategies independently, Bordewijk and his colleagues in "the center" -- Unilever's corporate offices -- were anxious to move to a more centralized management model. Their goal was to better leverage the company's fixed investments in brands, new product development and manufacturing capability across multiple -- even global -- markets, while not sacrificing the local responsiveness that they deemed to be a core Unilever strength. Unilever Foods' first attempt to follow this approach, with "Krona," a new cream-spread product, had initially seemed promising. The concept originated in the newly formed international committee for "yellow fats" - Unilever's umbrella term for margarines and spreads. A team had then developed and launched the product in Germany, using that country as a test market: the intent was that if the product was successful, it would be rolled out internationally. Krona was a success in Germany: within its first year on the market, 3,700 tons had been sold, exceeding sales forecasts. Now, however, after two successful years in the German market, Krona had still not been launched in other European countries because of disappointing test results in those venues. Bordewijk was concerned about the apparent lack of cooperation by the managers in Unilever subsidiaries, and worried that Germany had possibly played too dominant a role during Krona's development, ignoring the input of managers in other countries. Thus, despite a product concept which managers across Europe initially had deemed to be internationally attractive, Bordewijk questioned whether Krona would become an international success. 

Company Background 

Unilever's enormous diversity of products had historically served people's everyday needs, and in 1997 could be broken down into three categories: foods, detergents, and personal care products. The For the exclusive use of F. Walker, 2021. This document is authorized for use only by Frances Walker in 2021. 698-017 Unilever's Butter-Beater: Innovation for Global Diversity 2 company marketed over a thousand brands. Detergents (25% of corporate turnover) included such well-known names as Omo, which was sold in 50 countries with local adaptations. Personal care products, accounting for 16% of turnover, included Calvin Klein fragrances and Elizabeth Arden cosmetics, Pepsodent and Mentadent-brand toothpaste, Faberge Organics hair care products, and Vaseline-brand skin lotions. The biggest portion of turnover1 (59%), however, came from foods. Six foods categories -- margarine, tea, ice cream, culinary products, frozen foods, and bakery products -- constituted 70% of food sales. Unilever was the world's largest margarine manufacturer. Its European brands included Flora, Becel, Rama, Blue Band, and Lätta; North American brands included Imperial, Promise, Country Crock, Mrs. Filbert's, and I-Can't-Believe-It's-Not-Butter. The company's North American margarine business, managed by its Van den Bergh Foods unit, had been particularly successful. In the rapidly growing low-fat / health-oriented product segment, for example, Unilever brands, all of which had been introduced to the market within the last decade, occupied nearly 80% of the space allocated to that category in most supermarkets. 

Historical Growth by Acquisition 

The foods market in Europe was mature, and total growth was definitionally limited to the rate of population growth. Unilever's goal to increase profits by increasing sales and reducing costs in this low-growth environment had led to an aggressive acquisition effort in recent years. Within the past two years alone it had acquired 65 companies (see Exhibit 1). The result of this strategy was a diverse portfolio of mostly local brands in different categories. In comparison with Nestle, its main competitor in foods, most of Unilever's brands had no corporate identity, such as a common "umbrella" name. Unilever often described itself as "international" rather than "global," because it did not attempt to enter all markets with the same product. Since half of the company's business was in food, a local view was often necessary. The belief of most Unilever executives was that only a few food products- like tea and olive oil- could successfully cross national or regional borders. There might be a world standard in high fashion, but not in the daily diet. They saw Unilever's deep local knowledge of local consumers as a strongly positive heritage of its acquisitions strategy. Unilever's local operating companies had a high degree of independence in day-to-day operations. The people closest to each market had power to make decisions and could therefore respond quickly to local trends and needs. Hence, Unilever could be more responsive to local differences than many of its more centralized competitors such as Procter & Gamble, Nestlé, Kraft/General Foods, and Kao. Despite this local autonomy, Unilever nonetheless had a long history of moving its managers around the globe, to give them the experience and perspective that can only come from managing in a variety of environments. Bill Bordewijk, for example, had joined Unilever in his native Holland, but had served stints in the company's operations in Nigeria, England, Canada and the Netherlands. On average, high-potential managers spent between two and three years in a position before moving on to their next assignment. 1 "Turnover" is the term many English-speaking Europeans use instead of the term, "revenues" which is more common in North American English. 

Recent Changes in Organization and Management Process 

In an attempt to balance its strengths in local responsiveness with the scale economies in development and manufacturing that more centralized companies could achieve, Unilever had recently added two new institutions to its organizational structure. "European Business Groups" (EBGs) had been set up in 1996. These business groups were to support the collaboration of operating companies dealing with similar food products in the same region. For example, European Unilever companies whose primary business was ice cream or frozen foods belonged to the Ice Cream and Frozen Foods EBG, which acted as a coordinative and information-sharing body. In addition, "Category Boards" were established to support central coordination and global knowledge transfer in product development across different countries. Unilever's executives identified 13 significant product categories that they felt would benefit from central coordination in new product development. These included ice cream, yellow fats & spreads (e.g., margarine, butter, peanut butter) and frozen foods. The Category Boards worked with Business Groups on common issues of international relevance. These institutions created additional pathways for communication and coordination across geographic markets and product categories. To complement the Category Boards, Unilever had created Innovation Centers (ICs) for its foods business in 1995 to concentrate resources for innovation and to support global development. In this new structure of innovation centers, each country was assigned to specialize on a particular category for new product development. In yellow fats, for example, three such centers were established in Europe: The "IC Taste" in Hamburg was charged to develop new spreads that were innovative along the taste dimension; the "IC Kitchen" in Rotterdam focused on spreads that would be more convenient in cooking, and the "IC Health" in Crawley, England was to develop innovative spreads targeted at health-conscious consumers. The development teams at each IC were to collect and synthesize inputs from each European country, so that the products they developed could be sold with minimal local customization in each market. A central research organization in Vlaardingen, near Rotterdam, supported the advanced technology needs of the innovation centers. These new organizational structures forced country managers to consider both international strategy and the diverse needs of other countries in developing and commercializing new products, and contrasted sharply to the previous locally autonomous structure. The arguments in favor of international coordination rested in the company's economics -- particularly in manufacturing (see Exhibits 2 and 3). Bordewijk believed that with so many local companies and brands, Unilever's factories were sub-scale and competitively inefficient. He and other champions for greater centralization of product development, manufacturing and marketing felt that costs could be lowered by having global products and higher volumes per brand. Investments in technology, brands and manufacturing assets were indeed substantial, and in the absence of significant growth in foods markets, management saw better central coordination as a key to continued performance improvement. Transforming a group of local players into a global organization, however, was not an easy feat. To help in managing this transition, Unilever's executives determined to revamp the way they managed the development of new products in each of the company's operating businesses. Beginning in 1992, several of the company's most senior executives who were assigned this task, assisted by a management consulting firm and several prominent academics, devised the Innovation Process Management system (IPM), a management system built around the concept of aggregate project planning. By 1997, the new process had been implemented worldwide, with varying degrees For the exclusive use of F. Walker, 2021. This document is authorized for use only by Frances Walker in 2021. 698-017 Unilever's Butter-Beater: Innovation for Global Diversity 4 of enthusiasm and success.2 In this system, each local company established an aggregate project plan, comprised of the product, process and brand development projects that were needed to implement its strategic and annual operating plans. These local aggregate project plans were then "rolled up" into higher-level, aggregated views of these development plans by product category, so that similar strategic needs for new products or processes in multiple local businesses could be addressed through projects executed centrally at the appropriate Innovation Center. One of the key tenets of the IPM system was "Less Is More" -- a belief that if Unilever did not overload its development teams with too many projects, they would become much more productive. Some local-company development managers were frustrated that as they attempted to implement the IPM system's mandate to "weed out" the excess number of development projects that were clogging their development funnels, mandates from regional management to harmonize development initiatives across country borders were adding to the project workload. "We've cut way back on the number of new products we're trying to develop," noted one manager in the company's Swedish subsidiary. But we have more projects consuming the time of our people because of requests from the Innovation Centres that we harmonise our products with others in the region. As a result, I think we've become slower, not faster, in product development." 

The New International Concept for Food Products 

Unilever had fewer international foods brands in its portfolio than detergents or personal care products. This was partially due to the company's heritage, of having acquired a vast array of companies, brands and products. There were also some genuine differences in the attitudes of consumers towards particular types of foods, which were deeply rooted in the cultures of different European countries (see Exhibit 4). While coping with this diversity was particularly vexing for foods makers, even manufacturers of seemingly "standard" products such as laundry detergents had to cope with significant habitual differences across countries (see Exhibit 5). In the past, Unilever had addressed this diversity through local companies which had independently developed products tailored to local traditions. The result was not only local brands but managers who had considerable freedom in selecting which product lines to pursue and what targets to set. Occasionally this meant that similar products were developed in parallel in different countries, however. There seemed to be conflicting evidence about whether a globally or regionally managed foods company would be more successful than a locally organized one. There were some food products (mostly produced by competing firms) whose manufacturers seemed to have been able to overcome the power of local taste and tradition in order to create strong, relatively uniform regional or global products and brands. (see Exhibit 6). Unilever's main competitors, Nestle, Procter & Gamble, Jacobs[1]Kraft-Suchard and Mars, indeed were all more centralized in manufacturing and had strong global brands, such as Nescafe and Maggi. Even Unilever had introduced some "global" food products in recent years. Its Magnum ice cream brand, for instance, was a locally invented but globally managed brand that was successfully marketed in more than 60 countries. The newly introduced Category Boards were designed to support Unilever's strategy of regional or global product and process development. Some local managers, however, were unhappy about the loss of freedom and the burden of international coordination that this strategy and these structures entailed. The story of "Krona" illustrates the challenge Unilever faced when instituting an international management approach in a business with locally diverse requirements. 

The Development of "Krona" 

The strategic goal to develop a common European "alternative spread" product arose in the European Business Group. Managers of the different European subsidiaries had all observed that the consumption of traditional yellow fats, such as butter and margarine, was declining; worse, Unilever was one of the leaders in this declining market. To renew its growth, the company faced two broad options: To create line extensions of existing products, which would have to grow considerably faster than the market was shrinking; or to create a new product-market category; through it, foster a resurgence of growth potential; and retain as large a share in this segment as possible. The category managers for yellow fats believed that the first option, while profitable in the short term, would not alter the long-term market decline. The need to seek a new product category in spreads that would counteract the decline in the European yellow fats market seemed obvious. Market surveys conducted in Europe 1996 suggested that yellow fat sales were declining because rising health consciousness was prompting consumers to use less fat. Toppings were eaten without spreads, and alternative spreads such as cream cheese were gaining in popularity. Although many new margarines contained less fat, attitudes towards these products were rather negative: it was deemed not enjoyable, not essential for nourishment, and (in Germany) not "natural" -- findings that implied an opportunity for a healthy, more natural but good-tasting spread product. The category management established a "Novel Spreads" task force to develop internationally feasible concepts for alternative spreads. Peter Brohmeyer, marketing director in Germany, oversaw this team, which included marketing, market research and development managers from six different countries. This group synthesized inputs from each of Unilever's European foods subsidiaries. The task force developed several novel spread concepts and presented these to the category board, which selected five as international possibilities. One was a "butter-beater" product, called Krona, which held the promise of becoming the cornerstone of a new product category in spreads. The development organization at Union Deutsche Lebensmittelwerke (UDL) in Hamburg (which was later designated as the "IC Taste") was given the responsibility to manage the development of Krona. The other Yellow Fats ICs were charged to develop products around the most promising of certain other novel spread concepts (such as a Nutella-beater, assigned to the UK). The Krona concept arose from focus group research in Germany, which showed that consumers were uncertain about the benefits of both butter and margarine and that an opportunity for a new spread category existed. "Consumers wanted a milk-based spread that has fewer calories than butter but tastes as good," recalled Detlef Bodor, the leader of the German team. Consumer attitudes towards spreads were related to Germany's post-war history. Margarines (made from processed vegetable fats) had been perceived as the butter-alternative for poor people, whereas butter (made from cream, an animal fat) was perceived as a luxury good and a symbol of wealth-though its high fat content was a concern. Margarines were artificially processed, and some experts claimed that vegetable fats were not as healthful as were animal fats. In sum, both categories were deemed unsatisfactory: margarine was unnatural and not tasty; butter too fat and not easily spreadable. As development began, the UDL team realized that a product concept which had been developed by its R&D department in 1989 seemed to have the needed attributes. At the time it had not fit UDL's marketing strategy and had been shelved. It was a strong fit however, with the new strategic need. Krona was made from natural and healthful ingredients only; no preservatives were added. It was made from cream rather than a vegetable fat, and actually had a creamier mouth feel and tasted better than low-fat butter alternatives. Yet it contained only 26% fat (compared to 80% in butter), and was always easily spreadable, even straight from the refrigerator The category team assigned the Netherlands IC to be UDL's co-partner in developing this product. An international implementation team was designated to further refine the concept, and to meet monthly to exchange information about the status of the development. The German team was excited about the opportunity to build on this concept a product that provided a real alternative to butter and fit with the international strategy of having a new alternative spread -- and to do so within the shortest possible time, as requested from the category board. 

Positioning Krona in the German Spreads Market 

In Germany, 95% of the population of 80 million people used butter or margarine (including low[1]fat margarines) as a spread on bread; about 60% of these consumers also used alternative spreads such as cream cheese. Of the total spreads volume of 830,000 tons, butter represented 44% and margarines 55%. While the trend for margarines and butter was declining, the smaller market for alternative spreads, especially for "spreadable cream products" (6,600 tons in 1994) was growing fast. In 1994, Krona was tested with different positioning approaches in existing product segments: as new alternative close to butter, to margarine, to cream-cheese, to curd, to creme fraiche, and to sweet spreads. To test these positioning alternatives, the same product was given to different focus groups with packaging and explanations that caused consumers to associate the product as an alternative or derivative product within existing categories or as a new category. From this research, the approach that attacked butter directly-the "butter beater"-was chosen. The idea was to offer an attractive alternative to butter rather than to imitate butter. Team members referred to this as "benchbreaking" rather than "benchmarking". Next, a plastic tub package that emphasized the product's difference from existing butter[1]alternatives was designed (see Exhibit 7); a purchase price 30% higher than butter was set; and an advertising campaign was created. An extensive market research program followed, including concept-product tests (quantitative), advertising previews, and a microtest3 for consumer acceptance and volume estimation. The result looked very promising. Nevertheless, results also showed that the product's perceived uniqueness was rather low: consumers could not really say what was so special about Krona. The project team felt that this could be improved by the right advertising, however. As a result of this research, the German team also decided not to position Krona as a low-fat spread. As Peter Brohmeyer pointed out, "Excellent taste and low-fat content are believed in Germany and many European countries to be contradictory. If we had emphasized the low-fat benefit of Krona, people would not have believed that it tastes much better than low-fat products, which recently were attacked by the media because of their lack of taste and their artificiality." In supermarkets Krona would be placed next to butter and margarines. "The goal was to position this product to be a real alternative to butter, not by imitating butter but by creating a new and different segment," said Brohmeyer. 3 "Microtest" was a proprietary methodology used in Unilever to project the volume of new product concepts, based upon evidence from a quantitative concept product test and models of manufacturing, distribution, and marketing economics. 

Coordination of Branding and Advertising 

In October 1994, only one year after the concept for Krona was defined, the prototype and marketing mix had been fully developed and successfully tested. Before launching it in the German market, however, certain issues had to be coordinated across Europe to ensure a smooth subsequent roll-out across the continent. As a first step, the team had to reconsider the brand name. The trademark "Krona" had been successfully tested in Germany, but other companies held trademarks for that name in several other European countries. For the first time, the team had to struggle with the European differences; several names were tested but many were not internationally feasible. "Morgen" was a known Unilever brand in several countries, but tests showed that it in Germany it was perceived to be a cheese. In the end, the team decided that the product would have to have different local brand names. "If there was no best solution for Europe then we should take the best solution for Germany as the test market," recalled one member. The product would be introduced in Germany as Krona. Later, the name would be adapted in other countries as needed. The struggle with international diversity continued in devising a common advertising concept. The bread types on which to spread Krona were as different in each of the countries as were spreading behaviors (the French preferred to dip their baguettes, the English liked toast, and so on). The German team together with the advertising coordinator from the center and an international team from an advertising agency finally created a commercial that emphasized Krona's unique taste. The concept, "Krona changes history" was selected from a pool of 25 ideas because it was perceived as a good campaign for Germany and was internationally viable as well. 

The German Launch 

In September 1995, Krona was introduced in Germany with great fanfare and a substantial marketing budget. The response was even more positive than forecast. "The supply could hardly meet the demand, and commercials had to be delayed as supermarkets temporarily ran out of stock," a member of the German team recalled. By the end of 1995, 700 tons of Krona had been sold, and the product was stocked in 78% of retail outlets. Even discounters (with their strong limits on product line breadth) carried Krona because of its good turnover. By the end of 1996, 3,700 tons had been sold, and sales of 7000 tons were expected in 1997 -- in line with the microtest forecast. In the small segment of "spreadable cream products" Krona had achieved a market share of 53%. According to market research, 46% of Krona volume came from butter, 22% had been drawn from margarine, and 11% from cream cheese. Only 1% of customers had been regular users of other novel spreads. Even more importantly, only a small share of the Krona volume seemed to have cannibalized other UDL spreads. Strong consumer acceptance was reflected in a high repeat purchase rate of 50%. Krona won Unilever's Internal Innovation Award, and the German team was very proud of Krona's rapid success. The first part of the new international concept had been fulfilled: a lead country had developed an international concept and successfully tested in its market. Now the second part had to follow: the international roll-out of the product to the other countries. 

The Tortuous Transfer of Success 

Members of the German team, supported by the Unilever center, felt that a key to the project's success was to launch in several countries quickly. Just after the launch of Krona in Germany, therefore, the product was evaluated in the Netherlands by Van den Bergh Nederland (VdBN); and For the exclusive use of F. Walker, 2021. This document is authorized for use only by Frances Walker in 2021. 698-017 Unilever's Butter-Beater: Innovation for Global Diversity 8 in the United Kingdom by Van den Bergh Foods (VdBF), the British Unilever organization. "The results were not too exciting," noted Britta Zevenbergen, the German product manager for Krona. These organizations had adapted the product and the marketing mix somewhat, to account for local differences. But in both nations, microtest models projected unattractive sales and profits, and managers in those organizations became decidedly unenthusiastic about the product. 

The Dutch Perspective 

The market structure and consumer attitudes toward spreads in the Netherlands were different from those in Germany. Butter had a market share of only 13% whereas margarine had 87% of the total yellow fats annual volume of 196,000 tons (in 1994). Butter was also perceived as very unhealthy and full of fat: the Dutch did not share the Germans' perception that butter was more natural and therefore more healthful. Because of these factors, VdBN's Yellow Fats development and marketing staffs, located in Unilever's colorful, art-filled Center for Product Innovation in Rotterdam, initially had been very enthusiastic about the Krona concept. As the formal co-development center for Krona, they had formed their own team to shape the concept for the Dutch consumer. It soon became clear, however, that their ideas were diverging from those of the German team. One manager recalled, "We really believed in the project but were frustrated. But it wasn't long before people on our team were coming into my office pulling out their hair saying, 'The Germans are not listening to us. It will never work unless we get Germany to change it.'" Increasingly, it appeared that because Krona had been developed in Germany, the Netherlands team would have to adapt not only the product formulation, but the entire marketing mix to the unique tastes and competitive characteristics of its market. This rocky beginning led to even greater obstacles to launch, when microtest results conducted by VdBN were decidedly negative. Opinions were mixed about why the concept, which initially generated such excitement, now seemed to have fallen so flat in the Netherlands. "It is important to determine up front what the criteria for success and roll-out are," said Neil Braams, general manager for VdBN's Yellow Fats business. "Some people here question whether Krona really is a success. Based on Germany's microtest of 4,000 tonnes, I would not have launched a totally new brand here in the Netherlands. The high investment in advertising would not make an attractive business case. I am not sure what sort of trading contribution4 the brand makes in Germany." Because the volumes projected by the microtest were too low to justify establishing a new brand in the Netherlands, opinions within VdBNL management began to align around integrating the Krona concept into an existing brand as a line extension. Another possible reason for the poor microtest results was that in the German market there was already a reference point in butter alternatives for consumers, such as the "Rotkaeppchen" brand which had been in the market, albeit in small volumes, for some time. In the Netherlands there was not even a nascent white creamy spreads category in the market yet. "Consumers might have to be educated about what Krona is and what the benefits of such a new product are -- and that costs real money," another team member worried. "It just isn't clear whether this category will be a high volume one, or will remain a small niche. Is the risk of a long, costly introduction worth it?" Memories of the extraordinary patience it had taken to establish UDL's low-fat margarine, Lätta, in European markets were still keen. Sales had been very disappointing during its first four years after launch. It was only in the most recent three years that sales had grown to meet original expectations. 4 "Trading contribution is a Unilever measure of return after capital and expense investments. 

Braams offered additional reasons why VdBN's enthusiasm for Krona might have been dampened. "The EBG did some good thinking about spreads innovation but perhaps there was a lack of focus. They created a number of "novel" concepts which were then divided amongst the different countries. Each one then developed its concept for microtest according to its own consumers' needs. This automatically gave each country a different agenda. I do not believe that you can innovate by committee." VdBNL managers indeed had other priorities. The IC in Rotterdam had been charged to develop, new convenience-oriented spreads for European kitchens, and several concepts seemed very interesting. In addition, although VdBN was financially strong, volume was declining, and its managers felt strong pressure to generate near term incremental sales from "quick[1]win" projects. " I'd sum it up this way," noted a team member in Rotterdam. "The Krona concept just does not promise to be a big success in the short run, and there are better options available." "When the microtest was carried out, I think we probably wanted to prove that it would not work," another team member concluded. Despite these concerns, VdBNL marketers wanted to continue to explore the Krona concept with a low level of resource investment, to finalize their views about whether the concept had any chance for success in the Netherlands. If positive evidence emerged, they planned to adapt Krona to their own situation and learn from the Germans' experience. 

The British Perspective 

As in the Netherlands, there was no alternative segment for cream spreads yet established in the UK. The total market for all spreads was 480,000 tons -- with butter representing 24%, and margarine and other spreads 76%. Van den Bergh Foods' margarine brands, whose market share was 45% of the margarine category, included Flora, I Can't Believe It's Not Butter!, Stork and Olivio. Although the use of butter and margarine was declining, UK marketers were not sure whether a significant new product category could be established. As marketing manager Gillian Herrera-Heys worried, "The trend might develop, but at the moment only 6% of consumers use alternative spreads. You have to get on retailers' shelves quickly, and if you don't succeed from the beginning they will kick you out. You need to have a strong proposition from the outset. There's little time to educate consumers about what Krona is." Indeed, the dynamics of the UK foods market were dominated by its two massive retail chains, Sainsbury's and Tesco. Both were devoting increasing amounts of shelf space to their own store brands, in which they could generally earn greater margins than they could on sales of high priced, more heavily advertised branded products.5 They consequently applied significant pricing pressure on their suppliers of branded products, and aggressively dropped SKUs which did not meet their targets for profit margin per meter of shelf space. Andy Nota, who had just become marketing director for Van den Bergh Foods -UK (VdBF) recalled his involvement with Krona: "The IC taste idea to have a new category between butter and margarine is possibly premature for the UK. An alternative spread is likely to be a niche opportunity with limited volume potential, and unlikely to provide a significant growth that we require." The VdBF staff were also uncertain about what the concept was. "Can a 'butter-beater' really be an alternative?" wondered one member. "It still competes with butter. It's not different enough. We're kidding ourselves if we think it is a new product category. Krona's ambiguous concept found a big market niche in Germany -- but no one knows exactly how and why the niche was defined." It seemed clear from the microtest results in the UK that the niche did not exist there. 5 On average in the United Kingdom, large supermarket chains paid margarine manufacturers about $0.50 per pound for branded margarines, and $.40 for unbranded (store brand) margarines. For Krona's first microtest in the UK, the product was slightly adapted to local conditions: the name was changed to Vive la Vie, and the test-price was nearer to that of butter. The formulation of Krona remained the same as that developed for Germany, except that additional salt was added to the product, consistent with Britons' established preferences. Because the advertising concept and package were basically taken as they had already been developed in Germany for international markets, the UK team did no further testing of these concepts in focus groups; the first evaluation was the microtest, and the results were very disappointing. The number of people attracted to buy Vive la Vie was below average, and after a five-day test the percentage of people who liked the product was low. The main dislikes were the flavor, the short refrigerator life (the product had to be consumed within five days after being opened), and the too-creamy texture. Based on this test, sales volume was forecast to be 590 tons in the first year, declining to 430 in ongoing years. Research International, which had conducted the microtest, concluded, "The product was specifically assessed on each of the main usage factors and none of these generated a satisfactory performance rating. We feel it is therefore reasonable to conclude that, whilst trial could be increased via positioning/inducement, the product would still fail to generate satisfactory adoption." Gillian Herrera-Heys offered her interpretation: "Customers perceived no clear advantage of Krona; they didn't understand the product's difference. It wasn't matching their expectations: they were expecting a multi-purpose spread. Krona has to be used additionally to other spreads in the kitchen. They already have to stock margarine in the refrigerator. Many also stock butter. What reason is there for them to stock yet another product? Either it must be a multi-use product, or people need to see a clear, particular occasion on which to use it." "As long as we are uncertain about what kind of product Krona is, how should we expect consumers to understand it?" noted another team member, Manfred (Fred) Dudley. But Dudley also saw a caveat in the microtest results: "In the test you can't separate the product from the marketing mix, or the marketing mix from the market. Maybe the results were attributable to Krona's marketing concept being insufficiently adapted to our situation." There was, in fact, some sentiment within Unilever that the results of a microtest could be influenced by the energy and enthusiasm of a product's champion devoted to finding a flavor variant and marketing mix that could appeal to consumers in a particular market. While more effort could have been made to find something that could work in the UK, given that the product was such a success in Germany, the poor initial test results reduced the team's incentive to invest additional time in Krona. Moreover, they had other priorities. It was their mission to develop internationally usable spreads targeted at the health-conscious consumers, and they developing new healthful margarines that would be tested first in the UK market and later rolled out internationally. "The lesson we have learned from Krona, which we will try to apply to our new healthy spreads projects, is to have more international involvement up-front in development of the concept to get a broad agreement on the targets and positioning before we begin." concluded one team member. "For some reason, the international input that the Krona team collected in the concept development phase made little difference in the results." 

Response in Other Markets 

Krona was launched in Austria at the same time as Germany. Because its resources were limited, Unilever's Austrian subsidiary was only able to support the Krona launch with an in-store sampling program. The only television advertising support came gratis, via ads broadcast on German television stations that could be received in Austria. Nonetheless, sales volumes surpassed For the exclusive use of F. Walker, 2021. This document is authorized for use only by Frances Walker in 2021. Unilever's Butter-Beater: Innovation for Global Diversity 698-017 11 expectations, as they did in Germany -- not surprising, noted Bill Bordewijk, because the two countries' cultures are so similar. As of mid-1997, however, Unilever's Swiss subsidiary had not considered launching the product. Similarly, the concept had gained little momentum in Unilever's French and Swedish subsidiaries.

The Germans' Assessment 

Although Krona was a great success in Germany, the German team felt that the goal to develop a multinational product had not been met. Despite the new organization, with an international team that had agreed on the Krona concept in the beginning, the results after the development of Krona were as national as ever before. A new nationally successful brand had been created that probably would not gain high volumes across Europe. Opinions about how Unilever ought to respond to these developments differed significantly. Peter Brohmeyer, the German team leader, noted, "We realize even more now, that the diverse cultures in the European countries lead to enormous differences in consumers' preferences. You can't assume that if you have good results in Germany, the European potential is similar. It is still different and we have to take this into consideration for our strategies." Some, however, were convinced that Krona was internationally adaptable and could be successful in the other countries. It was just that local managers had not wanted to cooperate: "It's the not[1]invented-here syndrome, plain and simple" another posited. "The negative test results were an excuse for not having to support a product from another country. Another German team member was more forgiving: "It's not bad will on the part of these managers. They just have other priorities." Another interpretation that had considerable support in Hamburg was that Unilever's budgeting system impeded international roll-out. There was no international budget for market introductions in the various countries. The German team had been given a higher budget for international product development and advertising, but the financial risks of market introduction were carried by each country on its own. High costs for advertising in the first year of launching a new brand, for example, could significantly lower the year's profit of the local company, if sales of the product were lackluster. There was more unanimity about whether more intense involvement of other countries during the development phase would have been a good idea. "I would do it the same way again," concluded one team member. "It is not a good idea to develop for multinational needs in the first stage," said another. "Make it successful for your own country and then roll it out to Europe. Don't compromise in the beginning. The biggest danger is to fail in your own country, because then you could not motivate other countries to follow. The only thing that will create excitement in other countries is success in the country of first launch." A colleague concurred: "You would lose quality, waste resources, and it would more than double the time of development to respond to the huge diversity of needs in the early stage." One also realized that some of the members of the international spread team, who had agreed to the concepts and procedures, had meanwhile left the company or had been promoted to other jobs within Unilever. Another summarized, "Now we regard our role as lead country differently. We have become converts to a free internal market for good product ideas. We will develop products for our own market, and then propose them to the other countries. They can take them if they are interested, but we don't persuade them to take it. They can love it or leave it." 

The Future 

For the first time in the Unilever Yellow Fats business, an Innovation Center team had developed for other European countries a multinational product, and different countries had attempted to work on local adaptations of it. Managers had learned about the cultural differences they each faced. However, it was clear to all members that the process of developing multinational products had to be considerably improved if Unilever wanted to implement its strategy of more fully leveraging its investments in development, branding and manufacturing. Maybe more time was needed for learning and adaptation. But maybe something was wrong with the entire process.