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Unilever (Lever Brothers Co.)

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Unilever forerunner Lever Brothers was founded in London in 1885 by William Hesketh Lever, who studied emerging trends in advertising and applied what he learned to fight a "soap war" against other soap marketers in England and the U.S. He launched an extensive ad campaign to market his initial offering, Sunlight Soap, as the first packaged, branded laundry soap.

William Lever purchased two original works of art in the late 1880s. The first piece depicted a little girl holding a pretty garment; the other portrayed a woman showing off a dress to other women. Mr. Lever had the pieces reproduced in newspaper ads with the accompanying headline, "Sunlight Soap—As good as new." His innovative, though controversial, use of art produced for noncommercial purposes inspired many other advertisers to follow suit.

Early agency relationships

In 1899, Lever established an internal department to handle all advertising for the company's brands in Europe, Asia and the Middle East. The house agency was called Lintas, an acronym for Lever International Advertising Services. Although Lintas was global in scope, it did not emerge in the U.S. until the 1980s because Lever preferred to use American agencies for U.S. marketing. In 1902, for example, Lever Brothers began an association with J. Walter Thompson Co. and was still using that agency at the turn of the 21st century.

In the early part of the 20th century, however, the public began to question the value of advertising, believing that soap and other products would cost less if their manufacturers did not spend so much money on ads. To lessen the expense of competitive advertising, Lever Brothers sought mergers with other soap manufacturers. One of the company's key acquisition was Pears' soap.

Mr. Lever was an early advocate of "persuasive advertising," which suggests to the potential consumer that there are reasons to buy a product besides its inherent functional benefits. In the early 20th century, psychological studies concluded that emotional appeals were more effective than rational arguments for reaching advertising audiences. Buoyed by such findings, Lever and many other soap companies began to focus their ads on image rather than product and on beauty and romance rather than cleanliness and medicinal value.

By the 1920s, Lever Brothers had business operations in the U.K., Europe, Asia, Australia and the U.S. Between the end of World War I and his death in 1925, Mr. Lever entered the food business, buying fish, canned food, meat and ice cream marketers, including Thomas J. Lipton Inc.

In 1929, Lever Brothers merged with a longtime competitor, the successful Dutch company Margarine Union, which developed and marketed margarine as well as other food and soap products in the U.K. and throughout Europe. The new conglomerate, with headquarters in both London and Rotterdam, was named Unilever and its general strategic planning was conducted through a committee that included the chairmen of its two parent companies—Unilever PLC and Unilever NV—and a vice chairman.

Survival in the 1930s

Unilever and its U.S. subsidiary, Lever Brothers, were hurt by the stock market crash of 1929 and the severe global economic slump that followed. Still, Lever Brothers was the No. 10 magazine advertiser in the U.S. in 1930, more than doubling its 1929 advertising expenditures.

Throughout the 1930s, Lever Brothers was consistently among the top 10 advertisers in the U.S. It was also one of the top radio advertisers during the period, as were its key competitors, Procter & Gamble Co. and Colgate-Palmolive-Peet. Drug and toiletry items were the products most often sold through radio advertising.

Market research in 1935 indicated that only two of five people brushed their teeth, and marketers of toothpaste and tooth powders quickly seized the opportunity to make dental hygiene a growing product category. Pepsodent (acquired by Lever in 1944) was the leading toothpaste brand of the period, owing much of its success to advertising on the popular "Amos 'n' Andy" radio program and "The Pepsodent Show Starring Bob Hope," both produced by Lord & Thomas and its successor, Foote, Cone & Belding.

During World War II, Unilever was cut off from many of its businesses in Europe and Asia. In 1943, the company acquired the rights to sell frozen food in the U.K. under the already well-established Birds Eye name. Both Unilever and Lever continued to be leading advertisers of consumer products in the 1940s. In 1943, Lever Brothers ranked No. 5 in total U.S. ad spending, coming in No. 2 in radio. A particularly effective campaign for Lifebuoy bar soap used a comic-strip format, print cartoons and humor to warn consumers about the dangers of "B.O." (body odor).

The move to TV

After World War II, TV began to emerge as a viable advertising medium, and Lever was one of the first major TV advertisers, signing with CBS for four half-hour shows in 1945.

At the end of the 1940s, sales of Lever Brothers' and other laundry soaps dropped considerably as synthetic detergents came to market. Unilever countered by moving into new product categories and investing heavily in research facilities around the world.

In the early 1950s, Lever Brothers was enjoying modest success in the detergent market with Surf, Rinso Blue and Breeze, although sales trailed the market leader, P&G's Tide. In 1954, Lever introduced Wisk liquid detergent, a heavy-duty washing product. Launched by Batten, Barton, Durstine & Osborn with a $12 million campaign, Wisk became one of Lever Brothers' most successful brands.

Also in 1954, Lever Brothers sought to revitalize its presence in the bath soap market by offering Lux bar soap in pastel colors and reintroducing Lifebuoy as a year-round bath soap. Lever Brothers was the No. 8 U.S. advertiser that year.

In the mid-1950s, the company successfully launched Dove bar soap, emphasizing that the soap's "1/4 cleansing cream formula has made baths luxurious." Dove, handled by Ogilvy, Benson & Mather, became a consistent seller and one of the marketer's success stories.

Through Foote, Cone & Belding, Lever Brothers implemented another of its successful ad campaigns in the mid-1950s. The line, "You'll wonder where the yellow went, when you brush your teeth with Pepsodent," solidified the toothpaste brand's place as a product category leader at the time.

Challenges

In the 1950s, Lever Brothers faced a series of legal challenges. In 1951 and 1952, the Federal Trade Commission brought an antitrust suit against Lever Brothers and its two main rivals, Palmolive Colgate-Peet and P&G, accusing the three companies of price fixing. The litigation lasted until 1954, when the suit was dropped. After Unilever acquired Monsanto Chemical Co.'s All detergent line and trademark in 1957, the U.S. government unsuccessfully tried to get Lever Brothers to drop All, which became another consistent performer for the marketer.

The company again found itself in trouble with the FTC, which challenged the veracity of a Pepsodent toothpaste campaign that stated that the product removed tobacco stains from the teeth of all smokers. The claim was eventually modified.

Lever Brothers scored another advertising first in 1963 when, at the urging of the New York chapter of the Congress of Racial Equality, it aired a TV commercial for Wisk that featured an African-American child and a white child playing together. Lever Brothers remained one of the most significant advertisers in the U.S. in the mid-1960s (ranking No. 6 in expenditures in 1964), although it trailed P&G. Lever Brothers' ad spending declined each remaining year of the decade, and sales of Rinso, Silver Dust and Breeze detergents also dropped.

Lever Brothers tried to stimulate sales by spending heavily to promote Phase III, a deodorant soap bar, and by introducing a powdered form of its modestly successful Cold Water All brand and Soft-Spread Imperial, an extension of its premium Imperial brand. The company also launched Drive, a detergent with enzymes, and Twice as Nice, a "shampoo and conditioner in one," which was supported by a campaign from Ogilvy & Mather.

Drive, in particular, met with initial success (No. 4 in market share in the detergent category in 1969), backed by a JWT campaign that called Drive "the hungry detergent" that "eats what other detergents leave behind." However, the brand was pulled from the market a few years later, a victim of growing public concern over environmental effects of enzyme-containing products.

Another setback for Lever Brothers occurred in 1968 when the FTC declared a TV spot for 3B All a "rigged commercial," forcing the company to take it off the air. The commercial depicted a man in a giant washing machine talking about the cleansing power of the brand while water rose up and receded, revealing his clean clothes.

By 1969, Lever Brothers' sales had dropped to half their mid-1960s level and its earnings declined 20%. That year, however, BBDO created what became a classic for Wisk laundry detergent: the "Ring Around the Collar" campaign. It was used to sell the product for 22 years.

Diversification

The 1970s proved to be a modestly successful period for Lever, although its growth and profits were sufficiently stagnant to motivate Unilever to become more involved with its U.S. subsidiary. For Unilever, the 1970s were a period of further expansion and diversification, as the company moved into such fields as packaging, chemicals and market research. Backed by considerable advertising, All, Wisk, Dove bath soap (the leading "complexion" bar in the U.S.) and Mrs. Butterworth pancake syrup consistently did well in their product categories. Wisk became the best-selling brand in the history of Lever Brothers.

Targeting P&G's Crest and Colgate-Palmolive's Gleam, which together controlled 73% of the "therapeutic" toothpaste market, Lever introduced Aim, declaring that the new toothpaste's patented "stanous fluoride" gave it the edge over its competitors. By 1974, Aim had gained an 11% market share on the strength of Ogilvy campaigns with themes such as, "If it tastes better, they'll brush longer."

Lever launched a successful campaign for Promise, a margarine brand that promised to help lower cholesterol, in a BBDO effort that featured "slice-of-life" spots. Signal was introduced in 1977 and quickly became the No. 3 mouthwash. In 1975, Unilever acquired Glamorene, adding Drain Power and a line of carpet cleaners to the company's offerings and, in 1979, Lawry's foods, which was later merged with Lipton.

Several ad campaigns were particularly successful during the 1980s. Sales of Signal mouthwash improved as a result of a BBDO campaign, "Kiss me. I got Signal." Sunlight dishwashing liquid, also handled by BBDO, was successfully launched with ads that focused on the "real lemon juice" that gave the detergent its "extra cleansing power." McCann, which took over Promise, positioned the margarine as a healthful brand through a "Get Heart Smart" campaign. In 1987, a powdered version of Wisk was introduced, backed by a campaign from JWT that used the slogan "Tsk, Tsk, Tsk. Wisk, Wisk, Wisk."

Concentration on consumer goods

Lever Brothers and Unilever expanded rapidly in the 1980s, acquiring about 80 companies between 1984 and 1988. At the same time, Lever sold most of its service and supplementary businesses to concentrate on its consumer goods lines. Among the product lines brought to Lever during this period were Shedd's Country Crock margarine spreads, Chesebrough-Pond's personal care products and the Gold Bond line of ice cream. Acquisition of Faberge/Elizabeth Arden and Calvin Klein fragrances businesses enabled the company to make inroads into the prestige personal-care products market with its higher profit margins.

In 1986, CEO Michael Angus became chairman of Unilever. Instituting a new centralized management structure, he gave oversight responsibilities in product development and manufacturing areas to global product management teams rather than relying on local managers. Aggressive promotional spending by Unilever in the U.S. helped prevent rival P&G from making competitive inroads overseas, as P&G was forced to counter Unilever's spending in the U.S.

Unilever acquired more than 100 companies between 1992 and 1997, including Helene Curtis Industries, which added haircare brands Suave, Finesse and Salon Selectives to the company's personal-care product holdings. The company also bought Isaly Klondike Co., maker of Klondike ice cream products; Popsicle Industries; and Breyer's and Sealtest from Kraft General Foods, making Unilever the world's largest maker of ice cream and the leading advertiser of ice cream outside the U.S. Gorton's frozen foods and Ragu spaghetti sauces were also added to the Lever food line.

Unilever continued to advertise heavily. The company ranked between No. 12 and No. 18 in ad expenditures in the U.S. during the 1990s. Lever 2000, a new bar soap introduced into the competitive but sluggish U.S. market in the early 1990s, provided Lever with its most significant ad success story of the decade. Based on research indicating consumers were unhappy with bar soaps available to them, Lever 2000 was marketed as a superior, futuristic product for the entire family, combining moisturizing, deodorizing and antibacterial ingredients in one bar. It was launched with a distinctive package, $25 million in initial promotional expenditures and an ad campaign from JWT. Lever 2000 quickly became the No. 2 soap in its category and spawned imitations.

Unilever also began creating and testing interactive Web sites for brands and companies. In 1995, Unilever established an award-winning Web site for the Ragu brand, the first food-product Web site. That same year, Unilever signed agreements with America Online and Microsoft Corp. to develop the company's interactive marketing more fully. Unilever later formed an alliance with Netgrocer, the first online supermarket.

More reorganization

Unilever underwent another major corporate reorganization in 1996 to add flexibility to top decision-making. A seven-member executive committee held responsibility for overall strategy, while the chairmen of Unilever PLC and Unilever NV functioned in the role of CEO. The reorganization was in part an attempt to address market needs more quickly.

In 1995, Unilever launched a new laundry pretreatment product under the Wisk name in response to a P&G introduction of a similar product under the Tide name. However, Shout, marketed by the much smaller S.C. Johnson & Son, proved to be more successfully marketed.

Pointing to this and similar cases, a 10% erosion in Unilever's share of the packaged-goods market and the failure of either Unilever or P&G to develop new product categories, business analysts began to question whether gigantic global organizations could effectively compete with smaller, more agile regional marketers. Industry observers also noted that although both Unilever and P&G had used many ad agencies through the years, each had been extremely loyal to a small group of core shops; observers then asked whether such long-term agency affiliations inhibited the development of fresh ad campaigns.

Still, Unilever continued to grow, acquiring Ben & Jerry's ice cream and Bestfoods in 2000. In 2003, Unilever was the No. 2 global marketer overall, with worldwide measured ad spending of $3.32 billion, up 19.2% over 2002. It ranked No. 17 among U.S. national advertisers, with ad spending of $1.3 billion, down 18.8% from 2002, according to Advertising Age

In early 2004, Unilever Co-chairman Niall FitzGerald acknowledged the company might not meet the ambitious 5% to 6% sales growth figure for its leading brands it had set at the beginning of its "Path to Growth" restructuring in 1999 and would stop providing specific guidance on sales, earnings and margins. While Unilever succeeded in shedding roughly three quarters of the 1,600 brands it had globally at the outset of the restructuring, it didn’t succeed in re-invigorating growth of the remaining ones, as it faced a revitalized and aggressive foe in P&G.

Mr. FitzGerald also announced he would retire, which was followed shortly with an announcement that he would become chairman of Reuters. That left fellow Co-chairman Antony Burgmans and incoming Co-chairman Patrick Cescau to set Unilever on a new path

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