International Journal of Foreign Trade and International Business 2019; 1(2): 05-08

E-ISSN: 2663-3159
P-ISSN: 2663-3140
IJFTIB 2019; 1(2): 05-08 Comparative analysis of multi-domestic strategy of
Received: 04-05-2019
Accepted: 07-06-2019 P&G and Unilever Corporation
Dr. Nguyen Hoang Tien
Saigon international Dr. Nguyen Hoang Tien
University, Vietnam
Abstract
In recent years, the strong development of technology and the change in consumer behavior has made
competition in consumer markets increasing. It is a constant business rule of the market. Customers are
not only the people who buy the most of products of the company, but they are also the people who
stick to with the company and introduce the company to those around them like friends, family
members and colleagues. Currently, many businesses invest in Vietnam market, especially in the field
of FMCG consumer goods. How to make customers have a good impression of the company and
products the company is doing, this is a difficult question that any business person wants to find the
right answer. Therefore, building a research model of P&G and Unilever's multinational strategy is
essential. The objective of this study is to identify the factors affecting products of both businesses with
relatively equal positions in the consumer market, creating a more comprehensive view to increase
competitive advantage.

Keywords: Unilever, P&G, multi-domestic strategy, comparative analysis

1. Introduction
In recent years, Vietnam has gradually integrated and developed through globalization. The
Government of Vietnam with preferential policies for foreign investors, along with many
favorable conditions on labor forces and strategic positions has helped the Vietnam’s
economy to attract more attention and investment from multinational corporations in the
world. This is an opportunity to further develop our economy, but at the same time brings
about great challenges to domestic companies facing fierce competition from foreign goods
and services. Besides, Vietnamese companies and corporations are also facilitated by the
Government, as well as many opportunities in integrating Vietnamese products with the
world. However, with weak resources as well as the lack of experience in the international
market, many Vietnamese companies have stumbled when competing with foreign
corporations. Researching information on business strategies from global corporations
cannot be proceeded deeply into specific strategy of them (because it is a trade secret) but
can be based on press releases and on what they have done. Thereby, the research and
analysis will partly help weak Vietnamese companies to draw lessons and experiences from
foreign corporations’ big case study.
Among the popular business areas, consumer products have almost gone into every corner of
every person's life and every home. Multinational companies in the field of consumer goods
also occupy a large market share of foreign investment, while also firmly consolidating their
position in the market of Vietnamese consumer goods. In the field of FMCG (Fast Moving
Consumer Goods), Unilever and P&G (Procter & Gamble) are always the two biggest names
in the world, and also the names already present and in Vietnam from the early days. These
two giants own many famous brands, familiar to consumers not only in Vietnam, but also
many other countries in the world. Working together in the field of FMCG, these two
corporations share many direct brands competing in the market. Therefore, it can be
considered that Unilever and P&G are inseparable pair in the consumer market. The world
cosmetics race between leading giants like Procter & Gamble, Unilever and L'Oreal is
always very interesting. It seems that none of the giants wants to be more inferior in the
competition. They have come up with a variety of different marketing and advertising
tactics, so the race has left many interesting lessons in competition and marketing art. It
Correspondence
Dr. Nguyen Hoang Tien
seems that the race of the two big Unilever and P&G in Vietnam for nearly a decade has yet
Saigon International to show signs of cooling down.
University, Vietnam

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Not only on a global scale, the two consumer goods giants strategy. The multi-domestic strategy is a strategy aimed at
have for long time competed side by side in Vietnam maximizing meeting local needs. The characteristics of the
market. The rural market accounts for 47% of the turnover company implementing a multi-domestic strategy are that
of FMCG and has great potential. Rural areas account for they customize products and marketing strategies to suit
74% of the total population and account for two-thirds of all local requirements. Simultaneously with the trend of
toothpaste and laundry products sales. Regarding the globalization, the multi-domestic strategy has the opposite
product portfolio and coverage, it seems that both sides are trend to encourage companies to adapt to activities around
on equal footing. It can be said that even in Vietnam market, the world with specific characteristics and conditions.
Unilever is superior to P&G but this is only a temporary The advantage of multi-domestic strategy is that the
classification table. However, in the long term we do not company has transferred its advantages to foreign markets.
know who will be the winner of the race. From a consumer That is, the company establishes production facilities,
perspective, P&G with the potential of a multinational advertising forms, product messages in foreign markets like
company will try to create products in multiple segments to domestic production and marketing models. Companies take
meet the needs of billionaires to those who have income of advantage of previous production experiences and product
less than 1USD a day. and skill advantages to compete in the market. The main
advantage of the multi-domestic strategy is to meet local
2. Theoretical Framework requirements. This strategy allows companies to delve into
For an international business enterprise, market penetration consumer preferences in different countries' markets,
and expansion on an international scale will contribute to responding quickly and effectively to new consumer
both growth and the rate and the profitability of the preferences. The result that companies expect when
business. So it can be said that international business launching new products is that consumers will recognize
strategy is a part of business strategy of enterprises, higher value than competitors' products, allowing them to
including plans and steps of enterprises in the international follow a domestic multi-pricing strategy to ensure higher
market to maximize the value of enterprises. An profit and greater market share. Multi-domestic strategy is
international business strategy is a program that unifies a reasonable when there is high pressure on local reactions
unit's activities including defining objectives, measures and and low pressure on cost reduction.
means to achieve certain effectiveness in a global business The downside of the multi-domestic strategy is the use of
environment. An internationally defined business strategy the same model, the same products offered in the same
will help businesses compete effectively in the international markets with the same way of marketing, so the company's
market. International strategy can help international products meet the most common requirements of consumers
business enterprises develop mechanisms to effectively over the market but cannot meet the specific requirements of
coordinate and exploit the available resources in each region. Moreover, instead of bringing domestically
international market, building, forming and developing new produced products to foreign markets, company established
ones according to the requirements and long-term factories to produce those products abroad so it cannot take
orientation, helping enterprises compete successfully in the advantage of the experience and save costs. If the company
international market. There are four main international implemented a global strategy in markets with high local
business strategies: pressure, the company would easily lose its competitive
 International Strategy: Company considers itself a advantage. This is because competitors produce products
center, carrying out business activities on the basis of that focus on different local requirements and implement
promoting its strengths. This strategy is used when both marketing and distribution strategies in accordance with
cost pressure and pressure to meet local requirements those particular requirements. Gerald Albaum et al. (2002)
[4]
are low. argue that the disadvantage of a multi-domestic strategy
 Global Strategy: Company sees the world market as a is that it does not allow companies to exploit the economic
unified market. At the same time, the company will benefits of scale in product development, production or
proceed to unify and standardize company values to marketing. Thus, usually a multi-domestic strategy increases
combine competitive advantages to reduce costs and the cost of international companies and forces them to set
increase profits. This strategy is used when costs higher prices to recover those costs. Therefore, multi-
pressure is high and pressure to meet local requirements domestic strategy is often not suitable for industries with
low price competition. Deciding to implement this strategy, the
 Transnational Strategy: Company makes a strategy to main direction of companies is to meet the environmental
achieve all goals simultaneously. By rotating conditions of each market country. So it is difficult for them
competitive advantages within the company, it must to build well and clearly defined capabilities and potentials
also pay attention to local requirements. This strategy is to create competitive advantage over international or global
used when both costs pressure and pressure to meet competitors and local companies. Cultural and social
local requirements are high. differences require changes in tactics. Governments of
 Multi-market Strategy (Multi-domestic Strategy). countries around the world also often demand that
Multi-domestic strategy is only suitable for company companies' actions be in line with the interests of the host
that can make a difference to their competitors in terms countries. As industrialization grows, domestic competitors
of skills or products. At the same time, the company scramble to serve each small market segment which forces
must operate in the field of low pressure to reduce costs the company to adapt to it. With a local supplier able to
and demand to meet high local demand. create single products that match specific needs, customers
The company considers each country a separate market with will no longer be forced to accept products designed by
high cultural differences. Forming units that operate abroad, other countries. Distribution and sales are two factors that
but their activities are independently called a multi-domestic need to be adapted in each country. Although the brand

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name and advertising may be the same, the distribution and to measure research concepts. First, conducting focus
sales organization cannot be standardized because the group discussions includes the implementation through
savings due to scale are not much. But there are many a direct interview with 10 participating retailers and the
problems and difficulties in standardization because of supermarket distribution channel, and thereby
differences between countries and because of the potential identifying the information to be collected, contents to
that comes from scale savings are very few. Even using a be studied. At the same time, I also use expert interview
generic name has many inconveniences because of the techniques to produce important and necessary content.
specific related with language. For example, Ford's truck, After identifying the research model, the next step is to
currently Fiera, means "ugly old woman" in Spanish- draft a questionnaire to collect analytical data.
speaking countries. A local brand can stimulate pride and  Data collection and analysis: Based on the results of the
connect with local media and characteristics. Global brand above phase, the questionnaire was designed to conduct
name may have a bad meaning in some localities or may be interview surveys to understand the situation and
linked to a country's politics and thus also ups and downs assessments of retailers and product distribution
according to international events. channels of P&G and Unilever at the supermarket. Due
From the concept and the advantages and disadvantages of to the limitation of human resource, time and funding,
the multi-domestic strategy, we can generalize the necessary survey is conducted on representative sample to
conditions for the company to implement this strategy, produce generalized results.
including (Jeannet & Hennesey, 1995: Keegan, 1995) [5, 6]:  Data processing and analysis: The main tool is SPSS
 Firstly, the company has strong financial resources to 16.0 software (Tran Hoang Trong, Chu Nguyen Mong
be able to rebuild the entire production and distribution Ngoc 2008) [15]. Based on the theory of policies to
system in foreign markets. At the same time, it also encourage distribution channel members and actually
creates conditions for the company to survive and deal the use of these policies in the distribution of P&G and
with competitors when they take actions that affect the Unilever products in supermarkets, customer reviews
company such as discounts, promotions. are carried out.
 Secondly, the company has the ability to create
differences in skills and products that domestic 4. Research Results and Discussion
competitors find it difficult to meet. Since the company From the research content mainly based on reports, media
offers the same products all over its market, the channels, the marketing strategies of those two giants
company's products must be superior to domestic published on the internet, with references to professional
competitors to be competitive. knowledge on the topic, we can see that in recent years
 Thirdly, the company operates in the field of low costs Vietnam is developing and gradually integrating with the
pressure. The international strategy requires relatively international market. Vietnamese Government offers
high funding; the cost of production is almost fixed by preferential policies to foreign investors with the advantages
the initial investment costs for production equipment, of labor and strategic position to help the Vietnamese
so it is difficult to reduce costs. So if the market economy attract more foreign investors. This is an
requires a strong price reduction, the company cannot opportunity to bring Vietnam's economy to new heights, but
meet and be easily eliminated from the market. at the same time challenging domestic companies by
 Fourth, low pressure in responding to local allowing foreign companies to be presented in the domestic
requirements. Production and marketing activities in the market.
markets are the same so products only meet the similar The study of two major foreign corporations: P&G and
needs of different customers in different places. The Unilever, thereby giving proper comparisons, comments and
strategy does not meet the requirements of each reviews about them. Researching and comparing their
locality. business strategies will help us learn and draw valuable
experiences about appropriate business deals as well as
3. Research Methodology competition between competitors. Since then, it offers
Secondary data is taken from many different sources, solutions to contribute to the development of local
beginning with the basic marketing and marketing syllabus companies in the international market. Unilever Vietnam is
to get the theoretical basis for the research topic. In addition, considered one of the most successful foreign-invested
the article also seeks some scientific articles in specialized companies in business activities and community support.
journals and master theses, such as: “Assessing customer From 1995 to 2005, Unilever Vietnam contributed more
loyalty with Unilever's products and P&G at supermarkets than 1 million USD to the national budget. The company
in Ho Chi Minh City. Although these are not research currently has a staff of 3,000 direct and indirect employees,
studies that are similar to the objectives that of this article, and indirectly creates jobs for about 6,000 people through
the topic has many valuable references to build research suppliers and agents. In terms of market access, Unilever
models and research directions. Besides, the secondary data seems to be more flexible to clearly define its domestic
collection includes information related to the theoretical diversification strategy from the beginning. This is
issues of distribution, information on the business activities expressed through price strategy (minimizing input costs to
of supermarkets that could be found in many different create competitive prices), product portfolio offered and
sources. Data collection process includes following steps: messages conveyed to Vietnamese consumers (close and
 Preliminary overview: The basic purpose of this phase constantly changing). Talking about the war between the
is to understand the policies that the company can two competitors (Nguyen Dinh Tho and Mai Thi Trang
influence the cooperation of retailers in the distribution (2007) said that in the Vietnam market, Unilever is more
of Unilever products. The study used group discussion advantageous because in addition to cosmetics, they have
techniques to adjust and supplement observed variables more to offer in F&B products and services. In the brand of

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detergents and washing powder, Unilever surpassed P&G research has shown solutions that can be applied in business
when OMO and VISO proved too strong and had many practice, related with competition and cooperation in FMCG
advantages in price as well as in consumer awareness. industry. Also, some conclusions can be drawn as follows.
Moreover, in terms of coverage, Unilever has a wide In fact, comprehensive development strategies and solutions
distribution system, especially in rural areas. Media are suitable for overcoming immediate difficulties.
dominance also comes partly from the two sides’ strategies. However, there should be solutions related to further
Accordingly, P&G follows the regional strategy while improvement and development as a basis for strengthening
Unilever builds its own scenario for the Vietnamese market. cooperation in the channel, creating a more solid strategy. In
Therefore, the budget for product promotion will be order for the strategies to take place smoothly, the authors
different. Specifically, in 2002, on the Vietnam television propose some of the following ideas:
channel, Unilever was at the top spending 4 million USD to  Improve the construction of infrastructure systems in the
advertise, while P&G ranked 3rd with nearly 2 million USD city as well as neighboring districts, to shorten the gap
spent on TV commercials. Along with the strategy of between rural and urban areas, create favorable conditions
covering all communication channels, expanding the for covering the market and deliver goods and at the same
distribution system, Unilever's sales since 1995 have been time create an opportunity for economic development for
constantly growing, from 10 million USD in 1995 to 240 conditions that were far from the center.
million USD in 2002. On the sidelines, this figure in 2011  Create favorable conditions for business operations in
was 800 million USD. It is estimated that every year, general and FMCG business in particular.
Unilever's sales and profits grow at an average of 30-35%.  Set out regulations to ensure fair competition for all
commercial enterprises in the market.
Over the past 10 years, Unilever with all aspects of FMCG
has won a lot of affection from Vietnamese consumers. 6. References
Looking back on the 10-year journey in Vietnam to 1. Bert Rosenbloom. Marketing Channel: A management
understand why Unilever has a strong foothold in everyone's View, seventh edition published, South-Western, 2004.
heart. In fact, so far, P&G products are placed in the higher 2. Classen TE. An exporter guide to select foreign sales
segment of US consumer goods and P&G is a manufacturer agents and distribution, Journal of European Business.
with No. 1 position in developed countries, while Unilever 1991; 3(2):28-32.
has advantages in developing markets. Accordingly, P&G 3. Emre Olcer. https://www.amchamvietnam.com
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global revenue from 34% in 2010 and 23% in 2005. For manager/
Unilever, the developing market contribution rate into 4. Gerrald Albaum, Jesper Strandoskov, Edwin Duerr.
global revenue reached over 56% in 2005 and 53% in 2010. International Marketing and Export Management,
When the market in developed countries is saturated, P&G Prentice Hall, Fourth edition published, 2002.
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the Downy brand, TV commercials were closer to the edition published, Pearson Education, 1995.
Vietnamese, when it comes to shampooing milk called Head 7. Nguyen Dinh Cung. 2018 should continue to be a year
& Shoulder, P&G chose Vietnamese celebrities to convey to reduce costs for businesses, http://cafef.vn/ts-
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as done before. Emre Olcer (2015) [3] said that the business giam-chi-phi-cho-doanh-nghiep-
of P&G Vietnam is very good. P&G has grown 15 times in 20171121150941572.chn
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5. Conclusion and Recommendation Young Scientists Conference 2004, Vietnam National
Along with the growing economic development of the University, Hanoi, January 2005.
country, people's living standards are increasingly 11. Nielsen Vietnam, (2017). https://www.nielsen.com/
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industries with long-term and reliable partners.
This article entitled "Analyzing and comparing the multi-
domestic strategy of P&G and Unilever" through practical

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