How Unilever had to face an embarrassing brand failure after spending a huge amount for research. This incident gave a fillip to competitor P&G.

1. The Persil Power
Fiasco
How Unilever failed to research about consumer behavior
Presented by:-
Mutahira Dar
Semester III MBA , Section ‘C’
Presidency Business School

2. Company profile:-
 Anglo- Dutch multinational
company.
 Founded in 1933.
 Headquartered
in London and Rotterdam.
 One of the oldest multinational
companies .
 Its products are available in
around 190 countries.
 Unilever owns over 400 brands.

3. Unilever products

4. Unilever’s main competition was from P&G

5. So, what was Persil Power and why
did it attract so much flak?
 The detergent powder was launched in 1994 across Europe.
 It was the result of a major technological breakthrough (as per Unilever).
 Product development efforts spanned a period of 10 years.
 Unilever spent close to 100 million pounds.
 Intention was to overtake Ariel detergent.

6. What was unique about
Persil power ?
 Product had - manganese catalyst (accelerator )
that could clean clothes even at lower
temperatures.
 Breakthrough
 Unilever protected its innovative efforts by
• This product – result of Unilever’s
research- competitive advantage
• cleaned clothes without damaging
fabric color
• 35 patents
• Test marketing in 60000 households

7. P&G springs into action-
failure of Persil
 After testing, P&G found that under certain
conditions, Persil powder damaged the
clothes.
 The catalyst could damage colored clothes at
high temperatures.
 A big failure for Unilever.
 Negative publicity by P&G.
• lost the legal battle
• forced to withdraw the product
• lost 300 million pounds spent in development
and marketing.

8. So what went wrong?
 Unilever had conducted most of its tests in Dutch
households
 In Northern Europe, people washed their white and
colored clothes separately.
 In Southern Europe, clothes were washed together in
hot water.
 Problem:-
1. Manganese catalyst was fine at low temperatures.
2. But it reacted with certain dyes at hot temperatures.
 So, it was a niche product (cold water ,white
garments)

9. In an interview, Niall Fitzgerald said, “‘Communications
had evolved so fast that within seconds this wasn’t a
brand issue, this was a corporate issue. So even if we
had wanted to ring-fence our product, we couldn’t
have.’
Unilever chairman Sir Michael Perry referred to this
incident as the greatest marketing setback that Unilever
had ever seen.

10. Consequences
 People avoided this product with a thought that
it will destroy their clothes.
 The product was a flop.
 Most retailers quickly took the product from
their shelves.
 Unilever launched a crisis management program
 1995 – Persil power replaced with Persil New
Generation.

11.  Great organizations learn from their failures
instead of carping about it or fixing
accountabilities when the damage is already
done.
 This experience taught Unilever to promote
greater cross-functional co-ordination
between R&D and marketing functions.
 The company institutionalized the process of
setting up dedicated innovation centers
instead of adopting an ethnocentric
approach.
 No brand is an island.
 Products have to be tested under all
conditions.

13. Q1.What are the aspects of consumer behavior that
Unilever missed? How did it affect their business?
 Unilever only focused on one segment of market that
is Northern Europe where people washed clothes
separately and in low temperatures. (NICHE
PRODUCT) but sold product in other geographies.
 Failed to test product in all conditions.
 Lagged behind in research of usage norms in different
geographies.
 Effects on business:-
• product was withdrawn
• negative publicity by P&G
• loss of 300 million pounds

14. Q2.Does this case study highlight the
importance of understanding consumer
behavior before a business decides to
innovate a product?
 Yes, because it helps to understand
Difference in consumer behaviors in different geographies
Varied expectations of consumers
Reasons why consumers buy a product
Likes and dislikes of consumers
Impact of brand failure on corporate reputation

15. The significant risk for Unilever was…
• If one product encounters a problem the image of other products could be
damaged
• Dent in brand reputation
• Loss in customer’s trust and confidence in the brand

16. Thank you…