Marketing Plan: Why Is Unilever Selling Wish-Bone - Essay Example

Unilever's top management believes that this sale would assist the company to focus more on its core objectives and to continue to deliver sustainable growth for the organization. According to Kees Kruythoff, president of Unilever North America, “as we continue to shape our portfolio to deliver sustainable growth for Unilever, this change will give us the focus to drive growth behind our core foods portfolio” (qtd in Dornbrook).

In addition, Unilever plans to generate 70% of its total sales from emerging markets by 2020. Probably, Wish-Bone is less likely to gain a wider market acceptance in emerging markets like China, India, or Russia. Therefore, Unilever decided to sell out its iconic brand to add value to its long-term business goals. Why is Pinnacle buying Wish-Bone? When Unilever sells its iconic brand, Pinnacle Foods has its reasons to buy it. First, the current market position of Pinnacle Foods justifies the firm’s decision to acquire Wish-Bone.

The company’s well-recognized products are used by roughly 85% of American households, and the organization holds the #1 or #2 market position in 10 of the 12 categories in which it operates. Hence it would be easy for Pinnacle Foods to increase the American market share of Wish-Bone, which is already a leading salad dressing brand in North America. In addition, the planned acquisition supports the firm’s market expansion strategies. In the words of Pinnacle Foods CEO Bob Gamgort, “The acquisition of Wish-Bone is a perfect fit with our successful strategy of Reinvigorating Iconic Brands.

” (qtd in Dornbrook). He adds that the proposed acquisition would benefit the company to achieve cost synergies and enhance its ability to provide consumers with better meal solutions and recipe ideas. The Pinnacle management also claims that the Wish-Bone brand has ‘attractive margins’ and a strong cash flow. The top management thinks that its improved efficiencies on the production line would be helpful to boost the Wish-Bone profit margins. Pinnacle Foods also expects a tax advantage of nearly $125 million from the planned takeover.

In critical evaluation here, the same business seems to be attractive to one firm and unattractive to another due to the changes in the firm’s long-term objectives and market strategies. Unilever has nearly a dozen brands each of which generates more than €1 billion annually. In addition, the company has a global view and a strong presence in a large number of countries. Therefore, the sale of Wish-Bone may benefit the company to focus more on its global vision and get rid of a brand that experienced a share price decline over the past five years. At the same time, this takeover would fit Pinnacle’s strategy of ‘reinvigorating iconic brands’ because Wish-Bone is an iconic brand.