Unilever adopts 'zero-based budget' marketing approach

Nicola Riches
By Nicola Riches | 20 January 2016

Unilever, the maker of Magnum ice cream, Lipton Ice Tea and Rexona deodorant, has posted a year-end revenue of $US5.34 billion, but is embarking on a plan to implement “zero-based budgeting” in a bid to drive efficiencies in marketing.

The company posted a 4.1% increase in full-year sales, but says net profits slipped by 5%. However, CEO Paul Polman said in a presentation to analysts and investors overnight that, "We will make a further step change in our overheads and brand and marketing efficiencies with the global rollout of zero-based budgeting".

The approach, which has been rolled out by equity firm 3G Capital for global firms such as Kraft Heinz, apparently requires managers to justify marketing budgets from scratch every year.

Unilever marketing spending went up last year, up 0.2 percentage points to 15% of sales - around (US)$8.7bn. In absolute terms its marketing outlay rose nearly 12% from last year.

"I expect market conditions to be, if anything, more challenging and more volatile than in 2015," Polman says.

"Economic growth is unlikely to improve significantly and we have seen at the start of this year geopolitical tension which is on the rise.

"Stock markets are jumpy, not surprisingly, and currencies are volatile. And the impacts of climate change once more are only increasing."

Unilever Australia and New Zealand appointed John Broome vice-president and CMO last year. The former Kellogg’s CMO will begin his new role on 15 February. Broome will lead Unilever’s marketing function in Australia and New Zealand and will also join the Unilever ANZ leadership team.

Email Nicola at nicolariches@yaffa.com.au.

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