Documente Academic
Documente Profesional
Documente Cultură
ON
MARKETING STRATEGY
OF
Submitted to:
Director
Submitted by:
HARSHIT GARG
BBA (Bachelor of Business Administration)2015-2018
IIMT College of Management
Greater Noida
PREFACE
This project has been taken with a view to make a study on the Marketing
strategy of Philips India Ltd. With special reference to Karnataka state and
thus to uncover the strategies and plans that are inculcated by the Philips
India Ltd.
The present study creates awareness about the Marketing strategy put
forth by Philips India Ltd.
Last but not the least our sincere thanks to our class mates and
friends who helped us in completing this project.
CONTENTS
2. About Philips
3. SWOT Analysis
4. Marketing strategy
6. BCG Matrix
7. Questionnaire
8. Conclusion
9. Bibliography
ABOUT THE CONSUMER ELECTRONIC INDUSTRY
The consumer electronics industry is maturing at an incredibly rapid rate.
Demand for consumer electronic goods had always been there, but it really
has reached its peak in the past few years. This has subsequently triggered the
expansion of the consumer electronics industry, which is turning into the
foremost profitable markets in world market.
In the last few years, there has been dynamic technological progress. The
consumer electronics industry continues to be employing advanced
engineering to manufacture electronic goods which is reaping massive profits
as a result. People today live extremely hectic lives to keep up with the pace of
the world. A busy way of life calls for some form of fun. It is essential to
invigorate the brain and ease out anxiety and stress since bottled up tension
can be harmful to health. Innovative products have been developed which
provide people with various kinds of enjoyment.
Apart from home entertainment, there are more electronic goods which have
become a necessity in our daily life. Consumers are increasingly becoming
dependent upon electronic goods in their daily lives since it saves them
considerable time and energy. Consumer electronic goods have come to the
forefront in making the effort for a man simpler and perfect. These machines
have become a part of our everyday routine and it’s now tough to imagine a
life without them. The consumer electronics industry has definitely responded
to the requirements of time. World-class correspondence equipment like
cellular phones, fax machines and computers are also needed in our daily
lifestyles, which is bringing society closer every day.
There are various causes of the development of consumer electronics industry.
The consumer electronics industry provides us with a huge selection of goods
for daily use. These are found in many areas of life which includes office,
communications, and entertainment. The need for many of the most popular
electronic goods in our everyday life has added to the expansion of the
consumer electronics industry. Popular consumer electronic goods include
essential equipments like televisions, personal computers, radio, mobiles,
microwaves, stereo systems, refrigerators, washing machines as well as other
gadgets.
The need for consumer electronic goods has drawn huge amount of
investments for this business. These investments have successively triggered
the expansion of this business. The story of consumer electronics around the
world hasn’t followed a straight path. Different countries have climbed the
corporate ladder of success in this field of electronics faster compared to
others in different periods. Often, it’s been the United States of America while
sometimes Asian countries like Japan and China took over as the biggest
providers of consumer electronic goods. However, there were additional
nations as well like Ireland and others who had shocked society with their
accomplishments in the field of electronics. US consumer electronics
experienced tough competition from the Chinese and Japanese manufacturers
in the 1960s. As a result, the consumer electronics industry of the USA
diminished, but by the 1980s, the industry again gained its former position. The
United States’ consumer electronics industry is the world’s premier consumer
electronics industry.
Innovation of Consumer Electronics
Even if you might have asked it a decade back, situation would’ve been
noticeably diverse; yes, I’m talking about the situation of consumer electronics.
When compared to those bygone days, today’s consumer electronics industry
has succeeded to such a position in which innovation runs the motivator, the
gas behind everything that is instinctive and sophisticated. We now inhabit an
era of extreme gadgetry pleasures with music systems, cell-phones, Audio
Players, Pads, desktops, plasma Televisions, etc. Moulding the consumer
electronics saga. Honestly put, existence without these items would end up in
chaos!
What’s the specialty for these products and services? Would it be really
difficult to exist without having these? Contemplate! Would you live without
these? Absolutely not! Today’s technology has advanced at such a amazing
speed that we don’t have any idea when and just how we submit to them in
the process. Items are constantly being developed every day, keeping in mind
what buyers desire. Be it in your new kitchen or maybe your living room, in
your telecommunications routine or perhaps entertainment necessities, the
existence of consumer electronics now can be experienced anywhere. Credit
goes to the key consumer electronic product developers that leave no stones
unturned to give the best in the market industry to their clients.
Aided by the advent of cyberspace, it is less difficult for consumers to get the
merchandise of their choice instantaneously. By simply browsing on the
internet you can end up with a lot of information about your specific products.
Another highlight is consumer electronic news reports to aid you on the net
that will keep you up to date regarding the latest happenings around the world
of consumer electronics. Consumer Electronic updates also can be very
therapeutic for you in enlightening you about the most recent releases by
means of similar manufacturers.
CONSUMER ELECTRONIC INDUSTRY IN INDIA
The electronic industry in India took off around 1965 with an orientation
towards space and defence technologies. This was rigidly controlled and
initiated by the government. This was followed by developments in consumer
electronics mainly with transistor radios, black and white TV, calculators and
other audio products. Colour televisions soon followed. In 1982 a significant
year in the history of TV in India – the government allowed thousands of colour
TV sets to be imported into the country to coincide with the broadcast of Asian
games in New Delhi. 1985 saw the advent of computers and telephone
exchanges, which were succeeded by digital exchanges in 1988. The period
between 1984 and 1990 was a golden period for electronics during which the
industry witnessed continuous and rapid growth.
From 1991 onwards, there was first, an economic crisis triggered by the Gulf
War which was followed by political and economic uncertainties with the
country. Pressure on the electronic industries remained though growth and
developments have continued with digitalisation in all sectors, and more
recently the trend towards convergence of technologies. After the software
boom in mid 1990’s India’s focus shifted to software. While the hardware
sector was treated with indifference by successive governments. More over the
steep fall in custom tariffs made the hardware sector suddenly vulnerable to
international competition.
CURRENT SCENARIO
The electronic industry in India constitutes just 0.7% of the global electronic
industry. Hence it is miniscule by international comparison. However the
demand in the Indian market is growing rapidly and investments are flowing
into augment manufacturing capacity.
The output of the electronic hardware industry in India is worth US$11.6 billion
at present. India is also an exporter of a vast range of electronic components
and products for the following segments.
Display technologies
Entertainment electronics
Optical storage devices
Passive components
Electromechanical components
Telecom equipment
Transmission and signalling equipment
Semiconductor designing
Electronic manufacturing services
This growth has attracted global players to India and leaders like Solectron,
Flextronics, Sony, Panasonic, Philips, Nokia, Elcoteq and many more have made
large investments to access the Indian market. The consumer electronics
Korean companies such as LG and Samsung have made commitments by
establishing large manufacturing facilities and now enjoy a significant share in
the growing market for products such as Televisions, CD/DVD players, Audio
equipment and other entertainment products.
Consumer electronic goods are those which don’t wear out quickly, yielding
utility over time rather than at once. They can be further classified as either
white goods, such as refrigerators, washing machines and air conditioners or
brown goods such as blenders, cooking ranges and microwaves or consumer
electronics such as televisions and DVD players. Such big-ticket items typically
continue to be serviceable for three years at least and are characterized by long
inter-purchase times.
Performance
In the past 10 years, the global market has witnessed a surge in demand as
economies such as Brazil, Mexico, India and China have opened up and begun
rapid development, welcoming globalization with élan. The consumer durables
industry has always exhibited impressive growth despite strong competition
and constant price cutting, and the first contraction since the 2001 dot-com
bust has been due to the global recession. Given the strong correlation
between demand for durables (both new and replacements) and income, the
industry naturally suffered during the 2008-2009 period. However, projections
for current year going forward are very optimistic, as consumers resume
spending, and producers launch new enticing variants to grab new customers.
Leading players include Sony Corporation, Toshiba Corporation, Whirlpool
Corporation and Panasonic Corporation.
Developing countries such as India and China have largely been shielded from
the backlash of the recession, as consumers continued to buy basic appliances.
In fact, China has been ranked the second-biggest market in the world for
consumer electronics. Despite the recession, their strong domestic economy
and growing high-income population have buoyed demand leading to
aggressive market growth.
There is growing interest for new age products such as LCD-TVs and DVD
players. Meanwhile, the penetration of the basic, largest dollar items such as
ovens, washing machines and refrigerators is also increasing. India too, has
witnessed a similar phenomenon, with the urban consumer durables market
growing at almost 10 %p.a., and the rural durables market growing at 25% p.a.
Some high-growth categories within this segment include mobile phones, TVs
and music systems.
Challenges
The biggest threats to the local industry going forward are supply-related issues
pertaining to distribution and infrastructure, as well as demand issues due to
competition from imported goods. The lack of well developed distribution
networks makes it especially challenging to penetrate the fastest growing rural
areas economically. In addition, regular power cuts and poor road linkages
make systematic production, assembly and delivery problematic. On the
demand side, customers have increasing choice from both domestically
produced and imported goods, with similar features. This homogeneity makes
it difficult for players to remain ahead of the competition.
MNCs hold an edge over their Indian counterparts in terms of superior
technology combined with a steady flow of capital, while domestic companies
compete on the basis of their well-acknowledged brands, an extensive
distribution network and an insight in local market conditions. The largest
MNCs incorporated in India are Whirlpool India, LG India, Samsung India and
Sony India and home-grown brands are Videocon, Godrej Industries and IFB.
Future Prospects
Overall, the industry’s future remains robust, and interested applicants will
benefit from a holistic learning experience; Many of the research, sales,
marketing and advertising related roles will necessitate a good on-the-job
learning of target audiences, who may well be a totally new segment, based in
never-before visited Class II and III towns. In addition, those with technical
backgrounds will be able to leverage their knowledge and experience to
constantly develop and innovate the product variants. With more MNCs
growing their Indian businesses, there is great potential to also learn best-in-
class systems and management skills.
Royal Philips Electronics
Global Footprint
We are number one in lamps in Europe, Latin America and Asia Pacific
and number two in North America; in Automotive lighting, we are
leading in Europe, Latin America, Japan and Asia Pacific.
We are number one in the electric shavers and male grooming category
globally.
Businesses
Healthcare
Lighting
Innovation
Vision
“In a world where complexity increasingly touches every aspect of our daily
lives, we will lead in bringing sense and simplicity to people.”
Behaviours
Eager to win
Take ownership
Team up to excel
Brand Promise
We empower people to benefit from innovation by delivering on our brand
promise of “sense and simplicity”. This brand promise encapsulates our
commitment to deliver solutions that are advanced, easy to use, and designed
around the needs of all our users.
15 – 17 % for healthcare
8 – 10 % for consumer life style
8 – 10 % for lighting
Business Highlights in Q3
Two years ago, Philips' radios sold at Rs 600 -- a huge premium compared to
the Rs 200 or so that other brands cost. In mid-2003, the company slashed the
price to Rs 400 and even introduced new models at the Rs 160 price point,
especially targeting the non-urban youth segment.
Not surprisingly, dealers were upset at their shrinking margins. Some started
stocking competing brands, only to return, claim company officials, when they
found volumes were increasing exponentially.
"They soon realised it was more profitable to sell Philips radios because the
turnover is much higher," points out Gunjan Srivastava, business head, audio
consumer electronics.
Radio sales in themselves are not significant for Philips -- they account for
about 15 per cent of the audio business. But, as S Nagarajan, head sales and
service, explains, they help penetration and distribution of other products,
such as DVDs, colour televisions and mini music systems.
To ensure that happens, Philips changed its distribution strategy around two
years ago. Distributors are now allocated smaller geographical territories so
they can concentrate on getting firmer footholds in their areas.
Distributor in upcountry markets, who were earlier, allotted five or six districts
are now given only two or three. And not all are given the entire product range.
"We allocated only some products so that the focus is sharper" explains
Nagarajan.
Even as Philips constantly raised the technology bar (MP3 players, deeper bass,
sleeker, more streamlined systems), it's kept its prices competitive. The
company prices its minis at Rs 8,000-25,000, compared with the market range
of Rs 7,500-30,000.
Moreover, prices have been falling by 10 per cent on average every year. Of
course, that's true for other brands as well but, as Shivkumar points out, Philips
"found the sweet spot at which youngsters could buy".
How did it do that? By ensuring that it was neither perceived as a price warrior
like Aiwa or Sansui nor prohibitively expensive -- Sony products are on average
10 per cent more expensive.
Philips also brought in help from outside. In late 2002, it tied up with
Countrywide and Citibank to provide accessible finance schemes for its
products.
Has that helped? Consider: Philips entered the minis segment only in 2000, a
year behind Sony. But it's now carved up the market with Sony, with 45 per
cent share each.
The company also paid close attention to customer feedback. It has ramped up
the number of service centres across the country to 190, from 125 two years
ago. Today, over 900 technicians now attend to complaints, up from 600 in
2002.
The increased attention to the customer pays off in many ways. Realising that
many customers were using the DVD player to play music discs, Philips decided
to offer two speakers with built-in amplifiers, along with the player.
For just Rs 500 more, customers could get two benefits: enhance their music
playback and, when used to play movie discs, get home theatre-quality sound.
The response to the scheme has been encouraging, says Srivastava.
He adds that the company is now considering building the amplifier into the
player to further improve the sound.
VISION 2010
Philips announced its "Vision 2010" strategy to further position the company
as a market-driven, people-centric organization and a structure that fully
reflects the needs of its customer base, while also increasing shareholder
value.
The strategy provides a collective focus for their Consumer and Healthcare
businesses. The brand promise of 'Sense and Simplicity' encapsulates
Philips’s commitment to deliver products and solutions that are advanced,
easy-to use and designed to meet the needs of all the users wherever in the
world they may be.
Over the years, Philips has come up with several products and initiatives to
improve the lives of the masses. The rural thrust with affordable and
accessible products is one prong of Philips India strategy, and the other is of
course the focus on urban markets. Here too, innovation and convenience
are the guiding principles for growth. In the healthcare arena, Philips is
looking at growth and garnering customer confidence through new forms of
organization; new products; innovative business models and original
channels of distribution.
Strength
Brand – As Philips entered the Indian market before 120 years, they exactly
know the behaviour of the Indian consumers. So according to the consumers
requirements the Philips company has positioned its brand in the market and in
the consumers mind. Now in Indian context, Philips means a brand that can be
relied upon and the consumers in India belive on this brand. It has become a
house hold brand. The main advantage is that the diversed product line of the
company. It has almost all the products which are used by everyone in the house
and also the products for general use. For ex. Philips has lighting solutions,
trimmers, electric toothbrush, led lamps, mixers, home theatres, iron box, mp3
player, DVD player etc,. which includes all the possible products which is used by
all members of the house. So indirectly this factor is affecting the minds of the
people which is making the Philips to grow in the market.
Quality – The brand name of the company stays fit in the consumers mind. And
the main reason for that is the quality of the product which is produced by the
company directly or indirectly with the brand name of Philips. Even though the
company is a old player in the Indian market, with out the right quality it could
not reach the position that it is there now. The Indian customers are mainly price
sensitive at the same time they also give importance to the quality and this is the
main part which made Philips gain a huge market share.
Service – The service is a extra credit given to the customers by the sellers in
order to gain the good will and to get the consumer in to good terms with the
company who will in future will become a loyal customer of the company. Here
the company always tries to make a point that, once a consumer uses the product
of the company he should not even think of the other brand. If that is the
quality and service provided to the consumer he will never leave and go the
brand. So, here service plays a big role and that is the streangth of Philips as they
provide a good after sales service to the consumers. They have their own
exclusive service centers and linked with many big names in the market in order
to give the service.
WEAKNESS
Limited stock availability in the company – The company has a very strong
distributing channel which will help them in selling the Philips products in a good
pace. So when the situation is good for sale the availability of goods becomes a
real problem and this poses a big question in front of the company. The Philips is
also facing the same problem in recent years. As almost 70 – 80 % of the products
are imported to India, the problem of stock availability is more. The importing
norms will have different rules and regulations to the company that they can
import only certain volume of particular products in a mont or something like
that. So the estimation will always not help in importing the goods. Because the
human psychology plays a huge role in this decision making. So it is very difficult
and hence this problem is breaching the Philips India limited.
Limited product line – Though the company has a strong product line, the
marketing heads in the company are of a opinion that the product line of the
company should be increased in order to give the customers what they really
want. This is a right thought that the growing population in India wants some
newness in the products and they like it to be unique from others. So increasing
the product line may attract many more consumers towards the company in the
recent years. As the product line is limited in a particular sector boredom of
buying a same type of product has come into the consumers mind.
OPPORTUNITY
The company is mainly concentrated upon the health care and lighting sector
through which the company got a brand name which is very much in the minds of
the consumers. So, now at this point of time if the company introduces as many
as household appliances, into the market, it will gain a huge market share in
terms of household electronic appliances. This step will be a wise move by the
company.
Another huge opportunity with the Philips company is that of making the pricing
methods by acquisition. If the company acquires any local company and make
them produce the products of Philips in their plant which will reduce the cost of
the product drastically. Philips has done many such things in the past time for ex
– acquiring Preethi Company in the South India which helped them to reduce and
stabilize their pricing method.
THREAT
The big threat and challenge of the Philips Company is that of the China made
products which have a intense effect in the Indian market. Because of these
products the Philips Company is facing a huge problem in the Indian market. This
problem is mainly concerned on the pricing methods of the company. The
consumers expect that the price of the Philips company should also be reduced.
But Company is not in a position to do so.
MARKETING STRATEGY
Putting the right product in the right place, at the right price, at the right
time.
The term "marketing strategy" was coined in 1953 by Neil Borden in his
American marketing association presidential address. However, this was
actually a reformulation of an earlier idea by his associate, James Culliton, who
in 1948 described the role of the marketing manager as a "mixer of
ingredients", who sometimes follows recipes prepared by others, sometimes
prepares his own recipe as he goes along, sometimes adapts a recipe from
immediately available ingredients, and at other times invents new ingredients
no one else has tried.
You just need to create a product that a particularly group of people want, put
it on sale some place that those same people visit regularly, and price it at a
level which matches the value they feel they get out of it; and do all that at a
time they want to buy. Then you've got it made!
The marketing strategy and the 4 Ps of marketing are often used as synonyms
for each other. In fact, they are not necessarily the same thing.
"Marketing strategy" is a general phrase used to describe the different kinds of
choices organizations have to make in the whole process of bringing a product
or service to market. The 4 Ps is one way. And the 4ps are :
Product
Place
Price
Promotion
Product
What does the customer want from the product? What needs does it
satisfy?
What features does it have to meet these needs?
Place
Where do buyers look for your product or service?
If they look in a store, what kind? A specialist boutique or in a
supermarket, or both? Or online? Or direct, via a catalogue?
How can you access the right distribution channels?
Do you need to use a sales force? Or attend trade fairs? Or make online
submissions? Or send samples to catalogue companies?
What do you competitors do, and how can you learn from that and/or
differentiate?
Price
What is the value of the product or service to the buyer?
Are there established price points for products or services in this area?
Is the customer price sensitive? Will a small decrease in price gain you extra market
share? Or will a small increase be indiscernible, and so gain you extra profit margin?
What discounts should be offered to trade customers, or to other specific segments
of your market?
How will your price compare with your competitors?
Promotion
Where and when can you get across your marketing messages to your target
market?
Will you reach your audience by advertising in the press, or on TV, or radio, or on
billboards? By using direct marketing mailshot? Through PR? On the Internet?
When is the best time to promote? Is there seasonality in the market? Are there any
wider environmental issues that suggest or dictate the timing of your market launch,
or the timing of subsequent promotions?
How do your competitors do their promotions? And how does that influence your
choice of promotional activity?
The marketing strategy model can be used to help you decide how to take a
new offer to market. It can also be used to test your existing marketing
strategy. Whether you are considering a new or existing offer, follow the
steps below help you define and improve your marketing strategy.
The marketing strategy helps you define the marketing elements for
successfully positioning your market offer.
One of the best known models is the Four Ps, which helps you define your
marketing options in terms of product, place, price and promotion. Use the
model when you are planning a new venture, or evaluating an existing offer, to
optimize the impact with your target market.
MARKETING STRATEGY OF PHILIPS
The different product lines of the Philips Company are:
Imaging Systems
Home Healthcare Solutions
Patient Care and Clinical Informatics
Television
Personal Care
Audio & Video
Multimedia
Domestic Appliances
Health &
Wellness
Accessories
Lamps
Consumer Luminaries
Professional
Luminaries
Lighting
Electronics and Controls
Automotive Lighting
Packaged LEDs
LED solutions
This comes under 3 main heads. That is Healthcare, consumer lifestyle, lighting.
HEALTH CARE
Introduction
The future of healthcare is one of the most pressing global issues of our time.
Around the world, societies are facing the growing reality and burden of
increasing and in some cases aging populations, as well as the upward spiralling
costs of keeping us in good health. Worldwide, many more people live longer
with chronic disease – such as cardiovascular diseases, cancer, diabetes – than
in the past. Aging and unhealthy lifestyles are also contributing to the rise of
chronic diseases, putting even more pressure on healthcare systems. At the
same time the world is facing a global and growing deficit of healthcare
professionals. In the long term, these challenges present Philips with an
enormous opportunity. We focus our business on addressing the evolving
needs of the healthcare market by developing meaningful innovations that
contribute to better healthcare, at lower cost, around the world.
Healthcare landscape
The global healthcare market is dynamic and growing. Over the past three
decades, the healthcare industry has grown faster than Western world GDP,
and has also experienced high rates of growth in emerging markets such as
China and India. Rising healthcare costs present a major challenge to society.
The industry is looking to
Address this through continued innovation, both in traditional care settings and
also in the field of home healthcare. This approach will not only help to lighten
the burden on health systems, but will also help to provide a more comforting
and therapeutic environment for patient care
Products and services are sold to healthcare providers around the world,
including academic, enterprise and stand-alone institutions, clinics, physicians,
home healthcare agencies and consumer retailers. Marketing,
Sales and service channels are mainly direct. The United States is the largest
healthcare market,
Currently representing close to 43% of the global market, followed by Japan
and Germany. Approximately 20% of our annual sales are generated in
emerging markets, and we expect these to continue to grow faster than the
markets in Western Europe and North America. Philips Healthcare employs
approximately 35,500 employees worldwide. With regard to sourcing, please
refer to sub-section 5.3.3, Supply management, of this Annual Report.
Drive performance
Informatics in Brazil and the expansion of our clinical informatics portfolio with
the acquisition of Wheb Sistemas, a leading Brazilian provider of clinical
information systems.
• Continue to pursue integration of our recent acquisitions: In 2010 we
successfully completed steps to integrate
Prior-year acquisitions including Inner Cool Therapies Inc., a pioneer in the field
of therapeutic hypothermia,
And Traxtal, a medical technology innovator in image guided procedures. This
included the launch of the Philips Inner Cool RTx Endovascular System to help
enhance patient care by managing therapeutic hypothermia.
Consumer Lifestyle
Introduction
Across the world, consumers aspire to improve their health and feeling of well-
being, but struggle to balance this with the increasing complexity of their lives.
This trend is creating a large and growing market in the developed and
especially in the emerging economies, where Consumer Lifestyle can benefit by
delivering health and well-being solutions with advanced technology that meet
people’s needs. We strive to understand consumer needs and translate those
insights into breakthrough, meaningful innovations. Our competitive advantage
is our solutions that are easy to experience, advanced and designed around the
consumer. This strength is galvanized by our powerful global brand, our
understanding of the markets we operate in and the many synergies with our
channels, partners and supply chain.
Where we play
We are active in our four value spaces in health and wellbeing: Healthy Life,
Personal Care, Home Living and Lifestyle Entertainment, complemented by
Accessories. This portfolio is aligned with our brand equity and enables us to
provide our retail customers with a highly relevant and attractive product
portfolio. We focus on premium propositions with our differentiating brand
promise of “sense and simplicity”, relevant to the target group. In focusing on
the domain of health and well-being, we are tapping into significant trends –
such as consumer empowerment, growth in emerging markets and aging
populations – that will have a major impact on society in the future.
Healthy Life
The Healthy Life value space takes a holistic approach to enhancing consumers’
health, addressing the needs for mental and physical health and for healthy
relationships.
Personal Care
The Personal Care value space addresses the consumer need to “look and feel
your best” and so helps people feel more confident.
Home Living
The Home Living value space addresses consumers’ pressing need to have
more time to spend on themselves or with family and friends. We do this by
creating high quality solutions that enable quick and convenient cooking,
preparation of beverages, cleaning, caring and home comfort. Lifestyle
Entertainment
Lifestyle Entertainment is about enjoying entertainment and the little events in
everyday life: sharing time with family and friends, having time off from a
hectic schedule, and moments of comfort, fun and caring.
Drive performance
Introduction
A number of global trends are changing the way people use light. Lighting
solutions are transforming urban
Environments, creating livable cities through the use of light to enhance safety,
municipal identity and residential
well-being; consumers are increasingly applying lighting to create their own
ambience at home as a statement of their lifestyle; building owners and
retailers are recognizing the benefits of energy-efficient lighting in reducing
their operational costs; and schools are learning how lighting can improve
education. At the same time, more and more people are keen to help tackle
the issues of climate change and rising energy costs. Many countries and
regions have introduced legislative measures to address energy consumption
and the emission of greenhouse gases, which are linked to climate change. In
particular, 2010 saw further legislation to phase out old, incandescent lighting
and other energy-inefficient forms of electric lighting. Philips will continue to
play significant role in encouraging and enabling the switch to energy-efficient
lighting solutions, helping our customers to save on energy costs while making
a positive contribution to the environment. Another key development is the
ongoing trend toward custom solutions. Increasingly aware of the possibilities
beyond standard solutions, consumers, businesses and national and municipal
authorities demand highly adaptable lighting solutions which they can use to
customize their indoor and outdoor environments as and when they desire.
Flexible and dynamic, our LED lighting solutions allow a much higher degree of
customization and provide significantly greater possibilities for ambience
creation than solutions based on conventional technologies.
About Philips Lighting
At Philips CL, the consumer facing units can be found in the Sales Organizations
(SOs) that are the local representations of Philips CL and the business functions
(BFs) that support operations. The involved BFs are:
• Direct Sales
• Marketing Communication
• Marketing Intelligence
• Consumer Care
The assessment of Philips CL’s structure was focused on the above parties. The
results are based on five interviews, one with an employee at a SO and one at
each of the involved BFs. The interviewees commented on the structure of
Philips CL and how it had changed from 2007 to 2009. To make the assessment,
the recordings and notes from the interviews were reviewed for comments on
how well their BF was integrated with the other parties involved in providing
the consumer experience. If an interviewee described a situation of clear
functional silos or full integration, the statement was evaluated as respectively
stage 1 or stage 4. A not as clear statement was examined for a statement of
whether collaboration was managed informally or formally (e.g. formal
category meetings) resulting in an assessment of respectively stage 2 or
stage 3. Since the results are non-normally distributed and the scale is ordinal,
the median of the resulting scores is used as the overall score for Philips CL.
Shah et al. (2006) stated that the “processes for developing and sustaining
customer relationships differ from those aimed at the execution of efficient
customer transactions”. More consumer-centricity implies that the number of
unique products and services increases. Unique personalized products and
services generally require communication across organizational boundaries
since the delivery of these products and services is more complex than that of
standard products (Kumar A., 2007; Kates & Galbraith, 2007). While making the
management of consumer information within the company more complex, the
increased number of personalized products and services also require more
consumer information than the delivery of standard products and services. This
is because personalized product and services require detailed consumer
information (Vesanen, 2007). A way to obtain this increased amount of
information is to build a relationship with the consumer that enables the
company to learn about the consumer and build consumer profiles. The
processes that manage this relationship and disseminate the consumer
information within the company are called customer relationship management
(CRM) processes (Payne & Frow, 2005). Hence, when the relationship with the
consumer becomes more important, the CRM processes also become more
important. While a number of processes can be stated that play a role in the
transition form product- to consumer-centricity, in literature, there is
agreement that the CRM processes are among the key processes for consumer-
centric companies (Shah, Rust, Parasuraman, Staelin, & Day, 2006; Kates &
Galbraith, 2007; Kumar A. , 2007; Kumar & Petersen, 2005). This study will
therefore focus on CRM in the process domain.
Payne and Frow (2005) state that: “CRM is a strategic approach that is concerned
with creating improved shareholder value through the development of
appropriate relationships with key customers and customer segments”. Excellent
CRM should therefore boost Philips CL’s ability to become more consumer-centric.
When determining the performance of a CRM program, five distinctive processes
should be taken into account (Payne & Frow, 2005):
1. The strategy-development process that includes not only a business strategy
but also a consumer strategy
2. The value creation process that is at the heart of the exchange process
3. The multichannel integration process that encompasses all the consumer
touch points
4. The information-management process that includes the data collection and
data analysis functions
5. The performance-assessment process that ties the firm’s actions to
performance
High Low
Stars Question Mark
High
Health care Personal care
Low
Lighting Home appliances
Cash cows are units with high market share in a slow-growing industry.
These units typically generate cash in excess of the amount of cash needed
to maintain the business. They are regarded as staid and boring, in a
"mature" market, and every corporation would be thrilled to own as many
as possible. They are to be "milked" continuously with as little investment
as possible, since such investment would be wasted in an industry with low
growth.
Dogs, or more charitably called pets, are units with low market share in a
mature, slow-growing industry. These units typically "break even",
generating barely enough cash to maintain the business's market share.
Though owning a break-even unit provides the social benefit of providing
jobs and possible synergies that assist other business units, from an
accounting point of view such a unit is worthless, not generating cash for
the company. They depress a profitable company's return on assets ratio,
used by many investors to judge how well a company is being managed.
Dogs, it is thought, should be sold off.
Question marks (also known as problem child) are growing rapidly and thus
consume large amounts of cash, but because they have low market shares
they do not generate much cash. The result is large net cash consumption.
A question mark has the potential to gain market share and become a star,
and eventually a cash cow when the market growth slows. If the question
mark does not succeed in becoming the market leader, then after perhaps
years of cash consumption it will degenerate into a dog when the market
growth declines. Question marks must be analyzed carefully in order to
determine whether they are worth the investment required to grow market
share.
Stars are units with a high market share in a fast-growing industry. The hope
is that stars become the next cash cows. Sustaining the business unit's
market leadership may require extra cash, but this is worthwhile if that's
what it takes for the unit to remain a leader. When growth slows, stars
become cash cows if they have been able to maintain their category
leadership, or they move from brief stardom to dogdom.
As a particular industry matures and its growth slows, all business units
become either cash cows or dogs. The natural cycle for most business units is
that they start as question marks, and then turn into stars. Eventually the
market stops growing thus the business unit becomes a cash cow. At the end of
the cycle the cash cow turns into a dog.
The overall goal of this ranking was to help corporate analysts decide which of
their business units to fund, and how much; and which units to sell. Managers
were supposed to gain perspective from this analysis that allowed them to plan
with confidence to use money generated by the cash cows to fund the stars
and, possibly, the question marks. As the BCG stated in 1970:
Only a diversified company with a balanced portfolio can use its strengths to
truly capitalize on its growth opportunities. The balanced portfolio has:
stars whose high share and high growth assure the future;
cash cows that supply funds for that future growth; and
Question marks to be converted into stars with the added funds.
Relative market share
This indicates likely cash generation, because the higher the share the
more cash will be generated. As a result of 'economies of scale' (a basic
assumption of the BCG Matrix), it is assumed that these earnings will
grow faster the higher the share. The exact measure is the brand's share
relative to its largest competitor. Thus, if the brand had a share of 20
percent, and the largest competitor had the same, the ratio would be
1:1. If the largest competitor had a share of 60 percent; however, the
ratio would be 1:3, implying that the organization's brand was in a
relatively weak position. If the largest competitor only had a share of 5
percent, the ratio would be 4:1, implying that the brand owned was in a
relatively strong position, which might be reflected in profits and cash
flows. If this technique is used in practice, this scale is logarithmic, not
linear.
On the other hand, exactly what is a high relative share is a matter of
some debate. The best evidence is that the most stable position (at least
in Fast Moving Consumer Goods FMCG markets) is for the brand leader
to have a share double that of the second brand, and triple that of the
third. Brand leaders in this position tend to be very stable—and
profitable; the Rule of 123.
The reason for choosing relative market share, rather than just profits, is
that it carries more information than just cash flow. It shows where the
brand is positioned against its main competitors, and indicates where it
might be likely to go in the future. It can also show what type of
marketing activities might be expected to be effective.
Personal care is an area from which the company gets a very less profit.
There may be many reasons for that. For ex, the profit margin may be less or
people are not aware of it. Whatever be the reason the products which
comes under personal care do not give much profit to the company even
though the product resides in the market there is not much use of it. The
only use is that they can boast about their diverse product line and nothing
more than that. So, we have positioned this particular personal care in the
place of question mark to show the non performance of the particular line of
products.
The Philips Consumer Lifestyle sector is organized around its markets,
customers and consumers, and is focused on value creation through category
development and delivery through operational excellence.
The market-driven approach is applied with particular emphasis at local level,
enabling Consumer Lifestyle to
Address a variety of market dynamics and allowing the sales organizations to
operate with shorter lines of
Communication with the sector’s six businesses. This also promotes customer-
centricity in day-to-day operations.
In 2010 the sector consisted of the following areas of business:
• Health & Wellness: mother and child care, oral healthcare
• Personal Care: shaving and grooming, female depilation, hair care, vita light,
skincare
• Domestic Appliances: kitchen appliances, beverages/ espresso, garment care,
floor care, water, air
• Television
• Audio & Video Multimedia: home audio, home video, home cinema sound,
portable audio and video
• Accessories: on-the-go accessories, together @ home accessories, personal
displays, speech processing
We have positioned the health care as a star of Philips. This is the line where
the company is getting enough profit and are putting their all worth to
improve this line. Health care of the Philips is so famous all over the world.
Their maximum revenue is coming from the health care and they want to
improve that also.
Home appliances
2. Where has the electronic market headed in India? Does the entry
of Sony and Panasonic threaten Philips?
The mainline products are the products which give the profit to the
company and help to acquire the market share.
The mainline products of the Philips company are : Iron box, Mixers,
Home theatres, DVD players, Trimmers and Shavers, Radios. Lighting
as a whole is the main line product of Philips. They are dealing with
this from a long time and so they are experienced in this line of
products and most importantly they have a very good brand name
in lighting solutions. So this becomes their mainline product
9. How does the firm plan to position the product within the
market?
The quality and service is the one thing that the Philips Company
stands out from its competitors. The way the company gives the
service is really very good and the consumers appreciate this. They
always concentrate on the customers and they will see from the
customers’ point of view.
11. What kind of promotion do you follow?
Philips Company has a exclusive outlet for the Philip products which
is called as Philips arena which is situated in every city. So buyers
will contact this arena for buying. The advantage of buying from
here is that they will get a proper servicing to their products and all
the required transactions will be fast when compared to the other
places. Buyers also can reach any other retail outlets in the city
which deals with the Philips products. For the rural areas, the
dealers will have many sub-dealers to make the product reach the
rural places.
13. Do you need to use the sales force or attend trade fairs?
Book:
Websites:
www.philips.co.in
www.india.philips.com
en.wikipedia.org/wiki
www.encyclopedia.com
Magazines:
India Today
Business world