Phillips Hue Strategic Marketing Plan
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Phillips Hue Strategic Marketing Plan

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This presentation outlines a final marketing report for Principles of Marketing at Pepperdine University, and reflects the findings of our strategic marketing plan for the Phillips Hue LED lightbulb. ...

This presentation outlines a final marketing report for Principles of Marketing at Pepperdine University, and reflects the findings of our strategic marketing plan for the Phillips Hue LED lightbulb. The Phillips Hue LED lightbulb gives the consumer the ability to connect their smartphone with any standard-socket indoor lighting system. Our report focused primarily on a marketing strategy targeted towards high end hotels. This report was very well received by our honorable marketing instructor, Professor Frank Sadighian. While the report content is the result of a collaborative effort with three of my classmates, I was responsible for the PowerPoint composition.

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  • http://www.meethue.com/en-US

Phillips Hue Strategic Marketing Plan Presentation Transcript

  • 1. Presentation by: Taylor Clayton Natalia Pamich Dhruv Dhall Jason Han
  • 2. OurMission: “Improving people’s lives through meaningful innovation. Innovation is integral to everything we do. But innovation does not only mean “new technology”. It can also mean a new application, a new business model or a unique customer proposition brought about by an innovative partnership. By tracking global trends and understanding the challenges facing people in their daily lives, we ensure that people’s needs and aspirations are at the heart of our innovation endeavors.”
  • 3. Philips . . . • Largest manufacturer of lighting products • World-class technology, customer service, and inventions • Pioneer in the green-technology initiative • Greenpeace rates Philips as one of the top 10 Environmentally friendly companies in the world
  • 4. • Healthcare: Imaging Systems, Patient Care & Clinical Informatics, Home Healthcare Solutions, Customer Services • Lighting: Lamps, Consumer Luminaires, Professional Luminaires, Lighting Systems & Controls, Automotive Lighting, Lumileds • Consumer Lifestyle: Health & Wellness, Personal Care, Domestic Appliances, Lifestyle Entertainment
  • 5. High Market Share Low Market Share High Growth Rate Star Question Mark Low Growth Rate Cow Dog
  • 6. 1. The Philips brand is very popular (Leading global lighting company) 2. Philips has the ability to produce some of the best quality products in the consumer market 3. Strong innovation capabilities 4. Large global footprint (Serving 100+ countries) 5. Low-cost and highly efficient manufacturing and supply base.
  • 7. 1. Hue is currently for sale exclusively in the Apple Store. 2. The High Price of Hue
  • 8. 1. Growing market for energy efficient products 2. Emergence of new markets, services and customers 3. Technological change 4. Taxation law (recognized through energy efficient tax credits) 5. Government regulation and policies
  • 9. 1. Cheaper competitive products 2. Macroeconomic changes 3. More competitors enter the market 4. Foreign competitors making similar products, but utilizing cheap labor
  • 10. • $825 million revenue • Projected annual growth of 3.4% • High demand for energy-efficient lighting systems – environmental concerns, lower electricity costs • Growth stage of the industry life cycle • High competition with high barriers to entry • Philips market share of 43.1%
  • 11. LIFX LED Smart Bulbs - Kickstarter Project - Wireless hub-free - Notifications - Music sync Green Wave Smart LED Light Bulb - White light only - Additional physical remote - $200 initial price, $20 for each bulb thereafter
  • 12. Product Features Advantages Benefits Hue LED Smart Light Bulbs • Easy to use smart phone interface • Interconnectivity through wireless hub • Shaped like traditional light bulbs • Easy to learn how to use • Control lights from anywhere • Fits into old fixtures • Savings in time • Savings in Time • Savings in $ LIFX LED Smart Bulbs • Interconnectivity through Wi-Fi • Social network and email notifications • Lights can sync with music • Control lights from anywhere • Instant notifications • Quickly create party environment • Savings in Time •Savings in Time •Savings in Time& $ Greenwave Reality Smart LED Bulbs •Wireless hub connectivity •Additional physical remote •White light • Control lights from anywhere •Allows for more control • Cheap replication of traditional white light • Savings in Time • Savings in Time • Savings in $
  • 13. MARKETS PRODUCTS Current New Current Market Penetration - Phillips Sells Endura LED - Are In Decline Phase of PlC - Energy Saving Lamps - Sell at higher price and same amount - Product Can Either fade away or make minor profit Product Development - Time for HUE Led Light Bulbs - Current Markets of Families and Average Young Consumers - Risk as I-phone compatibility too specific and expensive New Market Development - Expand Current Bulbs to Spas and Clubs - Lack of interest and decline could prevent expansion and sales Diversification - Sell to brand new market of hospitality - Good expansion and large industry - Diversify Phillip’s product line and increase hotel revenue
  • 14. • Social Media is imperative in connection • Lighting is an important part of the guest’s stay • Increased concern for the environment. 42% of energy from lighting and 70% of that is inefficient. Hue is not inefficient.
  • 15. • Hermesworldwide.com – economy is rebounding • Luxury vacations and luxury hotels are more popular Hue can give luxury hotels favorable impressions through customizable options and Apple functions
  • 16. • Smart Phones are in growth stage of PLC • Popularity can be a marketing tactic to intrigue customers • Ipadsin room : customizability! • Increased emphasis for green technology • Popular pick for hotels
  • 17. • Main competitor – LED LIFX – Independent and not out yet • Green Wave Reality Light Bulb – No color options, not customizable – However, it is cheaper
  • 18. • EISA (Energy Independence and Security Act of 2007) – Medium screw base and socket – Voltage range within 110 and 130 volts – Minimum CRI rating of 80 – Hue has 91
  • 19. • Large Environmental Emphasis in Today’s Society • Baltimore Business Journal – “Lighting turned off after a time period.” – Hue is energy efficient so gives more total usage
  • 20. • Natural Disaster in Hurricane Sandy – Entire Cities Ran Out of Power – Entire Hotel would lose lighting – Need Emergency Response Team • HUE requires many resources • Supply chain manager must ensure that there is a stock for emergency situations
  • 21. • Hospitality segment • Small share of Philip’s Lighting division business
  • 22. • High-end, cosmopolitan hotels with modern and colorful décor • Age range of guests is 25 to 55
  • 23. To maintain youthful and colorful themes that attract consumers
  • 24. • Growing trend for making tablet devices available to guests in their rooms so they are satisfied with their room’s modern and “high- tech” features • For example, St. Regis in Shenzhen, China and the Four Seasons in Beverly Hills, California
  • 25. • Philips Hue • Six sigma
  • 26. • Objectives: gain market share, social responsibility • Constraints: newness of the product, type of competitive markets, current economic condition • Demand: demand curves, price elasticity • Costs: associated with production • Break-Even Quantity
  • 27. • Strategies: – Demand-oriented: captive pricing, target pricing, bundle pricing – Profit-oriented: target profit, target return-on-sales, target return-on-investment – Competition-oriented: customary pricing, psychological pricing • Dynamic, flexible-price policy with price cuts for bulk-buying.
  • 28. Price = $20/bulb (Based on customary/target pricing) With 100% mark-up BEQ = FC (P-UVC) = 36 545 905.82/(20 – 10) = 3 654 591 units BES = 3 654 591 units * 20 = $73 091 811.64 sales
  • 29. Regular Price Bundle Price with Hue iTouch $199 $99 iPad Mini $329 $229 iPad $399 $249 Hue – Apple Bundle Price New, discounted prices for Apple equipment:
  • 30. • The Promotion is a key factor in the success of this campaign – As demand is on the rise perfect time for Hue – No comparison to any hospitality lighting • Apple functionality and social media key aspects • Building relationships core as well
  • 31. • Brand New Product so Informational Product Style – Introduce Hospitality Industry to HUE – Marketing it with Apple is core – Both Hue and Apple Benefit from this • Methods – TV Apple I-pad advertisements – Great wide scale exposure – Large and diverse customer base
  • 32. • Social Media – Dedicated Managers to manage hotel accounts – Hue can create accounts to build relationships and reach out to clients – Constantly Show off Features as well • Hotel conventions – PR team directly represent HUE – Networking and brand development • Mixers – Gain Data and Keep in Touch – Generate Buzz Marketing – Spread the Word
  • 33. • Bulk Sales – Include some amounts of Apple I-pads with sales and orders – Cross Promotional Feature • Provides Increased Luxury to rooms • Boston.com – more features in a room, more satisfaction • Provides incentive to purchase and a deal
  • 34. • Direct Conversation Through Social Media • Direct Marketing through TV Ads • Iphoneapp also a form. Managers might see Ad on TV • Direct Meetings – Best and Most Detailed Information – Must have all materials and convey FABs • Conventions – While PR Manages Image, Sales should gain interest and desire for product through displays – Remember to use variety of methods for success • Di
  • 35. • Sales Team specifically for Hospitality – Conduct research into expectations and wants – Must have knowledge of product to explain – Six Steps – PBC – Negotiate Prices and Develop Deals – Develop Customer Relationships – Use Need Satisfaction Format of presentation
  • 36. • Corporate system of distribution • 20 Sales agents who engage in direct selling to modern luxury hotels • No need for wholesalers, distributors or stores • Maintain our own sales force to perform all channel functions • Strategic channel alliance with other divisions of Philips involved in the hospitality industry • Value created by quick transactional function
  • 37. Adds value to customer experience by having modern and “high-tech” features at their fingertips to customize their room Compatibility with Hotel’s Style/Decor PerceivedCustomerValueofGuestroom Perceptual Map High HighLow Other White LED light bulbs Hue
  • 38. Limited time: 1 Month Limited place: The Los Angeles W Hotel
  • 39. • Profit: high ROI and profit • Sales: $100 million in sales • Market Shares: increase the LED light bulb share in the luxury hospitality market • Quality • Customer Satisfaction • Employee Welfare • Social Responsibility: promote energy efficiency
  • 40. Lighting& Bulb Cost (as a percent of co. revenue) + LED Cost (as a percent of co. revenue) = LED Light Bulb Cost (as a percent of co. revenue) Profit 6.5% + 10.0% = 16.5% / 2= 8.25% Wages 19.1% + 14.7% = 33.8% / 2= 16.9% Purchases 49.9% + 22.0% = 71.9% / 2= 35.95% Depreciation 3.2% + 10.5% = 13.7% / 2= 6.85% Marketing 1.0% + (4.0%) = 5.0% / 2= 2.5% Rent & Utilities 4.1% + 8.5% = 12.6% / 2= 6.3% Other Totals: 16.2% 100% + (30.3%) 100% = 46.5% / 2= 23.25% = 100%
  • 41. Lighting& Bulb Manufacturing LED Bulb Manufacturing Input Materials: • Glass and glass products • Metal wire • Plastic • Rubber • Inert gases. Input materials: Different quantities of: • Synthetic sapphire • Gallium • Indium • Silicon carbide • Aluminum • Epoxy resin • Copper • LED Manufacturing requires a combination of resources used in these two separate manufacturing processes
  • 42. • To arrive at total budget we used Philip’s 2011 reported net operating capital for their lighting division of $6,554,614,000 • Multiply net operating capital by the LS&E market share of 53% • Gives the budget for the LS&E and electronics division $6,554,614,000 x 53%=$3,473,945,420
  • 43. • Next, apply our estimate of Hue’s 8% budget share to the LS&E budget to arrive at Hue’s final estimated budget $3,473,945,420 x 8% = $277,915,633.60 LED Light Bulb Cost (as a percent of co. revenue) X Hue’s Total Budget = Estimated Budget for Each Cost Category Profit 7.25% X $3,473,945,420 = $20,148,883 Wages 16.9% X $3,473,945,420 = $46,967,742 Purchases 35.95% X $3,473,945,420 = $99,910,670 Depreciation 6.85% X $3,473,945,420 = $19,037,220 Marketing 2.5% X $3,473,945,420 = $6,947,890 Rent & Utilities 6.3% X $3,473,945,420 = $17,508,684 Other Total 23.25% 100% X $3,473,945,420 = = $64,615,384 $3,473,945,420
  • 44. • Price • Place
  • 45. http://www.newscenter.philips.com/main/standard/news/press/2012/20121029-connected-lighting-system-for-the- home.wpd#.ULMN_7Se18s http://www.theverge.com/2012/11/8/3616828/smart-bulbs-phillips-hue-greenwave-reality-insteon-led http://energy.gov/energysaver/articles/frequently-asked-questions-lighting-choices-save-you-money http://www.kickstarter.com/projects/limemouse/lifx-the-light-bulb-reinvented http://www.bulbs.com/learning/ledfaq.aspx#anchorlast http://thenextweb.com/gadgets/2012/10/29/meet-philips-hue-the-smart-led-light-bulb-exclusively-hitting-apple-stores-on- october-30/ http://www.newscenter.philips.com/main/standard/news/press/2012/20121029-connected-lighting-system-for-the- home.wpd#.ULMN_7Se18s http://www.greenwavereality.com http://eartheasy.com/live_led_bulbs_comparison.html http://clients1.ibisworld.com.lib.pepperdine.edu/reports/us/industry/default.aspx?entid=4456 http://www.newscenter.philips.com/pwc_nc/main/corpcomms/resources/corporate/Q2_2012/presentation_2Q12.pdf http://www.philips.com/about/company/companyprofile.page http://www.usa.philips.com/c/led-light-bulbs/30033/cat/en/