PROJECT REPORT ON MARKETING MIX OF Submitted to: Prof. R. K. Vijaya Sarathy Director Dyananda Sagar Business School Submitted by:Madhu Medappa, Ankita Tandon, Shrawan Kumar, Abijeeth Prushty, Vinod Kumar PGDM(AICTE)2011-2013 Dyananda Sagar Business School Bangalore
PREFACEThis project has been taken with a view to make a study on the MarketingMix of Philips India Ltd. With special reference to Karnataka state and thusto uncover the strategies and plans that are inculcated by the Philips IndiaLtd.The present study creates awareness about the Marketing Mix put forth byPhilips India Ltd.It also provides knowledge to the readers about the electronic industry,Position of Philips India ltd., Marketing strategies implemented by Philips.The present is the effort to formulate the strategy of marketing mix to staystrong and to grow in the market for Philips.
ACKNOWLEDGEMENTA project is never the work of an individual. It is more over acombination of ideas, suggestions, review, contribution and workinvolving many folks. It cannot be completed without guidelines.First of all we would like to express our sincere gratitude toMr ABHISHEK SINGH (branch manager) Philips India Ltd, Bangalorefor giving us the opportunity to make this project and helped in everyway possible.Last but not the least our sincere thanks to our class mates andfriends who helped us in completing this project. Madhu Medappa (PGDMA1119) Ankita Tandon (PGDMA1103) G.Shrawan Kumar (PGDMA1157) Abijeeth Prushty (PGDMA1101) P.Vinod Kumar (PGDMA1131) PGDM (AICTE)
CONTENTS1. About the consumer electronic industry2. About Philips3. SWOT Analysis4. Marketing Mix5. Marketing Mix of Philips6. BCG Matrix7. Questionnaire8. Conclusion9. Bibliography
ABOUT THE CONSUMER ELECTRONIC INDUSTRYThe consumer electronics industry is maturing at an incredibly rapid rate.Demand for consumer electronic goods had always been there, but it reallyhas reached its peak in the past few years. This has subsequently triggered theexpansion of the consumer electronics industry, which is turning into theforemost profitable markets in world market.In the last few years, there has been dynamic technological progress. Theconsumer electronics industry continues to be employing advancedengineering to manufacture electronic goods which is reaping massive profitsas a result. People today live extremely hectic lives to keep up with the pace ofthe world. A busy way of life calls for some form of fun. It is essential toinvigorate the brain and ease out anxiety and stress since bottled up tensioncan be harmful to health. Innovative products have been developed whichprovide people with various kinds of enjoyment.Apart from home entertainment, there are more electronic goods which havebecome a necessity in our daily life. Consumers are increasingly becomingdependent upon electronic goods in their daily lives since it saves themconsiderable time and energy. Consumer electronic goods have come to theforefront in making the effort for a man simpler and perfect. These machineshave become a part of our everyday routine and it’s now tough to imagine alife without them. The consumer electronics industry has definitely respondedto the requirements of time. World-class correspondence equipment likecellular phones, fax machines and computers are also needed in our dailylifestyles, 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 goodsfor daily use. These are found in many areas of life which includes office,communications, and entertainment. The need for many of the most popularelectronic goods in our everyday life has added to the expansion of theconsumer electronics industry. Popular consumer electronic goods includeessential equipments like televisions, personal computers, radio, mobiles,microwaves, stereo systems, refrigerators, washing machines as well as othergadgets.
The need for consumer electronic goods has drawn huge amount ofinvestments for this business. These investments have successively triggeredthe expansion of this business. The story of consumer electronics around theworld hasn’t followed a straight path. Different countries have climbed thecorporate ladder of success in this field of electronics faster compared toothers in different periods. Often, it’s been the United States of America whilesometimes Asian countries like Japan and China took over as the biggestproviders of consumer electronic goods. However, there were additionalnations as well like Ireland and others who had shocked society with theiraccomplishments in the field of electronics. US consumer electronicsexperienced tough competition from the Chinese and Japanese manufacturersin the 1960s. As a result, the consumer electronics industry of the USAdiminished, but by the 1980s, the industry again gained its former position.The United States’ consumer electronics industry is the world’s premierconsumer electronics industry.
Innovation of Consumer ElectronicsEven if you might have asked it a decade back, situation would’ve beennoticeably diverse; yes, I’m talking about the situation of consumerelectronics. When compared to those bygone days, today’s consumerelectronics industry has succeeded to such a position in which innovation runsthe 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. Mouldingthe consumer electronics saga. Honestly put, existence without these itemswould end up in chaos!What’s the specialty for these products and services? Would it be reallydifficult to exist without having these? Contemplate! Would you live withoutthese? Absolutely not! Today’s technology has advanced at such a amazingspeed that we don’t have any idea when and just how we submit to them inthe process. Items are constantly being developed every day, keeping in mindwhat buyers desire. Be it in your new kitchen or maybe your living room, inyour telecommunications routine or perhaps entertainment necessities, theexistence of consumer electronics now can be experienced anywhere. Creditgoes to the key consumer electronic product developers that leave no stonesunturned 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 themerchandise of their choice instantaneously. By simply browsing on theinternet 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 netthat will keep you up to date regarding the latest happenings around the worldof consumer electronics. Consumer Electronic updates also can be verytherapeutic for you in enlightening you about the most recent releases bymeans of similar manufacturers.
CONSUMER ELECTRONIC INDUSTRY IN INDIAThe electronic industry in India took off around 1965 with an orientationtowards space and defence technologies. This was rigidly controlled andinitiated by the government. This was followed by developments in consumerelectronics mainly with transistor radios, black and white TV, calculators andother audio products. Colour televisions soon followed. In 1982 a significantyear in the history of TV in India – the government allowed thousands of colourTV sets to be imported into the country to coincide with the broadcast of Asiangames in New Delhi. 1985 saw the advent of computers and telephoneexchanges, which were succeeded by digital exchanges in 1988. The periodbetween 1984 and 1990 was a golden period for electronics during which theindustry witnessed continuous and rapid growth.From 1991 onwards, there was first, an economic crisis triggered by the GulfWar which was followed by political and economic uncertainties with thecountry. Pressure on the electronic industries remained though growth anddevelopments have continued with digitalisation in all sectors, and morerecently the trend towards convergence of technologies. After the softwareboom in mid 1990’s India’s focus shifted to software. While the hardwaresector was treated with indifference by successive governments. More overthe steep fall in custom tariffs made the hardware sector suddenly vulnerableto international competition.CURRENT SCENARIOIn recent years the electronic industry is growing at a brisk pace. It is currentlyworth US$ 32 billion and according to industry estimates it has the potential toreach US$150 billion by 2012. The largest segment is the consumer electronicssegment. While is largest export segment is of components.The electronic industry in India constitutes just 0.7% of the global electronicindustry. Hence it is miniscule by international comparison. However thedemand in the Indian market is growing rapidly and investments are flowinginto augment manufacturing capacity.
The output of the electronic hardware industry in India is worth US$11.6 billionat present. India is also an exporter of a vast range of electronic componentsand 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 servicesThis growth has attracted global players to India and leaders like Solectron,Flextronics, Sony, Panasonic, Philips, Nokia, Elcoteq and many more have madelarge investments to access the Indian market. The consumer electronicsKorean companies such as LG and Samsung have made commitments byestablishing large manufacturing facilities and now enjoy a significant share inthe growing market for products such as Televisions, CD/DVD players, Audioequipment and other entertainment products.Consumer electronic goods are those which don’t wear out quickly, yieldingutility over time rather than at once. They can be further classified as eitherwhite goods, such as refrigerators, washing machines and air conditioners orbrown goods such as blenders, cooking ranges and microwaves or consumerelectronics such as televisions and DVD players. Such big-ticket items typicallycontinue to be serviceable for three years at least and are characterized bylong inter-purchase times.PerformanceIn the past 10 years, the global market has witnessed a surge in demand aseconomies such as Brazil, Mexico, India and China have opened up and begunrapid development, welcoming globalization with élan. The consumer durablesindustry has always exhibited impressive growth despite strong competition
and constant price cutting, and the first contraction since the 2001 dot-combust has been due to the global recession. Given the strong correlationbetween demand for durables (both new and replacements) and income, theindustry naturally suffered during the 2008-2009 period. However, projectionsfor current year going forward are very optimistic, as consumers resumespending, and producers launch new enticing variants to grab new customers.Leading players include Sony Corporation, Toshiba Corporation, WhirlpoolCorporation and Panasonic Corporation.Developing countries such as India and China have largely been shielded fromthe backlash of the recession, as consumers continued to buy basic appliances.In fact, China has been ranked the second-biggest market in the world forconsumer electronics. Despite the recession, their strong domestic economyand growing high-income population have buoyed demand leading toaggressive market growth.There is growing interest for new age products such as LCD-TVs and DVDplayers. Meanwhile, the penetration of the basic, largest dollar items such asovens, washing machines and refrigerators is also increasing. India too, haswitnessed a similar phenomenon, with the urban consumer durables marketgrowing 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, TVsand music systems.The Indian consumer durables industry has witnessed a considerable change inthe past couple of years. Changing lifestyle, higher disposable income coupledwith greater affordability and a surge in advertising has been instrumental inbringing about a sea change in the consumer behaviour pattern. Apart fromsteady income gains, consumer financing and hire-purchase schemes havebecome a major driver in the consumer durables industry.In the case of more expensive consumer goods, such as refrigerators, washingmachines, colour televisions and personal computers, retailers are joiningforces with banks and finance companies to market their goods moreaggressively. In addition, change in policy, such as the WTO FTA in 2005
resulted in zero customs duty on imports of all telecom equipment, therebyimproving the pricing and affordability of imported goods.ChallengesThe biggest threats to the local industry going forward are supply-relatedissues pertaining to distribution and infrastructure, as well as demand issuesdue to competition from imported goods. The lack of well developeddistribution networks makes it especially challenging to penetrate the fastestgrowing rural areas economically. In addition, regular power cuts and poorroad linkages make systematic production, assembly and delivery problematic.On the demand side, customers have increasing choice from both domesticallyproduced and imported goods, with similar features. This homogeneity makesit difficult for players to remain ahead of the competition.MNCs hold an edge over their Indian counterparts in terms of superiortechnology combined with a steady flow of capital, while domestic companiescompete on the basis of their well-acknowledged brands, an extensivedistribution network and an insight in local market conditions. The largestMNCs incorporated in India are Whirlpool India, LG India, Samsung India andSony India and home-grown brands are Videocon, Godrej Industries and IFB.Future ProspectsOverall, the industry’s future remains robust, and interested applicants willbenefit from a holistic learning experience; Many of the research, sales,marketing and advertising related roles will necessitate a good on-the-joblearning of target audiences, who may well be a totally new segment, based innever-before visited Class II and III towns. In addition, those with technicalbackgrounds will be able to leverage their knowledge and experience toconstantly develop and innovate the product variants. With more MNCsgrowing their Indian businesses, there is great potential to also learn best-in-class systems and management skills.
Royal Philips ElectronicsRoyal Philips Electronics of the Netherlands is a diversified Health andWell-being company, focused on improving people’s lives throughtimely innovations. As a world leader in healthcare, lifestyle and lighting,Philips integrates technologies and design into people-centric solutions,based on fundamental customer insights and the brand promise of“sense and simplicity”.Headquartered in the Netherlands, Philips employs over 120,000employees with sales and services in more than 100 countriesworldwide. With sales of EUR 22.3 billion in 2010, the company is amarket leader in cardiac care, acute care and home healthcare, energyefficient lighting solutions and new lighting applications, as well aslifestyle products for personal well-being and pleasure with strongleadership positions in male shaving and grooming, portableentertainment and oral healthcare.Global FootprintPhilips is a global leader across its healthcare, lighting and lifestyleportfolio. It is the world’s largest home healthcare company, beingnumber one in: Monitoring systems, Automated External Defibrillators,Cardiac Ultrasound, and Cardiovascular X-ray.We are number one in lamps in Europe, Latin America and Asia Pacificand number two in North America; in Automotive lighting, we areleading in Europe, Latin America, Japan and Asia Pacific.We are number one in the electric shavers and male grooming categoryglobally.
BusinessesHealthcarePhilips simplifies healthcare by focusing on the people in the care cycle –patients and care providers. Through combining human insights andclinical expertise, Philips aim to improve patient outcomes whilelowering the burden on the healthcare system. Advanced healthcaresolutions are a fundamental part of the portfolio for both healthcareprofessionals and consumers, to meet the needs of patients in hospitalsand at home. Philips Healthcare employs approximately 35,500 peopleworldwide.LightingPhilips Lighting is the leading provider of lighting solutions andapplications both for professional and consumer markets, transforminghow lighting is used to enhance the human experience in the placeswhere people live and work. Whether at home, on the road, in the city,shopping, at work or at school, we are creating lighting solutions thattransform environments, create experiences, and help shape identities.We serve our customers through a market segment approach whichencompasses Homes, Office and Outdoor, Industry, Retail, Hospitality,Entertainment, Healthcare and Automotive. For these segments weprovide a wide range of offerings from across the entire lighting valuechain - from light sources, luminaries and lighting controls to lightingsolutions and services. Philips Lighting employs approximately 53,000.
Consumer LifestyleGuided by the brand promise of “sense and simplicity” and theconsumer insights, Philips Consumer Lifestyle offers rich, new consumerexperiences that meet consumers’ desire for relaxation and improvingtheir state of mind. Philips also responds to the consumers desire forwellness and pleasure by introducing products that meet the individual’sinterests in terms of their body and appearance. Philips ConsumerLifestyle employs approximately 17,700 people worldwide.Innovation50,000 registered patents illustrate the innovative nature of thecompany. Philips currently holds around 36,000 registered trademarks,63,000 design rights and 3,900 domain names.Philips has adopted an Open Innovation strategy which leverages thejoint innovative power of partnering companies and researchers to bringmore innovations to the market effectively and faster.In 2010, Philips invested EUR 1.58 billion in Research and Development.Philips is internationally recognized as a global leader in design,receiving a variety of international awards each year. For example:2010 if product design competition: 28 design awards
SustainabilitySustainability is at the centre of Philips’ strategy. Philips is committed toreducing its environmental footprint in all aspects of its business: in itsproducts, manufacturing, and procurement, as well as in thecommunities where the company acts and in the working practices of itsemployees.All Philips products go through an EcoDesign process, identifyingenvironmental impact in terms of energy efficiency, hazardoussubstances, take-back and recycling, weight and lifetime reliability.Philips’ processes on Green Product sales are verified annually by anindependent third party and published in the Annual Report.Philips aims to combat global healthcare challenges by focusing ondelivering better quality healthcare at lower costs, also in the emergingmarkets, such as China and India.Philips also takes a leading position in educational programs, showing itsstakeholders that energy efficient solutions are simple, easy andactionable and make economic sense for national and localgovernments, businesses, schools and individuals.
Mission"Improve the quality of people’s lives through timely introduction ofmeaningful innovations."Vision“In a world where complexity increasingly touches every aspect of our dailylives, we will lead in bringing sense and simplicity to people.”BehavioursEager to winTake ownershipTeam up to excelBrand PromiseWe empower people to benefit from innovation by delivering on our brandpromise of “sense and simplicity”. This brand promise encapsulates ourcommitment to deliver solutions that are advanced, easy to use, and designedaround the needs of all our users.MID TERM (2013) PERFORMANCE TARGETSPhilips’ business portfolio is well positioned in highly attractive markets andgeographies to capitalize on global trends. The large majority of the businesshas the right fundamentals for profitable organic growth.Philips mid-term performance goals are: Comparable sales growth of 4-6%, assuming real GDP growth of 3-4% per annum Reported EBITA margins of 10-12% for the group 15 – 17 % for healthcare 8 – 10 % for consumer life style 8 – 10 % for lighting Return on investment capital of 12 – 14 %
Building the Leading Brand in Health and Well-BeingWe seek to improve the quality of people’s lives through focusing on theirhealth and well-being. Quite simply, we want to help people live a healthy,fulfilled life.By “health” we mean not only medical-related aspects of health, but alsokeeping fit, eating a healthy diet, and generally living a healthy lifestyle.By “well-being” we mean general sense of fulfilment, feeling good and at ease.“Well-being” also refers to a sense of comfort, safety and security people feelin their environment – at home, at work, when shopping or on the road.Our focus on Health and Well-being automatically implies that we contributeto building a sustainable society.Business Highlights in Q3As the global leader in patient monitoring, Philips introduced the benefits ofmobility to hospitals with the global launch of a compact, wearable patientmonitor, the IntelliVue MX40.The monitor enables remote mobile monitoring of patients in a supervisedrecovery environment, giving clinicians the freedom and flexibility to spendmore time with patients.
Philips introduced the Perfect Care, a revolutionary iron that uses a new steamtechnology, allowing the user to iron all of their clothes at one lowtemperature setting. Philips is the no. 1 brand in ironing worldwide.Combining its expertise in healthcare and lighting, Philips is developing ablanket that wraps babies in healing light, to make significant advances in thetreatment of bilirubinemia – or neonatal jaundice. Bilirubinemia affects 60% offull-term newborns and 90% of premature babies.The battle of perceptionPhilips has been a household name in India for 75 years, but consumersassociated the brand more with tube lights and transistors than cutting-edgetechnology.Thats ironic, considering the company has made its mark globally as atechnology leader -- it invented the cassette recorder, the compact disc andthe DVD; the last in association with Sony.But a survey by advertising agency JWT, which held the Philips account from2001 (it has recently moved to Madras), revealed that Philips technology wasseen as reliable but not state-of-the-art.Clearly, Philips needed an image makeover. It began by taking the technologyroute. Post-2001, advertising campaigns emphasised the companystechnologically-advanced features.Philips was the first audio company to launch an MP3 player (May 2002), and itmade sure its communication played that up: "Dont buy a system if it doesnthave an MP3 player." Then there was the October 2002 campaign, in which alittle boy uses the power of the music system to nudge the cookie jar off thetop-most kitchen shelf."We were constantly refining the image of the company in the minds of theconsumer, making it more modern," explains Tarun Rai, senior vice president,JWT.But that wasnt enough. Thats where in-store displays and promotions thatdemonstrated the abilities of Philips products came in. In October 2003, JWTbroke the "Ramu kaka" ad, where the manservant inadvertently inserts a rotiinto the DVD player.The tagline made the message clear: "The new Philips DVD player playsanything". The campaign proved immensely popular -- it was used in other
Asian countries as well -- and Philips wasnt slow in leveraging its appeal. Atlive demos, customers would be invited to slip rotis into the player, creating abuzz around the product and the brand.But that would probably appeal more to families and Philips needed to reachout to the youth, its target customer base. So it went to where the action was -- colleges and rock festivals.Philips set up stalls, complete with a professional DJ. Youngsters were invitedto man the console, while the DJ gave them tips on mixing and spinning. "Wehad huge walk-ins and could provide an involvement and experience with thebrand," says Shivkumar.Clinch the dealerPhilips has successfully played the price card, but not all price cuts have beendue to better or cheaper technology. In some segments like radios, it did awaywith trade discounts and passed on the savings to the customer.Two years ago, Philips radios sold at Rs 600 -- a huge premium compared tothe Rs 200 or so that other brands cost. In mid-2003, the company slashed theprice 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 startedstocking competing brands, only to return, claim company officials, when theyfound volumes were increasing exponentially."They soon realised it was more profitable to sell Philips radios because theturnover is much higher," points out Gunjan Srivastava, business head, audioconsumer electronics.Radio sales in themselves are not significant for Philips -- they account forabout 15 per cent of the audio business. But, as S Nagarajan, head sales andservice, 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 twoyears ago. Distributors are now allocated smaller geographical territories sothey can concentrate on getting firmer footholds in their areas.
Distributor in upcountry markets, who were earlier, allotted five or six districtsare now given only two or three. And not all are given the entire productrange."We allocated only some products so that the focus is sharper" explainsNagarajan.Creating the value propositionPhilips realised early on that maintaining the price-quality equation is critical.Thats especially true of the minis (DVD and VCD hi-fi systems) segment, whichaccounts for a quarter of the audio market in value terms.Even as Philips constantly raised the technology bar (MP3 players, deeper bass,sleeker, more streamlined systems), its kept its prices competitive. Thecompany prices its minis at Rs 8,000-25,000, compared with the market rangeof Rs 7,500-30,000.Moreover, prices have been falling by 10 per cent on average every year. Ofcourse, thats 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 warriorlike Aiwa or Sansui nor prohibitively expensive -- Sony products are on average10 per cent more expensive.Philips also brought in help from outside. In late 2002, it tied up withCountrywide and Citibank to provide accessible finance schemes for itsproducts.Compared to equal monthly instalments of about Rs 1,000 earlier, the newschemes let customers pick up state-of-the-art sound machines for as little asRs 333 a month - that too, without a down-payment.Has that helped? Consider: Philips entered the minis segment only in 2000, ayear behind Sony. But its now carved up the market with Sony, with 45 percent share each.The company also paid close attention to customer feedback. It has ramped upthe 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 in2002.The increased attention to the customer pays off in many ways. Realising thatmany customers were using the DVD player to play music discs, Philips decidedto offer two speakers with built-in amplifiers, along with the player.For just Rs 500 more, customers could get two benefits: enhance their musicplayback 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 theplayer to further improve the sound.Product innovation has helped in rural markets, too. Based on customerresearch, in early 2003 Philips launched a radio with TV tuner -- this way,customers who didnt own a TV set could at least listen to televisionprogrammes.VISION 2010As part of Philips’s "Vision 2010" strategy, Philips Electronics India Limitedhad fuelled the companys growth plans in India with a marketing outlay ofRs 100 million for a series of five mega Philips Simplicity programs.These programs reflected the companys renewed focus on the consumerlifestyle, healthcare and lighting sectors.Philips announced its "Vision 2010" strategy to further position the companyas a market-driven, people-centric organization and a structure that fullyreflects the needs of its customer base, while also increasing shareholdervalue.Linking the strategy to India, Philips Electronics India Ltd. continued totransform, adapt and adapt to the changing needs of their consumers acrossHealthcare, Entertainment, Domestic Appliances and Lighting sectors.
Vision 2010 is a natural progression in their long stated journey towardsbeing a company that is focused around the consumer in three core areas ofHealthcare, Lighting and Consumer Lifestyle. The road ahead is exciting andthe timing is just right for Philips to emerge as the leading Healthcare andLifestyle company.The strategy provides a collective focus for their Consumer and Healthcarebusinesses. The brand promise of Sense and Simplicity encapsulatesPhilips’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 theworld they may be.Over the years, Philips has come up with several products and initiatives toimprove the lives of the masses. The rural thrust with affordable andaccessible products is one prong of Philips India strategy, and the other is ofcourse the focus on urban markets. Here too, innovation and convenienceare the guiding principles for growth. In the healthcare arena, Philips islooking at growth and garnering customer confidence through new forms oforganization; new products; innovative business models and originalchannels of distribution.
Strength Brand – As Philips entered the Indian market before 120 years, they exactlyknow the behaviour of the Indian consumers. So according to the consumersrequirements the Philips company has positioned its brand in the market and inthe consumers mind. Now in Indian context, Philips means a brand that can berelied upon and the consumers in India belive on this brand. It has become ahouse hold brand. The main advantage is that the diversed product line of thecompany. It has almost all the products which are used by everyone in the houseand also the products for general use. For ex. Philips has lighting solutions,trimmers, electric toothbrush, led lamps, mixers, home theatres, iron box, mp3player, DVD player etc,. which includes all the possible products which is used byall members of the house. So indirectly this factor is affecting the minds of thepeople which is making the Philips to grow in the market. Quality – The brand name of the company stays fit in the consumers mind. Andthe main reason for that is the quality of the product which is produced by thecompany directly or indirectly with the brand name of Philips. Even though thecompany is a old player in the Indian market, with out the right quality it couldnot reach the position that it is there now. The Indian customers are mainly pricesensitive at the same time they also give importance to the quality and this is themain part which made Philips gain a huge market share. Service – The service is a extra credit given to the customers by the sellers inorder to gain the good will and to get the consumer in to good terms with thecompany who will in future will become a loyal customer of the company. Herethe company always tries to make a point that, once a consumer uses theproduct 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 thebrand. So, here service plays a big role and that is the streangth of Philips as theyprovide a good after sales service to the consumers. They have their ownexclusive service centers and linked with many big names in the market in orderto give the service. Distribution channel – A strong distribution channel is like a solid nerve systemof the human body. So if the company has a strong distribution channel theselling of the products becomes easy. Philips has 8 intermediaries in Bangaloreand every 1person for a district in Karnataka and this acts as a strong hand of thecompany. They depend on their distribution channel heavily and till date theresults are positive from them. WEAKNESS Limited stock availability in the company – The company has a very strongdistributing channel which will help them in selling the Philips products in a goodpace. So when the situation is good for sale the availability of goods becomes areal problem and this poses a big question in front of the company. The Philips isalso facing the same problem in recent years. As almost 70 – 80 % of the productsare imported to India, the problem of stock availability is more. The importingnorms will have different rules and regulations to the company that they canimport only certain volume of particular products in a mont or something likethat. So the estimation will always not help in importing the goods. Because thehuman psychology plays a huge role in this decision making. So it is very difficultand hence this problem is breaching the Philips India limited.
Limited product line – Though the company has a strong product line, themarketing heads in the company are of a opinion that the product line of thecompany should be increased in order to give the customers what they reallywant. This is a right thought that the growing population in India wants somenewness in the products and they like it to be unique from others. So increasingthe product line may attract many more consumers towards the company in therecent years. As the product line is limited in a particular sector boredom ofbuying a same type of product has come into the consumers mind. OPPORTUNITY The company is mainly concentrated upon the health care and lighting sectorthrough which the company got a brand name which is very much in the minds ofthe consumers. So, now at this point of time if the company introduces as manyas household appliances, into the market, it will gain a huge market share interms of household electronic appliances. This step will be a wise move by thecompany. Another huge opportunity with the Philips company is that of making the pricingmethods by acquisition. If the company acquires any local company and makethem produce the products of Philips in their plant which will reduce the cost ofthe 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 andstabilize their pricing method.
THREAT The big threat and challenge of the Philips Company is that of the China madeproducts which have a intense effect in the Indian market. Because of theseproducts the Philips Company is facing a huge problem in the Indian market. Thisproblem is mainly concerned on the pricing methods of the company. Theconsumers expect that the price of the Philips company should also be reduced.But Company is not in a position to do so.
MARKETING MIXPutting the right product in the right place, at the right price, at the righttime.The marketing mix is a business tool used in marketing products. Themarketing mix is often synonymous with the four Ps: price, promotion,product, and place.The term "marketing mix" was coined in 1953 by Neil Borden in his Americanmarketing association presidential address. However, this was actually areformulation of an earlier idea by his associate, James Culliton, who in 1948described the role of the marketing manager as a "mixer of ingredients", whosometimes follows recipes prepared by others, sometimes prepares his ownrecipe as he goes along, sometimes adapts a recipe from immediately availableingredients, 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, putit on sale some place that those same people visit regularly, and price it at alevel which matches the value they feel they get out of it; and do all that at atime they want to buy. Then youve got it made!The marketing mix and the 4 Ps of marketing are often used as synonyms foreach other. In fact, they are not necessarily the same thing."Marketing mix" is a general phrase used to describe the different kinds ofchoices organizations have to make in the whole process of bringing a productor 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? Are there any features youve missed out? Are you including costly features that the customer wont actually use? How and where will the customer use it? What does it look like? How will customers experience it? What size(s), colour(s), and so on, should it be? What is it to be called? How is it branded? How is it differentiated versus your competitors? What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).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 mix model can be used to help you decide how to take a newoffer 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 belowhelp you define and improve your marketing mix.1. Start by identifying the product or service that you want to analyze.2. Now go through and answer the 4Ps questions – as defined in detail above.3. Try asking "why" and "what if" questions too, to challenge your offer. For example, ask why your target audience needs a particular feature. What if you drop your price by 5%? What if you offer more colours? Why sell through wholesalers rather than direct channels? What if you improve PR rather than rely on TV advertising?The marketing mix helps you define the marketing elements for successfullypositioning your market offer.One of the best known models is the Four Ps, which helps you define yourmarketing options in terms of product, place, price and promotion. Use themodel when you are planning a new venture, or evaluating an existing offer, tooptimize the impact with your target market.
MARKETING MIX OF PHILIPSThe different product lines of the Philips Company are:Imaging SystemsHome Healthcare SolutionsPatient Care and Clinical InformaticsTelevisionPersonal CareAudio & VideoMultimediaDomestic AppliancesHealth &WellnessAccessoriesLampsConsumer LuminariesProfessionalLuminariesLightingElectronics and ControlsAutomotive LightingPackaged LEDsLED solutionsThis comes under 3 main heads. That is Healthcare, consumer lifestyle,lighting.Koninklijke Philips Electronics N.V. (the ‘Company’) is the parent company ofthe Philips Group (‘Philips’ or the ‘Group’).The management of the Company isentrusted to the Board of Management under the supervision of theSupervisory Board. Philips’ activities in the field of health and well-being areorganized on a sector basis, with each operating sector –Healthcare, ConsumerLifestyle and Lighting – being responsible for the management of its businessesworldwide. The Group Management & Services sector provides the operating
sectors with support through shared service centres. Furthermore, countrymanagement organization supports the creation of value, connecting Philipswith key stakeholders, especially our employees, customers, government andsociety. The sector also includes pension.Also included under Group Management & Services are the activities throughwhich Philips invests in projects that are currently not part of the operatingsectors, but which could lead to additional organic growth or create valuethrough future spin-offs. At the end of 2010, Philips had 118 production sites in27 countries, sales and service outlets in approximately 100 countries, and119,001 employees.HEALTH CAREHealthcare challenges present major opportunities in the long term• Addressing the care cycle – our unique differentiator• Home healthcare is a core part of our healthcare strategy• Improved market leadership in core businessesIntroductionThe 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 ofincreasing and in some cases aging populations, as well as the upwardspiralling costs of keeping us in good health. Worldwide, many more peoplelive longer with chronic disease – such as cardiovascular diseases, cancer,diabetes – than in the past. Aging and unhealthy lifestyles are also contributingto the rise of chronic diseases, putting even more pressure on healthcaresystems. At the same time the world is facing a global and growing deficit ofhealthcare professionals. In the long term, these challenges present Philipswith an enormous opportunity. We focus our business on addressing theevolving needs of the healthcare market by developing meaningful innovationsthat contribute to better healthcare, at lower cost, around the world.
Healthcare landscapeThe global healthcare market is dynamic and growing. Over the past threedecades, the healthcare industry has grown faster than Western world GDP,and has also experienced high rates of growth in emerging markets such asChina and India. Rising healthcare costs present a major challenge to society.The industry is looking toAddress this through continued innovation, both in traditional care settingsand also in the field of home healthcare. This approach will not only help tolighten the burden on health systems, but will also help to provide a morecomforting and therapeutic environment for patient careAbout Philips HealthcarePhilips is one of the top-tier players in the healthcare technology market(based on sales) alongside General Electric (GE) and Siemens. Our Healthcaresector has global leadership positions in areas such as cardiac care,Acute care and home healthcare. Philips Healthcare’s current activities areorganized across four businesses:• Imaging Systems: interventional X-ray, diagnostic X-ray, computedtomography (CT), magnetic resonance (MR), nuclear medicine (NM) andultrasound imaging equipment, as well as women’s health• Patient Care & Clinical Informatics: cardiology informatics, includingdiagnostic electrocardiography (ECG); enterprise imaging informatics, includingradiology information systems (RIS) and picture archiving and communicationsystems (PACS); patient monitoring and clinical informatics; perinatal care,including fetal monitoring and Philips Children’s Medical Ventures; andtherapeutic care, which includes cardiac resuscitation, emergency caresolutions, therapeutic temperature management, hospital respiratory systems,and ventilation
• Home Healthcare Solutions: sleep management and respiratory care, medicalalert services, remote cardiac services, remote patient management• Customer Services: consultancy, site planning and project management,clinical services, Ambient Experience, education, equipment financing, assetmanagement and equipment maintenance and repairProducts 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 largesthealthcare market,Currently representing close to 43% of the global market, followed by Japanand Germany. Approximately 20% of our annual sales are generated inemerging markets, and we expect these to continue to grow faster than themarkets in Western Europe and North America. Philips Healthcare employsapproximately 35,500 employees worldwide. With regard to sourcing, pleaserefer to sub-section 5.3.3, Supply management, of thisAnnual Report.Drive performance• Continue to drive operational excellence and improveMargins: We are building on successful initiatives to structurally reduce ouroverall cost structure andImprove our organizational effectiveness. We are improving our marginsthrough better product reliability, improved pricing initiatives, optimization oflow-cost country sourcing, and increases in our service productivity andoperational efficiency. In 2010 we continued to improve the efficiency andeffectiveness of our organization, not only in response to the current economicclimate, but, even more importantly, to further strengthen our position for thefuture. We continued to manage costs and reorganize our business, both tomeet customer and market demands, as well as to enable profitable growth. Inaddition, we continue to drive the pace of operationalImprovement. Our Quote to Cash program has driven fundamental changeswithin our organization, focusing
On process standardization and simplification. A direct result of those effortswas the formation of a centralized Commercial Operations organization – withthe primary goal of making it easier for our customers to do business with us.• Drive emerging market growth: We continue to make key acquisitions tomeet the diverse and growing needs of the different markets around theworld. For example, our acquisition of Shanghai Apex Electronics in 2010provides high-quality value ultrasound transducers, enabling Philips to furthersupport the use ofUltrasound, a widely used diagnostic procedure that provides a critical yetaffordable and mobile modality for early diagnosis and real-time imaging. Theacquisition marks another step in Philips’ expanding presence in emergingmarkets, complementing the acquisition of healthcare informatics companyTescoInformatics in Brazil and the expansion of our clinical informatics portfolio withthe acquisition of Wheb Sistemas, a leading Brazilian provider of clinicalinformation systems.• Continue to pursue integration of our recent acquisitions: In 2010 wesuccessfully completed steps to integratePrior-year acquisitions including Inner Cool Therapies Inc., a pioneer in the fieldof therapeutic hypothermia,And Traxtal, a medical technology innovator in image guided procedures. Thisincluded the launch of the Philips Inner Cool RTx Endovascular System to helpenhance patient care by managing therapeutic hypothermia.
Consumer LifestyleLeading positions in categories such as male shaving and grooming, coffeeappliances and oral healthcare• Further decisive action taken to reduce our exposure in the Televisionbusiness• Increased focus on growth, taking a granular approach by making clearinvestment choices• Expanded business creation capabilities in emerging markets and investmentin key enablers to accelerate growthIntroductionAcross 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 andespecially in the emerging economies, where Consumer Lifestyle can benefitby delivering health and well-being solutions with advanced technology thatmeet people’s needs. We strive to understand consumer needs and translatethose insights into breakthrough, meaningful innovations. Our competitiveadvantage is our solutions that are easy to experience, advanced and designedaround the consumer. This strength is galvanized by our powerful global brand,our understanding of the markets we operate in and the many synergies withour channels, partners and supply chain.Helping people achieve a healthier and better lifeConsumer Lifestyle makes a difference to people’s lives by making it easier forthem to achieve a healthier and better lifestyle. We believe that “sense andsimplicity” can be the goal of technology and apply that principle to create lifeenhancing solutions.
Tracking trends and identifying opportunitiesConsumer Lifestyle works together with Philips Design to monitor trendsranging from consumer tastes to design aesthetics. With its global footprint,Consumer Lifestyle is well positioned to understand emerging needs in localmarkets. Country organizations are our interface with the consumer, allowingus to accurately identify local needs, tastes and commercial opportunities.Applying insights to develop innovative solutionsWe apply a rigorous product development process when creating new valuepropositions. At its heart are validated consumer insights, which show that thepropositions meet a market need. The combination of insight, simplicity andinnovation differentiates us from our competition and creates a platform forsustainable business success.Where we playWe are active in our four value spaces in health and wellbeing: Healthy Life,Personal Care, Home Living and Lifestyle Entertainment, complemented byAccessories. This portfolio is aligned with our brand equity and enables us toprovide our retail customers with a highly relevant and attractive productportfolio. We focus on premium propositions with our differentiating brandpromise of “sense and simplicity”, relevant to the target group. In focusing onthe domain of health and well-being, we are tapping into significant trends –such as consumer empowerment, growth in emerging markets and agingpopulations – that will have a major impact on society in the future.Healthy LifeThe Healthy Life value space takes a holistic approach to enhancing consumers’health, addressing the needs for mental and physical health and for healthyrelationships.
Personal CareThe Personal Care value space addresses the consumer need to “look and feelyour best” and so helps people feel more confident.Home LivingThe Home Living value space addresses consumers’ pressing need to havemore time to spend on themselves or with family and friends. We do this bycreating high quality solutions that enable quick and convenient cooking,preparation of beverages, cleaning, caring and home comfort.Lifestyle EntertainmentLifestyle Entertainment is about enjoying entertainment and the little events ineveryday life: sharing time with family and friends, having time off from ahectic schedule, and moments of comfort, fun and caring.About Consumer LifestyleThe Philips Consumer Lifestyle sector is organized around its markets,customers and consumers, and is focused on value creation through categorydevelopment and delivery through operational excellence.The market-driven approach is applied with particular emphasis at local level,enabling Consumer Lifestyle toAddress a variety of market dynamics and allowing the sales organizations tooperate with shorter lines ofCommunication 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, personaldisplays, speech processingDrive performance• Further increase cash flow by aggressively managing cash targets: We strictlymanaged working capital, which has been negative in many recent quarters.We effectively managed our credit and risk, including significantlyReducing overdue customer payments. There was an increase in the number ofsuppliers using supplier finance, which reduced total cost in the supply chain.As part of Philips’ drive to harmonize supplier terms, we improved overallpayment terms by 7 days.• Continue to reduce fixed costs and improve the overall agility of the costbase: We acted fast in the downturn and are benefiting from improved grossmargin and a lower cost base, supporting year-on-year EBITA marginImprovement. We continued to manage costs via our Earn 2 Invest Program,reinvesting savings to drive growth.• Strengthen excellence in execution and further develop “sense and simplicity”as a competitive edge: We have implemented an improved managementdecision support system with granular insight into integralPerformance per business, market and customer down to product level. Weare also striving to install a returnOn investment (ROI) culture in order to drive, and increase resources for, moreeffective advertising and promotional campaigns.
LightingLighting industry undergoing a radical transformation• Important global trends underpinning strategy• Winning in LEDIntroductionA number of global trends are changing the way people use light. Lightingsolutions are transforming urbanEnvironments, creating livable cities through the use of light to enhance safety,municipal identity and residentialwell-being; consumers are increasingly applying lighting to create their ownambience at home as a statement of their lifestyle; building owners andretailers are recognizing the benefits of energy-efficient lighting in reducingtheir operational costs; and schools are learning how lighting can improveeducation. At the same time, more and more people are keen to help tacklethe issues of climate change and rising energy costs. Many countries andregions have introduced legislative measures to address energy consumptionand the emission of greenhouse gases, which are linked to climate change. Inparticular, 2010 saw further legislation to phase out old, incandescent lightingand other energy-inefficient forms of electric lighting. Philips will continue toplay significant role in encouraging and enabling the switch to energy-efficientlighting solutions, helping our customers to save on energy costs while makinga positive contribution to the environment. Another key development is theongoing trend toward custom solutions. Increasingly aware of the possibilitiesbeyond standard solutions, consumers, businesses and national and municipalauthorities demand highly adaptable lighting solutions which they can use tocustomize their indoor and outdoor environments as and when they desire.Flexible and dynamic, our LED lighting solutions allow a much higher degree ofcustomization and provide significantly greater possibilities for ambiencecreation than solutions based on conventional technologies.
About Philips LightingPhilips Lighting is a global market leader, with recognized expertise in thedevelopment, manufacturing andApplication of innovative lighting solutions. We have pioneered many of thekey breakthroughs in lighting over the past 100 years, laying the basis for ourcurrent position. We address people’s lighting needs across a full range ofmarket segments. Indoors, we offer specialized lighting solutions for homes,shops, offices, schools, hotels,Factories and hospitals. Outdoors, we provide lighting for public spaces,residential areas and sports arenas. We also help to make roads and streetssafer for traffic and other road users (car lights and street lighting). In addition,we address the desire for light-inspired experiences through architecturalprojects. Finally, we offer specific applications of lighting in specialized areas,such as horticulture, refrigeration lighting and signage, as well as heating, airand water purification, and healthcare. Philips Lighting spans the entire lightingvalue chain – from lighting sources, electronics and controls to full applicationsand solutions – via the following businesses:• Lamps: incandescent, halogen, (compact) fluorescent, high-intensitydischarge• Consumer Luminaries: functional, decorative, lifestyle, scene-setting• Professional Luminaries: city beautification, road lighting, sports lighting,office lighting, shop/hospitality lighting, industry lighting• Lighting Systems & Controls: electronic and electromagnetic gear, controls,modules and drivers• Automotive Lighting: car headlights, car signalling, interior• Packaged LEDs• LED solutions: modules, LED replacement lamps
Simply enhancing life with lightPhilips Lighting is dedicated to enhancing life with light through theintroduction of innovative and energy efficient solutions or applications forlighting. Our approach is based on obtaining direct input both from customersand from end-users/consumers. Through a market segment-based approach,we can assess customer needs in a targeted way, track changes over time anddefine new insights that fuel our innovation process and ultimately increasethe success rate of new propositions introduced onto the market. We aim tobe the true front-runner in design-led, market and consumer-driven innovation– both in conventional lighting and in solid-state lighting – while continuing tocontribute to responsible energy use and sustainableGrowth. We believe the rise of LED; coupled with our global leadership,positions we well to continue to deliver on our mission to simply enhance lifewith light.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 CareThe assessment of Philips CL’s structure was focused on the above parties. Theresults are based on five interviews, one with an employee at a SO and one ateach of the involved BFs. The interviewees commented on the structure ofPhilips CL and how it had changed from 2007 to 2009. To make theassessment, the recordings and notes from the interviews were reviewed forcomments on how well their BF was integrated with the other parties involvedin providing the consumer experience. If an interviewee described a situationof clear functional silos or full integration, the statement was evaluated asrespectively stage 1 or stage 4. A not as clear statement was examined for astatement 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 sustainingcustomer relationships differ from those aimed at the execution of efficientcustomer transactions”. More consumer-centricity implies that the number ofunique products and services increases. Unique personalized products andservices generally require communication across organizational boundariessince the delivery of these products and services is more complex than that ofstandard products (Kumar A., 2007; Kates & Galbraith, 2007). While makingthe management of consumer information within the company more complex,the increased number of personalized products and services also require moreconsumer information than the delivery of standard products and services.This is because personalized product and services require detailed consumerinformation (Vesanen, 2007). A way to obtain this increased amount ofinformation is to build a relationship with the consumer that enables thecompany to learn about the consumer and build consumer profiles. Theprocesses that manage this relationship and disseminate the consumerinformation within the company are called customer relationship management(CRM) processes (Payne & Frow, 2005). Hence, when the relationship with theconsumer becomes more important, the CRM processes also become moreimportant. While a number of processes can be stated that play a role in thetransition form product- to consumer-centricity, in literature, there isagreement that the CRM processes are among the key processes forconsumer-centric companies (Shah, Rust, Parasuraman, Staelin, & Day, 2006;Kates & Galbraith, 2007; Kumar A. , 2007; Kumar & Petersen, 2005). This studywill therefore focus on CRM in the process domain.Payne and Frow (2005) state that: “CRM is a strategic approach that isconcerned with creating improved shareholder value through the developmentof appropriate relationships with key customers and customer segments”.Excellent CRM should therefore boost Philips CL’s ability to become moreconsumer-centric. When determining the performance of a CRM program, fivedistinctive processes should be taken into account (Payne & Frow, 2005):1. The strategy-development process that includes not only a business strategybut also a consumer strategy
2. The value creation process that is at the heart of the exchange process3. The multichannel integration process that encompasses all the consumertouch points4. The information-management process that includes the data collection anddata analysis functions5. The performance-assessment process that ties the firm’s actions toperformanceBoulding, Staelin, Ehret, and Johnston (2005) commented that companiesshould benchmark their processes to examine their consumer-centricity. Sincethe strategic domain is partly represented by the analysis of Philips CL’sorganizational culture, and the performance assessment process is linked tofinancial metrics, both the above described processes are not researchedwithin the process domain. The analysis will focus on the value creationprocess, the multichannel integration process and the information-management process.
BCG MATRIX High Low Stars Question MarkHigh Health care Personal care Cash Cow DogsLow 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 businesss 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 companys 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 units market leadership may require extra cash, but this is worthwhile if thats 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 unitsbecome either cash cows or dogs. The natural cycle for most business units isthat they start as question marks, and then turn into stars. Eventually themarket stops growing thus the business unit becomes a cash cow. At the endof the cycle the cash cow turns into a dog.The overall goal of this ranking was to help corporate analysts decide which oftheir business units to fund, and how much; and which units to sell. Managerswere supposed to gain perspective from this analysis that allowed them toplan with confidence to use money generated by the cash cows to fundthe stars and, possibly, the question marks. As the BCG stated in 1970:Only a diversified company with a balanced portfolio can use its strengths totruly 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 brands 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 organizations 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. Market growth rate Rapidly growing in rapidly growing markets, are what organizations strive for; but, as we have seen, the penalty is that they are usually net cash users - they require investment. The reason for this is often because the growth is being bought by the high investment, in the reasonable expectation that a high market share will eventually turn into a sound investment in future profits. The theory behind the matrix assumes, therefore, that a higher growth rate is indicative of
accompanying demands on investment. The cut-off point is usually chosen as 10 per cent per annum. Determining this cut-off point, the rate above which the growth is deemed to be significant (and likely to lead to extra demands on cash) is a critical requirement of the technique; and one that, again, makes the use of the BCG Matrix problematical in some product areas. What is more, the evidence, from FMCG markets at least, is that the most typical pattern is of very low growth, less than 1 per cent per annum. This is outside the range normally considered in BCG Matrix work, which may make application of this form of analysis unworkable in many markets. Where it can be applied, however, the market growth rate says more about the brand position than just its cash flow. It is a good indicator of that markets strength, of its future potential (of its maturity in terms of the market life-cycle), and also of its attractiveness to future competitors. It can also be used in growth analysis.For the Philips company in particular,Question mark - Personal careStar - Health CareCash cow – LightingDogs - Home appliances 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 categorydevelopment and delivery through operational excellence.The market-driven approach is applied with particular emphasis at local level,enabling Consumer Lifestyle toAddress a variety of market dynamics and allowing the sales organizations tooperate with shorter lines ofCommunication 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, personaldisplays, 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.Philips is one of the top-tier players in the healthcare technology market(based on sales) alongside GeneralElectric (GE) and Siemens. Our Healthcare sector has global leadershippositions in areas such as cardiac care,
Acute care and home healthcare. Philips Healthcare’s current activities areorganized acrossFour businesses:• Imaging Systems: interventional X-ray, diagnostic X-ray, computedtomography (CT), magnetic resonance (MR), nuclear medicine (NM) andultrasound imaging equipment, as well as women’s health• Patient Care & Clinical Informatics: cardiology informatics, includingdiagnostic electrocardiography(ECG); enterprise imaging informatics, includingRadiology information systems (RIS) and picture archiving and communicationsystems (PACS); patientmonitoring and clinical informatics; prenatal care, including fatal monitoringand Philips Children’s Medical Ventures; and therapeutic care, which includescardiac resuscitation, emergency care solutions, therapeuticTemperature management, hospital respiratory systems, and ventilation• Home Healthcare Solutions: sleep management and respiratory care, medicalalert services, remote cardiac services, remote patient management• Customer Services: consultancy, site planning and project management,clinical services, Ambient Experience, education, equipment financing, assetmanagement and equipment maintenance and repairPhilips Lighting is a global market leader, with recognized expertise in thedevelopment, manufacturing andApplication of innovative lighting solutions. We have pioneered many of thekey breakthroughs in lighting overThe past 100 years, laying the basis for our current position. We addresspeople’s lighting needs across a full range of market segments. Indoors, weoffer specialized lighting solutions for homes, shops, offices, schools, hotels,factories and hospitals. Outdoors, we provide lighting for public spaces,residential areas and sports arenas. We also help to make roads and streetssafer for traffic and other road users (car lights and street lighting). In addition,we address the desire for light-inspired experiences through architecturalprojects. Finally, we offer specific applications of lighting in specialized areas,such as horticulture, refrigeration lighting and signage, as well as heating, airand water purification, and healthcare. Philips Lighting spans the entire lighting
value chain – from lighting sources, electronics and controls to full applicationsand solutions – via the following businesses:• Lamps: incandescent, halogen, (compact) fluorescent, high-intensitydischarge• Consumer Luminaries: functional, decorative, lifestyle, scene-setting• Professional Luminaries: city beautification, road lighting, sports lighting,office lighting, shop/hospitality lighting, industry lighting• Lighting Systems & Controls: electronic and electromagnetic gear, controls,modules and drivers• Automotive Lighting: car headlights, car signalling, interior• Packaged LEDs• LED solutions: modules, LED replacement lampsHome appliancesPhilips Design is one of the longest-established design organizations of its kindin the world. It is headquartered in Eindhoven, the Netherlands, with branchstudios in Europe, the US and Asia Pacific. Its creative forceComprises designers, psychologists, ergonomists, sociologists, philosophersand anthropologists workingTogether to understand people’s needs and desires in order to generatedesigns which support people in?Accomplishing and experiencing things in natural, intuitive ways. PhilipsDesign’s forward-looking exploration projects deliver vital insights for newbusiness development, supporting the transformation towards a health andwellbeing company. In focusing on the domain of health and well-being, weare tapping into significant trends – such as consumer empowerment, growthin emerging markets and aging populations – that will have a major impact onsociety in the future.Healthy LifeThe Healthy Life value space takes a holistic approach to enhancing consumers’health, addressing the needs for mental and physical health and for healthyrelationships.
Personal CareThe Personal Care value space addresses the consumer need to “look and feelyour best” and so helps people feel more confident.Home LivingThe Home Living value space addresses consumers’ pressing need to havemore time to spend on themselves or with family and friends. We do this bycreating high quality solutions that enable quick and convenient cooking,preparation of beverages, cleaning, caring and home comfort.Lifestyle EntertainmentLifestyle Entertainment is about enjoying entertainment and the little events ineveryday life: sharing time with family and friends, having time off from ahectic schedule, and moments of comfort, fun and caring.
Questionnaire1. How does it feel to compete with Videocon and other competitors in India? In the statistics, Videocon is the toughest competitor of Philips India Ltd. But in practice, Videocon acts as a partner of the company. Philips Company gives the TV panel to the Videocon in order to market the product of the Philips. Indirectly the Philips company is getting the marketing done by the Videocon company. So in practicality the Philips company is not directly competing with the Videocon company.2. Where has the electronic market headed in India? Does the entry of Sony and Panasonic threaten Philips? The electronic market in India is heading in a very good way. The boom in the electronic market is huge in this time. A very good opportunity for all the electronic manufacturers in India to have a good profit. The disposable profit of the consumer of India is rising day by day and the trend to have sophisticated electronic gadgets in the house hold is becoming more and more day by day. The entry of the MNC companies to the Indian market do not put a lot of competition to the Philips as Philips is dealing in the Indian market for the past 120 years and they know how exactly to deal with the situations in the Indian market. So entry of some MNC’s like Sony or Philips is not such a huge competition or head breaking situation. So, there is no huge threat from the entry of the companies like Sony or Panasonic.
3. Is Philips India profitable yet? Where do you see the company in the next few years? Surely the Philips India is profitable at the current point of time. As they know the true nature of the market they are strong in their footholds and they are good at it. So profit will not be a matter of fact at any point of time to Philips. We can see the company as a leader in the market for consumer goods-electronics in the Indian market in next few years.4. What do you see as the greatest challenge of Philips in India? The company was situated in India before 120 years. So the behaviour of the consumers in the Indian market is well known to the company. The maximum part of consumers are those who give much importance to the price of the product than to the quality. So price becomes the main factor in this context. Even though the company knows very well about the behaviour of the consumers, the changing trend of the consumers in India is very drastic and this becomes the challenge to the Philips. As pricing is the main factor, because of the entry of the China products, the value of electronic items has gone very low and hence it forces the quality products also to reduce their prices. But the Philips company did not do this. They stick to their pricing policy which sometimes causes problems.
5. Which is Philips main line product? 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 product6. What are you going to do to strengthen the mainline products? In order to strengthen the mainline product of the company the company has to introduce new products every six months. This will help the company to make a new obsolescence stage for the company in the product life cycle. If they introduce the new products every 6 months, there will be newness in the products which will help them to improve their sales.7. What are you doing to improve reach? The Philips Company wants to improve the reach to the consumers by improving the distribution channel. So for this they have 8 distributors for the cities and 1 for every district. This will increase the sales volume of the products of the company and every consumer can be reached by this type of distribution channel. They also focus on the modern traders that are the Girias, Croma etc. from which they get a nice share.
8. To whom is the product aimed? The Philips Company targets the market of a product according to the products. They mainly deal with the household products and so they target that set of consumers who are especially concerned about the interior of the house. And also to the organizational consumers they target a certain product.9. How does the firm plan to position the product within the market? Positioning is a strategy by which the company keeps the products in such a position where the consumers want to see it. So the strong foothold of the Philips Company is its quality. So they thought that positioning their products in the way of good quality is the best way and Philips Company is positioning its products as a good quality product. Its uniqueness is another plus point. They have a unique identity in the market and they are kept it up as a positioning strategy. The brand and design of the Philips Company is the real and strong way of positioning the product of the Philips Company.10. What differential advantage will the product offer over your competitors? 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 plans the promotions in different ways. One of the ways is that of seasonal wise. For ex, if there comes Diwali, they will set such promotional activities which suits the occasion. In other kind of promotional activities, like giving discounts, giving adds in different Medias, newspaper ads, free with one product.12. Where do buyers look for your product or service? 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? This depends on the particular products. If the product is newly launched, they have to be displayed in the trade fairs in order to take the products into the minds of the consumers. If not sales force plays a major role in the selling of the product.
CONCLUSIONPhilips is India’s largest and most preferred lighting and healthcare instruments company.Through its strategic long-term tie-ups with key and criticalauxiliary manufacturers, Philips provides its customers manybenefits.The brand’s vision is to deliver excitement to the consumers, byproviding comfort at its best.Complete control over core components and technology.The company has strong potential to grow and that throughgreater innovations.In addition to corporate sector the company has the option to stepinto the local household by understanding their psychology.In short it can be said that the company is still growing by makingconstant efforts.
BIBLOGRAPHYBook: Philip Kotler, Marketing Management, 13th editionWebsites: www.philips.co.in www.india.philips.com en.wikipedia.org/wiki www.encyclopedia.comMagazines: India Today Business world