This document discusses potential new business models for household appliance manufacturers centered around renting appliances rather than selling them. It notes that appliances are often designed to last just past the warranty period. A rental model could allow appliances to be more durable while still generating revenue through subscription fees. Customers' changing needs could be better met by renting different appliance models as their households evolve. Manufacturers could partner with detergent brands for additional revenue streams. The document advocates exploring non-traditional retail channels and new roles for technical support staff to implement a rental-focused business model.

1. The obsolescence of
household appliances
Everybody suspects that household appliances are
designed to last just a little more that the warranty
covers.
If we performed a modification in the life of a
consumers’ good, a plenty of business model
inconsistencies would be found and to get this way off.
Then, a technology that helps to improve a washing
machine duration, that is POSITIVE for the consumer,
for environment (less KgCO2) and for society, could be
totally rejected by the sector rules.
¿How might we change that?

2. The game rules
A higher duration means that, at mid term, the number of
units in the market to be lower. Then, market could
decrease, and nobody would be interested in this: nor the
manufacturers, nor the distributors.
This feature (long lasting) may be perceived as an opportunity
to increase the product price, but only at short term.
Competitors’ technology productivity only assures a short
opportunity window, but in few months they’ll achieve a
similar or better technology. So, at mid-long term, the
competition will erode the price.
Repairs and extended warranty are a business with high
margins and interesting for manufacturers and their technical
assistance partners. This renenue stream, despite being less,
would be reduced more (more reliable means less faults).
¿How might we transform these problems in opportunity
sources?

3. Revenues performed by product,
extended warranty and repair part
sales.
Orthodoxies of the model
Getting customer process is based on
promotion and advertising (mass
media) and upselling brand values
and new model features.
“If the older model didn’t fail, I
consider to follow with the same
brand”. This is the only loyalty
evidence I’ve percieved from this
sector. And their actions are not
effective because the getting process
of competition is powerful.
Available in supermarkets,
household stores (some online)

4. Some trends to consider
Our society is demanding a more responsible
behaviour with the environment: less energy
consumption, natural resources responsible
use and improve the lifecycle (reduction,
reutilization and recycling)
Collaborative economy is about to start to
show us its potential (Uber, Airbnb…). We are
more consciuous about the non-sense of
novelty and the benefits of sharing.
The smartphone is the key interface element
(nowadays) and screen revolution is coming.
The concept “app” is also in our way to
understand and consume in the digital world.
The Internet of Things (IoT) shows that
products will be connected, but we may strive
to think the purpose.
Conventional homes for heterosexual couples
with two children are from the past history: to
share appartment, monoparental families, 3
and 4 generations living together… Homes
change as families as well.
In few years, 55 year old people living alone
more than in couples, with uncertain incomes
(pension threat), and behaviours quite
different than our generation’s.
New lifestyles and home organization change and, in consecuence, may change products to adapt to.
Which business model might fit to these trends?

5. Other inspiring business models
Taxi drivers (owners) use to buy
vehicles with an intense criterium of
long-lasting than a standard buyer.
The duration is translated in an
intensive utilization, higher than the
average, but not in time. The more
lasting is a vehicle, the more
profitability of this investment.
In some countries, houses are builted
with concrete and cement and they last
more than 100 years.
But nevertheless, the consumers use to
rent. So, several users consume the same
good during the product life. Often, they
perform a setup and redecor ate to
adapt to the new tenant.
The typical business pattern “razor and blade” looks for
the customer engagement drawing a good that needs a
consumable that brings the margin and rotation to the
brand. One sucessful case is Nesspresso, but other one
more interesting is Keurig’s(*) where the consumable is
what adds value and the machine is only the means to
achieve it.
Corporate world has assume that, for its
criticity and cost, printing is not an
equipment anymore, but a service, with a
specific payment model: pay per print.
(*) https://medium.com/@BoltVC/keurig-accidentally-created-the-perfect-business-model-for-hardware-startups-18e9c3b4e796

6. The challenge
I’ll propose a business model in which the washer
machine is a good to rent: a service.
To rent helps to exploit the main requirement: a long
lasting good. With this, the washing machine units will
be reduced but without reducing the market size (in
dollars).
The relation lever is in brand loyalty, but otherwise, in
selection freedom of the service provider.
To whom might this be interesting and what
might we offer them?

7. Customers
55+ year old people. In this life time, family unit use to
decrease, children leaves, married to divorced (rate is
growing) but also to increase to house a dependent
parent, promptly to grandchildren (and their parents).
Needs are decreasing but can be growing as well.
The model is to pass from a ownership model to a
rent/service model.
Our customers will be people with a high rate of vital
changes and oriented to solution buying (not products)
The segmentation driver will be the vital moments and
household demands related.
Young people between 20 and 40 years old change
from sharing an appartment with a fried, to move due
to a new job, to live together, having children… Needs
are growing.

8. The proposal
Value proposition is to adapt instantly to the laundry
needs of the family unit (in-house)
That means, that if a person lives single and needs less
utilization will contract an economic service and if the
family grows he/she will demand a more complete
service.
The company might answer to these needs changing
the washing machine model to rent. And if a machine
was fault, the company might send and install a new
model, without charging the customer.
I figure out a standard product, long-lasting, with a
modular aesthetic finish (customizable by the renter) ,
a minimal physical interface and a powerful virtual
interface (smartphone and/or web).
Revenues come from the specific rented model.
New idea:
New revenues by “customized parts” to a client. If the
customer wishes a wood front-end, a vintage design or
iron finish should pay for it. These incomes may be
financed though the monthly subscription or a rewards
program. Do you remember the loyalty concept?
New idea:
The washing machine programs are supplied as the
client buy them via App. So, a “baby clothes wash” may
be purchased apart by only $0.99

9. Changes to do
In this case, the customer relationship is more interesting
because the get process can be done through an innovation or
specific need (household, change, older machine with fault,
etc). Loyalty can be managed by contract and rewards (as
mobile companies teach us).
Finally, the grow process is easy by up-selling the model,
cross-selling of accessories and a viral effect in friends,
families and neighbors.
The main novelty is that the channel can be changed or
complemented to new companies like utilities (gas,
water, energy), telecom and even other non-specialised
retailers (Fnac, bookstores, hardware stores…)
The technical service channel could get new revenues
by installation and removal of new parts (with
proprietary fixation system), that should give them an
opportunity to gain a often relation with the customer.
Even more, some of them could become “assemblers”
or “decorators”.
Which activities should be key in this business model?
Probably, a manufacturer should have the same as
currently, but adding news like rent risk management
(and financing), customization design and new
channel management (with lower negotiation power).
Some of these activities could be considered a new
business themselves.

10. Going forward
Lets think, do we buy washing machines or the possibility
to wash our dirty clothes in-house? What do really achieve
the result: washing machine or the laundry soap?
Facing this new paradigm, are we able to offer a global
solution to the customer? Why not we brand the washing
machine with the soap and softener brand? I’m
completely sure that Reckitt Benckiser, P&G, Henkel
and other would be excited to have a captive system
for their commodity products.
I encourage the manufacturers to explore these
possibilities but always starting from the business
model and defining a product that fits this model.
With its deployment, we’ll get improvements for
environment, reducing low value intermediaries, a
market access cost reduction and precise sale
forecasting for this value chain that only expenses the
product.
See the Amazon Dash Button to
perform orders instantly: just
one touch to buy

11. About the author
Miquel Angel Pérez is Telecommunication Master Degree and MBA by the UPC (Spain). He has more than 15
years experience in Marketing for B2B industrial markets and Technology based companies. Expert in research and
innovation networks of Spain, he has carried out research about methodologies and systems for innovation, with the
aim to assure market uptake and financial viability.
Miquel Angel adds his knowledge in new product, service and business model conceptualization based on
exploitation of intangible assets for clients and internally for The Knowledge Agents Alliance as well.
@maperez1977
es.linkedin.com/in/miquelangelperez
Business Designer
Innovation Advisor
Marketing Manager
#DesignInTech
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