MARKETING EXCELLENCE PHILIPS

Royal Philips Electronics, established in 1891, is one of the world’s largest electronics companies and one of the most respected brands. Anton and Gerard Philips started that are known to focus on authenticity and quality. For example, this high-range machinery equips at least 25 percent of the French restaurants. The chefs, as customer influencers, are also regularly

Philips & Co. in 1891 in Eindhoven, the Netherlands by^ manufacturing carbon filament lamps. Their firm eventu­ally evolved into a global company and today employs a workforce of 116,000 around the world. A market leader in medical diagnostic imaging, patient monitoring systems, energy-efficient lighting solutions, and lifestyle solutions for personal wellbeing, Philips manufactures more than 50,000 products across 100 countries, in which it also op­erates sales and service outlets. In 2014, the firm reported sales of around $30.97 billion. It offers product content and support in 100 countries and in over 35 languages. With global outreach and products in many areas, Philips needs to develop a borderless style of brand management to solidify its reputation as a global brand. The company has experimented with many different ways of doing this.

The branding of Philips started when Anton Philips cre­ated a logo for the company by using the initial letters of Philips & Co. The word Philips also appeared on the glass of its metal filament lamps. In 1898, postcards showing a variety of Dutch national costumes were used as marketing tools, with the letters of the word Philips printed in a row of lightbulbs at the top of every card. In 1926, Philips introduced a symbol that featured waves and stars. The waves symbol­ized radio waves, and the stars represented the evening sky through which those radio waves travel. In 1930, the waves and stars were enclosed in a circle as part of the design. To avoid legal problems with owners of well-known circular emblems and to find a trademark that would be unique to Philips, the company eventually created a shield including the circle and word mark, which it has used consistently since the 1930s. However, marketing and advertising have varied across products. Between 1930 and 1995, all advertising and marketing campaigns were carried out at the product level, on a local market basis. The company thus found itself running many different marketing campaigns at once, and not allowing for a global representation of the company.

Between 1970 and 1995, Philips also faced tough competition from up-and-coming Japanese electronics companies, which cut into its market share. Because they had large automated plants, the Japanese companies were able to flood markets with inexpensive consumer electron­ics. This required Philips to close its less profitable factories and start creating larger and more effective units. The com­pany also closed its business units in defense and home appliances that were not directly related to its core business. To reduce costs, it began sharing its R&D expenses with other large corporations, including AT&T and Siemens AG.

Philips has always been known for its technological prowess and ability to innovate. It is credited with the intro­duction of innovative products, including the radio, audio cassette, video cassette recorder (VCR), compact disc (CD), and digital video disc (DVD). However, simply being able to use technology in new and innovative ways was not enough for the company. It wanted to become a global brand and champion the idea that technology will improve people’s lives.

For this purpose, Philips initiated a new branding cam­paign, “Let’s make things better,” that emphasized improv­ing people’s lives through technological solutions. The com­pany rolled the campaign out globally in all markets and related the campaign to all its products. This also brought the whole company together, gave employees a sense of belonging, and provided a unified company look for an external audience. The campaign’s primary objective was ‘ to help Philips connect with people, and in this endeavor it was successful. Nonetheless, the management team was concerned that the campaign did not convey the design excellence or technical superiority of its products.

To identify the perceptions consumers had, Philips undertook a market research study of more than 1,650 con­sumers and 180 companies, who were customers of Philips around the world. It also undertook research among 26,000 respondents to measure the brand equity. Focus groups and questionnaires helped to (a) identify and test new routes for moving the Philips brand going forward, and (b) enable the company to better understand its current market posi­tion. The results showed that consumers believed they could “rely on Philips’ products,” and that the company did live up to its promise of making things better. The com­pany also discovered that its core target group consisted of well-educated and affluent decision makers between 35 and 55. This group typically disliked the unnecessary hassle often created by new technology and valued simplicity and efficiency in all fields. Its members wanted technology that could get the job done without drawing attention to itself, and were put off by the need to read and understand com­plicated manuals before trying out their new purchases.

Philips acted on this information by rebranding it­self again: The new campaign was called “sense and simplicity.” The emphasis shifted to the benefits of tech­nology without the hassle of understanding the technol­ogy, and this strategy still characterizes everything Philips does and reflects the market-oriented nature of the com­pany, that is, everything is designed to meet customer needs and consumer insights. The “sense and simplicity” campaign was based on three premises – first, products are designed around the consumer; second, they are easy to experience; and third, they are advanced.

Philips continues to develop new products based on these three premises, and communicates its brand posi­tion through advertisements that target the core group with relevant and interesting content. The new brand positioning has proved to be a success. In 2014, the company realized a 5 percent growth in total brand value in Interbrand’s annual ranking, its 11th increase in as many years. In 2004, before the launch of the new cam­paign, the estimate of total brand value was $4.4 billion; by 2014, it had more than doubled to $ 10.264 billion.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.