7/30/2019 final-120720061442-phpapp02 (1)

1/58

PROJECT REPORT

ON

MARKETING MIXOF

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

7/30/2019 final-120720061442-phpapp02 (1)

2/58

PREFACE

This project has been taken with a view to make a study on the Marketing

Mix of Philips India Ltd. With special reference to Karnataka state and thus

to uncover the strategies and plans that are inculcated by the Philips India

Ltd.

The present study creates awareness about the Marketing Mix put forth by

Philips 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 stay

strong and to grow in the market for Philips.

7/30/2019 final-120720061442-phpapp02 (1)

3/58

ACKNOWLEDGEMENT

A project is never the work of an individual. It is more over a

combination of ideas, suggestions, review, contribution and work

involving many folks. It cannot be completed without guidelines.

First of all we would like to express our sincere gratitude to

Mr ABHISHEK SINGH (branch manager) Philips India Ltd, Bangalore

for giving us the opportunity to make this project and helped in every

way possible.

Last but not the least our sincere thanks to our class mates and

friends 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)

7/30/2019 final-120720061442-phpapp02 (1)

4/58

CONTENTS

1.About the consumer electronic industry2.About Philips3.SWOT Analysis

4.Marketing Mix5.Marketing Mix of Philips6.BCG Matrix7.Questionnaire8.Conclusion9.Bibliography

7/30/2019 final-120720061442-phpapp02 (1)

5/58

ABOUT THE CONSUMER ELECTRONIC INDUSTRY

The consumer electronics industry is maturing at an incredibly rapid rate.

Demand for consumer electronic goods had always been there, but it really

has reached its peak in the past few years. This has subsequently triggered the

expansion of the consumer electronics industry, which is turning into the

foremost profitable markets in world market.

In the last few years, there has been dynamic technological progress. The

consumer electronics industry continues to be employing advanced

engineering to manufacture electronic goods which is reaping massive profits

as a result. People today live extremely hectic lives to keep up with the pace of

the world. A busy way of life calls for some form of fun. It is essential toinvigorate the brain and ease out anxiety and stress since bottled up tension

can be harmful to health. Innovative products have been developed which

provide people with various kinds of enjoyment.

Apart from home entertainment, there are more electronic goods which have

become a necessity in our daily life. Consumers are increasingly becoming

dependent upon electronic goods in their daily lives since it saves them

considerable time and energy. Consumer electronic goods have come to the

forefront in making the effort for a man simpler and perfect. These machines

have become a part of our everyday routine and its now tough to imagine a

life without them. The consumer electronics industry has definitely responded

to the requirements of time. World-class correspondence equipment like

cellular phones, fax machines and computers are also needed in our daily

lifestyles, which is bringing society closer every day.

There are various causes of the development of consumer electronics industry.

The consumer electronics industry provides us with a huge selection of goods

for daily use. These are found in many areas of life which includes office,

communications, and entertainment. The need for many of the most popular

electronic goods in our everyday life has added to the expansion of the

consumer electronics industry. Popular consumer electronic goods include

essential equipments like televisions, personal computers, radio, mobiles,

microwaves, stereo systems, refrigerators, washing machines as well as other

gadgets.

7/30/2019 final-120720061442-phpapp02 (1)

6/58

The need for consumer electronic goods has drawn huge amount of

investments for this business. These investments have successively triggered

the expansion of this business. The story of consumer electronics around the

world hasnt followed a straight path. Different countries have climbed the

corporate ladder of success in this field of electronics faster compared to

others in different periods. Often, its been the United States of America while

sometimes Asian countries like Japan and China took over as the biggest

providers of consumer electronic goods. However, there were additional

nations as well like Ireland and others who had shocked society with their

accomplishments in the field of electronics. US consumer electronics

experienced tough competition from the Chinese and Japanese manufacturers

in the 1960s. As a result, the consumer electronics industry of the USA

diminished, but by the 1980s, the industry again gained its former position.

The United States consumer electronics industry is the worlds premier

consumer electronics industry.

7/30/2019 final-120720061442-phpapp02 (1)

7/58

Innovation of Consumer Electronics

Even if you might have asked it a decade back, situation wouldve been

noticeably diverse; yes, Im talking about the situation ofconsumerelectronics. When compared to those bygone days, todays consumer

electronics industry has succeeded to such a position in which innovation runs

the motivator, the gas behind everything that is instinctive and sophisticated.

We now inhabit an era of extreme gadgetry pleasures with music systems, cell-

phones, Audio Players, Pads, desktops, plasma Televisions, etc. Moulding

the consumer electronics saga. Honestly put, existence without these items

would end up in chaos!

Whats the specialty for these products and services? Would it be really

difficult to exist without having these? Contemplate! Would you live without

these? Absolutely not! Todays technology has advanced at such a amazing

speed that we dont have any idea when and just how we submit to them in

the process. Items are constantly being developed every day, keeping in mind

what buyers desire. Be it in your new kitchen or maybe your living room, in

your telecommunications routine or perhaps entertainment necessities, the

existence of consumer electronics now can be experienced anywhere. Creditgoes to the key consumer electronic product developers that leave no stones

unturned to give the best in the market industry to their clients.

Aided by the advent of cyberspace, it is less difficult for consumers to get the

merchandise of their choice instantaneously. By simply browsing on the

internet you can end up with a lot of information about your specific products.

Another highlight is consumer electronic news reports to aid you on the net

that will keep you up to date regarding the latest happenings around the world

of consumer electronics. Consumer Electronic updates also can be very

therapeutic for you in enlightening you about the most recent releases by

means of similar manufacturers.

7/30/2019 final-120720061442-phpapp02 (1)

8/58

CONSUMER ELECTRONIC INDUSTRY IN INDIA

The electronic industry in India took off around 1965 with an orientation

towards space and defence technologies. This was rigidly controlled and

initiated by the government. This was followed by developments in consumer

electronics mainly with transistor radios, black and white TV, calculators and

other audio products. Colour televisions soon followed. In 1982 a significant

year in the history of TV in India the government allowed thousands of colour

TV sets to be imported into the country to coincide with the broadcast of Asian

games in New Delhi. 1985 saw the advent of computers and telephone

exchanges, which were succeeded by digital exchanges in 1988. The period

between 1984 and 1990 was a golden period for electronics during which theindustry witnessed continuous and rapid growth.

From 1991 onwards, there was first, an economic crisis triggered by the Gulf

War which was followed by political and economic uncertainties with the

country. Pressure on the electronic industries remained though growth and

developments have continued with digitalisation in all sectors, and more

recently the trend towards convergence of technologies. After the software

boom in mid 1990s Indias focus shifted to software. While the hardware sector was treated with indifference by successive governments. More over

the steep fall in custom tariffs made the hardware sector suddenly vulnerable

to international competition.

CURRENT SCENARIO

In recent years the electronic industry is growing at a brisk pace. It is currently

worth US$ 32 billion and according to industry estimates it has the potential to

reach US$150 billion by 2012. The largest segment is the consumer electronics

segment. While is largest export segment is of components.

The electronic industry in India constitutes just 0.7% of the global electronic

industry. Hence it is miniscule by international comparison. However the

demand in the Indian market is growing rapidly and investments are flowing

into augment manufacturing capacity.

7/30/2019 final-120720061442-phpapp02 (1)

9/58

The output of the electronic hardware industry in India is worth US$11.6 billion

at present. India is also an exporter of a vast range of electronic components

and products for the following segments.

Display technologies Entertainment electronics Optical storage devices Passive components Electromechanical components Telecom equipment Transmission and signalling equipment Semiconductor designing Electronic manufacturing services

This growth has attracted global players to India and leaders like Solectron,

Flextronics, Sony, Panasonic, Philips, Nokia, Elcoteq and many more have made

large investments to access the Indian market. The consumer electronics

Korean companies such as LG and Samsung have made commitments by

establishing large manufacturing facilities and now enjoy a significant share in

the growing market for products such as Televisions, CD/DVD players, Audio

equipment and other entertainment products.

Consumer electronic goods are those which dont wear out quickly, yielding

utility over time rather than at once. They can be further classified as either

white goods, such as refrigerators, washing machines and air conditioners or

brown goods such as blenders, cooking ranges and microwaves or consumer

electronics such as televisions and DVD players. Such big-ticket items typically

continue to be serviceable for three years at least and are characterized by

long inter-purchase times.

Performance

In the past 10 years, the global market has witnessed a surge in demand as

economies such as Brazil, Mexico, India and China have opened up and begun

rapid development, welcoming globalization with lan. The consumer durables

industry has always exhibited impressive growth despite strong competition

7/30/2019 final-120720061442-phpapp02 (1)

10/58

and constant price cutting, and the first contraction since the 2001 dot-com

bust has been due to the global recession. Given the strong correlation

between demand for durables (both new and replacements) and income, the

industry naturally suffered during the 2008-2009 period. However, projections

for current year going forward are very optimistic, as consumers resume

spending, and producers launch new enticing variants to grab new customers.

Leading players include Sony Corporation, Toshiba Corporation, Whirlpool

Corporation and Panasonic Corporation.

Developing countries such as India and China have largely been shielded from

the backlash of the recession, as consumers continued to buy basic appliances.

In fact, China has been ranked the second-biggest market in the world forconsumer electronics. Despite the recession, their strong domestic economy

and growing high-income population have buoyed demand leading to

aggressive market growth.

There is growing interest for new age products such as LCD-TVs and DVD

players. Meanwhile, the penetration of the basic, largest dollar items such as

ovens, washing machines and refrigerators is also increasing. India too, has

witnessed a similar phenomenon, with the urban consumer durables market

growing at almost 10 %p.a., and the rural durables market growing at 25% p.a.

Some high-growth categories within this segment include mobile phones, TVs

and music systems.

The Indian consumer durables industry has witnessed a considerable change in

the past couple of years. Changing lifestyle, higher disposable income coupled

with greater affordability and a surge in advertising has been instrumental in

bringing about a sea change in the consumer behaviour pattern. Apart from

steady income gains, consumer financing and hire-purchase schemes have

become a major driver in the consumer durables industry.

In the case of more expensive consumer goods, such as refrigerators, washing

machines, colour televisions and personal computers, retailers are joining

forces with banks and finance companies to market their goods more

aggressively. In addition, change in policy, such as the WTO FTA in 2005

7/30/2019 final-120720061442-phpapp02 (1)

11/58

resulted in zero customs duty on imports of all telecom equipment, thereby

improving the pricing and affordability of imported goods.

Challenges

The biggest threats to the local industry going forward are supply-related

issues pertaining to distribution and infrastructure, as well as demand issues

due to competition from imported goods. The lack of well developed

distribution networks makes it especially challenging to penetrate the fastest

growing rural areas economically. In addition, regular power cuts and poor

road linkages make systematic production, assembly and delivery problematic.

On the demand side, customers have increasing choice from both domestically

produced and imported goods, with similar features. This homogeneity makesit difficult for players to remain ahead of the competition.

MNCs hold an edge over their Indian counterparts in terms of superior

technology combined with a steady flow of capital, while domestic companies

compete on the basis of their well-acknowledged brands, an extensive

distribution network and an insight in local market conditions. The largest

MNCs incorporated in India are Whirlpool India, LG India, Samsung India and

Sony India and home-grown brands are Videocon, Godrej Industries and IFB.

Future Prospects

Overall, the industrys future remains robust, and interested applicants will

benefit from a holistic learning experience; Many of the research, sales,

marketing and advertising related roles will necessitate a good on-the-job

learning of target audiences, who may well be a totally new segment, based in

never-before visited Class II and III towns. In addition, those with technical

backgrounds will be able to leverage their knowledge and experience to

constantly develop and innovate the product variants. With more MNCs

growing their Indian businesses, there is great potential to also learn best-in-

class systems and management skills.

7/30/2019 final-120720061442-phpapp02 (1)

12/58

Royal Philips Electronics

Royal Philips Electronics of the Netherlands is a diversified Health and

Well-being company, focused on improving peoples lives through

timely 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 120,000

employees with sales and services in more than 100 countries

worldwide. With sales of EUR 22.3 billion in 2010, the company is a

market leader in cardiac care, acute care and home healthcare, energy

efficient lighting solutions and new lighting applications, as well as

lifestyle products for personal well-being and pleasure with strong

leadership positions in male shaving and grooming, portableentertainment and oral healthcare.

Global Footprint

Philips is a global leader across its healthcare, lighting and lifestyle

portfolio. It is the worlds largest home healthcare company, being

number 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 Pacific

and number two in North America; in Automotive lighting, we are

leading in Europe, Latin America, Japan and Asia Pacific.

We are number one in the electric shavers and male grooming category

globally.

7/30/2019 final-120720061442-phpapp02 (1)

13/58

BusinessesHealthcare

Philips simplifies healthcare by focusing on the people in the care cycle

patients and care providers. Through combining human insights and

clinical expertise, Philips aim to improve patient outcomes whilelowering the burden on the healthcare system. Advanced healthcare

solutions are a fundamental part of the portfolio for both healthcare

professionals and consumers, to meet the needs of patients in hospitals

and at home. Philips Healthcare employs approximately 35,500 people

worldwide.

Lighting

Philips Lighting is the leading provider of lighting solutions and

applications both for professional and consumer markets, transforming

how lighting is used to enhance the human experience in the places

where people live and work. Whether at home, on the road, in the city,shopping, at work or at school, we are creating lighting solutions that

transform environments, create experiences, and help shape identities.

We serve our customers through a market segment approach which

encompasses Homes, Office and Outdoor, Industry, Retail, Hospitality,

Entertainment, Healthcare and Automotive. For these segments we

provide a wide range of offerings from across the entire lighting value

chain - from light sources, luminaries and lighting controls to lighting

solutions and services. Philips Lighting employs approximately 53,000.

7/30/2019 final-120720061442-phpapp02 (1)

14/58

Consumer Lifestyle

Guided by the brand promise of sense and simplicity and the

consumer insights, Philips Consumer Lifestyle offers rich, new consumer

experiences that meet consumers desire for relaxation and improving

their state of mind. Philips also responds to the consumer's desire for

wellness and pleasure by introducing products that meet the individuals

interests in terms of their body and appearance. Philips ConsumerLifestyle employs approximately 17,700 people worldwide.

Innovation

50,000 registered patents illustrate the innovative nature of the

company. 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 the

joint innovative power of partnering companies and researchers to bring

more 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

7/30/2019 final-120720061442-phpapp02 (1)

15/58

Sustainability

Sustainability is at the centre of Philips strategy. Philips is committed to

reducing its environmental footprint in all aspects of its business: in its

products, manufacturing, and procurement, as well as in the

communities where the company acts and in the working practices of its

employees.

All Philips products go through an EcoDesign process, identifying

environmental impact in terms of energy efficiency, hazardous

substances, take-back and recycling, weight and lifetime reliability.

Philips processes on Green Product sales are verified annually by an

independent third party and published in the Annual Report.

Philips aims to combat global healthcare challenges by focusing on

delivering 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 its

stakeholders that energy efficient solutions are simple, easy and

actionable and make economic sense for national and local

governments, businesses, schools and individuals.

7/30/2019 final-120720061442-phpapp02 (1)

16/58

Mission"Improve the quality of peoples lives through timely introduction of

meaningful innovations."

VisionIn a world where complexity increasingly touches every aspect of our daily

lives, we will lead in bringing sense and simplicity to people.

Behaviours

Eager to win Take ownership Team up to excel

Brand Promise

We empower people to benefit from innovation by delivering on our brand

promise of sense and simplicity. This brand promise encapsulates our

commitment to deliver solutions that are advanced, easy to use, and designed

around the needs of all our users.

MID TERM (2013) PERFORMANCE TARGETS

Philips business portfolio is well positioned in highly attractive markets and

geographies to capitalize on global trends. The large majority of the business

has 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 %

7/30/2019 final-120720061442-phpapp02 (1)

17/58

Building the Leading Brand in Health and Well-Being

We seek to improve the quality of peoples lives through focusing on their

health 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 also

keeping 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 feel

in their environment at home, at work, when shopping or on the road.

Our focus on Health and Well-being automatically implies that we contribute

to building a sustainable society.

Business Highlights in Q3

As the global leader in patient monitoring, Philips introduced the benefits ofmobility to hospitals with the global launch of a compact, wearable patient

monitor, the IntelliVue MX40.

The monitor enables remote mobile monitoring of patients in a supervised

recovery environment, giving clinicians the freedom and flexibility to spend

more time with patients.

7/30/2019 final-120720061442-phpapp02 (1)

18/58

Philips introduced the Perfect Care, a revolutionary iron that uses a new steam

technology, allowing the user to iron all of their clothes at one low

temperature 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 the

treatment of bilirubinemia or neonatal jaundice. Bilirubinemia affects 60% of

full-term newborns and 90% of premature babies.

The battle of perception

Philips has been a household name in India for 75 years, but consumers

associated the brand more with tube lights and transistors than cutting-edge

technology.

That's ironic, considering the company has made its mark globally as a

technology leader -- it invented the cassette recorder, the compact disc and

the DVD; the last in association with Sony.

But a survey by advertising agency JWT, which held the Philips account from

2001 (it has recently moved to Madras), revealed that Philips technology was

seen 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 company's

technologically-advanced features.

Philips was the first audio company to launch an MP3 player (May 2002), and it

made sure its communication played that up: "Don't buy a system if it doesn't

have an MP3 player." Then there was the October 2002 campaign, in which a

little boy uses the power of the music system to nudge the cookie jar off the

top-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 wasn't enough. That's where in-store displays and promotions that

demonstrated the abilities of Philips products came in. In October 2003, JWT

broke the "Ramu kaka" ad, where the manservant inadvertently inserts a roti

into the DVD player.

The tagline made the message clear: "The new Philips DVD player plays

anything". The campaign proved immensely popular -- it was used in other

7/30/2019 final-120720061442-phpapp02 (1)

19/58

Asian countries as well -- and Philips wasn't slow in leveraging its appeal. At

live demos, customers would be invited to slip rotis into the player, creating a

buzz around the product and the brand.

But that would probably appeal more to families and Philips needed to reach

out 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 invited

to man the console, while the DJ gave them tips on mixing and spinning. "We

had huge walk-ins and could provide an involvement and experience with the

brand," says Shivkumar.

Clinch the dealer

Philips has successfully played the price card, but not all price cuts have been

due to better or cheaper technology. In some segments like radios, it did away

with trade discounts and passed on the savings to the customer.

Two years ago, Philips' radios sold at Rs 600 -- a huge premium compared to

the Rs 200 or so that other brands cost. In mid-2003, the company slashed the

price to Rs 400 and even introduced new models at the Rs 160 price point,

especially targeting the non-urban youth segment.

Not surprisingly, dealers were upset at their shrinking margins. Some started

stocking competing brands, only to return, claim company officials, when they

found volumes were increasing exponentially.

"They soon realised it was more profitable to sell Philips radios because the

turnover is much higher," points out Gunjan Srivastava, business head, audio

consumer electronics.

Radio sales in themselves are not significant for Philips -- they account forabout 15 per cent of the audio business. But, as S Nagarajan, head sales and

service, explains, they help penetration and distribution of other products,

such as DVDs, colour televisions and mini music systems.

To ensure that happens, Philips changed its distribution strategy around two

years ago. Distributors are now allocated smaller geographical territories so

they can concentrate on getting firmer footholds in their areas.

7/30/2019 final-120720061442-phpapp02 (1)

20/58

Distributor in upcountry markets, who were earlier, allotted five or six districts

are now given only two or three. And not all are given the entire product

range.

"We allocated only some products so that the focus is sharper" explainsNagarajan.

Creating the value proposition

Philips realised early on that maintaining the price-quality equation is critical.

That's especially true of the minis (DVD and VCD hi-fi systems) segment, which

accounts 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), it's kept its prices competitive. The

company prices its minis at Rs 8,000-25,000, compared with the market range

of Rs 7,500-30,000.

Moreover, prices have been falling by 10 per cent on average every year. Of

course, that's true for other brands as well but, as Shivkumar points out,

Philips "found the sweet spot at which youngsters could buy".

How did it do that? By ensuring that it was neither perceived as a price warriorlike Aiwa or Sansui nor prohibitively expensive -- Sony products are on average

10 per cent more expensive.

Philips also brought in help from outside. In late 2002, it tied up with

Countrywide and Citibank to provide accessible finance schemes for its

products.

Compared to equal monthly instalments of about Rs 1,000 earlier, the new

schemes 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, a

year behind Sony. But it's now carved up the market with Sony, with 45 per

cent share each.

The company also paid close attention to customer feedback. It has ramped up

the number of service centres across the country to 190, from 125 two years

7/30/2019 final-120720061442-phpapp02 (1)

21/58

ago. Today, over 900 technicians now attend to complaints, up from 600 in

2002.

The increased attention to the customer pays off in many ways. Realising that

many customers were using the DVD player to play music discs, Philips decidedto offer two speakers with built-in amplifiers, along with the player.

For just Rs 500 more, customers could get two benefits: enhance their music

playback and, when used to play movie discs, get home theatre-quality sound.

The response to the scheme has been encouraging, says Srivastava.

He adds that the company is now considering building the amplifier into the

player to further improve the sound.

Product innovation has helped in rural markets, too. Based on customer

research, in early 2003 Philips launched a radio with TV tuner -- this way,

customers who didn't own a TV set could at least listen to television

programmes.

VISION 2010

As part of Philipss "Vision 2010" strategy, Philips Electronics India Limited

had fuelled the company's growth plans in India with a marketing outlay of

Rs 100 million for a series of five mega 'Philips Simplicity programs.'

These programs reflected the company's renewed focus on the consumer

lifestyle, healthcare and lighting sectors.

Philips announced its "Vision 2010" strategy to further position the company

as a market-driven, people-centric organization and a structure that fullyreflects the needs of its customer base, while also increasing shareholder

value.

Linking the strategy to India, Philips Electronics India Ltd. continued to

transform, adapt and adapt to the changing needs of their consumers across

Healthcare, Entertainment, Domestic Appliances and Lighting sectors.

7/30/2019 final-120720061442-phpapp02 (1)

22/58

Vision 2010 is a natural progression in their long stated journey towards

being a company that is focused around the consumer in three core areas of

Healthcare, Lighting and Consumer Lifestyle. The road ahead is exciting and

the timing is just right for Philips to emerge as the leading Healthcare and

Lifestyle company.

The strategy provides a collective focus for their Consumer and Healthcare

businesses. The brand promise of 'Sense and Simplicity' encapsulates

Philipss commitment to deliver products and solutions that are advanced,

easy-to use and designed to meet the needs of all the users wherever in the

world they may be.

Over the years, Philips has come up with several products and initiatives to

improve the lives of the masses. The rural thrust with affordable and

accessible products is one prong of Philips India strategy, and the other is of

course the focus on urban markets. Here too, innovation and convenience

are the guiding principles for growth. In the healthcare arena, Philips is

looking at growth and garnering customer confidence through new forms of

organization; new products; innovative business models and original

channels of distribution.

7/30/2019 final-120720061442-phpapp02 (1)

23/58

Strength

Brand As Philips entered the Indian market before 120 years, they exactly

know the behaviour of the Indian consumers. So according to the consumers

requirements the Philips company has positioned its brand in the market and in

the consumers mind. Now in Indian context, Philips means a brand that can be

relied upon and the consumers in India belive on this brand. It has become a

house hold brand. The main advantage is that the diversed product line of the

company. It has almost all the products which are used by everyone in the house

and also the products for general use. For ex. Philips has lighting solutions,

trimmers, electric toothbrush, led lamps, mixers, home theatres, iron box, mp3

player, DVD player etc,. which includes all the possible products which is used by

all members of the house. So indirectly this factor is affecting the minds of the

people which is making the Philips to grow in the market.

Quality The brand name of the company stays fit in the consumers mind. And

the main reason for that is the quality of the product which is produced by the

company directly or indirectly with the brand name of Philips. Even though the

company is a old player in the Indian market, with out the right quality it could

not reach the position that it is there now. The Indian customers are mainly price

sensitive at the same time they also give importance to the quality and this is the

main part which made Philips gain a huge market share.

Service The service is a extra credit given to the customers by the sellers in

order to gain the good will and to get the consumer in to good terms with the

company who will in future will become a loyal customer of the company. Here

the company always tries to make a point that, once a consumer uses the

product of the company he should not even think of the other brand. If that is the

7/30/2019 final-120720061442-phpapp02 (1)

24/58

quality and service provided to the consumer he will never leave and go the

brand. So, here service plays a big role and that is the streangth of Philips as they

provide a good after sales service to the consumers. They have their own

exclusive service centers and linked with many big names in the market in order

to give the service.

Distribution channel A strong distribution channel is like a solid nerve system

of the human body. So if the company has a strong distribution channel the

selling of the products becomes easy. Philips has 8 intermediaries in Bangalore

and every 1person for a district in Karnataka and this acts as a strong hand of the

company. They depend on their distribution channel heavily and till date the

results are positive from them.

WEAKNESS

Limited stock availability in the company The company has a very strong

distributing channel which will help them in selling the Philips products in a good

pace. So when the situation is good for sale the availability of goods becomes a

real problem and this poses a big question in front of the company. The Philips is

also facing the same problem in recent years. As almost 70 80 % of the products

are imported to India, the problem of stock availability is more. The importing

norms will have different rules and regulations to the company that they can

import only certain volume of particular products in a mont or something like

that. So the estimation will always not help in importing the goods. Because the

human psychology plays a huge role in this decision making. So it is very difficult

and hence this problem is breaching the Philips India limited.

7/30/2019 final-120720061442-phpapp02 (1)

25/58

Limited product line Though the company has a strong product line, the

marketing heads in the company are of a opinion that the product line of the

company should be increased in order to give the customers what they really

want. This is a right thought that the growing population in India wants some

newness in the products and they like it to be unique from others. So increasing

the product line may attract many more consumers towards the company in the

recent years. As the product line is limited in a particular sector boredom of

buying a same type of product has come into the consumers mind.

OPPORTUNITY

The company is mainly concentrated upon the health care and lighting sector

through which the company got a brand name which is very much in the minds of

the consumers. So, now at this point of time if the company introduces as many

as household appliances, into the market, it will gain a huge market share in

terms of household electronic appliances. This step will be a wise move by the

company.

Another huge opportunity with the Philips company is that of making the pricing

methods by acquisition. If the company acquires any local company and make

them produce the products of Philips in their plant which will reduce the cost of

the product drastically. Philips has done many such things in the past time for ex

acquiring Preethi Company in the South India which helped them to reduce and

stabilize their pricing method.

7/30/2019 final-120720061442-phpapp02 (1)

26/58

THREAT

The big threat and challenge of the Philips Company is that of the China made

products which have a intense effect in the Indian market. Because of these

products the Philips Company is facing a huge problem in the Indian market. This

problem is mainly concerned on the pricing methods of the company. The

consumers expect that the price of the Philips company should also be reduced.

But Company is not in a position to do so.

7/30/2019 final-120720061442-phpapp02 (1)

27/58

7/30/2019 final-120720061442-phpapp02 (1)

28/58

Product

What does the customer want from the product? What needs does itsatisfy?

What features does it have to meet these needs? Are there any features you've missed out? Are you including costly features that the customer won't 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 marketshare? Or will a small increase be indiscernible, and so gain you extra profit margin?

7/30/2019 final-120720061442-phpapp02 (1)

29/58

What discounts should be offered to trade customers, or to other specific segmentsof 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 onbillboards? 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 anywider 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 yourchoice of promotional activity?

The marketing mix model can be used to help you decide how to take a new

offer to market. It can also be used to test your existing marketing strategy.

Whether you are considering a new or existing offer, follow the steps below

help you define and improve your marketing 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 whyyour 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 your

marketing options in terms of product, place, price and promotion. Use the

model when you are planning a new venture, or evaluating an existing offer, to

optimize the impact with your target market.

7/30/2019 final-120720061442-phpapp02 (1)

30/58

MARKETING MIX OF PHILIPS

The different product lines of the Philips Company are:

Imaging Systems

Home Healthcare Solutions

Patient Care and Clinical Informatics

Television

Personal Care

Audio & Video

Multimedia

Domestic AppliancesHealth &

Wellness

Accessories

Lamps

Consumer Luminaries

Professional

Luminaries

Lighting

Electronics and Controls

Automotive Lighting

Packaged LEDs

LED solutions

This comes under 3 main heads. That is Healthcare, consumer lifestyle,

lighting.

Koninklijke Philips Electronics N.V. (the Company) is the parent company of

the Philips Group (Philips or the Group).The management of the Company is

entrusted to the Board of Management under the supervision of the

Supervisory Board. Philips activities in the field of health and well-being are

organized on a sector basis, with each operating sectorHealthcare, Consumer

Lifestyle and Lighting being responsible for the management of its businesses

worldwide. The Group Management & Services sector provides the operating

7/30/2019 final-120720061442-phpapp02 (1)

31/58

sectors with support through shared service centres. Furthermore, country

management organization supports the creation of value, connecting Philips

with key stakeholders, especially our employees, customers, government and

society. The sector also includes pension.

Also included under Group Management & Services are the activities through

which Philips invests in projects that are currently not part of the operating

sectors, but which could lead to additional organic growth or create value

through future spin-offs. At the end of 2010, Philips had 118 production sites in

27 countries, sales and service outlets in approximately 100 countries, and

119,001 employees.

HEALTH CARE

Healthcare 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 businesses

Introduction

The future of healthcare is one of the most pressing global issues of our time.

Around the world, societies are facing the growing reality and burden of

increasing and in some cases aging populations, as well as the upward

spiralling costs of keeping us in good health. Worldwide, many more people

live longer with chronic disease such as cardiovascular diseases, cancer,

diabetes than in the past. Aging and unhealthy lifestyles are also contributingto the rise of chronic diseases, putting even more pressure on healthcare

systems. At the same time the world is facing a global and growing deficit of

healthcare professionals. In the long term, these challenges present Philips

with an enormous opportunity. We focus our business on addressing the

evolving needs of the healthcare market by developing meaningful innovations

that contribute to better healthcare, at lower cost, around the world.

7/30/2019 final-120720061442-phpapp02 (1)

32/58

Healthcare landscape

The global healthcare market is dynamic and growing. Over the past three

decades, the healthcare industry has grown faster than Western world GDP,

and has also experienced high rates of growth in emerging markets such as

China and India. Rising healthcare costs present a major challenge to society.

The industry is looking to

Address this through continued innovation, both in traditional care settings

and also in the field of home healthcare. This approach will not only help tolighten the burden on health systems, but will also help to provide a more

comforting and therapeutic environment for patient care

About Philips Healthcare

Philips is one of the top-tier players in the healthcare technology market(based on sales) alongside General Electric (GE) and Siemens. Our Healthcare

sector has global leadership positions in areas such as cardiac care,

Acute care and home healthcare. Philips Healthcares current activities are

organized across four businesses:

Imaging Systems: interventional X-ray, diagnostic X-ray, computed

tomography (CT), magnetic resonance (MR), nuclear medicine (NM) and

ultrasound imaging equipment, as well as womens health

Patient Care & Clinical Informatics: cardiology informatics, including

diagnostic electrocardiography (ECG); enterprise imaging informatics, including

radiology information systems (RIS) and picture archiving and communication

systems (PACS); patient monitoring and clinical informatics; perinatal care,

including fetal monitoring and Philips Childrens Medical Ventures; and

therapeutic care, which includes cardiac resuscitation, emergency care

solutions, therapeutic temperature management, hospital respiratory systems,

and ventilation

7/30/2019 final-120720061442-phpapp02 (1)

33/58

Home Healthcare Solutions: sleep management and respiratory care, medical

alert services, remote cardiac services, remote patient management

Customer Services: consultancy, site planning and project management,

clinical services, Ambient Experience, education, equipment financing, asset

management and equipment maintenance and repair

Products and services are sold to healthcare providers around the world,

including academic, enterprise and stand-alone institutions, clinics, physicians,

home healthcare agencies and consumer retailers. Marketing,

Sales and service channels are mainly direct. The United States is the largest

healthcare market,

Currently representing close to 43% of the global market, followed by Japanand Germany. Approximately 20% of our annual sales are generated in

emerging markets, and we expect these to continue to grow faster than the

markets in Western Europe and North America. Philips Healthcare employs

approximately 35,500 employees worldwide. With regard to sourcing, please

refer to sub-section 5.3.3, Supply management, of this

Annual Report.

Drive performance

Continue to drive operational excellence and improve

Margins: We are building on successful initiatives to structurally reduce our

overall cost structure and

Improve our organizational effectiveness. We are improving our margins

through better product reliability, improved pricing initiatives, optimization of

low-cost country sourcing, and increases in our service productivity and

operational efficiency. In 2010 we continued to improve the efficiency and

effectiveness of our organization, not only in response to the current economic

climate, but, even more importantly, to further strengthen our position for the

future. We continued to manage costs and reorganize our business, both to

meet customer and market demands, as well as to enable profitable growth. In

addition, we continue to drive the pace of operational

Improvement. Our Quote to Cash program has driven fundamental changeswithin our organization, focusing

7/30/2019 final-120720061442-phpapp02 (1)

34/58

On process standardization and simplification. A direct result of those efforts

was the formation of a centralized Commercial Operations organization with

the primary goal of making it easier for our customers to do business with us.

Drive emerging market growth: We continue to make key acquisitions to

meet the diverse and growing needs of the different markets around the

world. For example, our acquisition of Shanghai Apex Electronics in 2010

provides high-quality value ultrasound transducers, enabling Philips to further

support the use of

Ultrasound, a widely used diagnostic procedure that provides a critical yet

affordable and mobile modality for early diagnosis and real-time imaging. The

acquisition marks another step in Philips expanding presence in emerging

markets, complementing the acquisition of healthcare informatics companyTesco

Informatics in Brazil and the expansion of our clinical informatics portfolio with

the acquisition of Wheb Sistemas, a leading Brazilian provider of clinical

information systems.

Continue to pursue integration of our recent acquisitions: In 2010 we

successfully completed steps to integrate

Prior-year acquisitions including Inner Cool Therapies Inc., a pioneer in the field

of therapeutic hypothermia,

And Traxtal, a medical technology innovator in image guided procedures. This

included the launch of the Philips Inner Cool RTx Endovascular System to help

enhance patient care by managing therapeutic hypothermia.

7/30/2019 final-120720061442-phpapp02 (1)

35/58

Consumer Lifestyle

Leading positions in categories such as male shaving and grooming, coffee

appliances and oral healthcare

Further decisive action taken to reduce our exposure in the Television

business

Increased focus on growth, taking a granular approach by making clear

investment choices

Expanded business creation capabilities in emerging markets and investment

in key enablers to accelerate growth

Introduction

Across the world, consumers aspire to improve their health and feeling of well-

being, but struggle to balance this with the increasing complexity of their lives.

This trend is creating a large and growing market in the developed and

especially in the emerging economies, where Consumer Lifestyle can benefit

by delivering health and well-being solutions with advanced technology that

meet peoples needs. We strive to understand consumer needs and translate

those insights into breakthrough, meaningful innovations. Our competitive

advantage is our solutions that are easy to experience, advanced and designed

around the consumer. This strength is galvanized by our powerful global brand,

our understanding of the markets we operate in and the many synergies with

our channels, partners and supply chain.

Helping people achieve a healthier and better life

Consumer Lifestyle makes a difference to peoples lives by making it easier for

them to achieve a healthier and better lifestyle. We believe that sense and

simplicity can be the goal of technology and apply that principle to create life

enhancing solutions.

7/30/2019 final-120720061442-phpapp02 (1)

36/58

Tracking trends and identifying opportunities

Consumer Lifestyle works together with Philips Design to monitor trends

ranging from consumer tastes to design aesthetics. With its global footprint,Consumer Lifestyle is well positioned to understand emerging needs in local

markets. Country organizations are our interface with the consumer, allowing

us to accurately identify local needs, tastes and commercial opportunities.

Applying insights to develop innovative solutions

We apply a rigorous product development process when creating new value

propositions. At its heart are validated consumer insights, which show that the

propositions meet a market need. The combination of insight, simplicity and

innovation differentiates us from our competition and creates a platform for

sustainable business success.

Where we play

We are active in our four value spaces in health and wellbeing: Healthy Life,

Personal Care, Home Living and Lifestyle Entertainment, complemented by

Accessories. This portfolio is aligned with our brand equity and enables us to

provide our retail customers with a highly relevant and attractive product

portfolio. We focus on premium propositions with our differentiating brand

promise of sense and simplicity, relevant to the target group. In focusing on

the domain of health and well-being, we are tapping into significant trends

such as consumer empowerment, growth in emerging markets and agingpopulations that will have a major impact on society in the future.

Healthy Life

The Healthy Life value space takes a holistic approach to enhancing consumers

health, addressing the needs for mental and physical health and for healthy

relationships.

7/30/2019 final-120720061442-phpapp02 (1)

37/58

Personal Care

The Personal Care value space addresses the consumer need to look and feel

your best and so helps people feel more confident.

Home Living

The Home Living value space addresses consumers pressing need to have

more time to spend on themselves or with family and friends. We do this by

creating high quality solutions that enable quick and convenient cooking,

preparation of beverages, cleaning, caring and home comfort.Lifestyle Entertainment

Lifestyle Entertainment is about enjoying entertainment and the little events in

everyday life: sharing time with family and friends, having time off from a

hectic schedule, and moments of comfort, fun and caring.

About Consumer Lifestyle

The Philips Consumer Lifestyle sector is organized around its markets,

customers and consumers, and is focused on value creation through category

development and delivery through operational excellence.

The market-driven approach is applied with particular emphasis at local level,

enabling Consumer Lifestyle to

Address a variety of market dynamics and allowing the sales organizations to

operate with shorter lines of

Communication with the sectors 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

7/30/2019 final-120720061442-phpapp02 (1)

38/58

Audio & Video Multimedia: home audio, home video, home cinema sound,

portable audio and video

Accessories: on-the-go accessories, together @ home accessories, personal

displays, speech processing

Drive performance

Further increase cash flow by aggressively managing cash targets: We strictly

managed working capital, which has been negative in many recent quarters.

We effectivelymanaged our credit and risk, including significantly

Reducing overdue customer payments. There was an increase in the number of

suppliers using supplier finance, which reduced total cost in the supply chain.

As part of Philips drive to harmonize supplier terms, we improved overall

payment terms by 7 days.

Continue to reduce fixed costs and improve the overall agility of the cost

base: We acted fast in the downturn and arebenefiting from improved gross

margin and a lower costbase, supporting year-on-year EBITA margin

Improvement. 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 management

decisionsupport system with granular insight into integral

Performance per business, market and customer down to product level. We

are also striving to install a return

On investment (ROI) culture in order to drive, and increase resources for, more

effective advertising and promotional campaigns.

7/30/2019 final-120720061442-phpapp02 (1)

39/58

Lighting

Lighting industry undergoing a radical transformation Important global trends underpinning strategy

Winning in LED

Introduction

A number of global trends are changing the way people use light. Lighting

solutions are transforming urban

Environments, creating livable cities through the use of light to enhance safety,municipal identity and residential

well-being; consumers are increasingly applying lighting to create their own

ambience at home as a statement of their lifestyle; building owners and

retailers are recognizing the benefits of energy-efficient lighting in reducing

their operational costs; and schools are learning how lighting can improve

education. At the same time, more and more people are keen to help tackle

the issues of climate change and rising energy costs. Many countries and

regions have introduced legislative measures to address energy consumption

and the emission of greenhouse gases, which are linked to climate change. In

particular, 2010 saw further legislation to phase out old, incandescent lighting

and other energy-inefficient forms of electric lighting. Philips will continue to

play significant role in encouraging and enabling the switch to energy-efficient

lighting solutions, helping our customers to save on energy costs while making

a positive contribution to the environment. Another key development is the

ongoing trend toward custom solutions. Increasingly aware of the possibilitiesbeyond standard solutions, consumers, businesses and national and municipal

authorities demand highly adaptable lighting solutions which they can use to

customize their indoor and outdoor environments as and when they desire.

Flexible and dynamic, our LED lighting solutions allow a much higher degree of

customization and provide significantly greater possibilities for ambience

creation than solutions based on conventional technologies.

7/30/2019 final-120720061442-phpapp02 (1)

40/58

About Philips Lighting

Philips Lighting is a global market leader, with recognized expertise in the

development, manufacturing andApplication of innovative lighting solutions. We have pioneered many of the

key breakthroughs in lighting over the past 100 years, laying the basis for our

current position. We address peoples lighting needs across a full range of

market 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 streets

safer for traffic and other road users (car lights and street lighting). In addition,

we address the desire for light-inspired experiences through architectural

projects. Finally, we offer specific applications of lighting in specialized areas,

such as horticulture, refrigeration lighting and signage, as well as heating, air

and water purification, and healthcare. Philips Lighting spans the entire lighting

value chain from lighting sources, electronics and controls to full applications

and 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

7/30/2019 final-120720061442-phpapp02 (1)

41/58

Simply enhancing life with light

Philips Lighting is dedicated to enhancing life with light through the

introduction of innovative and energy efficient solutions or applications forlighting. Our approach is based on obtaining direct input both from customers

and from end-users/consumers. Through a market segment-based approach,

we can assess customer needs in a targeted way, track changes over time and

define new insights that fuel our innovation process and ultimately increase

the success rate of new propositions introduced onto the market. We aim to

be the true front-runner in design-led, market and consumer-driven innovation

both in conventional lighting and in solid-state lighting while continuing to

contribute to responsible energy use and sustainable

Growth. We believe the rise of LED; coupled with our global leadership,

positions we well to continue to deliver on our mission to simply enhance life

with 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 Care

The assessment of Philips CLs structure was focused on the above parties. The

results are based on five interviews, one with an employee at a SO and one at

each of the involved BFs. The interviewees commented on the structure of

Philips CL and how it had changed from 2007 to 2009. To make the

assessment, the recordings and notes from the interviews were reviewed for

comments on how well their BF was integrated with the other parties involved

in providing the consumer experience. If an interviewee described a situation

of clear functional silos or full integration, the statement was evaluated as

respectively stage 1 or stage 4. A not as clear statement was examined for a

statement of whether collaboration was managed informally or formally (e.g.formal category meetings) resulting in an assessment of respectively stage 2 or

7/30/2019 final-120720061442-phpapp02 (1)

42/58

stage 3. Since the results are non-normally distributed and the scale is ordinal,

the median of the resulting scores is used as the overall score for Philips CL.

Shah et al. (2006) stated that the processes for developing and sustaining

customer relationships differ from those aimed at the execution of efficient

customer transactions. More consumer-centricity implies that the number of

unique products and services increases. Unique personalized products and

services generally require communication across organizational boundaries

since the delivery of these products and services is more complex than that of

standard products (Kumar A., 2007; Kates & Galbraith, 2007). While making

the management of consumer information within the company more complex,

the increased number of personalized products and services also require moreconsumer information than the delivery of standard products and services.

This is because personalized product and services require detailed consumer

information (Vesanen, 2007). A way to obtain this increased amount of

information is to build a relationship with the consumer that enables the

company to learn about the consumer and build consumer profiles. The

processes that manage this relationship and disseminate the consumer

information within the company are called customer relationship management

(CRM) processes (Payne & Frow, 2005). Hence, when the relationship with the

consumer becomes more important, the CRM processes also become more

important. While a number of processes can be stated that play a role in the

transition form product- to consumer-centricity, in literature, there is

agreement that the CRM processes are among the key processes for

consumer-centric companies (Shah, Rust, Parasuraman, Staelin, & Day, 2006;

Kates & Galbraith, 2007; Kumar A. , 2007; Kumar & Petersen, 2005). This study

will therefore focus on CRM in the process domain.Payne and Frow (2005) state that: CRM is a strategic approach that is

concerned with creating improved shareholder value through the development

of appropriate relationships with key customers and customer segments.

Excellent CRM should therefore boost Philips CLs ability to become more

consumer-centric. When determining the performance of a CRM program, five

distinctive processes should be taken into account (Payne & Frow, 2005):

1. The strategy-development process that includes not only a business strategy

but also a consumer strategy

7/30/2019 final-120720061442-phpapp02 (1)

43/58

2. The value creation process that is at the heart of the exchange process

3. The multichannel integration process that encompasses all the consumer

touch points

4. The information-management process that includes the data collection and

data analysis functions

5. The performance-assessment process that ties the firms actions to

performance

Boulding, Staelin, Ehret, and Johnston (2005) commented that companies

should benchmark their processes to examine their consumer-centricity. Since

the strategic domain is partly represented by the analysis of Philips CLs

organizational culture, and the performance assessment process is linked tofinancial metrics, both the above described processes are not researched

within the process domain. The analysis will focus on the value creation

process, the multichannel integration process and the information-

management process.

7/30/2019 final-120720061442-phpapp02 (1)

44/58

BCG MATRIX

Stars

Health care

Question Mark

Personal care

Cash Cow

Lighting

Dogs

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 calledpets, are units with low market share in a

mature, slow-growing industry. These units typically "break even",

generating barely enough cash to maintain the business's market share.

Though owning a break-even unit provides the social benefit of providing

jobs and possible synergies that assist other business units, from an

accounting point of view such a unit is worthless, not generating cash for

the company. They depress a profitable company'sreturn on assetsratio,

High Low

High

Low

http://en.wikipedia.org/wiki/Return_on_assetshttp://en.wikipedia.org/wiki/Return_on_assetshttp://en.wikipedia.org/wiki/Return_on_assetshttp://en.wikipedia.org/wiki/Return_on_assets

7/30/2019 final-120720061442-phpapp02 (1)

45/58

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 thusconsume large amounts of cash, but because they have low market shares

they do not generate much cash. The result is large net cash consumption.

A question mark has the potential to gain market share and become a star,

and eventually a cash cow when the market growth slows. If the question

mark does not succeed in becoming the market leader, then after perhaps

years of cash consumption it will degenerate into a dog when the market

growth declines. Question marks must be analyzed carefully in order to

determine whether they are worth the investment required to grow market

share. Stars are units with a high market share in a fast-growing industry. The

hope is that stars become the next cash cows. Sustaining the business unit's

market leadership may require extra cash, but this is worthwhile if that's

what it takes for the unit to remain a leader. When growth slows, stars

become cash cows if they have been able to maintain their category

leadership, or they move from briefstardom 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 is

that they start as question marks, and then turn into stars. Eventually the

market stops growing thus the business unit becomes a cash cow. At the end

of the cycle the cash cow turns into a dog.

The overall goal of this ranking was to help corporate analysts decide which of

their business units to fund, and how much; and which units to sell. Managers

were supposed to gain perspective from this analysis that allowed them to

plan with confidence to use money generated by the cash cows to fund

the stars and, possibly, the question marks. As the BCG stated in 1970:

Only a diversified company with a balanced portfolio can use its strengths to

truly capitalize on its growth opportunities. The balanced portfolio has:

stars whose high share and high growth assure the future; cash cows that supply funds for that future growth; and Question marks to be converted into stars with the added funds.

7/30/2019 final-120720061442-phpapp02 (1)

46/58

Relative market share

This indicates likely cash generation, because the higher the share themore cash will be generated. As a result of 'economies of scale' (a basicassumption of the BCG Matrix), it is assumed that these earnings will

grow faster the higher the share. The exact measure is the brand's share

relative to its largest competitor. Thus, if the brand had a share of 20

percent, and the largest competitor had the same, the ratio would be

1:1. If the largest competitor had a share of 60 percent; however, the

ratio would be 1:3, implying that the organization's brand was in a

relatively weak position. If the largest competitor only had a share of 5

percent, the ratio would be 4:1, implying that the brand owned was in arelatively 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 ofsome debate. The best evidence is that the most stable position (at least

in Fast Moving Consumer GoodsFMCGmarkets) 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 stableand

profitable; the Rule of 123.

The reason for choosing relative market share, rather than just profits, isthat 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

http://en.wikipedia.org/wiki/FMCGhttp://en.wikipedia.org/wiki/FMCGhttp://en.wikipedia.org/wiki/FMCGhttp://en.wikipedia.org/wiki/FMCG

7/30/2019 final-120720061442-phpapp02 (1)

47/58

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 moreabout the brand position than just its cash flow. It is a good indicator ofthat market's 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 care

Star - Health Care

Cash cow Lighting

Dogs - 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.

7/30/2019 final-120720061442-phpapp02 (1)

48/58

The Philips Consumer Lifestyle sector is organized around its markets,

customers and consumers, and is focused on value creation through category

development and delivery through operational excellence.

The market-driven approach is applied with particular emphasis at local level,

enabling Consumer Lifestyle to

Address a variety of market dynamics and allowing the sales organizations to

operate with shorter lines of

Communication with the sectors six businesses. This also promotes customer-

centricity in day-to-day operations.

In 2010 the sector consisted of the following areas of business:

Health & Wellness: mother and child care, oral healthcare

Personal Care: shaving and grooming, female depilation, hair care, vita light,skincare

Domestic Appliances: kitchen appliances, beverages/ espresso, garment care,

floor care, water, air

Television

Audio & Video Multimedia: home audio, home video, home cinema sound,

portable audio and video

Accessories: on-the-go accessories, together @ home accessories, personal

displays, speech processing

We have positioned the health care as a star of Philips. This is the line where

the company is getting enough profit and are putting their all worth to

improve this line. Health care of the Philips is so famous all over the world.

Their maximum revenue is coming from the health care and they want toimprove that also.

Philips is one of the top-tier players in the healthcare technology market

(based on sales) alongside General

Electric (GE) and Siemens. Our Healthcare sector has global leadership

positions in areas such as cardiac care,

7/30/2019 final-120720061442-phpapp02 (1)

49/58

Acute care and home healthcare. Philips Healthcares current activities are

organized across

Four businesses:

Imaging Systems: interventional X-ray, diagnostic X-ray, computed

tomography (CT), magnetic resonance (MR), nuclear medicine (NM) and

ultrasound imaging equipment, as well as womens health

Patient Care & Clinical Informatics: cardiology informatics, including

diagnostic electrocardiography

(ECG); enterprise imaging informatics, including

Radiology information systems (RIS) and picture archiving and communication

systems (PACS); patient

monitoring and clinical informatics; prenatal care, including fatal monitoringand Philips Childrens Medical Ventures; and therapeutic care, which includes

cardiac resuscitation, emergency care solutions, therapeutic

Temperature management, hospital respiratory systems, and ventilation

Home Healthcare Solutions: sleep management and respiratory care, medical

alert services, remote cardiac services, remote patient management

Customer Services: consultancy, site planning and project management,

clinical services, Ambient Experience, education, equipment financing, asset

management and equipment maintenance and repair

Philips Lighting is a global market leader, with recognized expertise in the

development, manufacturing and

Application of innovative lighting solutions. We have pioneered many of the

key breakthroughs in lighting over

The past 100 years, laying the basis for our current position. We address

peoples lighting needs across a full range of market 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 streets

safer for traffic and other road users (car lights and street lighting). In addition,

we address the desire for light-inspired experiences through architectural

projects. 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

7/30/2019 final-120720061442-phpapp02 (1)

50/58

value chain from lighting sources, electronics and controls to full applications

and solutions via the following businesses:

Lamps: incandescent, halogen, (compact) fluorescent, high-intensity

discharge

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

Home appliances

Philips Design is one of the longest-established design organizations of its kind

in the world. It is headquartered in Eindhoven, the Netherlands, with branch

studios in Europe, the US and Asia Pacific. Its creative force

Comprises designers, psychologists, ergonomists, sociologists, philosophersand anthropologists working

Together to understand peoples needs and desires in order to generate

designs which support people in?

Accomplishing and experiencing things in natural, intuitive ways. Philips

Designs forward-looking exploration projects deliver vital insights for new

business development, supporting the transformation towards a health and

wellbeing company. In focusing on the domain of health and well-being, we

are tapping into significant trends such as consumer empowerment, growth

in emerging markets and aging populations that will have a major impact on

society in the future.

Healthy Life

The Healthy Life value space takes a holistic approach to enhancing consumers

health, addressing the needs for mental and physical health and for healthy

relationships.

7/30/2019 final-120720061442-phpapp02 (1)

51/58

Personal Care

The Personal Care value space addresses the consumer need to look and feel

your best and so helps people feel more confident.

Home Living

The Home Living value space addresses consumers pressing need to have

more time to spend on themselves or with family and friends. We do this by

creating high quality solutions that enable quick and convenient cooking,

preparation of beverages, cleaning, caring and home comfort.

Lifestyle Entertainment

Lifestyle Entertainment is about enjoying entertainment and the little events in

everyday life: sharing time with family and friends, having time off from a

hectic schedule, and moments of comfort, fun and caring.

7/30/2019 final-120720061442-phpapp02 (1)

52/58

Questionnaire

1.How does it feel to compete with Videocon and other competitorsin 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 ofSony 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 alot 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 MNCs

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.

7/30/2019 final-120720061442-phpapp02 (1)

53/58

3. Is Philips India profitable yet? Where do you see the company in thenext 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 givemuch 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.

7/30/2019 final-120720061442-phpapp02 (1)

54/58

5.Which is Philips main line product?The mainline pr