Jerry Wang Consumer Channel Jan, 2013 Channel Distribution Plan -- New “ 慧心 ” LED Bulb

Jerry WangConsumer ChannelJan, 2013

Channel Distribution Plan-- New “ ” 慧心 LED Bulb

Confidential Consumer Channel, Jan, 2013, Market Activation_Consumer Channel

Objective and Key Initiatives

We will launch new LED Bulb series in Consumer Channel in

March onwards, it’s a different journey compared with our

past experience. Occupy the shelves as much as you can; Break into the channels/categories as broad as you can

Objectives 2013

Channel sales in 2013 reaches RMB 60M;

New channel sales reaches 10% of overall LED bulb sales;

Market share leadership in LED bulb market, accounts for (?%);

Trigger the conversion from CFLi to LED

Key initiatives to Win:

New business model

Penetration speed (LED price falling/ product upgrade too fast)

New channel re-positioning

Strong execution and attractive incentive plan;

2

3


LED Bulb Product 2013

10-70W 800lm

9-60W600lm

6-40W350lm

2012

2013

新的 LED 球泡系列将于 2013 年 3 月上市，主要变化：• 瓦数下降，更小瓦数即可实现同样流明输出，意味着更高效，更节能。• 增加两款大功率球泡，满足高亮度应用需求。• 2700K 色温改为 3000K ，以符合未来国标定义。• 不再使用 MyVision 系列名称，中文包装上仍保留“慧心”名称。• 塑料包装更换为纸盒包装，降低成本，便于运输陈列，有利环保。• 价格一步降到位，之后不再执行其他调价。

2013 年 3 月上市

• 2700K 暖光• 6500K 冷光• 塑料包装

建议零售价

2013 年 7 月

5-40W350lm

8-60W600lm

13-85W 1050lm • 3000K 暖白

• 6500K 冷光• 纸盒包装

3-25W250lm

*BS/MR 牌价

4


LED Bulb – MyAmbiance 随心系列

11-60W 全角度调光球泡

4-25W蜡烛灯

2012

2013

• MyAmbiance 系列强调光线效果、舒适与美观，色温均为 2700K 暖光。• P45 小球泡规格改为小螺口，更好地匹配灯具。• 全角度调光球泡预计在 2013 年 7 月上市，作为民用市场旗舰产品，突出飞利浦的 LED 技术领先性。• 4-20W MR16 灯杯 ( 白色外壳 ) 零售价调整为 79 元，仅在指定渠道销售，清空库存后退市。

2013 年 7 月切换包装

¥ 99 ¥ 79 ¥ 259

• 2700K 暖光• 塑料包装

建议零售价 ¥ 129¥ 129

4-25W 小球泡 (E27)

• 2700K 暖光• 纸盒包装

4-25W蜡烛灯

4-25W 小球泡 (E14)

2013 年 7 月上市2013 年 4 月上市

¥ 129

4-20W灯杯 (MR16)

5


Channel Listing Schedule

Brand Store1

BS A&B listing finished in March (310 to 430)

Trade MR New Channel2 3 4

BS C listing finished (100)

Mar

chA

pril

May

TD

District Dis (500)

Wholesale store (470)

Retailer/Hardware (10K)

Integ. Lighting Center (1k)

Home Lighting Center (630)

MR Dealer (70)

All key stores (50)

* EI/South/North KA stores as priority

A stores

B stores

Stores with shelf listing (reach 500)

Taobao Flagship store (1st launch)

360buy

TV (0-4)

Credit Card Award Plan

…

Channel Brand Store Trade MR New Channel Total

2013 Sales Target (k rmb)

7200 34800 12000 6000 60000

% 12% 58% 20% 10% 100%

*Strategy will be re-defined.

6

TD meetings


MR channel Listing targetReach 500 stores in 1st half year ， yearly target 1000 stores

RSO Target retailers

Overall store number

(>4000m2)

LED listing target

1st half year(before labor day)

Q3(before national day)

Q4(before new year)

total coverage

E1 12 430 260 40 20 320 74%E2 18 300 140 50 30 220 73%NR 14 160 80 20 20 120 75%SR 8 240 80 23 27 130 54%CR 11 130 50 20 13 83 64%SW 8 62 56 4 2 62 100%NE 3 70 14 8 8 30 43%NW 6 60 20 5 10 35 58%Total 48 1452 700 170 130 1000 69%

7

8Confidential Consumer Channel, Jan, 2013, Market Activation_Consumer Channel

MR channel LED Display Standard Flagship stores/ A stores/B stores /C stores, quickly expanding but focus on efficient stores

Flagship stores (TOP 100)

A stores (Top 101-300)

B stores (Top 301-600)

C stores (Top601-1000)

Portfolio full range over 90% SKU over 70% SKU over 50% SKU

Display (shelf)

upgrading with education material (LED shelf)

upgrading with education material (LED shelf)

shelf upgrading with education material

display on shelf

Display (secondary)

support on LED center (long term display), fully POSM for education

support on rack/TG/upgrading on cap( long term display), with PSOM

support on promotion display (short term); part

of POSM

promotion display in peak season with POSM

Promotion

continuous program with gift or price down; with POSM

gift or price promotion in peak season

price promotion in peak season

price promotion in best peak season

People

sales/merchandiser/full time promoter

specific merchandiser or full time promoter

specific merchandiser share local PSR;

services

weekly checking order/stock/sales; monthly DGR

weekly checking order/stock; monthly checking sales; quarterly

DGR

monthly check stock/sales; quarterly

DGR

monthly checking sales/quarterly stock/half

year DGR

8


Pricing12NC Description DP Retailer Price Shelf Price New Channel Price

929000248509 LEDBulb 5-40W E27 3000K 230V A55

929000216209 LEDBulb 5-40W E27 6500K 230V A55

929000248809 LEDBulb 8-60W E27 3000K 230V A55

929000216909 LEDBulb 7-60W E27 6500K 230V A55

929000249109 LEDBulb 10-70W E27 3000K 230V A55

929000249709 LEDBulb 10-70W E27 6500K 230V A55

929000249409 LEDBulb 13-85W E27 3000K 230V A67

929000250009 LEDBulb 13-85W E27 6500K 230V A67

929000209239 myAmbiance 4-25W E14 2700K 230V B35 CL

929000242439 myAmbiance 4-25W E14 2700K 230V P45 FR

929000210839 myAmbiance 4-20W 2700K 12V MR16 24D

Pricing strategy is for the whole 2013, within this year, Philips will no do price down action further;

Most likely competitors will fight back on price after our new products launch, but we believe we still have advantage;

It’s the key to maintain retailers’ margin at a reasonable level, we will do promotions afterwards;

Estimated channel margin is >40%, but expect to lower the level in the next step;

9


Sales Target Deployment

Channel

Brand Store Trade MR New Channel Total7200 34800 12000 6000 60000

12% 58% 20% 10% 100%

RegionE1 E2 North N-E South Central S-W West MR KA Total

19200 6600 9000 1200 16200 2400 2400 1200 1800 6000032% 11% 15% 2% 27% 4% 4% 2% 3% 100%

Each region will breakdown the target to each channel/ each month (Mar-Dec) afterwards.

10


How to WinKey Initiatives

New business model

Penetration speed (LED price falling/ product upgrade too fast)

New channel re-positioning

Strong execution and attractive incentive plan;

Description/ Specific resources

Dedicated sales in regions, in Q1, E1/E2/South/North in place;

LED sales target will separately be a KPI for each region/channel heads;

LED lamp or category will have special business terms with key TDs and MR KAs;

Aggressive target to list on shelf within short time;

More shelf display and 2nd display in key Hyper/Super;

Store productivity/ sale-out data tracking;

Need to find a big online store to 1st launch of new LED lamps; Taobao or 360buy; main page Ad and re-design LED lamp page;

Discuss with credit card centers for Award plan product;

TV shopping (plan after Apr)

Special package needed;Clear merchandising standard / instructions to promoters/sales;

• Best position principle

• Sales contribution principle

• Full SKUs principle;

Pictures of store display, regularly check;

LED Incentive Plan for promoter / Best Display Award/ Best Sales;

11


LED Incentive Plan

12

Promoter Incentive Plan– Mar- May launch period, 1% sell-out sales as incentive for each promoter; rough

budget rmb30K

– Jun-Sept, set sales target for each store, if over target, 5% of surpass will be incentive;

Best Display Award– In May, give to the sales for best display for MR;

– Each type of store (Hyper/Super..), 2 winners over the country;

Sales incentive for LED bulb

– By channel (BS/ TR/ MR & new channel)

– At year end


Action Plan/ TimingAction Description Timing Owner

Product Training

• RSO annual meeting briefing Jan Klaus

• Learning kit preparing Jan Klaus

• Sales /promoter training Feb Sunny/ sales team

Merchandising standard

• BS display standard• Main shelf display• 2nd display • SKU requirements

1st design-JanFinal- mid of Feb

Emenu &Sunny

Target deploy• Detailed target to RSO/channel Jan Kenneth / Jerry

• Contract terms/ pricing finalize Jan Kenneth / Jerry

Aging stock promotion • Clean all current products’ stock Jan/FebSunny & RSO leader

Product launch • New product listing plan, See slide 6 March/Apr/May Jerry

• Dealer launch meeting in SH/BJ/GZ March ?

Launch activities• Online Ad• Lum city event• Launch Promotion

March Trade marketing

Incentive Plan• For promoter• Best Display

Feb Jerry

New channel develop• Taobao / 360buy deal discussion Before CNY ?

• New channel plan Before CNY ?

13

14

Documents

Jerry Wang Consumer Channel Jan, 2013 Channel Distribution Plan -- New “ 慧心 ” LED Bulb