PHILIPS CASE STUDY

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PHILIPSsense and simplicity

DIVISIONS Philips Consumer Electronics Philips Lighting Philips Medical Systems Philips Domestic Appliances and

Personal Care B2B

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INDUSTRY ELECTRONICSFounded Eindhoven, 15 May 1891Founder Gerard Philips

Frederik PhilipsHeadquarters Amsterdam, NetherlandsArea served WorldwideKey people Jeroen van der Veer(Chairman)

Frans van Houten (CEO)Products Home appliances

LightingMedical equipment

Revenue €21.39 billion (2014)Operating income €486 million (2014)Profit €415 million (2014)Total assets €30.97 billion (2014)Total equity €10.86 billion (2014)Number of employees 116,000 (2014)Slogan "Innovation & You"Website www.philips.com/global/

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(1910 to 1950s) Philips Metal Filament Lamp Factory Ltd. was

founded  in Eindhoven in 1907. That was followed in 1912 by the foundation of

Philips Lightbulb Factories Ltd.

In 1920s,Philips started to diversify its product range.

In the 1920s, the company started to manufacture other products, such as vacuum tubes. 

In 1939 they introduced their electric razor, the Philishave.

In 1949, the company began selling television sets.

Vacuum Tubes.

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1990 TO 2015 In may 1990 when company

posted losses of $2.6 billion,top management launched a major initiative known as”Operation Centurion”.

In 1999,Philips embarked on a worldwide marketing campaign and changed their company’s image to a technology-oriented company rather than a market –oriented one.

In 2001,Philips launched a company wide restructuring program called “Towards One Philips’(TOP) under CEO Gerard Kleisterlee to foster greater co-operation.

The program helped not only in lowering costs but also promoted a spirit of collaboration.

In January 2011 Philips agreed to acquire the assets of Preethi, a leading India-based kitchen appliances company.

In March 2012 Philips announced its intention to sell, or demerge its television manufacturing operations to TPV Technology.

April 2013, Philips announced a collaboration with Paradox Engineering for the realization and implementation of a “pilot project” on network-connected street-lighting management solutions. This project was endorsed by the San Francisco Public Utilities Commission (SFPUC).

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TARGET APPLICATIONS IN THE PROFESSIONAL MARKET ARE DECORATIVE OUTDOOR AND SHOP LIGHTING…

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..creating new lighting possibilities

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CASE STUDY

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REVENUE

• Globally,Philips derives 34 percent of its revenues from lighting ,in India,the figure is 58 per cent.

• In Health care,the global contribution is 40 per cent.In India it is 18 per cent

• In Consumer lifestyle,the company gets 26 per cent of its overall revenues,in India,it is 24 per cent.

• Totally the Indian unit closed the fiscal ended march 2012 with revenues of Rs 5,579 crore,growing at a clip of about 23 per cent per annum.

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PHILIPSGROWTH OVER THE YEARS

1891 1912 1920 1939 1949 1963 1982 2000 2011 2015

ACQUIRED THE ASSETS

OF PREETHI.-INDIA BASED

KITCHEN APPLIANCES

COMPANY

LAUNCHED COMPACT DISC.

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INTRODUCED THEIR

ELECTRIC LASER.

STARTED MANUFACTURING VACCUUM TUBES.

.

.

PHILIPS WAS

FOUNDED. PHILIPS LIGHTBULB FACTORY COMES INTO EXISTANCE.

PHILIPS BEGAN SELLING TELEVISION SETS.

INTRODUCED THE COMPACT AUDIO CASSETTE TAPE FOLLOWED BY “RADIO RECORDER” FEW YEARS LATER.

PHILIPS BOUGHT OPTIVA CORPORATION

ACQUIRED VOLCANO CORPORATION

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Solutions

Philips embarked an improvement program called BEST (Business Excellent through Speed and Teamwork).

Have several tools and approaches as a part of BEST.

Some of them are:• Philips Business Excellence Model

(PBE)• Process Survey Tools(PST)• Balanced Scorecard (BSC).

Problem

Philips was successful since its inception, but its faced poor financial performance during the 1990s due to several reason:

• Fall of market share.• High Manufacturing Costs.• Lack of competitive product price• Growing competition and Rapid

changes in the external environment

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STRATEGY OF PHILIPS8/29/2016

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…cont’d

RETAILEmerging

urbanization ,

population growth and

new demand.

AUTOPhilips offers

best-in-class

lightning solutions in OEM &

OESe.g.

Hyundai

INDUSTRYRequires better illumination for performanceReduces operating cost

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HEALTHCARE

Supports hospitals and diagnostic centre medical

equipments providers for

experience of care

AnesthesiaCardiology

Critical careHome respiratory

careRadiology

PERSONAL CARE

Market leader in male grooming

equipmentsPersonal care

product is introduce in Tier 1 & Tier2

cities

TrimmersRazors

Wet & Dry electric shaver

Steam IronHair dryer & straightner

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Questions raised at

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Q.1 Evaluate Philips "sense and simplicity" strategy. What are the risks the company faces in using the tagline?

Strategy –Philips sense and simplicity strategy was based around a marketing insight they obtained from a market research on their consumer segment. Philips wanted to make the technology hassle free and easy to access.

Risks –1) They would compromise on the advancement in technology in order to make things simpler.2) They would give the impression of a less advanced electronics manufacturer, because of it's simple design and features.

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Q2. What strategies can Philips follow to ward off competition from Japanese manufactures of consumers electronics?

The major advantage that Japanese manufacturers have over Philipsis their ability to keep their prices lower.

if Philips were to emphasize adherence toquality, simplicity of design, the multi-lingual instructional manuals, and the sense thattheir products provide more value for money, they would have an advantage. The ‘Senseand Simplicity’ campaign is all well and good, but Philips should take care to ensure thatadvertisements are designed in such a way as to ensure that customers understand theproducts in exactly what the company wants them to.

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Summary BMW’s

Logo

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Thank you23

Created by Kouts Kumar, IET Lucknow, during a marketing internship under Prof. Sameer

Mathur, IIM Lucknow.8/2

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