Philips eyes 10% of RI market

Johannes Simbolon, The Jakarta Post, Bangkok

The Dutch technology giant Philips is targeting to increase its market share in Indonesia's electronics market to 10 percent this year, believing that affluent Indonesians will pay greater attention to its products.

The company has almost tripled its market share in the Indonesian market over the past three years, up from 2.5 percent in 1999 to 6.5 percent last year.

"Three years ago, our market share in Indonesia was very small. Since then, our market share has been going up very fast ... We are now targeting 10 percent of the market," Frans van Houten, executive vice president of Philips Consumer Electronics for Asia Pacific, Middle East and Africa said last Wednesday in Bangkok during the company's annual meeting with the regional press.

Van Houten said Philips was also targeting a 10 percent market share in other Asia Pacific countries.

According to company data, Philips' electronics market share is still less than 10 percent in all the Asia Pacific countries, except for three, New Zealand, Singapore and Pakistan, where it has a 24.3 percent, 14.8 percent and 21.3 percent market share respectively last year.

In Indonesia, Philips' electronics products have been available for many years but the company has thus far failed to compete with Japanese brands for various reasons, including a weak marketing strategy. Until 1999, it distributed its products through a joint venture operation with a local firm.

The economic crisis sparked by the sharp depreciation of the rupiah against the U.S. dollar in 1997 and 1998 dealt a further blow to the company, pushing up the prices of its products, which are all imported. At that time, Philips' spare parts became difficult to find in Indonesia.

The company then reviewed its marketing strategy. It acquired its local partner's share in the joint venture operation in late 1998 so that it could wholly run the franchise, which is now called PT Philips Electronics Indonesia.

Since then, despite the lingering economic crisis, Philips has been involved in an aggressive campaign to promote its products.

"Three years ago when I came to this region, one of the first decisions that I took was that Indonesia would be a priority despite the economic crisis.

"One of the first acts that we did was to establish a new company, Philips Electronic Indonesia, as a vehicle to reenter the market," van Houten explained.

He said Philips would focus on consumers in Jakarta and other big cities before moving into the rural areas.

He ruled out the possibility of producing products for the lower end of the market, saying Philips would maintain its image as a producer of quality products for middle and high income buyers.

He dismissed consumer worries about its after-sales service, saying that Philips' spare parts were plentiful on the local market, and that there were numerous service centers in big towns authorized by the company to repair any broken equipment.

The company imports all its products, and van Houten ruled out the possibility of setting up a manufacturing plant in Indonesia for the moment, citing Indonesia's currency fluctuations, social and political instability, and the lack of skilled workers in the country.

During the two-day press event, Philips also announced some of its latest products that would soon hit the electronics stands in the Asian market, including Indonesia.

One of the new products is the Matchline TV series using Pixel Plus technology. This technology doubles the horizontal resolution of standard TVs and increases vertical resolution, thus bringing sharpness, detail and depth to pictures on screen.

Another product is the Streamium MC-1 2000, an audio product that enables consumers to choose music stations available on the internet through broadband access.

Thus far, Philips has inked agreements with seven top online music providers to make their services available on the new Philips audio product. The music providers are AOL Music, Launch, Andante, MP3.com, MUSICMATCH, Radio Free Virgin and iM Networks.

Philips also launched its new digital video disc (DVD) product, called the DVDR890 recorder. This is equipped with a number of facilities that makes it easy to use, and produces excellent pictures.

The company also announced during the press event its collaboration with sport footwear, apparel and equipment maker Nike to produce and market "smart" products that combine audio technology with sport footwear, apparel and equipment. Athletes wearing Nike products can now comfortably use Philips's audio players during sporting and fitness activities.