Philips seeks a stronger grip on Asia-Pacific
Philips seeks a stronger grip on Asia-Pacific
Philips, one of the world's top consumer product manufacturers, invited members of the press from at least 10 countries in the Asia-Pacific region to Hong Kong on Aug. 18 and Aug. 19 to get a glimpse of the company's vision and its latest products. The Jakarta Post reporter Ardimas Sasdi attended the event and filed this report.
HONG KONG, China (JP): Today's consumers are discerning and want to know everything about a product before spending their hard-earned money on it. Quality, ease of use, superiority and price; these things count.
The world's top producers of consumer goods are fully aware of consumers' demands, and strive to meet these demands in order to spur their sales.
"Nowadays, especially in such a competitive environment as the world of consumer electronics, companies have to compete on all fronts. Consumers can always find a product that sacrifices quality for price and is therefore cheaper, or a product that offers other functionalities," said Gavin Proctor, Philips' Taipei branch manager for design.
"So what makes the difference today? Design does," he said.
Gavin, who joined Philips several years ago, said the company always tried to explore customers' existent and latent needs. This means knowing more about people -- physically, emotionally, intellectually, socially and culturally -- in order to identify what they really need and what their aspirations are.
In order to achieve these goals, Gavin and his team of 450 experts from traditionally nondesign related disciplines, such as anthropology, sociology, psychology, trend analysis and visual trend analysis, work to study and satisfy consumers' demands and aspirations. These experts collaborate with designers and technologists in the creation of products.
Are all these efforts enough? Not for Philips. In extremely competitive and nearly saturated markets, companies have to go further.
"We must inject more meaning and emotional appeal into our products in order to woo customers," said Aaron Boey, director and vice president of brand management at Philips Consumer Electronics (PCE) Asia-Pacific Pte. Ltd.
Like many European companies, Philips is often associated with high-quality and expensive products, an assumption considered by Philips executives as misleading.
In Indonesia, Philips -- which employs 233,700 people and sells and services its products in 150 countries worldwide -- is better known for its household appliances, including lamps, rice cookers, blenders, hair dryers and irons.
"We have a wide-range of products. Our prices for the same class of products are competitive with those of Panasonic, Sony and Toshiba," said Cosmas Subagus, a senior executive at Philips Indonesia.
To build and strengthen its image among customers in the Asia Pacific, Philips launched a promotional campaign at the country and regional level in 1998. With the help of this campaign, Philips Indonesia is optimistic that by the year 2003 it will be one of the top three consumer electronics companies in the country, along with Sony of Japan and Goldstar of South Korea. Philips is currently in the top 10 consumer electronic companies in Indonesia, with a market share of between 3 percent and 4 percent.
Star products
The ongoing campaign also includes the promotion of Philips' "star products" with "star features and technologies", and a study on teenagers as potential customers.
Philips' 1999 star products, scheduled to be available at the end of this year or early next year, include Digital Video Disk (DVD) 955, a 29-inch real flat TV which delivers sharp pictures and perfect images from any angle of the TV screen, a 72-inch flat TV which can be hung on the wall like a painting and serve as a home cinema, a compact disk recorder and a Xenium mobile phone.
However, the price for the higher-end products are steep, especially by Indonesian standards. A high-resolution flat plasma television, for example, costs US$15,000 (about Rp 133 million), while the 65-inch projection TV costs "only" $12,000.
Philips is also launching the Building the Philips Consumer Brand in Asia-Pacific campaign in an effort to strengthen its position in the region.
"We have become more consumer sensitive and want to build Philips' Asian brands," said Aaron Boey, a Malaysian university graduate who is responsible for strategically positioning and building the Philips brand throughout the Asia-Pacific region.
To gain insight into customer satisfaction, guidance on the production of new products and global consumer and segmentation studies, Philips also conducted 14,000 interviews in 17 countries.
The integrated promotional drive comes under the main team of "human, imagination and seduction", and covers print and broadcast media, outdoor advertising, the Internet, youth programs on MTV and e-commerce. The cost of this drive across the Asia Pacific will come to some $80 million.
This advertising campaign makes Philips the largest advertiser in Pan-Asian media and places the company among the top three advertiser in all key markets in the region.
Headquartered in Eindhoven, the Netherlands, Philips Consumer Electronics is a business unit of Royal Philips Electronics of the Netherlands, one of the world's largest electronic companies and Europe's largest such company, with sales totaling more than $33.9 billion in 1998.
Potential markets
Frans van Houten, Philips managing director for consumer electronics in the Asia Pacific, Middle East and Africa, told the press Philips invested millions of dollar in factories and other programs, including advertising, to grab a bigger market share in potential markets in the Asia Pacific, such as China and India -- two major Asian countries which are prime targets for Philips.
"China is the fastest growing market in the Asia Pacific, and will become the single largest market in the world within five years," Van Houten said.
In China, Philips' market share for consumer electronic products grew by 1.5 percent in the first quarter of 1999 to 6.4 percent. It has the top market share for personal computer monitors in the country.
India, with a population of over 800 million, is another potential market for Philips. The company's market share in India grew 0.8 percent in the first quarter of 1999 to 10.3 percent.
Singapore, Hong Kong and Taiwan are presently Philips' strongest markets for DVDs, while Australia, New Zealand, Thailand and China are seen as growing markets.
Indonesia was formerly among Philips top three potential markets along with China and India, but its potential was damaged by the economic crisis which hit the country in July 1997.
In general, the Asia-Pacific region is gaining importance for Philips in technology, product development, manufacturing and revenue.
"Philips has emerged from the regional economic turmoil of 1999 stronger and more determined to strengthen its position as a global consumer electronics player," said van Houten, adding that Philips Consumer Electronics has done exceptionally well in terms of sales in the first half of 1999, exceeding the budget forecast by 27 percent.