Philips in brand make-over
By Zi Mu (China Business Weekly)
Updated: 2004-09-22 10:39

Dutch conglomerate Philips Electronics is polishing its brand as part of its broadened marketing campaign, which is aimed at turning itself into a market-driven firm.

Philips, the top maker of consumer electronics in Europe, last week launched a new, worldwide brand strategy that highlights the concept of "Sense and Simplicity."

The move comes as Philips, an incredible innovator in the high-tech industry, copes with its market performance, which has fallen short of expectations.

Philips, which holds more than 100,000 patents, has been the No 1 company, for the last two years, in terms of patent applications filed with the World Intellectual Organization.

But the firm's business growth has been sluggish in recent years, as its technological edge has largely failed to translate into substantial market success.

And that's why the firm is seeking a facelift.

David Chang, president and chief executive officer (CEO) of Philips China, said the brand makeover is aimed at helping Philips adapt to changing market needs.

"Philips' brand has changed, and is continuing to change," he said.

A recent survey of global consumers conducted by Philips has found "consumers are bored with the complexity of technologies," Chang said.

Gerard Kleisterlee, president and CEO of Philips, acknowledged "Philips is not the only technology company to grasp the need for simplicity.

"But I believe we're the first to put a stake in the ground and declare our intent to take action. Others may aspire to be more fashionable, more youth-oriented, and more gadget mad," he said in a statement.

"Our route to innovation isn't about extra complexity -- it's about extra simplicity."

"Sense and simplicity," aimed at making technologies easier to use, will replace the "Let's Make Things Better" slogan Philips launched in 1995.

Philips announced it will invest, beginning this month, about 80 million euros (US$96.6 million) in the new marketing campaign.

Chang would not say how much of that money will poured into China's market, which is becoming increasing important to Philips.

However, he said Philips will launch 30 brand-service flagship shops, and more than 1,000 brand-service centres in China to better serve consumers.

Philips is one of the best-known brands in China, but not the most-preferred brand with Chinese consumers.

The rebranding is expected to help Philips fight off growing competition from hard-charging Chinese manufacturers, which are filling the market with low-priced imitations of brandname products.

The initiative will also put Philips firmly on the fast track in China.

Philips' sales in China and exports from the country totalled US$7.5 billion last year, up 11.9 per cent year-on-year.

Philips has been striving to increase its annual revenue in China to approximately US$12 billion by 2007.

Philips has been aggressively reshuffling its business strategy in China, which it expects to become the largest contributor to its global revenues.

Last year, Kleisterlee said Philips will "step up R&D (research and development) activities, hire more R&D engineers and transfer more business management activities to China."

Philips China last year contributed more than 20 per cent to the firm's global revenues, but its sales in the country were only 7 per cent of global sales, Chang said.

In February, Philips reported a full year global revenue of 29.04 billion euros (US$36.88 billion).

To change that scenario, Philips needs to look at China beyond a manufacturing base.

Philips China has appointed a chief marketing officer (CMO), who will assume office today.

The CMO's major responsibility will be co-ordinating branding and marketing campaigns among Philips' sprawling businesses in China, Chang said.

Philips has 35 wholly owned and joint ventures in China, with operations ranging from consumer electronics, small home appliances, semiconductors, lighting to medical and health.

Philips has appointed a "Mr China" for each product division (PD) to form Philips "China Management Team" (CMT).

Apart from deploying global policy in China and approving relevant country policies, CMT focuses on reviewing progress and implementing China strategies that emphasize cross-PD business opportunities and synergies in a One-Philips way, Chang said.

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