CASE STUDY: PHILIPS ELECTRICAL SHAVERS

Situational Analysis: Economy:The global recession and economic downturn particularly in consumer
markets has reduced its sales predominantly felt within Consumer Lifestyle
category which reported a steady decline in comparable sales. This also affected
the sales of Television sets, as well as lower sales in Audio & Video Multimedia
and Peripherals & Accessories
There was comparable increase in sales growth at Healthcare because of its
merging markets and across all businesses, notably costumer services, clinical
care systems, and healthcare informatics and patient monitoring.
Because of the strong growth in energy-efficient lighting solutions, lighting
saw a comparable sales increase.

Technological:The ability of Philips Research and Development team to create innovative

technological advances and solutions for costumers is a major factor of Philips

competitiveness in its markets.
Philips constantly invests on technological advancement to reduce energy
consumption, weight and hazardous substances. Philips is highly concentrating in
Green Innovations-- the Research & Development spend related to the
development of new generations of Green Products and breakthrough Green
technologies.
Philips still faces competitive challenges such as speed of innovation, fastmoving market trends and rapid technological change, shortening product life
cycles which requires price management, cost reduction and/or efficiency
increase. Philips must develop superior technology anticipating consumer needs
and continue to rapidly develop attractive products, to tackle the competitiveness
of brands such as LG, SAMSUNG.

Public Policy and Culture:The Philips slogan relays the significance of creativity: Sense and Simplicity

having replaced Lets make things better. The change of branding message
characterises the changes of economic paradigm the industry has moved from
making things to pleasing the senses and appealing to values.
India being a diversified country, where people belong to various religions and
cultures, the company believes it is essential to have a detailed understanding of
the world nowadays and the ability to foresee what it will be like in the future. In
the sphere of design, Philips Foresight, Trends & People. The company looks into
the needs of people in different regions and assesses what quality of life means to
them - both now and in the future. This will help Philips to gain strategic insights
into global and regional sociocultural changes which influence new values,
lifestyles and needs.
The company tracks significant changes, in cultural trends, artistic expression,
fashion, media, and architecture to identify trends.

Strengths:Philips always believe in something new and innovative. With this motto in

their policy the company came up with pioneering products of their time. Philips
invests in high-growth and profitable businesses and emerging geographies to
achieve market leadership positions.
As the companys commitment R&D allows them to introduce specialised
products be it the Philips Lamp, Radio, Compact Disc or the Flat T.V. Panels.
Philips are now leaders in energy-efficient lighting with TL5 lamps and LED light
sources, electronic gear, high-efficiency optics and energy-saving lighting
controls. Philips is also aiming for the Green products.
Philips commitment to energy efficient innovations puts it as one of the
favourites with the global climate change, rising energy costs and pressure to meet
targets on CO2 reductions.

Marketing:After years of resisting celebrity endorsements, Philips, the 121-year-old

Dutch electronics major, brought Arjun Kapoor to endorse its male grooming
products, such as electric shavers, and Alia Bhatt to push its female grooming
products.
The main motive behind this strategy was to give the brand a face value, and
will allow the company to gain a youth push towards its products.

Weakness:Philips got entangled in lawsuits against its consumer durables division, which
depleted the companys brand image.
The deal made with Funai Electric Co was broken off and Philips took the
control of the consumer electronics operation. Due to this Philips said it would
seek damages for breach of contract in the $200-million sale.
These legal struggles cost the companys money and subsequently the
companys profitability was depreciated.
Some of the HR related issues the company is facing are:The company is facing the shortage of its Sales people, compared with its
competitors.
The company also experienced a labour strike in its Salt Lake Factory in
Kolkata during the year 1966. The issues were majorly call for hike in basic
salaries and dearness allowances for the workers.

MAJOR PROBLEMS FACED BY PHILIPS IN INDIA

If you want to become a Global player, first understand the Local
environment and behaviour.
(For example, when McDonalds started its operations in India. They adapted
according to the culture of India, and came up with McAloo Tikki, Chicken
McGrill against their premium servings of Hamburger. As in Indian culture people
dont prefer to consume beef.)

Here are some factors, which Philips need to understand while

crafting its strategies:

Indians prefer traditional shaving razors rather than electrical shavers. As most
of the peoples mentality is that the shaving razors provides them a finer shave as
compared to the electrical ones.
As Indians are penny-pincher in their nature. So they prefer spending small
amounts at regular intervals on normal shaving razors rather than on spending
rupees 1800/1200 on electrical shavers.
The consumers were in dilemma as to how the electrical shavers would
perform and how would it react to their skin type.

You have to taste the culture to understand it

Indians are purist by nature, which is why we prefer to use free quantity of
water

in every sphere of our lives, be it brushing our teeth, to washing our face

and using lavatories.

Whereas in western countries, the usage of water for these purposes are
almost nil or insignificant, due to their harsh cold climatic conditions. So, the
consumers of these countries prefer using mouthwash liquids, face wipes and
tissue papers in the lavatories.

Strategic Alternatives:Almost 50% of Indias population shave regularly with varying habits,
which shows that India is a huge untapped market. So, a global player like
Philips need to become local and should change their marketing strategies
according to the Indian culture, tastes and preferences.

The Choice:1) To target working professionals in various IT hubs of India (Bengaluru,

Chennai, Pune, Delhi NCR, Hyderabad).
2) To target the millions of sales executives working across various cities.
3) To target students across various professional institutes in multiple cities,
developed as educational hubs (Lucknow, Pune, New Delhi and Dehradun).

Action Plan:Time is Money, make it worthwhile

1) The thousands of IT executives working across various organizations are not
having affordability issues but paucity of time. So Philips need to concentrate
their efforts on gaining a strong foothold among these consumers.
2) The job profile of the sales executive is such that, they induce their 80-90% of
their time in travelling. Availability of water is a major issue amongst these
people during travel. But, they still need to look spick and span all the time.
So, the electrical shavers can make their life a lot easier and more flexible, as
they can use it on the go.
3) Philips should consider manufacturing and introducing economical variants of
their electrical shavers product line for Tier-II and Tier-III cities. Where the
people are still price sensitive.
4) As consumers from some part of India, generally prefer keeping a subtle
beard. Cash rich Punjab and Haryana are the states, where almost 90 percent
persons maintain beards, either due to religion or due to traditions of the local
areas. So, Philips ponder over adding a new attachment for trimming in their
existing models of electrical shavers.