philips innovation addressing to consumers

8/3/2019 Philips Innovation Addressing to Consumers

1/23

Growth in Emerging Markets

Leading the Growth in China

Fabian Wong

GM of Philips Consumer Lifestyle Greater China


2/23

Key takeaways

Emerging markets present a significantopportunity for growth. We have a verystrong brand and are investing incapabilities to accelerate growth

China is a key source of growthpotential, and we have a strong track-record of success that positions us forthe future

We are accelerating growth byinnovating for local health & wellbeingneeds and investing in our go-to-market capabilities


3/23

20M

Emerging markets present a significant growthopportunity for Philips Consumer Lifestyle

3

Note: * Analysis of middle class and above urban households only

1. Middle class defined as households with annual income above $10,000

2. Middle class defined as households with annual income above $5,000Source: Middle class forecasts - BCG forecast model and analysis

GDP forecasts - EIU

Middleclass*

7%

GDP

5%

Brazil1

Middleclass*

7%

GDP

4%

Russia1

GDP

9%

Middleclass*

15%

India2

Middleclass*

14%

GDP

8%

China1

12%

GDP

4-9%

Middleclass*

BRIC12

Number of middle class* urban households in 2015

Growth in emerging markets, 2010-2015

49M 236M98M69M


4/23

China is a key source of growth potential for Philips

Estimated GDP growth at 8%/yr

Middle to affluent class will double in5 years

Continuing urbanization drives home

improvement market

Lower tier cities markets grow faster

than metro and 1st tier cities

+13%

201520142013201220112010

Note: * Shaver, Hair Care, Mother & Child Care, Air & Water, Kitchen Appliances

Source: EIU, GfK, ZYK, Philips market intelligence 4

Key categories* growing at afaster pace

Post financial crisis, Chinas economic

growth prospects remain intact


5/23

Philips is well positioned to address uniquelocal consumer needs

More conscious abouthealth; willing to spendto control health risks

Continued popularity oflocal heritage, e.g.traditional Chinese

medicine

Strong family value /one-child policy to stay;focus on children andelderly; Emphasis on

education

Internet becomes animportant part of daily life

Concern about food safetyand air / water quality

Strong trade up intention;Brand and trustworthinessstill a clear differentiating

factor

Increasing attention onappearance with Asian-specific requirements

5


6/23

Philips is driving growth and is a Consumer Lifestylemarket leader in China

6Source: 1. GfK, ZYK; 2. Philips NPS report 2009; 3. NPS 2010 Pulse Check

Shaver Hair Care

Floor Care Garment Care

DVD Player Juicer

Toaster

Coffee Maker

PC Headsets

Female Depilation

Home Cinema Sound

Audio Home System

Air Cleaner Blender

Food Processor

Powered Toothbrush

Portable DVD

Cordless Phone

Headphone

PC Mini-speaker

Mother & Child Care

Home cinema sound

Steam iron

Juicer

Rice cooker

Hair care

Shaver3

DVD player

Vacuum cleaner

Mother and child care

Cordless phone

Audio home system

NPS leader or co-leader in 11 categories2Market leader in 11 categories1

Number 2 or 3 in 10 categories1

Leader

Co-leader


7/23

Philips strong brand is uniquely positioned togrow sales as the market expands

7Source: Heartbeat, China; TNS proprietary analysis; Consumer durable brands

Brand 13

Brand 12

Brand 11

Brand 10

Brand 9

Brand 8

Brand 7

Benchmark

Brand 6

Brand 5

Brand 4

Brand 3

Brand 2

Brand 1

Philips 122

Brand equity, China 2010 Philips ranks top 3 of all brands

124

122

122

121

115

104

103

100

100

97

94

91

89

88

83


8/23

With a strong Philips brand equity, there is asignificant improvement across purchase funnel

8Source: Philips Heartbeat report, 2010

2008 2009 2010

Stands for Simplicity

Products based onconsumer needs

Regularly first to marketwith new ideas

Easy to use and install

Leader

Co-leader>60%

PurchasePreferenceConsiderationAwareness

2010

2009

Strengthened Simplicity throughbrand campaigns

Of consumers who consider Philips,more than 60% make the purchase


9/23

Capturing growth by focusing on integratedgo-to-market approach

201120102009

Distribution network covering all 31

provinces in China, supported by 7

regional and 30 liaison offices

Philips product counters available in

more than 450 cities, from tier 1 to tier 4

More than 8,000 counters

More than 9,500 promoters

We are doubling A&P over two yearsOur distribution and retail reach

9

A&P investment, indexed 2009


10/23

Innovating and winning around local relevantconsumer insights

Washable two headshaver for mid market

Constant lowertemperature hairdryerfor hair care

Remove obviouscreases with optimalconvenience

Effectively detoxifieschemical from furniturein the air

10

Washable ShaverSalonshine CareHairdryer Garment Steamer Air Cleaner


11/23

Key takeaways

Emerging markets present a significantopportunity for growth. We have a verystrong brand and are investing incapabilities to accelerate growth

China is a key source of growthpotential, and we have a strong track-record of success that positions us forthe future

We are accelerating growth byinnovating for local health & wellbeingneeds and investing in our go-to-market capabilities


12/23


13/23

Growth in Emerging Markets

Domestic Appliances expanding

capabilities in Asia

Murali Sivaraman

GM Business Group Domestic Appliances


14/23

Key Takeaways

Domestic Appliances has consistently grownacross categories over the past years

The geographic diversity of DomesticAppliances is driven by local consumerneeds with an increasing demand for locally

relevant solutions

To ensure speed and focus to captureopportunities in emerging markets,specifically Asia :

Domestic Appliances leadership willmove to Shanghai

Establish business creation hubs forKitchen Appliances in major markets


15/23

Domestic Appliances has consistently grown acrosscategories

15Note: * Compound Annual Growth Rate

Strong product and marketing

innovation driving consistent growth

in Kitchen Appliances across

markets

Kitchen appliances (Indexed sales)

2007 2010

Strong exposure to emerging

markets (> 50% revenues in 2010)

Focus on Coffee and leadership

through Saeco acquisitionCoffee

Sales by market

Emerging

Mature

2006 2010

CAGR11%*


16/23

Philips brand preference in Domestic Appliances isvery strong, particularly in emerging markets

16

Note: *India market share data only available for 2009

Source:Brand Preference: Consumer HeartBEAT study 2010, B2C; Market Share: GfK , ZYK (China), Francis Kanoi (India)

No 1

Top 3

Top 10

Measurement not available

KitchenAppliances

GarmentCare

FloorCare

Coffee

Brazil

Russia

India*

China

France

Germany

KitchenAppliances

GarmentCare

FloorCare

Coffee*

Brazil

Russia

India

China

France

Germany

Top 3 position in 83% of tracked markets

Philips market share (sales value), 2010Philips consumer brand preference, 2010

Top 3 position in 72% of tracked markets

Market share applies to categorieswhere Philips plays today


17/23

Diversity of Domestic Appliances is driven by localconsumer needs

17


18/23

India consumer insight Silent Mixer

+22%

201020092008

Category repositioned with local

insight of silent operation

Locally designed & manufactured,

addressing India relevant tough food

processing applications

Indexed Sales growthSuper Silent Mixer Grinder in India

18


19/23

Healthy food without added oil - Western Europe

19

Strong consumer responseAirfryer in Western Europe

Philips addresses consumer need tomake fried food in a much healthierway

The Airfryer allows prepare the besttasting fries without added oil!

Fries from the Airfryer contain up to80% less fat

Blind taste test showed that 2/3rd ofconsumers prefer the crispy fries from

the Airfryer

Great market response articulated instrong (online) coverage and five starproduct reviews


20/23

Emerging markets provide untapped growthopportunities driven by local needs

20

50% of Chinas DA market isdriven by Soymilk maker and

Induction Cooker

Spaces where Philips canexpand its presence significantlythrough locally developedsolutions

Domestic appliance market in China

5%

5%5%

17%

15%

22%

26%

Floor care

Other kitchen appliances

Coffee

Kettles

Garment care

Water

Air

Induction cooker

Rice cooker

Soymilk maker

Categories where Philips plays today

Categories where Philips does not play


21/23

To ensure speed and focus to capture opportunitiesin emerging markets

Domestic Appliances Leadership will Move to Shanghai

Building a

second global

home for CL

Installing

business

creation hubs

Domestic Appliances will make China its Global Home in Q1 2011

Move Business Group roles to develop global business creationcapabilities in China

Grow Asian talent / leadership pool

Business creation hubs (speed and focus through the chain) forCategory Kitchen Appliances in major markets

Category Leader based in China from Q1 2011, and globally

responsible for business creation Each business creation hub will have end-to-end responsibility /

capabilities

Create propositions based on local insights

Acceleration through acquisitions

21


22/23

Key Takeaways

Domestic Appliances has consistently grownacross categories over the past years

The geographic diversity of DomesticAppliances is driven by local consumerneeds with an increasing demand for locally

relevant solutions

To ensure speed and focus to captureopportunities in emerging markets,specifically Asia :

Domestic Appliances leadership willmove to Shanghai

Establish business creation hubs forKitchen Appliances in major markets


23/23

philips innovation addressing to consumers

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