A report on MARKETING MIX in philips

PROJECT REPORT
ON

MARKETING MIX
OF

Submitted to:
Prof. R. K. Vijaya Sarathy
Director
Dyananda Sagar Business School

Submitted by:
Madhu Medappa, Ankita Tandon, Shrawan Kumar, Abijeeth Prushty, Vinod Kumar
PGDM(AICTE)2011-2013
Dyananda Sagar Business School
Bangalore

PREFACE
This project has been taken with a view to make a study on the Marketing
Mix of Philips India Ltd. With special reference to Karnataka state and thus
to uncover the strategies and plans that are inculcated by the Philips India
Ltd.

The present study creates awareness about the Marketing Mix put forth by
Philips India Ltd.

It also provides knowledge to the readers about the electronic industry,
Position of Philips India ltd., Marketing strategies implemented by Philips.

The present is the effort to formulate the strategy of marketing mix to stay
strong and to grow in the market for Philips.

ACKNOWLEDGEMENT

A project is never the work of an individual. It is more over a
combination of ideas, suggestions, review, contribution and work
involving many folks. It cannot be completed without guidelines.

First of all we would like to express our sincere gratitude to
Mr ABHISHEK SINGH (branch manager) Philips India Ltd, Bangalore
for giving us the opportunity to make this project and helped in every
way possible.

Last but not the least our sincere thanks to our class mates and
friends who helped us in completing this project.

Madhu Medappa (PGDMA1119)
Ankita Tandon (PGDMA1103)
G.Shrawan Kumar (PGDMA1157)
Abijeeth Prushty (PGDMA1101)
P.Vinod Kumar (PGDMA1131)
PGDM (AICTE)

CONTENTS

1. About the consumer electronic industry

2. About Philips

3. SWOT Analysis

4. Marketing Mix

5. Marketing Mix of Philips

6. BCG Matrix

7. Questionnaire

8. Conclusion

9. Bibliography

ABOUT THE CONSUMER ELECTRONIC INDUSTRY
The consumer electronics industry is maturing at an incredibly rapid rate.
Demand for consumer electronic goods had always been there, but it really
has reached its peak in the past few years. This has subsequently triggered the
expansion of the consumer electronics industry, which is turning into the
foremost profitable markets in world market.
In the last few years, there has been dynamic technological progress. The
consumer electronics industry continues to be employing advanced
engineering to manufacture electronic goods which is reaping massive profits
as a result. People today live extremely hectic lives to keep up with the pace of
the world. A busy way of life calls for some form of fun. It is essential to
invigorate the brain and ease out anxiety and stress since bottled up tension
can be harmful to health. Innovative products have been developed which
provide people with various kinds of enjoyment.

Apart from home entertainment, there are more electronic goods which have
become a necessity in our daily life. Consumers are increasingly becoming
dependent upon electronic goods in their daily lives since it saves them
considerable time and energy. Consumer electronic goods have come to the
forefront in making the effort for a man simpler and perfect. These machines
have become a part of our everyday routine and it’s now tough to imagine a
life without them. The consumer electronics industry has definitely responded
to the requirements of time. World-class correspondence equipment like
cellular phones, fax machines and computers are also needed in our daily
lifestyles, which is bringing society closer every day.
There are various causes of the development of consumer electronics industry.
The consumer electronics industry provides us with a huge selection of goods
for daily use. These are found in many areas of life which includes office,
communications, and entertainment. The need for many of the most popular
electronic goods in our everyday life has added to the expansion of the
consumer electronics industry. Popular consumer electronic goods include
essential equipments like televisions, personal computers, radio, mobiles,
microwaves, stereo systems, refrigerators, washing machines as well as other
gadgets.

The need for consumer electronic goods has drawn huge amount of
investments for this business. These investments have successively triggered
the expansion of this business. The story of consumer electronics around the
world hasn’t followed a straight path. Different countries have climbed the
corporate ladder of success in this field of electronics faster compared to
others in different periods. Often, it’s been the United States of America while
sometimes Asian countries like Japan and China took over as the biggest
providers of consumer electronic goods. However, there were additional
nations as well like Ireland and others who had shocked society with their
accomplishments in the field of electronics. US consumer electronics
experienced tough competition from the Chinese and Japanese manufacturers
in the 1960s. As a result, the consumer electronics industry of the USA
diminished, but by the 1980s, the industry again gained its former position.
The United States’ consumer electronics industry is the world’s premier
consumer electronics industry.

Innovation of Consumer Electronics

Even if you might have asked it a decade back, situation would’ve been
noticeably diverse; yes, I’m talking about the situation of consumer
electronics. When compared to those bygone days, today’s consumer
electronics industry has succeeded to such a position in which innovation runs
the motivator, the gas behind everything that is instinctive and sophisticated.
We now inhabit an era of extreme gadgetry pleasures with music systems, cell-
phones, Audio Players, Pads, desktops, plasma Televisions, etc. Moulding
the consumer electronics saga. Honestly put, existence without these items
would end up in chaos!
What’s the specialty for these products and services? Would it be really
difficult to exist without having these? Contemplate! Would you live without
these? Absolutely not! Today’s technology has advanced at such a amazing
speed that we don’t have any idea when and just how we submit to them in
the process. Items are constantly being developed every day, keeping in mind
what buyers desire. Be it in your new kitchen or maybe your living room, in
your telecommunications routine or perhaps entertainment necessities, the
existence of consumer electronics now can be experienced anywhere. Credit
goes to the key consumer electronic product developers that leave no stones
unturned to give the best in the market industry to their clients.

Aided by the advent of cyberspace, it is less difficult for consumers to get the
merchandise of their choice instantaneously. By simply browsing on the
internet you can end up with a lot of information about your specific products.
Another highlight is consumer electronic news reports to aid you on the net
that will keep you up to date regarding the latest happenings around the world
of consumer electronics. Consumer Electronic updates also can be very
therapeutic for you in enlightening you about the most recent releases by
means of similar manufacturers.

CONSUMER ELECTRONIC INDUSTRY IN INDIA
The electronic industry in India took off around 1965 with an orientation
towards space and defence technologies. This was rigidly controlled and
initiated by the government. This was followed by developments in consumer
electronics mainly with transistor radios, black and white TV, calculators and
other audio products. Colour televisions soon followed. In 1982 a significant
year in the history of TV in India – the government allowed thousands of colour
TV sets to be imported into the country to coincide with the broadcast of Asian
games in New Delhi. 1985 saw the advent of computers and telephone
exchanges, which were succeeded by digital exchanges in 1988. The period
between 1984 and 1990 was a golden period for electronics during which the
industry witnessed continuous and rapid growth.

From 1991 onwards, there was first, an economic crisis triggered by the Gulf
War which was followed by political and economic uncertainties with the
country. Pressure on the electronic industries remained though growth and
developments have continued with digitalisation in all sectors, and more
recently the trend towards convergence of technologies. After the software
boom in mid 1990’s India’s focus shifted to software. While the hardware
sector was treated with indifference by successive governments. More over
the steep fall in custom tariffs made the hardware sector suddenly vulnerable
to international competition.

CURRENT SCENARIO

In recent years the electronic industry is growing at a brisk pace. It is currently
worth US$ 32 billion and according to industry estimates it has the potential to
reach US$150 billion by 2012. The largest segment is the consumer electronics
segment. While is largest export segment is of components.

The electronic industry in India constitutes just 0.7% of the global electronic
industry. Hence it is miniscule by international comparison. However the
demand in the Indian market is growing rapidly and investments are flowing
into augment manufacturing capacity.

The output of the electronic hardware industry in India is worth US$11.6 billion
at present. India is also an exporter of a vast range of electronic components
and products for the following segments.

Display technologies
Entertainment electronics
Optical storage devices
Passive components
Electromechanical components
Telecom equipment
Transmission and signalling equipment
Semiconductor designing
Electronic manufacturing services

This growth has attracted global players to India and leaders like Solectron,
Flextronics, Sony, Panasonic, Philips, Nokia, Elcoteq and many more have made
large investments to access the Indian market. The consumer electronics
Korean companies such as LG and Samsung have made commitments by
establishing large manufacturing facilities and now enjoy a significant share in
the growing market for products such as Televisions, CD/DVD players, Audio
equipment and other entertainment products.

Consumer electronic goods are those which don’t wear out quickly, yielding
utility over time rather than at once. They can be further classified as either
white goods, such as refrigerators, washing machines and air conditioners or
brown goods such as blenders, cooking ranges and microwaves or consumer
electronics such as televisions and DVD players. Such big-ticket items typically
continue to be serviceable for three years at least and are characterized by
long inter-purchase times.

Performance
In the past 10 years, the global market has witnessed a surge in demand as
economies such as Brazil, Mexico, India and China have opened up and begun
rapid development, welcoming globalization with élan. The consumer durables
industry has always exhibited impressive growth despite strong competition

and constant price cutting, and the first contraction since the 2001 dot-com
bust has been due to the global recession. Given the strong correlation
between demand for durables (both new and replacements) and income, the
industry naturally suffered during the 2008-2009 period. However, projections
for current year going forward are very optimistic, as consumers resume
spending, and producers launch new enticing variants to grab new customers.
Leading players include Sony Corporation, Toshiba Corporation, Whirlpool
Corporation and Panasonic Corporation.

Developing countries such as India and China have largely been shielded from
the backlash of the recession, as consumers continued to buy basic appliances.
In fact, China has been ranked the second-biggest market in the world for
consumer electronics. Despite the recession, their strong domestic economy
and growing high-income population have buoyed demand leading to
aggressive market growth.

There is growing interest for new age products such as LCD-TVs and DVD
players. Meanwhile, the penetration of the basic, largest dollar items such as
ovens, washing machines and refrigerators is also increasing. India too, has
witnessed a similar phenomenon, with the urban consumer durables market
growing at almost 10 %p.a., and the rural durables market growing at 25% p.a.
Some high-growth categories within this segment include mobile phones, TVs
and music systems.

The Indian consumer durables industry has witnessed a considerable change in
the past couple of years. Changing lifestyle, higher disposable income coupled
with greater affordability and a surge in advertising has been instrumental in
bringing about a sea change in the consumer behaviour pattern. Apart from
steady income gains, consumer financing and hire-purchase schemes have
become a major driver in the consumer durables industry.
In the case of more expensive consumer goods, such as refrigerators, washing
machines, colour televisions and personal computers, retailers are joining
forces with banks and finance companies to market their goods more
aggressively. In addition, change in policy, such as the WTO FTA in 2005

resulted in zero customs duty on imports of all telecom equipment, thereby
improving the pricing and affordability of imported goods.

Challenges
The biggest threats to the local industry going forward are supply-related
issues pertaining to distribution and infrastructure, as well as demand issues
due to competition from imported goods. The lack of well developed
distribution networks makes it especially challenging to penetrate the fastest
growing rural areas economically. In addition, regular power cuts and poor
road linkages make systematic production, assembly and delivery problematic.
On the demand side, customers have increasing choice from both domestically
produced and imported goods, with similar features. This homogeneity makes
it difficult for players to remain ahead of the competition.
MNCs hold an edge over their Indian counterparts in terms of superior
technology combined with a steady flow of capital, while domestic companies
compete on the basis of their well-acknowledged brands, an extensive
distribution network and an insight in local market conditions. The largest
MNCs incorporated in India are Whirlpool India, LG India, Samsung India and
Sony India and home-grown brands are Videocon, Godrej Industries and IFB.

Future Prospects
Overall, the industry’s future remains robust, and interested applicants will
benefit from a holistic learning experience; Many of the research, sales,
marketing and advertising related roles will necessitate a good on-the-job
learning of target audiences, who may well be a totally new segment, based in
never-before visited Class II and III towns. In addition, those with technical
backgrounds will be able to leverage their knowledge and experience to
constantly develop and innovate the product variants. With more MNCs
growing their Indian businesses, there is great potential to also learn best-in-
class systems and management skills.

Royal Philips Electronics

Royal Philips Electronics of the Netherlands is a diversified Health and
Well-being company, focused on improving people’s lives through
timely innovations. As a world leader in healthcare, lifestyle and lighting,
Philips integrates technologies and design into people-centric solutions,
based on fundamental customer insights and the brand promise of
“sense and simplicity”.

Headquartered in the Netherlands, Philips employs over 120,000
employees with sales and services in more than 100 countries
worldwide. With sales of EUR 22.3 billion in 2010, the company is a
market leader in cardiac care, acute care and home healthcare, energy
efficient lighting solutions and new lighting applications, as well as
lifestyle products for personal well-being and pleasure with strong
leadership positions in male shaving and grooming, portable
entertainment and oral healthcare.

Global Footprint
Philips is a global leader across its healthcare, lighting and lifestyle
portfolio. It is the world’s largest home healthcare company, being
number one in: Monitoring systems, Automated External Defibrillators,
Cardiac Ultrasound, and Cardiovascular X-ray.

We are number one in lamps in Europe, Latin America and Asia Pacific
and number two in North America; in Automotive lighting, we are
leading in Europe, Latin America, Japan and Asia Pacific.
We are number one in the electric shavers and male grooming category
globally.

Businesses
Healthcare

Philips simplifies healthcare by focusing on the people in the care cycle –
patients and care providers. Through combining human insights and
clinical expertise, Philips aim to improve patient outcomes while
lowering the burden on the healthcare system. Advanced healthcare
solutions are a fundamental part of the portfolio for both healthcare
professionals and consumers, to meet the needs of patients in hospitals
and at home. Philips Healthcare employs approximately 35,500 people
worldwide.

Lighting

Philips Lighting is the leading provider of lighting solutions and
applications both for professional and consumer markets, transforming
how lighting is used to enhance the human experience in the places
where people live and work. Whether at home, on the road, in the city,
shopping, at work or at school, we are creating lighting solutions that
transform environments, create experiences, and help shape identities.
We serve our customers through a market segment approach which
encompasses Homes, Office and Outdoor, Industry, Retail, Hospitality,
Entertainment, Healthcare and Automotive. For these segments we
provide a wide range of offerings from across the entire lighting value
chain - from light sources, luminaries and lighting controls to lighting
solutions and services. Philips Lighting employs approximately 53,000.

Consumer Lifestyle

Guided by the brand promise of “sense and simplicity” and the
consumer insights, Philips Consumer Lifestyle offers rich, new consumer
experiences that meet consumers’ desire for relaxation and improving
their state of mind. Philips also responds to the consumer's desire for
wellness and pleasure by introducing products that meet the individual’s
interests in terms of their body and appearance. Philips Consumer
Lifestyle employs approximately 17,700 people worldwide.

Innovation

50,000 registered patents illustrate the innovative nature of the
company. Philips currently holds around 36,000 registered trademarks,
63,000 design rights and 3,900 domain names.

Philips has adopted an Open Innovation strategy which leverages the
joint innovative power of partnering companies and researchers to bring
more innovations to the market effectively and faster.

In 2010, Philips invested EUR 1.58 billion in Research and Development.

Philips is internationally recognized as a global leader in design,
receiving a variety of international awards each year. For example:

2010 if product design competition: 28 design awards

Sustainability

Sustainability is at the centre of Philips’ strategy. Philips is committed to
reducing its environmental footprint in all aspects of its business: in its
products, manufacturing, and procurement, as well as in the
communities where the company acts and in the working practices of its
employees.

All Philips products go through an EcoDesign process, identifying
environmental impact in terms of energy efficiency, hazardous
substances, take-back and recycling, weight and lifetime reliability.
Philips’ processes on Green Product sales are verified annually by an
independent third party and published in the Annual Report.

Philips aims to combat global healthcare challenges by focusing on
delivering better quality healthcare at lower costs, also in the emerging
markets, such as China and India.

Philips also takes a leading position in educational programs, showing its
stakeholders that energy efficient solutions are simple, easy and
actionable and make economic sense for national and local
governments, businesses, schools and individuals.

Mission
"Improve the quality of people’s lives through timely introduction of
meaningful innovations."

Vision
“In a world where complexity increasingly touches every aspect of our daily
lives, we will lead in bringing sense and simplicity to people.”

Behaviours
Eager to win
Take ownership
Team up to excel

Brand Promise
We empower people to benefit from innovation by delivering on our brand
promise of “sense and simplicity”. This brand promise encapsulates our
commitment to deliver solutions that are advanced, easy to use, and designed
around the needs of all our users.

MID TERM (2013) PERFORMANCE TARGETS

Philips’ business portfolio is well positioned in highly attractive markets and
geographies to capitalize on global trends. The large majority of the business
has the right fundamentals for profitable organic growth.

Philips mid-term performance goals are:

Comparable sales growth of 4-6%, assuming real GDP growth of 3-4%
per annum
Reported EBITA margins of 10-12% for the group

15 – 17 % for healthcare
8 – 10 % for consumer life style
8 – 10 % for lighting

Return on investment capital of 12 – 14 %

Building the Leading Brand in Health and Well-Being

We seek to improve the quality of people’s lives through focusing on their
health and well-being. Quite simply, we want to help people live a healthy,
fulfilled life.

By “health” we mean not only medical-related aspects of health, but also
keeping fit, eating a healthy diet, and generally living a healthy lifestyle.

By “well-being” we mean general sense of fulfilment, feeling good and at ease.
“Well-being” also refers to a sense of comfort, safety and security people feel
in their environment – at home, at work, when shopping or on the road.

Our focus on Health and Well-being automatically implies that we contribute
to building a sustainable society.

Business Highlights in Q3

As the global leader in patient monitoring, Philips introduced the benefits of
mobility to hospitals with the global launch of a compact, wearable patient
monitor, the IntelliVue MX40.
The monitor enables remote mobile monitoring of patients in a supervised
recovery environment, giving clinicians the freedom and flexibility to spend
more time with patients.

Philips introduced the Perfect Care, a revolutionary iron that uses a new steam
technology, allowing the user to iron all of their clothes at one low
temperature setting. Philips is the no. 1 brand in ironing worldwide.

Combining its expertise in healthcare and lighting, Philips is developing a
blanket that wraps babies in healing light, to make significant advances in the
treatment of bilirubinemia – or neonatal jaundice. Bilirubinemia affects 60% of
full-term newborns and 90% of premature babies.

The battle of perception
Philips has been a household name in India for 75 years, but consumers
associated the brand more with tube lights and transistors than cutting-edge
technology.
That's ironic, considering the company has made its mark globally as a
technology leader -- it invented the cassette recorder, the compact disc and
the DVD; the last in association with Sony.
But a survey by advertising agency JWT, which held the Philips account from
2001 (it has recently moved to Madras), revealed that Philips technology was
seen as reliable but not state-of-the-art.
Clearly, Philips needed an image makeover. It began by taking the technology
route. Post-2001, advertising campaigns emphasised the company's
technologically-advanced features.
Philips was the first audio company to launch an MP3 player (May 2002), and it
made sure its communication played that up: "Don't buy a system if it doesn't
have an MP3 player." Then there was the October 2002 campaign, in which a
little boy uses the power of the music system to nudge the cookie jar off the
top-most kitchen shelf.
"We were constantly refining the image of the company in the minds of the
consumer, making it more modern," explains Tarun Rai, senior vice president,
JWT.
But that wasn't enough. That's where in-store displays and promotions that
demonstrated the abilities of Philips products came in. In October 2003, JWT
broke the "Ramu kaka" ad, where the manservant inadvertently inserts a roti
into the DVD player.
The tagline made the message clear: "The new Philips DVD player plays
anything". The campaign proved immensely popular -- it was used in other

Asian countries as well -- and Philips wasn't slow in leveraging its appeal. At
live demos, customers would be invited to slip rotis into the player, creating a
buzz around the product and the brand.
But that would probably appeal more to families and Philips needed to reach
out to the youth, its target customer base. So it went to where the action was -
- colleges and rock festivals.
Philips set up stalls, complete with a professional DJ. Youngsters were invited
to man the console, while the DJ gave them tips on mixing and spinning. "We
had huge walk-ins and could provide an involvement and experience with the
brand," says Shivkumar.

Clinch the dealer
Philips has successfully played the price card, but not all price cuts have been
due to better or cheaper technology. In some segments like radios, it did away
with trade discounts and passed on the savings to the customer.
Two years ago, Philips' radios sold at Rs 600 -- a huge premium compared to
the Rs 200 or so that other brands cost. In mid-2003, the company slashed the
price to Rs 400 and even introduced new models at the Rs 160 price point,
especially targeting the non-urban youth segment.
Not surprisingly, dealers were upset at their shrinking margins. Some started
stocking competing brands, only to return, claim company officials, when they
found volumes were increasing exponentially.
"They soon realised it was more profitable to sell Philips radios because the
turnover is much higher," points out Gunjan Srivastava, business head, audio
consumer electronics.
Radio sales in themselves are not significant for Philips -- they account for
about 15 per cent of the audio business. But, as S Nagarajan, head sales and
service, explains, they help penetration and distribution of other products,
such as DVDs, colour televisions and mini music systems.
To ensure that happens, Philips changed its distribution strategy around two
years ago. Distributors are now allocated smaller geographical territories so
they can concentrate on getting firmer footholds in their areas.

Distributor in upcountry markets, who were earlier, allotted five or six districts
are now given only two or three. And not all are given the entire product
range.
"We allocated only some products so that the focus is sharper" explains
Nagarajan.

Creating the value proposition
Philips realised early on that maintaining the price-quality equation is critical.
That's especially true of the minis (DVD and VCD hi-fi systems) segment, which
accounts for a quarter of the audio market in value terms.
Even as Philips constantly raised the technology bar (MP3 players, deeper bass,
sleeker, more streamlined systems), it's kept its prices competitive. The
company prices its minis at Rs 8,000-25,000, compared with the market range
of Rs 7,500-30,000.
Moreover, prices have been falling by 10 per cent on average every year. Of
course, that's true for other brands as well but, as Shivkumar points out,
Philips "found the sweet spot at which youngsters could buy".
How did it do that? By ensuring that it was neither perceived as a price warrior
like Aiwa or Sansui nor prohibitively expensive -- Sony products are on average
10 per cent more expensive.
Philips also brought in help from outside. In late 2002, it tied up with
Countrywide and Citibank to provide accessible finance schemes for its
products.
Compared to equal monthly instalments of about Rs 1,000 earlier, the new
schemes let customers pick up state-of-the-art sound machines for as little as
Rs 333 a month - that too, without a down-payment.
Has that helped? Consider: Philips entered the minis segment only in 2000, a
year behind Sony. But it's now carved up the market with Sony, with 45 per
cent share each.
The company also paid close attention to customer feedback. It has ramped up
the number of service centres across the country to 190, from 125 two years

ago. Today, over 900 technicians now attend to complaints, up from 600 in
2002.
The increased attention to the customer pays off in many ways. Realising that
many customers were using the DVD player to play music discs, Philips decided
to offer two speakers with built-in amplifiers, along with the player.
For just Rs 500 more, customers could get two benefits: enhance their music
playback and, when used to play movie discs, get home theatre-quality sound.
The response to the scheme has been encouraging, says Srivastava.
He adds that the company is now considering building the amplifier into the
player to further improve the sound.
Product innovation has helped in rural markets, too. Based on customer
research, in early 2003 Philips launched a radio with TV tuner -- this way,
customers who didn't own a TV set could at least listen to television
programmes.

VISION 2010
As part of Philips’s "Vision 2010" strategy, Philips Electronics India Limited
had fuelled the company's growth plans in India with a marketing outlay of
Rs 100 million for a series of five mega 'Philips Simplicity programs.'

These programs reflected the company's renewed focus on the consumer
lifestyle, healthcare and lighting sectors.

Philips announced its "Vision 2010" strategy to further position the company
as a market-driven, people-centric organization and a structure that fully
reflects the needs of its customer base, while also increasing shareholder
value.

Linking the strategy to India, Philips Electronics India Ltd. continued to
transform, adapt and adapt to the changing needs of their consumers across
Healthcare, Entertainment, Domestic Appliances and Lighting sectors.

Vision 2010 is a natural progression in their long stated journey towards
being a company that is focused around the consumer in three core areas of
Healthcare, Lighting and Consumer Lifestyle. The road ahead is exciting and
the timing is just right for Philips to emerge as the leading Healthcare and
Lifestyle company.

The strategy provides a collective focus for their Consumer and Healthcare
businesses. The brand promise of 'Sense and Simplicity' encapsulates
Philips’s commitment to deliver products and solutions that are advanced,
easy-to use and designed to meet the needs of all the users wherever in the
world they may be.

Over the years, Philips has come up with several products and initiatives to
improve the lives of the masses. The rural thrust with affordable and
accessible products is one prong of Philips India strategy, and the other is of
course the focus on urban markets. Here too, innovation and convenience
are the guiding principles for growth. In the healthcare arena, Philips is
looking at growth and garnering customer confidence through new forms of
organization; new products; innovative business models and original
channels of distribution.

Strength

Brand – As Philips entered the Indian market before 120 years, they exactly
know the behaviour of the Indian consumers. So according to the consumers
requirements the Philips company has positioned its brand in the market and in
the consumers mind. Now in Indian context, Philips means a brand that can be
relied upon and the consumers in India belive on this brand. It has become a
house hold brand. The main advantage is that the diversed product line of the
company. It has almost all the products which are used by everyone in the house
and also the products for general use. For ex. Philips has lighting solutions,
trimmers, electric toothbrush, led lamps, mixers, home theatres, iron box, mp3
player, DVD player etc,. which includes all the possible products which is used by
all members of the house. So indirectly this factor is affecting the minds of the
people which is making the Philips to grow in the market.

Quality – The brand name of the company stays fit in the consumers mind. And
the main reason for that is the quality of the product which is produced by the
company directly or indirectly with the brand name of Philips. Even though the
company is a old player in the Indian market, with out the right quality it could
not reach the position that it is there now. The Indian customers are mainly price
sensitive at the same time they also give importance to the quality and this is the
main part which made Philips gain a huge market share.

Service – The service is a extra credit given to the customers by the sellers in
order to gain the good will and to get the consumer in to good terms with the
company who will in future will become a loyal customer of the company. Here
the company always tries to make a point that, once a consumer uses the
product of the company he should not even think of the other brand. If that is the

quality and service provided to the consumer he will never leave and go the
brand. So, here service plays a big role and that is the streangth of Philips as they
provide a good after sales service to the consumers. They have their own
exclusive service centers and linked with many big names in the market in order
to give the service.

Distribution channel – A strong distribution channel is like a solid nerve system
of the human body. So if the company has a strong distribution channel the
selling of the products becomes easy. Philips has 8 intermediaries in Bangalore
and every 1person for a district in Karnataka and this acts as a strong hand of the
company. They depend on their distribution channel heavily and till date the
results are positive from them.

WEAKNESS

Limited stock availability in the company – The company has a very strong
distributing channel which will help them in selling the Philips products in a good
pace. So when the situation is good for sale the availability of goods becomes a
real problem and this poses a big question in front of the company. The Philips is
also facing the same problem in recent years. As almost 70 – 80 % of the products
are imported to India, the problem of stock availability is more. The importing
norms will have different rules and regulations to the company that they can
import only certain volume of particular products in a mont or something like
that. So the estimation will always not help in importing the goods. Because the
human psychology plays a huge role in this decision making. So it is very difficult
and hence this problem is breaching the Philips India limited.

Limited product line – Though the company has a strong product line, the
marketing heads in the company are of a opinion that the product line of the
company should be increased in order to give the customers what they really
want. This is a right thought that the growing population in India wants some
newness in the products and they like it to be unique from others. So increasing
the product line may attract many more consumers towards the company in the
recent years. As the product line is limited in a particular sector boredom of
buying a same type of product has come into the consumers mind.

OPPORTUNITY

The company is mainly concentrated upon the health care and lighting sector
through which the company got a brand name which is very much in the minds of
the consumers. So, now at this point of time if the company introduces as many
as household appliances, into the market, it will gain a huge market share in
terms of household electronic appliances. This step will be a wise move by the
company.

Another huge opportunity with the Philips company is that of making the pricing
methods by acquisition. If the company acquires any local company and make
them produce the products of Philips in their plant which will reduce the cost of
the product drastically. Philips has done many such things in the past time for ex
– acquiring Preethi Company in the South India which helped them to reduce and
stabilize their pricing method.

THREAT

The big threat and challenge of the Philips Company is that of the China made
products which have a intense effect in the Indian market. Because of these
products the Philips Company is facing a huge problem in the Indian market. This
problem is mainly concerned on the pricing methods of the company. The
consumers expect that the price of the Philips company should also be reduced.
But Company is not in a position to do so.

MARKETING MIX
Putting the right product in the right place, at the right price, at the right
time.

The marketing mix is a business tool used in marketing products. The
marketing mix is often synonymous with the 'four Ps': 'price', 'promotion',
'product', and 'place'.

The term "marketing mix" was coined in 1953 by Neil Borden in his American
marketing association presidential address. However, this was actually a
reformulation of an earlier idea by his associate, James Culliton, who in 1948
described the role of the marketing manager as a "mixer of ingredients", who
sometimes follows recipes prepared by others, sometimes prepares his own
recipe as he goes along, sometimes adapts a recipe from immediately available
ingredients, and at other times invents new ingredients no one else has tried.

You just need to create a product that a particularly group of people want, put
it on sale some place that those same people visit regularly, and price it at a
level which matches the value they feel they get out of it; and do all that at a
time they want to buy. Then you've got it made!

The marketing mix and the 4 Ps of marketing are often used as synonyms for
each other. In fact, they are not necessarily the same thing.
"Marketing mix" is a general phrase used to describe the different kinds of
choices organizations have to make in the whole process of bringing a product
or service to market. The 4 Ps is one way. And the 4ps are :

Product
Place
Price
Promotion

Product
What does the customer want from the product? What needs does it
satisfy?
What features does it have to meet these needs?

Are there any features you've missed out?
Are you including costly features that the customer won't actually
use?
How and where will the customer use it?
What does it look like? How will customers experience it?
What size(s), colour(s), and so on, should it be?
What is it to be called?
How is it branded?
How is it differentiated versus your competitors?
What is the most it can cost to provide, and still be sold sufficiently
profitably? (See also Price, below).

Place
Where do buyers look for your product or service?
If they look in a store, what kind? A specialist boutique or in a
supermarket, or both? Or online? Or direct, via a catalogue?
How can you access the right distribution channels?
Do you need to use a sales force? Or attend trade fairs? Or make online
submissions? Or send samples to catalogue companies?
What do you competitors do, and how can you learn from that and/or
differentiate?

Price
What is the value of the product or service to the buyer?
Are there established price points for products or services in this area?
Is the customer price sensitive? Will a small decrease in price gain you extra market
share? Or will a small increase be indiscernible, and so gain you extra profit margin?

What discounts should be offered to trade customers, or to other specific segments
of your market?
How will your price compare with your competitors?

Promotion
Where and when can you get across your marketing messages to your target
market?
Will you reach your audience by advertising in the press, or on TV, or radio, or on
billboards? By using direct marketing mailshot? Through PR? On the Internet?
When is the best time to promote? Is there seasonality in the market? Are there any
wider environmental issues that suggest or dictate the timing of your market launch,
or the timing of subsequent promotions?
How do your competitors do their promotions? And how does that influence your
choice of promotional activity?

The marketing mix model can be used to help you decide how to take a new
offer to market. It can also be used to test your existing marketing strategy.
Whether you are considering a new or existing offer, follow the steps below
help you define and improve your marketing mix.

1. Start by identifying the product or service that you want to analyze.
2. Now go through and answer the 4Ps questions – as defined in detail above.
3. Try asking "why" and "what if" questions too, to challenge your offer. For example,
ask why your target audience needs a particular feature. What if you drop your price
by 5%? What if you offer more colours? Why sell through wholesalers rather than
direct channels? What if you improve PR rather than rely on TV advertising?

The marketing mix helps you define the marketing elements for successfully
positioning your market offer.
One of the best known models is the Four Ps, which helps you define your
marketing options in terms of product, place, price and promotion. Use the
model when you are planning a new venture, or evaluating an existing offer, to
optimize the impact with your target market.

MARKETING MIX OF PHILIPS
The different product lines of the Philips Company are:
Imaging Systems
Home Healthcare Solutions
Patient Care and Clinical Informatics
Television
Personal Care
Audio & Video
Multimedia
Domestic Appliances
Health &
Wellness
Accessories
Lamps
Consumer Luminaries
Professional
Luminaries
Lighting
Electronics and Controls
Automotive Lighting
Packaged LEDs
LED solutions

This comes under 3 main heads. That is Healthcare, consumer lifestyle,
lighting.

Koninklijke Philips Electronics N.V. (the ‘Company’) is the parent company of
the Philips Group (‘Philips’ or the ‘Group’).The management of the Company is
entrusted to the Board of Management under the supervision of the
Supervisory Board. Philips’ activities in the field of health and well-being are
organized on a sector basis, with each operating sector –Healthcare, Consumer
Lifestyle and Lighting – being responsible for the management of its businesses
worldwide. The Group Management & Services sector provides the operating

sectors with support through shared service centres. Furthermore, country
management organization supports the creation of value, connecting Philips
with key stakeholders, especially our employees, customers, government and
society. The sector also includes pension.
Also included under Group Management & Services are the activities through
which Philips invests in projects that are currently not part of the operating
sectors, but which could lead to additional organic growth or create value
through future spin-offs. At the end of 2010, Philips had 118 production sites in
27 countries, sales and service outlets in approximately 100 countries, and
119,001 employees.

HEALTH CARE

Healthcare challenges present major opportunities in the long term
• Addressing the care cycle – our unique differentiator
• Home healthcare is a core part of our healthcare strategy
• Improved market leadership in core businesses

Introduction

The future of healthcare is one of the most pressing global issues of our time.
Around the world, societies are facing the growing reality and burden of
increasing and in some cases aging populations, as well as the upward
spiralling costs of keeping us in good health. Worldwide, many more people
live longer with chronic disease – such as cardiovascular diseases, cancer,
diabetes – than in the past. Aging and unhealthy lifestyles are also contributing
to the rise of chronic diseases, putting even more pressure on healthcare
systems. At the same time the world is facing a global and growing deficit of
healthcare professionals. In the long term, these challenges present Philips
with an enormous opportunity. We focus our business on addressing the
evolving needs of the healthcare market by developing meaningful innovations
that contribute to better healthcare, at lower cost, around the world.

Healthcare landscape

The global healthcare market is dynamic and growing. Over the past three
decades, the healthcare industry has grown faster than Western world GDP,
and has also experienced high rates of growth in emerging markets such as
China and India. Rising healthcare costs present a major challenge to society.
The industry is looking to
Address this through continued innovation, both in traditional care settings
and also in the field of home healthcare. This approach will not only help to
lighten the burden on health systems, but will also help to provide a more
comforting and therapeutic environment for patient care

About Philips Healthcare

Philips is one of the top-tier players in the healthcare technology market
(based on sales) alongside General Electric (GE) and Siemens. Our Healthcare
sector has global leadership positions in areas such as cardiac care,
Acute care and home healthcare. Philips Healthcare’s current activities are
organized across four businesses:
• Imaging Systems: interventional X-ray, diagnostic X-ray, computed
tomography (CT), magnetic resonance (MR), nuclear medicine (NM) and
ultrasound imaging equipment, as well as women’s health
• Patient Care & Clinical Informatics: cardiology informatics, including
diagnostic electrocardiography (ECG); enterprise imaging informatics, including
radiology information systems (RIS) and picture archiving and communication
systems (PACS); patient monitoring and clinical informatics; perinatal care,
including fetal monitoring and Philips Children’s Medical Ventures; and
therapeutic care, which includes cardiac resuscitation, emergency care
solutions, therapeutic temperature management, hospital respiratory systems,
and ventilation

• Home Healthcare Solutions: sleep management and respiratory care, medical
alert services, remote cardiac services, remote patient management
• Customer Services: consultancy, site planning and project management,
clinical services, Ambient Experience, education, equipment financing, asset
management and equipment maintenance and repair

Products and services are sold to healthcare providers around the world,
including academic, enterprise and stand-alone institutions, clinics, physicians,
home healthcare agencies and consumer retailers. Marketing,
Sales and service channels are mainly direct. The United States is the largest
healthcare market,
Currently representing close to 43% of the global market, followed by Japan
and Germany. Approximately 20% of our annual sales are generated in
emerging markets, and we expect these to continue to grow faster than the
markets in Western Europe and North America. Philips Healthcare employs
approximately 35,500 employees worldwide. With regard to sourcing, please
refer to sub-section 5.3.3, Supply management, of this
Annual Report.

Drive performance

• Continue to drive operational excellence and improve
Margins: We are building on successful initiatives to structurally reduce our
overall cost structure and
Improve our organizational effectiveness. We are improving our margins
through better product reliability, improved pricing initiatives, optimization of
low-cost country sourcing, and increases in our service productivity and
operational efficiency. In 2010 we continued to improve the efficiency and
effectiveness of our organization, not only in response to the current economic
climate, but, even more importantly, to further strengthen our position for the
future. We continued to manage costs and reorganize our business, both to
meet customer and market demands, as well as to enable profitable growth. In
addition, we continue to drive the pace of operational
Improvement. Our Quote to Cash program has driven fundamental changes
within our organization, focusing

On process standardization and simplification. A direct result of those efforts
was the formation of a centralized Commercial Operations organization – with
the primary goal of making it easier for our customers to do business with us.
• Drive emerging market growth: We continue to make key acquisitions to
meet the diverse and growing needs of the different markets around the
world. For example, our acquisition of Shanghai Apex Electronics in 2010
provides high-quality value ultrasound transducers, enabling Philips to further
support the use of
Ultrasound, a widely used diagnostic procedure that provides a critical yet
affordable and mobile modality for early diagnosis and real-time imaging. The
acquisition marks another step in Philips’ expanding presence in emerging
markets, complementing the acquisition of healthcare informatics company
Tesco

Informatics in Brazil and the expansion of our clinical informatics portfolio with
the acquisition of Wheb Sistemas, a leading Brazilian provider of clinical
information systems.
• Continue to pursue integration of our recent acquisitions: In 2010 we
successfully completed steps to integrate
Prior-year acquisitions including Inner Cool Therapies Inc., a pioneer in the field
of therapeutic hypothermia,
And Traxtal, a medical technology innovator in image guided procedures. This
included the launch of the Philips Inner Cool RTx Endovascular System to help
enhance patient care by managing therapeutic hypothermia.

Consumer Lifestyle

Leading positions in categories such as male shaving and grooming, coffee
appliances and oral healthcare
• Further decisive action taken to reduce our exposure in the Television
business
• Increased focus on growth, taking a granular approach by making clear
investment choices
• Expanded business creation capabilities in emerging markets and investment
in key enablers to accelerate growth

Introduction

Across the world, consumers aspire to improve their health and feeling of well-
being, but struggle to balance this with the increasing complexity of their lives.
This trend is creating a large and growing market in the developed and
especially in the emerging economies, where Consumer Lifestyle can benefit
by delivering health and well-being solutions with advanced technology that
meet people’s needs. We strive to understand consumer needs and translate
those insights into breakthrough, meaningful innovations. Our competitive
advantage is our solutions that are easy to experience, advanced and designed
around the consumer. This strength is galvanized by our powerful global brand,
our understanding of the markets we operate in and the many synergies with
our channels, partners and supply chain.

Helping people achieve a healthier and better life

Consumer Lifestyle makes a difference to people’s lives by making it easier for
them to achieve a healthier and better lifestyle. We believe that “sense and
simplicity” can be the goal of technology and apply that principle to create life
enhancing solutions.

Tracking trends and identifying opportunities

Consumer Lifestyle works together with Philips Design to monitor trends
ranging from consumer tastes to design aesthetics. With its global footprint,
Consumer Lifestyle is well positioned to understand emerging needs in local
markets. Country organizations are our interface with the consumer, allowing
us to accurately identify local needs, tastes and commercial opportunities.

Applying insights to develop innovative solutions

We apply a rigorous product development process when creating new value
propositions. At its heart are validated consumer insights, which show that the
propositions meet a market need. The combination of insight, simplicity and
innovation differentiates us from our competition and creates a platform for
sustainable business success.

Where we play

We are active in our four value spaces in health and wellbeing: Healthy Life,
Personal Care, Home Living and Lifestyle Entertainment, complemented by
Accessories. This portfolio is aligned with our brand equity and enables us to
provide our retail customers with a highly relevant and attractive product
portfolio. We focus on premium propositions with our differentiating brand
promise of “sense and simplicity”, relevant to the target group. In focusing on
the domain of health and well-being, we are tapping into significant trends –
such as consumer empowerment, growth in emerging markets and aging
populations – that will have a major impact on society in the future.

Healthy Life

The Healthy Life value space takes a holistic approach to enhancing consumers’
health, addressing the needs for mental and physical health and for healthy
relationships.

Personal Care

The Personal Care value space addresses the consumer need to “look and feel
your best” and so helps people feel more confident.

Home Living

The Home Living value space addresses consumers’ pressing need to have
more time to spend on themselves or with family and friends. We do this by
creating high quality solutions that enable quick and convenient cooking,
preparation of beverages, cleaning, caring and home comfort.
Lifestyle Entertainment
Lifestyle Entertainment is about enjoying entertainment and the little events in
everyday life: sharing time with family and friends, having time off from a
hectic schedule, and moments of comfort, fun and caring.

About Consumer Lifestyle

The Philips Consumer Lifestyle sector is organized around its markets,
customers and consumers, and is focused on value creation through category
development and delivery through operational excellence.
The market-driven approach is applied with particular emphasis at local level,
enabling Consumer Lifestyle to
Address a variety of market dynamics and allowing the sales organizations to
operate with shorter lines of
Communication with the sector’s six businesses. This also promotes customer-
centricity in day-to-day operations.
In 2010 the sector consisted of the following areas of business:
• Health & Wellness: mother and child care, oral healthcare
• Personal Care: shaving and grooming, female depilation, hair care, vita light,
skincare Domestic Appliances: kitchen appliances, beverages/ espresso,
garment care, floor care, water, air
• Television

• Audio & Video Multimedia: home audio, home video, home cinema sound,
portable audio and video
• Accessories: on-the-go accessories, together @ home accessories, personal
displays, speech processing

Drive performance

• Further increase cash flow by aggressively managing cash targets: We strictly
managed working capital, which has been negative in many recent quarters.
We effectively managed our credit and risk, including significantly
Reducing overdue customer payments. There was an increase in the number of
suppliers using supplier finance, which reduced total cost in the supply chain.
As part of Philips’ drive to harmonize supplier terms, we improved overall
payment terms by 7 days.
• Continue to reduce fixed costs and improve the overall agility of the cost
base: We acted fast in the downturn and are benefiting from improved gross
margin and a lower cost base, supporting year-on-year EBITA margin
Improvement. We continued to manage costs via our Earn 2 Invest Program,
reinvesting savings to drive growth.
• Strengthen excellence in execution and further develop “sense and simplicity”
as a competitive edge: We have implemented an improved management
decision support system with granular insight into integral
Performance per business, market and customer down to product level. We
are also striving to install a return
On investment (ROI) culture in order to drive, and increase resources for, more
effective advertising and promotional campaigns.

Lighting

Lighting industry undergoing a radical transformation
• Important global trends underpinning strategy
• Winning in LED

Introduction
A number of global trends are changing the way people use light. Lighting
solutions are transforming urban
Environments, creating livable cities through the use of light to enhance safety,
municipal identity and residential
well-being; consumers are increasingly applying lighting to create their own
ambience at home as a statement of their lifestyle; building owners and
retailers are recognizing the benefits of energy-efficient lighting in reducing
their operational costs; and schools are learning how lighting can improve
education. At the same time, more and more people are keen to help tackle
the issues of climate change and rising energy costs. Many countries and
regions have introduced legislative measures to address energy consumption
and the emission of greenhouse gases, which are linked to climate change. In
particular, 2010 saw further legislation to phase out old, incandescent lighting
and other energy-inefficient forms of electric lighting. Philips will continue to
play significant role in encouraging and enabling the switch to energy-efficient
lighting solutions, helping our customers to save on energy costs while making
a positive contribution to the environment. Another key development is the
ongoing trend toward custom solutions. Increasingly aware of the possibilities
beyond standard solutions, consumers, businesses and national and municipal
authorities demand highly adaptable lighting solutions which they can use to
customize their indoor and outdoor environments as and when they desire.
Flexible and dynamic, our LED lighting solutions allow a much higher degree of
customization and provide significantly greater possibilities for ambience
creation than solutions based on conventional technologies.

About Philips Lighting

Philips Lighting is a global market leader, with recognized expertise in the
development, manufacturing and
Application of innovative lighting solutions. We have pioneered many of the
key breakthroughs in lighting over the past 100 years, laying the basis for our
current position. We address people’s lighting needs across a full range of
market segments. Indoors, we offer specialized lighting solutions for homes,
shops, offices, schools, hotels,
Factories and hospitals. Outdoors, we provide lighting for public spaces,
residential areas and sports arenas. We also help to make roads and streets
safer for traffic and other road users (car lights and street lighting). In addition,
we address the desire for light-inspired experiences through architectural
projects. Finally, we offer specific applications of lighting in specialized areas,
such as horticulture, refrigeration lighting and signage, as well as heating, air
and water purification, and healthcare. Philips Lighting spans the entire lighting
value chain – from lighting sources, electronics and controls to full applications
and solutions – via the following businesses:
• Lamps: incandescent, halogen, (compact) fluorescent, high-intensity
discharge
• Consumer Luminaries: functional, decorative, lifestyle, scene-setting
• Professional Luminaries: city beautification, road lighting, sports lighting,
office lighting, shop/hospitality lighting, industry lighting
• Lighting Systems & Controls: electronic and electromagnetic gear, controls,
modules and drivers
• Automotive Lighting: car headlights, car signalling, interior
• Packaged LEDs
• LED solutions: modules, LED replacement lamps

Simply enhancing life with light

Philips Lighting is dedicated to enhancing life with light through the
introduction of innovative and energy efficient solutions or applications for
lighting. Our approach is based on obtaining direct input both from customers
and from end-users/consumers. Through a market segment-based approach,
we can assess customer needs in a targeted way, track changes over time and
define new insights that fuel our innovation process and ultimately increase
the success rate of new propositions introduced onto the market. We aim to
be the true front-runner in design-led, market and consumer-driven innovation
– both in conventional lighting and in solid-state lighting – while continuing to
contribute to responsible energy use and sustainable
Growth. We believe the rise of LED; coupled with our global leadership,
positions we well to continue to deliver on our mission to simply enhance life
with light.

At Philips CL, the consumer facing units can be found in the Sales Organizations
(SOs) that are the local representations of Philips CL and the business functions
(BFs) that support operations. The involved BFs are:
• Direct Sales
• Marketing Communication
• Marketing Intelligence
• Consumer Care

The assessment of Philips CL’s structure was focused on the above parties. The
results are based on five interviews, one with an employee at a SO and one at
each of the involved BFs. The interviewees commented on the structure of
Philips CL and how it had changed from 2007 to 2009. To make the
assessment, the recordings and notes from the interviews were reviewed for
comments on how well their BF was integrated with the other parties involved
in providing the consumer experience. If an interviewee described a situation
of clear functional silos or full integration, the statement was evaluated as
respectively stage 1 or stage 4. A not as clear statement was examined for a
statement of whether collaboration was managed informally or formally (e.g.
formal category meetings) resulting in an assessment of respectively stage 2 or

stage 3. Since the results are non-normally distributed and the scale is ordinal,
the median of the resulting scores is used as the overall score for Philips CL.

Shah et al. (2006) stated that the “processes for developing and sustaining
customer relationships differ from those aimed at the execution of efficient
customer transactions”. More consumer-centricity implies that the number of
unique products and services increases. Unique personalized products and
services generally require communication across organizational boundaries
since the delivery of these products and services is more complex than that of
standard products (Kumar A., 2007; Kates & Galbraith, 2007). While making
the management of consumer information within the company more complex,
the increased number of personalized products and services also require more
consumer information than the delivery of standard products and services.
This is because personalized product and services require detailed consumer
information (Vesanen, 2007). A way to obtain this increased amount of
information is to build a relationship with the consumer that enables the
company to learn about the consumer and build consumer profiles. The
processes that manage this relationship and disseminate the consumer
information within the company are called customer relationship management
(CRM) processes (Payne & Frow, 2005). Hence, when the relationship with the
consumer becomes more important, the CRM processes also become more
important. While a number of processes can be stated that play a role in the
transition form product- to consumer-centricity, in literature, there is
agreement that the CRM processes are among the key processes for
consumer-centric companies (Shah, Rust, Parasuraman, Staelin, & Day, 2006;
Kates & Galbraith, 2007; Kumar A. , 2007; Kumar & Petersen, 2005). This study
will therefore focus on CRM in the process domain.
Payne and Frow (2005) state that: “CRM is a strategic approach that is
concerned with creating improved shareholder value through the development
of appropriate relationships with key customers and customer segments”.
Excellent CRM should therefore boost Philips CL’s ability to become more
consumer-centric. When determining the performance of a CRM program, five
distinctive processes should be taken into account (Payne & Frow, 2005):
1. The strategy-development process that includes not only a business strategy
but also a consumer strategy

2. The value creation process that is at the heart of the exchange process
3. The multichannel integration process that encompasses all the consumer
touch points
4. The information-management process that includes the data collection and
data analysis functions
5. The performance-assessment process that ties the firm’s actions to
performance

Boulding, Staelin, Ehret, and Johnston (2005) commented that companies
should benchmark their processes to examine their consumer-centricity. Since
the strategic domain is partly represented by the analysis of Philips CL’s
organizational culture, and the performance assessment process is linked to
financial metrics, both the above described processes are not researched
within the process domain. The analysis will focus on the value creation
process, the multichannel integration process and the information-
management process.

BCG MATRIX

High Low
Stars Question Mark

High
Health care Personal care

Cash Cow Dogs

Low
Lighting Home appliances

 Cash cows are units with high market share in a slow-growing industry.
These units typically generate cash in excess of the amount of cash needed
to maintain the business. They are regarded as staid and boring, in a
"mature" market, and every corporation would be thrilled to own as many
as possible. They are to be "milked" continuously with as little investment
as possible, since such investment would be wasted in an industry with low
growth.
 Dogs, or more charitably called pets, are units with low market share in a
mature, slow-growing industry. These units typically "break even",
generating barely enough cash to maintain the business's market share.
Though owning a break-even unit provides the social benefit of providing
jobs and possible synergies that assist other business units, from an
accounting point of view such a unit is worthless, not generating cash for
the company. They depress a profitable company's return on assets ratio,

used by many investors to judge how well a company is being
managed. Dogs, it is thought, should be sold off.
 Question marks (also known as problem child) are growing rapidly and thus
consume large amounts of cash, but because they have low market shares
they do not generate much cash. The result is large net cash consumption.
A question mark has the potential to gain market share and become a star,
and eventually a cash cow when the market growth slows. If the question
mark does not succeed in becoming the market leader, then after perhaps
years of cash consumption it will degenerate into a dog when the market
growth declines. Question marks must be analyzed carefully in order to
determine whether they are worth the investment required to grow market
share.
 Stars are units with a high market share in a fast-growing industry. The
hope is that stars become the next cash cows. Sustaining the business unit's
market leadership may require extra cash, but this is worthwhile if that's
what it takes for the unit to remain a leader. When growth slows, stars
become cash cows if they have been able to maintain their category
leadership, or they move from brief stardom to dogdom.
As a particular industry matures and its growth slows, all business units
become either cash cows or dogs. The natural cycle for most business units is
that they start as question marks, and then turn into stars. Eventually the
market stops growing thus the business unit becomes a cash cow. At the end
of the cycle the cash cow turns into a dog.
The overall goal of this ranking was to help corporate analysts decide which of
their business units to fund, and how much; and which units to sell. Managers
were supposed to gain perspective from this analysis that allowed them to
plan with confidence to use money generated by the cash cows to fund
the stars and, possibly, the question marks. As the BCG stated in 1970:
Only a diversified company with a balanced portfolio can use its strengths to
truly capitalize on its growth opportunities. The balanced portfolio has:

 stars whose high share and high growth assure the future;
 cash cows that supply funds for that future growth; and
 Question marks to be converted into stars with the added funds.

Relative market share

 This indicates likely cash generation, because the higher the share the
more cash will be generated. As a result of 'economies of scale' (a basic
assumption of the BCG Matrix), it is assumed that these earnings will
grow faster the higher the share. The exact measure is the brand's share
relative to its largest competitor. Thus, if the brand had a share of 20
percent, and the largest competitor had the same, the ratio would be
1:1. If the largest competitor had a share of 60 percent; however, the
ratio would be 1:3, implying that the organization's brand was in a
relatively weak position. If the largest competitor only had a share of 5
percent, the ratio would be 4:1, implying that the brand owned was in a
relatively strong position, which might be reflected in profits and cash
flows. If this technique is used in practice, this scale is logarithmic, not
linear.
 On the other hand, exactly what is a high relative share is a matter of
some debate. The best evidence is that the most stable position (at least
in Fast Moving Consumer Goods FMCG markets) is for the brand leader
to have a share double that of the second brand, and triple that of the
third. Brand leaders in this position tend to be very stable—and
profitable; the Rule of 123.
 The reason for choosing relative market share, rather than just profits, is
that it carries more information than just cash flow. It shows where the
brand is positioned against its main competitors, and indicates where it
might be likely to go in the future. It can also show what type of
marketing activities might be expected to be effective.

Market growth rate
 Rapidly growing in rapidly growing markets, are what organizations
strive for; but, as we have seen, the penalty is that they are usually net
cash users - they require investment. The reason for this is often
because the growth is being 'bought' by the high investment, in the
reasonable expectation that a high market share will eventually turn into
a sound investment in future profits. The theory behind the matrix
assumes, therefore, that a higher growth rate is indicative of

accompanying demands on investment. The cut-off point is usually
chosen as 10 per cent per annum. Determining this cut-off point, the
rate above which the growth is deemed to be significant (and likely to
lead to extra demands on cash) is a critical requirement of the
technique; and one that, again, makes the use of the BCG Matrix
problematical in some product areas. What is more, the evidence, from
FMCG markets at least, is that the most typical pattern is of very low
growth, less than 1 per cent per annum. This is outside the range
normally considered in BCG Matrix work, which may make application of
this form of analysis unworkable in many markets.
 Where it can be applied, however, the market growth rate says more
about the brand position than just its cash flow. It is a good indicator of
that market's strength, of its future potential (of its 'maturity' in terms of
the market life-cycle), and also of its attractiveness to future
competitors. It can also be used in growth analysis.

For the Philips company in particular,

Question mark - Personal care

Star - Health Care

Cash cow – Lighting

Dogs - Home appliances

Personal care is an area from which the company gets a very less profit.
There may be many reasons for that. For ex, the profit margin may be less or
people are not aware of it. Whatever be the reason the products which
comes under personal care do not give much profit to the company even
though the product resides in the market there is not much use of it. The
only use is that they can boast about their diverse product line and nothing
more than that. So, we have positioned this particular personal care in the
place of question mark to show the non performance of the particular line
of products.

The Philips Consumer Lifestyle sector is organized around its markets,
customers and consumers, and is focused on value creation through category
development and delivery through operational excellence.
The market-driven approach is applied with particular emphasis at local level,
enabling Consumer Lifestyle to
Address a variety of market dynamics and allowing the sales organizations to
operate with shorter lines of
Communication with the sector’s six businesses. This also promotes customer-
centricity in day-to-day operations.
In 2010 the sector consisted of the following areas of business:
• Health & Wellness: mother and child care, oral healthcare
• Personal Care: shaving and grooming, female depilation, hair care, vita light,
skincare
• Domestic Appliances: kitchen appliances, beverages/ espresso, garment care,
floor care, water, air
• Television
• Audio & Video Multimedia: home audio, home video, home cinema sound,
portable audio and video
• Accessories: on-the-go accessories, together @ home accessories, personal
displays, speech processing

We have positioned the health care as a star of Philips. This is the line where
the company is getting enough profit and are putting their all worth to
improve this line. Health care of the Philips is so famous all over the world.
Their maximum revenue is coming from the health care and they want to
improve that also.

Philips is one of the top-tier players in the healthcare technology market
(based on sales) alongside General
Electric (GE) and Siemens. Our Healthcare sector has global leadership
positions in areas such as cardiac care,

Acute care and home healthcare. Philips Healthcare’s current activities are
organized across
Four businesses:
• Imaging Systems: interventional X-ray, diagnostic X-ray, computed
tomography (CT), magnetic resonance (MR), nuclear medicine (NM) and
ultrasound imaging equipment, as well as women’s health
• Patient Care & Clinical Informatics: cardiology informatics, including
diagnostic electrocardiography
(ECG); enterprise imaging informatics, including
Radiology information systems (RIS) and picture archiving and communication
systems (PACS); patient
monitoring and clinical informatics; prenatal care, including fatal monitoring
and Philips Children’s Medical Ventures; and therapeutic care, which includes
cardiac resuscitation, emergency care solutions, therapeutic
Temperature management, hospital respiratory systems, and ventilation
• Home Healthcare Solutions: sleep management and respiratory care, medical
alert services, remote cardiac services, remote patient management
• Customer Services: consultancy, site planning and project management,
clinical services, Ambient Experience, education, equipment financing, asset
management and equipment maintenance and repair

Philips Lighting is a global market leader, with recognized expertise in the
development, manufacturing and
Application of innovative lighting solutions. We have pioneered many of the
key breakthroughs in lighting over
The past 100 years, laying the basis for our current position. We address
people’s lighting needs across a full range of market segments. Indoors, we
offer specialized lighting solutions for homes, shops, offices, schools, hotels,
factories and hospitals. Outdoors, we provide lighting for public spaces,
residential areas and sports arenas. We also help to make roads and streets
safer for traffic and other road users (car lights and street lighting). In addition,
we address the desire for light-inspired experiences through architectural
projects. Finally, we offer specific applications of lighting in specialized areas,
such as horticulture, refrigeration lighting and signage, as well as heating, air
and water purification, and healthcare. Philips Lighting spans the entire lighting

value chain – from lighting sources, electronics and controls to full applications
and solutions – via the following businesses:
• Lamps: incandescent, halogen, (compact) fluorescent, high-intensity
discharge
• Consumer Luminaries: functional, decorative, lifestyle, scene-setting
• Professional Luminaries: city beautification, road lighting, sports lighting,
office lighting, shop/hospitality lighting, industry lighting
• Lighting Systems & Controls: electronic and electromagnetic gear, controls,
modules and drivers
• Automotive Lighting: car headlights, car signalling, interior
• Packaged LEDs
• LED solutions: modules, LED replacement lamps

Home appliances

Philips Design is one of the longest-established design organizations of its kind
in the world. It is headquartered in Eindhoven, the Netherlands, with branch
studios in Europe, the US and Asia Pacific. Its creative force
Comprises designers, psychologists, ergonomists, sociologists, philosophers
and anthropologists working
Together to understand people’s needs and desires in order to generate
designs which support people in?
Accomplishing and experiencing things in natural, intuitive ways. Philips
Design’s forward-looking exploration projects deliver vital insights for new
business development, supporting the transformation towards a health and
wellbeing company. In focusing on the domain of health and well-being, we
are tapping into significant trends – such as consumer empowerment, growth
in emerging markets and aging populations – that will have a major impact on
society in the future.
Healthy Life
The Healthy Life value space takes a holistic approach to enhancing consumers’
health, addressing the needs for mental and physical health and for healthy
relationships.

Personal Care
The Personal Care value space addresses the consumer need to “look and feel
your best” and so helps people feel more confident.
Home Living
The Home Living value space addresses consumers’ pressing need to have
more time to spend on themselves or with family and friends. We do this by
creating high quality solutions that enable quick and convenient cooking,
preparation of beverages, cleaning, caring and home comfort.
Lifestyle Entertainment
Lifestyle Entertainment is about enjoying entertainment and the little events in
everyday life: sharing time with family and friends, having time off from a
hectic schedule, and moments of comfort, fun and caring.

Questionnaire
1. How does it feel to compete with Videocon and other competitors
in India?

In the statistics, Videocon is the toughest competitor of Philips India
Ltd. But in practice, Videocon acts as a partner of the company.
Philips Company gives the TV panel to the Videocon in order to
market the product of the Philips. Indirectly the Philips company is
getting the marketing done by the Videocon company. So in
practicality the Philips company is not directly competing with the
Videocon company.

2. Where has the electronic market headed in India? Does the entry of
Sony and Panasonic threaten Philips?

The electronic market in India is heading in a very good way. The
boom in the electronic market is huge in this time. A very good
opportunity for all the electronic manufacturers in India to have a
good profit. The disposable profit of the consumer of India is rising
day by day and the trend to have sophisticated electronic gadgets in
the house hold is becoming more and more day by day.
The entry of the MNC companies to the Indian market do not put a
lot of competition to the Philips as Philips is dealing in the Indian
market for the past 120 years and they know how exactly to deal
with the situations in the Indian market. So entry of some MNC’s
like Sony or Philips is not such a huge competition or head breaking
situation. So, there is no huge threat from the entry of the
companies like Sony or Panasonic.

3. Is Philips India profitable yet? Where do you see the company in the
next few years?

Surely the Philips India is profitable at the current point of time. As
they know the true nature of the market they are strong in their
footholds and they are good at it. So profit will not be a matter of
fact at any point of time to Philips.
We can see the company as a leader in the market for consumer
goods-electronics in the Indian market in next few years.

4. What do you see as the greatest challenge of Philips in India?

The company was situated in India before 120 years. So the
behaviour of the consumers in the Indian market is well known to
the company. The maximum part of consumers are those who give
much importance to the price of the product than to the quality. So
price becomes the main factor in this context. Even though the
company knows very well about the behaviour of the consumers,
the changing trend of the consumers in India is very drastic and this
becomes the challenge to the Philips. As pricing is the main factor,
because of the entry of the China products, the value of electronic
items has gone very low and hence it forces the quality products
also to reduce their prices. But the Philips company did not do this.
They stick to their pricing policy which sometimes causes problems.

5. Which is Philips main line product?

The mainline products are the products which give the profit to the
company and help to acquire the market share.
The mainline products of the Philips company are : Iron box, Mixers,
Home theatres, DVD players, Trimmers and Shavers, Radios.
Lighting as a whole is the main line product of Philips. They are
dealing with this from a long time and so they are experienced in
this line of products and most importantly they have a very good
brand name in lighting solutions. So this becomes their mainline
product

6. What are you going to do to strengthen the mainline products?

In order to strengthen the mainline product of the company the
company has to introduce new products every six months. This will
help the company to make a new obsolescence stage for the
company in the product life cycle. If they introduce the new
products every 6 months, there will be newness in the products
which will help them to improve their sales.

7. What are you doing to improve reach?

The Philips Company wants to improve the reach to the consumers
by improving the distribution channel. So for this they have 8
distributors for the cities and 1 for every district. This will increase
the sales volume of the products of the company and every
consumer can be reached by this type of distribution channel. They
also focus on the modern traders that are the Girias, Croma etc.
from which they get a nice share.

8. To whom is the product aimed?

The Philips Company targets the market of a product according to
the products. They mainly deal with the household products and so
they target that set of consumers who are especially concerned
about the interior of the house. And also to the organizational
consumers they target a certain product.

9. How does the firm plan to position the product within the market?

Positioning is a strategy by which the company keeps the products
in such a position where the consumers want to see it. So the strong
foothold of the Philips Company is its quality. So they thought that
positioning their products in the way of good quality is the best way
and Philips Company is positioning its products as a good quality
product. Its uniqueness is another plus point. They have a unique
identity in the market and they are kept it up as a positioning
strategy. The brand and design of the Philips Company is the real
and strong way of positioning the product of the Philips Company.

10. What differential advantage will the product offer over your
competitors?

The quality and service is the one thing that the Philips Company
stands out from its competitors. The way the company gives the
service is really very good and the consumers appreciate this. They
always concentrate on the customers and they will see from the
customers’ point of view.

11. What kind of promotion do you follow?

Philips plans the promotions in different ways. One of the ways is
that of seasonal wise. For ex, if there comes Diwali, they will set
such promotional activities which suits the occasion. In other kind
of promotional activities, like giving discounts, giving adds in
different Medias, newspaper ads, free with one product.

12. Where do buyers look for your product or service?

Philips Company has a exclusive outlet for the Philip products which
is called as Philips arena which is situated in every city. So buyers
will contact this arena for buying. The advantage of buying from
here is that they will get a proper servicing to their products and all
the required transactions will be fast when compared to the other
places. Buyers also can reach any other retail outlets in the city
which deals with the Philips products. For the rural areas, the
dealers will have many sub-dealers to make the product reach the
rural places.

13. Do you need to use the sales force or attend trade fairs?

This depends on the particular products. If the product is newly
launched, they have to be displayed in the trade fairs in order to
take the products into the minds of the consumers. If not sales
force plays a major role in the selling of the product.

CONCLUSION

Philips is India’s largest and most preferred lighting and health
care instruments company.
Through its strategic long-term tie-ups with key and critical
auxiliary manufacturers, Philips provides its customers many
benefits.
The brand’s vision is to deliver excitement to the consumers, by
providing comfort at its best.
Complete control over core components and technology.
The company has strong potential to grow and that through
greater innovations.
In addition to corporate sector the company has the option to step
into the local household by understanding their psychology.
In short it can be said that the company is still growing by making
constant efforts.

BIBLOGRAPHY

Book:

Philip Kotler, Marketing Management, 13th edition

Websites:

www.philips.co.in
www.india.philips.com
en.wikipedia.org/wiki
www.encyclopedia.com

Magazines:

India Today
Business world

A report on MARKETING MIX in philips

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