EB:What are your plans to make India a manufacturing hub for Royal Philips Electronics?
Like most multinational companies, we have a distributed manufacturing strategy with a number of manufacturing sites around the world, including India. In India, we manufacture lighting lamps in Vadodra and Mohali and through our recent Alpha and Meditronics acquisitions, we manufacture X-ray equipments.
Philips has made India a research and development (R&D) hub for the company. We have two research and development (R&D) centres in India. They are Philips Innovation Campus (PIC) in Bengaluru and Philips R&D centre in Noida.
EB: Can you give us details of these development centres in India?
We have a significant R&D facility—PIC—at Bengaluru. It was established in August 1996 with a vision to be an innovation hub creating next generation solutions and products for healthcare and lifestyle. PIC focuses on health-care and consumer lifestyle product development. PIC has emerged as a critical partner in the development of strategic and futuristic technologies for Philips worldwide. About 60,000 registered patents illustrate the innovative nature of the company. 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.
PIC has built-up an extensive know-how and expertise in the software engineering and technology domains relevant to its business. In addition, competencies in the areas of project management, requirement engineering and quality assurance have been established to offer customers products and services of the highest quality, at the fastest time-to-market and the lowest cost of ownership. The Philips R&D centre at Noida focuses on lighting.
EB: What are your investment plans in India?
We don’t disclose specific investment amounts. However, we can say that our Meditronics and Alpha acquisitions are significant healthcare investments in this market. If we look at all the emerging markets in 2008, we increased our marketing investment by 27 per cent.
EB: What are your strategies to capture the Indian market, especially the consumer market, which is dominated by other brands like Samsung, Sony, etc?
Over the last year, Philips has clearly aligned itself as a health and wellbeing company. You’ll notice that we no longer refer ourselves as a consumer electronics company, although we do remain in that business. Under the health and wellbeing umbrella, we operate in three sectors—healthcare, lighting and consumer lifestyle. This makes us different from our competitors who are not in all of these sectors.
Philips’ overarching market strategy is threefold. First, we place a laser focus on customer insights, second, we try to penetrate further into tier two and three markets and third, we want to give consumers a good in-store experience.
EB: Can you share some more details?
Customer insights enable us to design and market products that meet India’s needs. One great example is our just launched modular switches designed and developed in India. We spoke with consumers about light switches and they told us clearly that safety was their primary concern. No one should be worried that a child’s wet hand can result in a shock at the light switch. That’s why we incorporated a protective technology into our modular switches and also highlighted it in our advertisements. It means that even a child can operate a light switch. All feel safe using Philips modular switch.
If you look specifically at the consumer lifestyle portfolio at Philips, we’ve regrouped our products into four broad categories that make sense to consumers. In the healthy living space, consumers will find items like our water purifier and intelligent food processor. Home living gives consumers products like home theatre systems and LCD TVs. Under personal care, you’ll find stylers and grooming kits. Finally, the interactive living category has products such as our ‘Go Gear’ MP3 player.
Our second strategy looks at the broader market penetration. We launched our value campaign earlier this year in over 35 locations and we’re following it up with significant advertising in the coming festival season. We’re also focusing on the festival season in tier II and III markets. For example, in Cochin recently, we announced a special scratch card coupon to celebrate Onam festival.
Finally, we’re looking at improving the consumers’ in-store experience. For example, in Delhi you can find Philips ‘health’, ‘lifestyle’, ‘water’ corners in around 40 stores. Consumers can touch and feel our products and get a quick overview of how the product can help simplify their life. We plan to expand these health and lifestyle corners to other cities by the end of the year.
We also have experience zones which exhibit every lifestyle solution that Philips has to offer in home decorative lighting space. We have unveiled the most elegant ‘light lounge’ for the home decorative lighting segment. These are experience zones created across 700 to 1,000 sq feet area and exhibit an array of unique concept for every application within the environs of a home.
These lounges have been created in partnership with key distributors across India. Philips has looked at a combination of shopping malls, high streets and stand-alone locations in addition to partnering with retailers to create a shop-in-shop concept. Philips will create 35 such lighting lounges by end of 2009. Additionally, well-trained ‘home design experts’ will aid the consumers in making the right choice for their homes.
EB: What are the other areas Philips is eying in the Indian market?
As mentioned above, Philips does a lot of work in the business-to-business market in healthcare and lighting. We have a leadership position in lighting and will continue to expand in this area. In healthcare, we have broadened our product portfolio through the Alpha and Meditronics acquisitions. Now we can offer value to premium products to hospitals across India.
EB: What are your growth plans in India?
Our growth plans are simple. Continue to listen to our customers and provide them with the products that meet their needs and simplify their lives. We plan to do this across our three core sectors—healthcare, lighting and consumer lifestyle. And we’ll do this in tier one, two, three and even in rural markets.
