A Cutting-edge Company

Ann-Cathrin Starosky s1897624

Marloes Thijssen s1863584
Robert van Kasteel s1651552
John Hein s1942727
 Philips – A Cutting Edge Company

Table of Contents
Page

1 Introduction…………………….....…………………………………….….…………………….…..…….3

1.1 History of Philips……………………….………………………….………………….……….......... 3

1.2 Products………………………………………………………………………………..…………..……….3

1.3.1 Values….………………………………………………………………………………..…………..……….4

1.3.2 Vision 2010..………..……………………………………………………..…………..……….4

2 Philips performance over the past 5 years….………..……………………………………... 5

3 Philips’ Strengths………….………………………………………………………….……..……………. 6

4 Marketing strategy………………..……..………….…………………………….…………..………...7

4.1 Segmentation, Targeting and Positioning…………….………………….……….......... 7

4.2 Product Strategies..…..…………………………………………………………..…………..………. 8

4.3 Market entry and distribution strategies..………………..…………..…………..………. 9

4.4 Promotion Strategies……..……………………………………………………..…………….…… ..11

4.5 Pricing Strategies………………...………………………………………………..…………..……….12

5 Conclusion…………………….…………………………….………………………….……..…………….12

6 Appendix A (SWOT-Analysis)...................................................................... .....14

7 References....................................................................................................... 15

2|Page
 Philips – A Cutting Edge Company

“Royal Philips Electronics of the Netherlands is a diversified Health and Well-being company, focused on
improving people’s lives through timely innovations.” 1 Philips is the world leader in lighting, healthcare
and lifestyle. Philips’ headquarter is located in the Netherlands; additionally Philips has established
subunits in more than 60 countries worldwide with approximately 128.000 employees. 2

1.1 History
Anton and Gerard Philips established Philips & Co. in the year 1891 in Eindhoven, the Netherlands. First
Philips & Co. produced carbon-filament lamps and became one of the largest carbon-filament lamp
producers in Europe. In 1910 Philips employed 2000 subordinates and was the largest single employer
in the Netherlands. Later in 1914, the company began selling the X-ray and radio technology, which was
the first innovation of Philips. Until today, the list of inventions has grown impressively. The inventions
of Philips consist of many breakthroughs and enriched people’s everyday lives.

In the early years Philips established a research laboratory to stimulate product innovation as well as to
study physical and chemical phenomena. Due to this laboratory Philips discovered numerous of well
known products. Furthermore, Philips was one of the companies which became involved in the earliest
experience in the television and radio production. Over the years, the product range became
increasingly larger. They inaugurated the electric shaver in 1939, the Compact Audio Cassette in 1963,
the Compact Disc in 1983 and several other important innovations. The company’s growth was
enormous.

In the 21st century Philips continued to uprise and change. A long time people saw Philips just as a
simple electronic producer, but a few years ago Philips started projecting a new image that highlights
the products in the areas of Lifestyle and Healthcare. In 2004 Philips exposed the new brand promise of
“sense and simplicity”.3 “In September 2007, Philips communicated its Vision 2010 strategic plan to
further grow the company with increased profitability targets. As part of Vision 2010, the organizational
structure was simplified per January 1, 2008 by forming three sectors: Healthcare, Lighting and
Consumer Lifestyle. These steps further positioned Philips as a market-driven, people-centric company
with a strategy and a structure that fully reflects the needs of its customer base. With this set of
businesses, Philips aims to build the leading brand in Health and Well-being.” 4

1.2 Products
The product range of Philips is divided into seven categories, which are Sound and Vision, Personal
Care, Mother and Child Care, Household Products, Lighting, PC Products and Phones and Accessories.
Under the category Sound and Vision are products like televisions, home theatre, blue-ray and DVD,

1
http://www.philips.com/about/company/companyprofile.page
2
http://www.philips.com/about/company/companyprofile.page
3
http://www.philips.com/about/company/history/ourheritage/index.page
4
http://www.philips.com/about/company/history/ourheritage/index.page
3|Page
 Philips – A Cutting Edge Company

MP3 players are encompassed. Other products of Philips are men’s shaving, hair care, coffee makers,
toasting, energy-saving lamps, car lamps, phones. These are just a few of Philips’ diverse product range.
The sector with the most earnings is the Healthcare sector with an EBITA of 452 million euro in the 4 th
quarter of 2009. 5 Philips has not only a great product range, but they are also prestigious all over the
world and sell their products in a great variety of countries, like for instance Germany, Canada, Australia
and India. The market cluster with the most sales in the 4 th quarter of 2009 was Western Europe with
sales of 2,832 million euro. Another enormous market with 1,794 million euro sales was North America.
6

1.3.1 Values
The strategy update “Vision 2010” laid down the values which reflect the ambitions Philips has The
values are called the four D’s and act like a compass for the company to guide how to behave and to
remind them of the attitudes they should have towards their work, customers and other employees.
“With Vision 2010, we are putting people right at the center of things, with Health and Well-being as
our overarching theme. We are thereby putting into practice our mission: improving the quality of life
through the introduction of meaningful innovations.” (Gerard Kleisterlee, President and CEO of Royal
Philips Electronics)

1.3.2 Vision 2010

Delight Customers
We anticipate and exceed customer Deliver great results
expectations We continually raise the bar
 We play to win big and always set
 We demonstrate Passion for Philips and
ambitious targets
“sense and simplicity”
 We challenge the status quo and
 We create superior customer experiment with new ways
experiences, based on deep insights  We take clear decisions and implement
 We act as One Philips ambassadors all with speed and discipline
the time

Develop people Depend on each other

We get the best from ourselves and each other We deliver more value by working as One Philips
 We attract the best players to create  We think as One Philips and act as
strong diverse teams owners
 We take risks by giving people stretch  We trust and empower each other to
assignments to accelerate their contribute our best
development  We team up and allocate resources to
 We personally invest significant time to the most promising opportunities
coach and recognize people
(Source: http://www.philips.com/about/company/missionandvisionvaluesandstrategy/values.page)

In addition to the Vision 2010 Strategy Philips has a specific mission and vision of how they will work in
the future. The mission of Philips is to "improve the quality of people’s lives through timely introduction

5
http://www.newscenter.philips.com/main/confidential/resources/corporate/quarterly_results/R_4Q09.pdf
6
http://www.newscenter.philips.com/main/confidential/resources/corporate/quarterly_results/R_4Q09.pdf
4|Page
 Philips – A Cutting Edge Company

of meaningful innovations."7 Furthermore, Philips’ vision is that “In a world where complexity
increasingly touches every aspect of our daily lives, we will lead in bringing sense and simplicity to
people.”8

2. Philip’s performance over the last 5 years

To discuss the overall performance of Philips over the last five years, we have looked trough all available
annual reports. Here we found all the data we needed to analyze the performance.

Philips is a brand that is known all over the world and is one of the largest electronics companies in the
world. In recent years Philips has gone through a transformation that has given the company a more
balanced portfolio of businesses in the domain of well-being and health. These and the other Philips
businesses have been able to develop and improve their market share during the last five years. Since
2005 Philips has made some significant acquisitions, with the biggest being the acquisition of Genlyte
and Respironics in 2008. These two acquisitions are the reason why over 50% of Philips’ global sales are
generated by activities in which they are the world market leader. As a result of these acquisitions
Philips has amassed an exceptional range of well-respected brands, including Lightolier, and makes up
the world’s largest integrated lighting solutions provider. As a consequence of this, Philips has build up
an extensive portfolio combined with a global commitment to sustainability.

In 2009, Philips had sales that exceeded €23 billion. Philips has done quite well over the last few years
with steadily increasing sales since 2005 from €25 billion to €26,7 in 2007, until a 4% decrease in 2008
due to the economic malaise. Over the last five years Philips has always been profitable, with profits
even as high as €5 billion in 2006, except from 2008 when there was a global recession. In 2009 the
recession was still felt although there was a minimal profit of €424 million, but this was mainly due to
several layoffs. Philips has also become very aware of the environment in these last couple of years and
this is why they additionally started to sell Green products in 2006. They set a few targets for themselves
over the period 2007-2012 (as can be read in the annual report of 2006), for example that they wanted to
double their revenues from Green products to 30% of total sales, and double their investment in making
Green innovations. Finally Philips has done very well the last couple of years and exceeded expectations
by bringing revenues of Green products to 30,9% in 2009, and investing €409 million in Green in 2009
as to the €284 million of 2008.

That Philips has done well over the last five years is also noticeable in the brand value of the Philips
which has increased gradually.

Value of the Philips brand (Amounts in USD billions) (www.philips.com)

7
http://www.philips.com/about/company/missionandvisionvaluesandstrategy/index.page
8
http://www.philips.com/about/company/missionandvisionvaluesandstrategy/index.page

5|Page
 Philips – A Cutting Edge Company

10
7.7 8.3 8.1
8 6.7 2005
5.9 2006
6
2007
4 2008
2 2009
0

(all figures and data come from www.philips.com)

3. Philips strengths
To determine the company’s international competiveness at the marco-level we want to utilize Porter’s
Diamond. In this model there are a couple of characteristics that explain the competitiveness of a firm.
The Factor conditions are strong, which for Philips means that they are very good at innovation and have
advanced research and development labs. Another important component is that Philips has highly skilled
people in these R&D labs. The company also has a strong position in their main markets, with a great
demand for their products in Europe and North-America. Because of the large home market in Europe
this gives Philips a cost advantage and a lot of experience.

Porter’s Five-Forces model focuses at the meso level of a company’s marketing strategy 9. Because
Philips is such a large company and a respected global brand, it has a lot of bargaining power over its
suppliers. This is mainly because there are only a few companies that sell electric shavers and Philips is
the market leader in almost every part of the world. Due the company’s size it is able to produce in large
quantities, and therefore it can buy resources in bulk at a lower price at the same time. There is however
the presence of a substitute, namely the normal razor. But most buyers are not willing to substitute, as
they find the electric shaver more convenient. Another strength of Philips is that they are very well
established in their main markets, and have build up a strong reputation and market base. Their brand
identity is good and a lot of customers are loyal to the brand. This makes it hard for other companies to
enter this market and try to decrease Philips market share. The perceived value is the customer’s overall
evaluation of the product offered by the firm. 10 In Philips’ case the customer buys a Philips product
because they expect it to deliver a certain level of standard.

Furthermore Philips has a good acquisition strategy. This way they expanded their product market and
segment.

9
Essentials of Global Marketing 2008 (Svend Hollensen), p 78
10
Essentials of Global Marketing 2008 (Svend Hollensen), p 83
6|Page
 Philips – A Cutting Edge Company

4. Marketing Strategy
After having introduced the company of Philips, its product range and its global presence as well as
having studied the past five years and the firm’s national and international competiveness, we will
analyze in the following section relevant marketing topics and tools.

Philips, as being the largest electronic company in Europe, offers a gigantic range of products. These are
divided into the three major segments: Healthcare, Lightning and Lifestyle. We decided to focus on the
Lifestyle segment and more specific on electric shavers in this report.

4.1 Segmentation, targeting and positioning

A commonly wrong assumption is that companies should try to win as many customers as possible
without performing a detailed targeting of the market. Certainly a great customer base is one of the most
important aims of any profitable company, but to ensure long-term success, it is impossible to serve all
customers equally. That means that it is crucial to define a target group to be able to produce
competitive, tailor-made and delighting products.

To determine which segment Philips serves, we firstly want to divide the market into segments. The
plainest distinction which can be made in the world of razors is between manual blade shavers and
electronic shavers. While Philips focuses only on the electrical shavers segment there can be made even
more distinctions. The two most common options are rotary shavers and foil shavers, furthermore there
can be differentiated between wet- and dry-use shavers. Although the company has a great range of
products which are differentiated in uncountable specific features, all of the products belong to the group
of rotary shavers for which the company once became so famous under the Philishave brand name.
However, wet- as well as dry-use shavers are being produced. 11

To further determine the target group we want now to go into more detail concerning societal aspects.
The major part of shaving products produced by Philips is aiming at the male population. Nevertheless
the company is aware of the potential of the female serving market and pays growing attention. Currently
there is a special product group called “female depilation” offering epilators, lady shavers, bikini
trimmers as well as partially so-called IPL hair removal systems. Moreover there is a complementary
men’s grooming segment with different kinds of hair trimmers. Nevertheless we want to focus in our
report on the men’s shaving section which offers products from 30£ to 250£. Due to the uncountable
number of blade shaver offers and the great advertisement campaigns many people, especially younger
generations, prefer this cheaper option. To be precise, only 18 percent of all men use solely electrical
shavers.12 Therefore the targeting group can be summarized as the wealthy segment of males between 35
and 54 which can afford to buy these premium razors. But what should not be neglected is that there is
also a great amount of women who still prefer male shavers.

To make Philips targeting more clearly we want to include the company’s position in the world market.
On 9th of May 2007 the company was able to announce that it had reached the phenomenal production

11
http://www.shavers.co.uk/introduction_to_electric_shavers.php
12
http://www.businessweek.com/magazine/content/07_24/b4038413.htm
7|Page
 Philips – A Cutting Edge Company

line of 500 million electric shavers. Certainly, with more than 70 years of heritage and sales of razors in
56 countries worldwide the company is the global market leader in electric shavers. The value
proposition of the razors is very high as the former Philishave company aims at the highest premium
segment in this market

4.2 Product strategies

In the following we want to go into more detail regarding marketing management. We have already
discovered that Philips is aiming at the upper class of society with premium products, but we want to
figure out to what extent the company takes action in favor of its customers in comparison to the interest
of the organization and society as a whole.

After analyzing the situation we came to the conclusion that Philips chose a combination out of the
Production Concept, the Marketing Concept and even of the Societal Marketing Concept. To explain this
let us begin with the Production Concept. In this concept the most valuable aspect is continuous
improvement and innovation of the product. Philips has clearly proven that it is an innovative company,
as it was the first who started with the production of rotary shavers. But there were several other
innovations which contributed to the current position as a market leader. The latest innovation is based
on the cooperation with Nivea. To reduce skin irritations and improve the feeling of shaving the
companies developed a razor with implemented Nivea-products such as lotions. Another example is the
newest flagship of the razor segment, the Arcitec. This razor is the first rotary razor with three
independently flexing heads which ensure an excellent shaving result. However, what is most important
is that the company has never forgotten that customers do not want an innovative razor, but much more
an excellent shaving result. This means that Philips is aware of the so called marketing myopia.

What goes along with the Marketing Concept is related to our last point. Philips slogan is “sense and
simplicity” and this comprises the importance to satisfy the true customer’s needs. It is not the main goal
to design the most innovative razor on the market, but much more the most effective one. It is not about
the way to get somewhere, but about the result. And therefore Philips is not trying to create new
customer’s needs which might be irrelevant at the second glance, but it is trying to develop products
tailor-made to the customer segment resulting in delighted consumers. A very important evidence that
the Marketing Concept is applied is the fact that Philips refers its decisions to direct market research. In
2006 the company conducted intensive market research interviewing 5000 men about their true problems
and needs concerning the perfect shaving experience. The outcome was a not very hidden problem, but
still it opened a true opportunity to outperform competitors. Many customers claimed that it was
extremely difficult to get a satisfying shaving result on the neck under the chin. Philips took this issue to
heart and invented the new arcitec which is able to deal with this problem better than any other shaver in
advance. Another indicator are the four D’s representing Philips values: Delight customers, Deliver great
results, Develop people and Depend on each other13.

13
Philips, Annual Report 2009
8|Page
 Philips – A Cutting Edge Company

Finally, we also found indications of the Societal Marketing Concept as we consider the Philips
Company as a whole. In recent years Philips emphasized sustainability very much and included it in
important performance goals. The “EcoVision4 targets” for example include the doubling of revenues
from green products to 30% of total sales, a doubling of the investment in so called green innovations to
a cumulative 1 billion euro and an improvement of operational energy efficiency by 25% as well as a
reduction of CO2 emissions by 25% (Annual Report 2009).

Additionally it is important to consider the general and after-sales service of the company. As Philips’
shavers segment is a relatively strong Product-dominant entity the level of services is rather low.
Nevertheless the company tries to achieve high customer satisfaction through additional services like
shaving advice via video tutorials on the webpage, the ability to register products to stay up to date about
the latest news and innovations, very user-friendly and effective buyer's guide with comparison function
of the features of all models and consultations for every kind of customer and the possibility to join clubs
like the Philishave Collectors Club (PCC).14

4.3 Market entry and distribution strategies

So far we have addressed the first “p” of the 4P-Marketing mix; the Product. In the subsequent step we
want to address the place more detailed. Currently Philips achieves sales and service outlets in 100
countries, 127 production sites and 7 research laboratories in Europe, North America as well as Asia.
One important aspect which enabled Philips to internationalize more easily is its great range of products.
The company had the ability to enter markets which were especially attractive to specific products. That
means for instance if one country had a weak industry for light bulbs, Philips could enter this market and
achieve relatively easy strong positions due to good market research, analyses and decisions regarding
the country of internationalization. Through this early presence in various countries the company was
able to establish a good brand image and reputation resulting in opportunities for other products, as
management could use the already established wholesaler, retailer and supplier networks. Additionally,
this meant that Philips often had the chance to enjoy first-mover advantages.

In the history of Philips the company has completed a great amount of mergers and acquisitions.
Amperex, Magnavox, Signetics, Mullard, VLSI, Agilent Healthcare Solutions Group, Marconi Medical
Systems, Agilent Technologies and Respironics, Inc. to name just a few.15 These new acquired
companies definitively provided Philips with local knowledge, acceptance in the market and essential
relations with suppliers.

To describe the current state of affairs we want to apply the model introduced by Uppsala. He used four
different stages to describe the mode of entering international markets. From the first to the fourth stage
the level of commitment is steadily increasing. Philips can be classified as a member of the third as well
as the fourth stage. Stage three implies the establishment of foreign sales subsidiaries and stage four the

14
http://home.wanadoo.nl/philiclub/indexeng.htm
15
http://www.answers.com/topic/philips#Acquisitions.2C_subsidiaries_and_spinouts
9|Page
 Philips – A Cutting Edge Company

establishment of production and manufacturing units. As Philips has sale subsidiaries in 100 countries
and produces in 127 places, we can assume that a great percentage of the 100 countries of sales have also
production sites. However, we have to focus on Philips Shavers, which are being sold in 56 countries, but
currently only produced in two production centers for shavers, which are Drachten in the Netherlands
and Zhuhai, China.16 This means, that Philips follows a relatively strong export mode strategy with high
flexibility, low risks and low control.

The remaining question is which are these 56 countries Philips is selling electrical shavers in? The most
important markets for this product segment are definitively Europe and the USA in which the company
was selling razors under the name Norelco. But also the Asian market is getting more important as there
was a significant 11 percent increase in value only in the year 2006. 17 In 2004 both Europe and China,
due to its great population, contributed 34 percent of the total sales. The USA is the third most important
region with 26 percent of total sales, followed by the Middle East together with Africa and Latin
America, with 2 and 4 percent respectively. 18 The underlying reason why Philips does not enter the
electrical shaver market in India and China as intensively as it does in Europe and America are the
following: Firstly it was proven by research that Chinese man have in general less hair than men in other
cultures. Moreover their hair is thicker and grows more slowly, so that there is no need and demand for
three headed, expensive razors like the arcitec. Nevertheless Philips will offer two headed razors as well
as the arcitec as the premium razor on the market to be present in the China. Concerning the Indian
market there has been determined another problem. Due to the fact that it is still possible to “get a shave
at the corner stand for 20 rupees, or 50 cents” the Indian population has not yet the want and therefore
the demand which is crucial to sell the shavers.

The primary channel Philips uses to sell its products is certainly through a tremendous network of
retailers. For instance, if you go in a random city into a random electronic store the chances to find
Philips electronic shavers are extremely high. To put it briefly, Philips follows the intensive coverage
approach. Moreover Philips uses the internet effectively to sell products. Unfortunately is it only
possible to buy products from the online shop from 47 out of the 56 countries Philips sells razors in.
While this form of virtual marketing is already well established and contributes essential stakes, the m-
marketing techniques have not been adopted, yet.

Adaption takes most obviously place in the United States, as the company is selling razors there under
the brand name Norelco. However, this adaption is steadily reduced due to the fact that Philips is aiming
to unify all products under one brand name. 19 Another adaption is the special offering of two headed
razors for the Chinese market.20 But, to put it in a nutshell, there is in general no need to adapt razors to
different cultures, as the demand for having an excellent shaving result is the same throughout the world

16
http://www.answers.com/topic/philishave
17
http://iavbbs.com/gflinn/news.htm
18
Essentials of Global Marketing 2008 (Svend Hollensen), p. 476
19
http://www.answers.com/topic/philishave
20
http://iavbbs.com/gflinn/news.htm
10 | P a g e
 Philips – A Cutting Edge Company

and the products are greatly standardized throughout the world. Differences might only occur in the
promotion of the product in different cultures, which we will address under the following topic.

4.4 Promotion strategies

Finally one of the most important questions arises when a company is facing its promotion opportunities.
In 2006 Phillips has chosen to follow the Straight extension strategy as it decided to steadily reduce its
last major adaption to the US market. The brand name Norelco will be changed in two steps from
Philips-Norelco to simply Philips in order to unify the products and benefit from the more positive
associations of the great company’s brand name. In other words this means that until 2006 there was
used to some extend the Promotion adaption strategy. An additional positive effect will be a reduction of
promotion costs as these can be more standardized.

This leads us to the next topic of promotion: standardization. As we have already discovered, human
demands for shaving results are similar throughout the world. Nevertheless it can be essential to the
product’s success to adjust advertisements to cultural differences. Still, Philips did not see the need to
adjust its commercials to a great extent besides of the language. 21

But, what Philips does is advertising through effective co-operations. The probably most famous channel
of promotion is Philips connection to world class sports. One important example emerged out of the
Philips Sport Club, the soccer club PSV (Philips Sport Vereniging), which is currently one of Europe’s
top clubs. Philips owns also the naming rights of the Philips Stadium, which is the team’s home stadium
in Eindhoven. Moreover the company has the naming rights of the Philips Arena in Atlanta (Georgia)
and even the Australian premier basketball league is named Philips Championship. In total the company
has sponsored uncountable sports events, teams and even music events. The most current and successful
campaign was started in 2006 in partnership with AT&T and the Williams F1. Therefore Philips is now
sponsor of one of the “Big three” F1 teams and attracts a lot of attention. 22 The company uses this
valuable partnership by developing razors with the Williams F1 design in order to address this huge fan-
base as well as younger generations.

Lastly we also want to mention Philips involvement in several Hollywood movies like the James Bond
movie “A View to a Kill” and “The Long Wait”. Moreover the company uses extensively television, full-
page magazine and billboard advertisements. The budget for advertising and sales promotion was 804
million euro in 2009 (2008: 949 million €).

21
Essentials of Global Marketing 2008 (Svend Hollensen, p.479-480
22
http://www.answers.com/topic/philips#Sports.2C_sponsorships_and_naming_rights
11 | P a g e
 Philips – A Cutting Edge Company

4.5 Pricing strategies

A major element in marketing is pricing; this is because the price of a product has an immediate impact
on other components of the marketing process. As well as having an impact on profit, a higher or lower
price of a product can also change gross margins and sales volumes.

One of the strategies that Philips is using is skimming. Skimming means you sell your product at a high
price to achieve high profits. Philips puts quality in this case before quantity, with a higher price but also
a high quality product which is appreciated by their buyers. This and the fact that the company is aiming
at the top level of the market is the explanation why Philips can ask these high prices because their
aiming at the top of the market. People want to pay more for their electric shaver, because Philips is an
innovator and they know that it is a quality product. For example they have a special electric shaver that
moisturizes your skin while you shave, by dispensing a NIVEA conditioner. This way you get a smooth
shave and your skin gets looks after at the same time.

Another strategy is market pricing; with market pricing the company bases its price on similar products
in the target market. Philips as one of the market leaders in electric shavers can put up competitive
prices. And, as seen with their skimming approach, people are willing to pay their prices as they know
that electric shavers are that expensive.

6. Conclusion
Philips is the largest electronics company in the world. They made a positive transformation over the
years and became market leader. The company has been profitable over the last couple years except in
years of global recession. In this assignment we focused on the Lifestyle segment, in particular electronic
shavers.

It is crucial to define a target group to be able to produce tailor-made and delighting products. Males,
who are able to afford premium razors are the target but without neglecting the great amount of women
who prefer male shavers.

An important aspect is that the company has never forgotten that the customers mainly want an excellent
shaving result, they are aware of marketing myopia. They focus on the effectiveness of the product and
therefore they try to develop products tailor-made to the customer segment resulting in delighted
consumers.

Philips invented the state of the art arcitec which solves the problem of getting a satisfying shaving result
on the neck under the chin. Another indicator are the four D’s representing Philips values: Delight
customers, Deliver great results, Develop people and Depend on each other.

One important aspect which enabled Philips to internationalize more easily is its tremendous range and
variety of products. Philips follows a relatively strong export mode strategy with high flexibility, low
risks and low control. The primary channel Philips uses to sell its products is certainly through a

12 | P a g e
 Philips – A Cutting Edge Company

tremendous network of retailers. Philips follows the intensive coverage approach. Moreover Philips uses
the internet effectively to sell products.

As there is no need to adapt razors to different cultures, as the demand for having an excellent shaving
result is the same throughout the world, the products are greatly standardized throughout the world. But,
what Philips does is advertising through effective co-operations. The probably most famous channel of
promotion is Philips connection to world class sports. Moreover the company uses extensively television,
full-page magazine and billboard advertisements.

One of the pricing strategies that Philips is using is skimming. Skimming means you sell your product at
a high price to achieve high profits. Another strategy is market pricing, with market pricing the company
bases its price on exchangeable products in the target market.

Philips strengths are innovation, advanced research and development labs. Another important thing is
that Philips has highly skilled people in these R&D labs. Philips also has a powerful position in their
main markets, with a great demand for their products in Europe and North-America. Because of the large
home market in Europe Philips enjoys a cost advantage and gained a lot of experience. To put it in a
nutshell, Philips has truly selected an appropriate marketing strategy which results can be seen in the
profitability of the company.

13 | P a g e
 Philips – A Cutting Edge Company

Appendix
SWOT-Analysis

Strengths (internal) Weaknesses (internal)

 Strong position in main markets  The consumer lifestyle division is

 Good geographical diversification (25%
of sales is generated in emerging
countries)
 Great innovation capability
sensitive to the economic slowdown
 Sensitivity towards the rate of the dollar
 Lack of brand recognition
 Products marketed under different names
then Philips

 Good acquisition strategy (new

products)

Opportunities (external) Threats (external)

 Philips is a strong global brand which  Highly competitive market (especially in

makes it easier to differentiate and the electronics market)
launch new products.

 A lot of potential in the long term

(population aging is positive for the
health care sector)

 Rising demand for health care

equipment

 Growing awareness for energy efficient

lighting

14 | P a g e
 Philips – A Cutting Edge Company

References
Websites

Philips

URL: www.philips.com/about/company/companyprofile.page
URL: www.philips.com/about/company/history/ourheritage/index.page
URL: http://www.philips.com/about/company/missionandvisionvaluesandstrategy/index.page
URL:www.newscenter.philips.com/main/confidential/resources/corporate/quarterly_results/R_
4Q09.pdf

Shavers.co.uk

URL: www.shavers.co.uk/introduction_to_electric_shavers.php

Businessweek

URL: http://www.businessweek.com/magazine/content/07_24/b4038413.htm

Philipshave collectors club

URL: home.wanadoo.nl/philiclub/indexeng.htm

Answers.com

URL:www.answers.com/topic/philishave
URL: www.answers.com/topic/philips#Sports.2C_sponsorships_and_naming_rights
URL: www.answers.com/topic/philips#Acquisitions.2C_subsidiaries_and_spinouts
URL: www.answers.com/topic/philips#Sports.2C_sponsorships_and_naming_rights

Others

URL: www.avbbs.com/gflinn/news.htm

Bibliography

Essentials of Global Marketing 2008 (Svend Hollensen)

Principles of Marketing, Eleventh Edition (P. Kotler and G. Armstrong)

15 | P a g e
 Philips – A Cutting Edge Company

Pictures

URL: http://www.designawards.com.au/images/INDUSTRY/Philips%20Arcitec.jpg

URL: http://farm4.static.flickr.com/3365/3453191149_c0c94ea346_o.jpg

16 | P a g e