indira institute of management, pune curious 2016...

Indira Institute of Management, Pune

Curious 2016- National Level Case Study Competition

Winners (1st Prize)

Case Solution by: Indian Institute of Management, Bengaluru Mr.Siddharth Kulkarni, Ms.Jyoti Rani, Mr.Himanshu Maharana

Case Analysis Philips – Internal Analysis:

Philips is one of he largest electronics companies, with € 21.6 billion market capitalization, in

the world with presence in 60 countries. Philips is a Dutch technology company with

products focused on consumer lifestyle (personal care), healthcare and lighting.

Philips India is the market leader in personal care appliances with a 31% volume share in

20151. Extensive R&D, marketing, and strong distribution channels helped Philips to gain 2

percentage point in volume share from last year. Philips launched a massive advertising

campaign with celebrities Varun Dhawan and Arjun Kapoor, Bollywood film actors, and this

helped in growth in beard trimmers and electric shavers market witnessed growth in the last

few years of the review period. The company is, also, offering promotional discounts on its

trimmer and marketing through leading internet retailing stores Amazon India and

Flipkart.The company with 35% and 26% volume shares 1, in both body shavers and hair

care appliances, respectively, enjoys the leading position. Philips strategically spent a lot into

R&D for innovation and development of products. Philips spent € 1.9 billion on R&D in

2015-162. Philips also spent € 1 billion on marketing and promotions in 2015

1 Personal Care Appliances In India Euromonitor International, January 2016

2 Philips Annual Report 2015

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Team Registration No: IIMP/CURIOUS/2016/106

which was a 10% increase from last year. Philips brand value increased by 6% to over $ 10.9

billion as per Interbrand, which put it in 47 rank among world most valuable brands 2.

Market Analysis:

Market size and growth: The men shaving market (razor and blade) was 22 billion in

2014 and have an estimated growth of approximately 5.1% year on year that will lead to

28% growth by 20193

as these are used regularly by a relatively larger consumer base.

Competition: The electric shaver category in India is in its nascent stage, and there are

very fewer competitors. Panasonic is only large competitors for Philips.

Substitutors: In India, people prefer different products from different brands for shaving.

A product like disposable or reusable razors, trimmers and shavers are widely available in

the market for a wet or dry shave. The young generation has started using trimmers to get

a stylish look, ease of use and no variable investments on blades.

Qualitative Research:

Customer Behavior:

Customers attitude, perceptions & motivation: Customer behavior is analyzed for two

different segments of consumers divided on the basis of age. Based on initial

segmentation criterion we found that customers in the age group 24 to 32 have distinct

needs than that of the older segment that is 33 and above. The method of research used is

qualitative studies which include depth interviews and focus groups. The interviews were

done to understand what are the perceptions regarding electric shavers and what are the

factors that are important while purchasing electric shavers.

Philips has targeted the older (33 and above) age group so far in India and in U.S. but

various issues have been identified with this age group. The attitudes and perceptions of

the older segment are given below.

Resistance to change/ Habitual behavior: It was quite evident in the interviews that the

older segment is resistant to change. This segment has been using razors and blades for

the past 20 years and is habituated to the process of wet shaving. Use of electric shavers

requires this consumer to break his habits and accept something out of his comfort zone.

3 Men's Grooming In India Euromonitor International, July 2015

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Interview candidates mentioned that they were not comfortable with the circular shaving

motion of electric shaver vis-à-vis linear motion of regular blades.

Perception of difficulty/complexity in usage: The consumer is unaware of how the

product works and thinks that it is very difficult to use this product. Thus, this market

requires a lot a customer education.

Other reasons for not using electric shavers:

Low awareness about the product features & benefits: Consumers are not aware of any

existing Philips products like Philishave series and Aquatouch series. Consumers do not

recall any of the promotional campaigns or television ads and hence there no association

with the product or the brand.

No clear value proposition: Also upon research it was found that customers don’t think

that electric shavers are currently providing them any value over other substitutes.

Attitudes and perception studies of young (24 to 32) age group:

High innovators: The product will be welcomed in this segment. As this segment is

relatively new to shaving, they are more likely to change their behavior and switch to

electric shavers. This segment has many early adopters that make the diffusion of electric

shavers easy and fast.

Electric shavers lie in this

block where the product

change is high but the

behavior change is also very

high which reduces the

diffusion rate.

Low Product Change High

Low

Easy Sells

Smash hits

Sure Failures

Long Hauls

High

Beh

avi

ora

l C

ha

nge

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Issues identified:

1) Wrong targeting: Electric shaver is an innovative product, and the diffusion of this

innovation is a must for its success in India. Electric shavers cannot be targeted

towards older segment as the adoption rate is very low as mentioned earlier.

2) High consumer awareness and customer education are required for this product

category to develop in India. Consumers are unknown of the usage ways.

3) Electric shavers are positioned mainly as functional products. This type of

positioning has not been successful so far in India as the tangible benefits provided

by electric shavers are same as that of razor-blade systems. Thus, a different type of

positioning is required for electric shavers.

4) Although affordability is not a problem, price of electric shavers is still an issue as

the consumers, don’t see the value they obtain from electric shavers.

Proposed Solution and recommendations:

Considering the market size, customer readiness, and future opportunities, we suggest,

Philips to enter the Indian market. In our solution, we have suggested, to enter India with

the same R&D product under the brand name NEO. We have proposed STP strategies,

marketing mix, branding, communication strategies, diversification and sourcing

strategies. Philips can also reposition and relaunch its present men electric shaver product

line India.

Segmentation and Targeting

As mentioned, one of the issues is wrong targeting. A better choice for target segment is

the young urban males. Philips should adopt a strategy of “catching early”, where in a

brand targets customers in early age so that they remain a loyal customer throughout their

life. This strategy ensures that no behavioral change is required at a later stage. In India,

where the demographics are relatively young, we suggest, Philips should target the age

group of 24-32 years. This age group would be newly shavers, innovators and tend to buy

new technology based products that will make it easy to make them change their style of

shaving. Also, this segment will be starting their professional careers, and they have the

potential to buy this product. The estimated target is 2.2 million which consists of 24-32

years male in an urban region with high or high middle-class income category.

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Factors related to shaving that is important for the two age groups:

Trendy

Affordability 5

4

3

2 1

0

Safety

Young(24-32)

Old(33-55) Time saving Comfort

Aspiration Shaving

Performance

Thus, younger segment gives higher importance to Aspiration, trendiness, and safety

whereas older segment rates these parameters very low. Thus, these factors should be

taken care of in product design and positioning.

Product Strategy:

Variety: Range of products should be available with

different functional features and with 2-3 different

colors, mainly blue-black or gray-black.

Quality: New technology-based product for better shaving

and charging performance with multi-precision blade

system, quick rinse system, super lift and cut action

Design: Eco-design with heads of rounded profile for

skin protection, head flex in 5 directions to provide

close shave

Brand Name: Philips brand adds trustworthiness, quality, and reliability factor to

the product

Features: Can be used for both wet and dry shave. Battery with charging/low

battery indicator light and replaceable blades.

Packaging: Packaging is done by 72% recyclable material with details of product

and usage written on the packaging.

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Pricing Strategy:

Since India is a developing nation, Philips should try to bring its product with right price

specifications. Philips has more than seven product in men electric shavers product line, and

they can come to India with a several products, with products at several price point and

benefits. The positioning should be same for all the products, and higher price gives more

functional benefits and enhances the user experience. This will ensure that people at each

price point have an aspirational association associated with the product they are using.

Positioning Strategy:

The electric shavers brand from Philips should be targeted at young urban males. This

product in the past was positioned in a functional way, talking about benefits and value

the customer receives. But this positioning has failed. Also, the customer thinks that

electric shavers are overpriced. The reason behind this segment buying an I-phone or an

I-pad worth thousands is the symbolic benefits they get by acquiring these products.

Thus, this segment has a higher willingness to pay for the aspirational product and hence

the electric shaver should be positioned as a lifestyle product bundled with symbolic

benefits like modern, trendy, innovative and aspiration and functional benefits like safety,

long-term cost savings, time saving, no changeable razor. We want the product to be

positioned as a product meant for “new generation.”

The value proposition for this new product should be,

“For young urban males, Neo is a next generation electric shaver that communicates

style, comfort, luxury and provides a perfect shave with its high-tech multi-precision

blade system.”

Brand Mantra: New way of shaving, stylish, modern and trendy

Points of difference: New unique shaving experience, both wet & dry shave,

Ease of use, time saving, durable

Points of parity: Smooth shaving, safe

Substantiators: New technology, high cordless power use, Multi-Precision Blade

System, Smart--Click precision trimmer

Personality/Character: Cool, Trendy, Young, High technology, aspirational.

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Branding Strategy:

Philips should brand the electric shavers as innovative products with aspirational symbolic

benefits. They can leverage their present consumer relationship and culture which include

global presence, innovative culture, trustworthiness, and quality. They should promote this

brand an advanced quality product which is modern, provide self-enhancement and

confidence. We have suggested ‘NEO’ as the brand name which means ‘new or reborn.'

Product Promotions and Brand Communication Strategies:

The electric shaver is a new category and hence the awareness is low, thus heavy

promotional budget should be allocated. As the target is urban males, the campaigns

should emphasize youth, style, status, and adventure. The brand communications should

be built around the core proposition of “next generation” and should have a consistent

brand promise. As strong brand image should be formed with deep functional and

symbolic associations. The creative should have a combination of symbolic and rational

appeals. To educate the customer, the promotional creative should demonstrate product

features, benefits, and usage. Apart from this, the campaigns should also have a habit

creation advertising strategy.

Campaign 1: “The new way shaving.”

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Your

grandfather

used a razor!!

Your father uses a

razor!!

It’s time to

revolutionize the

shaving experience…

Start using Philips NEO…a next generation shaver..

Boring way to shave!! Cool way to shave!!


This campaign would generate and bolster associations of a new generation and news ways

of doing things. The creative would depict grandfather using a very primitive technique of

shaving, and then a father using a better razor blade system and then a young guy using a

stylish Philips NEO for shaving, thus defining this to be the new way of shaving. The

campaign would be built around the core proposition of “next generation”.

Campaign 2: “The cool shave.”

This campaign suggests that traditional razor blade shaving is a boring way to shave and

using the Philips NEO is the new cool. This campaign would be built around the benefits

of style and symbolism. Product design should continue to be futuristic and sleek.

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Campaign 3: “Gifting.”

The gift campaign will be targeted towards female Indian consumer having middle to

high-income levels. The positioning of the product in this campaign would be as the best

gift for their male partners on special occasions such as birthdays and festivals. In this

campaign, the creative should have a peripheral route and should cherish the bond of love

and commitment in any man-woman relationship. The campaign will be a seasonal, one

that is active during festive seasons or specific months.

Other Supporting Marketing Strategies:

Celebrity endorsement: Celebrity endorsement is a must in a category like this. A young

Bollywood actor or a sportsperson should be a good option. The current brand ambassador

for Aquatouch, Varun Dhawan is a perfect celebrity endorser the brand needs.

Expert Testimonials: Bloggers like Miss Malini and few others blogging about male

grooming can be incentivized to provide positive testimonials and reviews. Youngsters today

refer to these opinion leaders for expert advice and the product will benefit from this.

Placement strategies: The electric shavers can be placed at famous hair and beauty

salons like Javed Habib for free trials and demonstrations. The product can also be

displayed in Bollywood movies to gain further awareness.

Diversification strategy: In long term many diversification options are favorable. Philips

can enter new segments like older age group or female consumers. Other diversification

strategy should be launching products satisfying various needs in different occasions like

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getting ready for a party, quick shave, mobile shave, etc. It can also develop

complementary products like gels and hair groomers etc.

Awareness through Digital Marketing Campaign:

As per the young target market of the product, digital marketing will help to get the

attention of the potential customers. The young people check product details and follow

the reviews online for a product which makes online presence a must to spread product

knowledge. Different campaigns on Facebook or twitter will help to generate awareness.

Campaigns such as customer’s tweet about their experiences or post on the product page

on Facebook can make more people aware of the product. A clear cut digital marketing

campaign will show the product on the relevant search query and will lead to curiosity

about the new technology.

On the other hand, having online competitions increases customer interest to a high level.

Quizzes based on product information will make people dig about the product in order to

gain some incentive. Sharing winner’s reviews online or on television advertisement will

make more impact on viewers. Showing products online as the advertisement if

customers have searched the product or related products in recent past, is a technique to

get attention and increase the chances of clicks to the product details page.

Product Distribution and Sourcing Strategy:

Philips follows an incremental product innovation strategy like its competitors in the shaving

industry. Philips standardizes the product across the globe to ensure economies of scale and

efficiency. In India, Philips should follow the same strategy and try to outsource the

manufacturing of product component. Also, Philips can take advantage of Make in India

campaign by expanding its manufacturing in India. It should develop long-term relationship

and partnership with local manufacturers to ensure reliability and quality.

Philips can use both direct and indirect channels for distribution. They should leverage

their extensive distribution network to ensure product accessibility and shelf-space. They

should continue to use online retail like Amazon and Flipkart to sell their products as a

large chunk of the target buy electronic products through online retail.

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Appendix

Exhibit 1:

Target Group4:

Population = 1.3 billion as of march, 2016 Urban population (32%) = 43 million Male population (1.08) = 22.3 million Age group (24-32 years) = 4.46 million

Income groups (upper and upper middle class approximately 50%)5

= 2.2 million

(As average age of India is 27, assuming +5 & -3 will have 20% where 25-55 age group constitutes 40% of population)

Exhibit 2:

Exhibit 3:

4 http://www.worldometers.info/world-population/india-population/ 5

http://www.maturski.org/EN-Marketing/Changes-in-consumer-behaviour.html

http://www.worldometers.info/world-population/india-population/

http://www.maturski.org/EN-Marketing/Changes-in-consumer-behaviour.html

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