Case Study Philips

CASE STUDY
PHILIPS
OVERVIEW PHILIPS
(1910 to 1950s)
Philips Metal Filament Lamp Factory Ltd. was founded in Eindhoven in 1907.
That was followed in 1912 by the foundation of Philips Lightbulb Factories Ltd.
➢ In 1920s,Philips started to diversify its product range.
➢ In the 1920s, the company started to manufacture other products, such as

vacuum tubes.
➢ In 1939 they introduced their electric razor, the Philishave.
➢ In 1949, the company began selling television sets.
(1990 to 2015)
➢ In may 1990 when company posted losses of $2.6 billion,top management

launched a major initiative known as”Operation Centurion”.
➢ In 1999,Philips embarked on a worldwide marketing campaign and changed their

company’s image to a technology-oriented company rather than a market
–oriented one.
➢ In 2001,Philips launched a company wide restructuring program called “Towards

One Philips’(TOP) under CEO Gerard Kleisterlee to foster greater co-operation.
➢ The program helped not only in lowering costs but also promoted a spirit of
collaboration.
➢ In January 2011 Philips agreed to acquire the assets of Preethi, a leading

India-based kitchen appliances company.
➢ In March 2012 Philips announced its intention to sell, or demerge its television
manufacturing operations to TPV Technology.
➢ April 2013, Philips announced a collaboration with Paradox Engineering for the
realization and implementation of a “pilot project” on network-connected
street-lighting management solutions. This project was endorsed by the San
Francisco Public Utilities Commission (SFPUC).
REVENUE
Globally,Philips derives 34 percent of its revenues from lighting ,in India,the figure is 58
per cent.
In Health care,the global contribution is 40 per cent.In India it is 18 per cent
In Consumer lifestyle,the company gets 26 per cent of its overall revenues,in India,it is
24 per cent.
Totally the Indian unit closed the fiscal ended march 2012 with revenues of Rs 5,579
crore,growing at a clip of about 23 per cent per annum.
Problem
Philips was successful since its inception, but its faced poor financial performance during
the 1990s due to several reason:
● Fall of market share.

● High Manufacturing Costs.
● Lack of competitive product price
● Growing competition and Rapid changes in the external environment
Solutions
● Philips embarked an improvement program called BEST (Business Excellent
through Speed and Teamwork).
● Have several tools and approaches as a part of BEST.
● Some of them are:
Philips Business Excellence Model (PBE)
Process Survey Tools(PST)
Balanced Scorecard (BSC).
MARKET SEGMENT
Q.1 Evaluate Philips "sense and simplicity" strategy. What are the risks the
company faces in using the tagline?
Strategy
– Philips sense and simplicity strategy was based around a marketing insight they
obtained from market research on their consumer segment. Philips wanted to make the
technology hassle-free and easy to access.
Risks
1) They would compromise on the advancement in technology in order to make things
simpler.
2) They would give the impression of a less advanced electronics manufacturer,

because of it's simple design and features. 8/29/201620
CEO Gerard Kleisterlee introduced the Sense and Simplicity brand to warm up the
Dutch conglomerate's techie image and make it more consumer-friendlyIt is the
combination of two unique capabilities that enables us to deliver on our“sense and
simplicity” promise. These capabilities are firstly, by understanding people and secondly,
technology integration and product design. We put our end users front and center of
product innovations starting with understanding their needs and aspirations. We use
best-in-class research facilities and agencies to validate and ensure that our product
innovations are designed around people's needs and aspirations, easy to experience,
and advanced.
➢ Everything is designed to meet customers' need
➢ Targeted customer
➢ Easy to experience
➢ Improving people’s lives through meaningful innovation
Risk
-simplicity is a very complex topic-the bigger challenge is rewiring the entire organization
- they would compromise on the advancement in technology in order to make things
simpler.
-They would give the impression of a less advanced electronics manufacturer, because
of it's simple design and features
Philips Launches 'Simple' Products
Even before it began promoting the 'Sense and Simplicity' concept, Philips sold some
products that seemed to exemplify the concept. For example, the Senseo, a coffee
maker that was a huge hit with coffee lovers, was simple (it only had one button) and yet
sophisticated enough to make gourmet coffee. Another product was the HeartStart, a
defibrillator that could be used by patients at home. Under the 'Sense and Simplicity'
initiative, Philips launched several more products such as thePhilishave Cool Skin (an
electric razor), the Perfective (an electric iron), the Perfectdraft (a beer pump), and the
Intelliclean (a toothbrush system)..
Q2. What strategies can Philips follow to ward off competition from Japanese
manufactures of consumers electronics?
The major advantage that Japanese manufacturers have over Philips is their ability to
keep their prices lower.
If Philips were to emphasize adherence to quality, simplicity of design, the multi-lingual

instructional manuals, and the sense that their products provide more value for money,
they would have an advantage. The ‘Sense and Simplicity’ campaign is all well and
good, but Philips should take care to ensure that advertisements are designed in such a
way as to ensure that customers understand the products in exactly what the company
wants them to.
Thành viên
1. Nguyễn Anh Khôi
2. Đặng Thị Thiên Hương
3. Phạm Nguyễn Mỹ Huyền
4. Nguyễn Thùy Linh
5. Phan Thành Khang

Case Study Philips

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CASE STUDY

➢ In the 1920s, the company started to manufacture other products, such as

➢ In 1939 they introduced their electric razor, the Philishave.

➢ In 1949, the company began selling television sets.

➢ In may 1990 when company posted losses of $2.6 billion,top management

➢ In 1999,Philips embarked on a worldwide marketing campaign and changed their

➢ In 2001,Philips launched a company wide restructuring program called “Towards

➢ In January 2011 Philips agreed to acquire the assets of Preethi, a leading

In Health care,the global contribution is 40 per cent.In India it is 18 per cent

● Fall of market share.

2) They would give the impression of a less advanced electronics manufacturer,

Philips Launches 'Simple' Products

If Philips were to emphasize adherence to quality, simplicity of design, the multi-lingual

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