The Hindu Business Line : A sense of culture

What better time to get aggressive in the emerging markets than now, seems to be the message Netherlands-based Royal Philips Electronics has been sending out over the past couple of years. And now it has capped its intention with its Indian company P hilips Electronics India Ltd, which has 75 years of consumer experience under its belt, not only rolling out several new culture-specific products across verticals, but also for the first time appointing a chief marketing officer for the Indian sub-continent.

Though Philips is a household name here and a market leader in several categories, the company seems to have shaken off its complacence to introduce more and more consumer- and culture-centric, technology-driven products. “Our brand promise to the consumer is ‘Sense and Simplicity’ (remember all the Philips ads?), but behind the simplicity is complex technology that is driven by extensive R& D activity and immense consumer insight,” says Murali Sivaraman, Philips’ Managing Director and CEO for the Indian sub-continent.

“Our products find a use in virtually every aspect of daily life - at home, at work and on the move,” he says, detailing the verticals the company has divided itself into - consumer lifestyle (home entertainment products, domestic appliances and personal care appliances); lighting (lamps, luminaires, lighting electronics, automotive and special lighting); and healthcare (diagnostic imaging products such as CTs, MRIs, X-rays, cardiovascular system, nuclear medicine, PET-CT, and ultrasound imaging systems) – each of which offer an array of products, some with unique country-specific USPs.

The consumer lifestyle division, in which Philips is market leader in most categories, for instance, has two products up its sleeve that are likely to generate interest in the market. Its ‘Rip-All AZ1856 CD Sound Machine’, which was soft-launched a few months ago and is still awaiting a country-wide roll-out, has been conceptualised and created primarily for the Indian market where consumers who are hooked to their ‘old is gold’ cassettes and FM radio songs can have them in new technology format. “Rip- All provides consumers with the option of ripping music from cassettes, CDs and FM Radio into MP3 format. The same can be downloaded and played back through USB flash drive or MP3 players. Music lovers no longer run the risk of losing any songs. Now preserving old music from the favourite cassette or a song from the radio is just a single touch away,” explains Sivaraman. Though India is the focus for the product right now, its potential in the entire BRIC markets is definitely at the back of the company’s mind.

The second product, which is being test-marketed in Kerala right now, is the intelligent food processor, which addresses the needs of the Indian homemaker. “The Indian woman always puts one hand on the lid of the processor when she is using it and hence has to be always present when she works the mixer. So we have designed a hands-free model where an arm and a timer do the woman’s job, while she is free to attend to other things,” explains Vivek Sharma, Chief Marketing Officer for the Indian sub-continent, adding that it comes with a 750 W powerful motor with a ‘reverse quadra flow’ for a superior grinding experience.

In the lighting category, Philips claims to be at the forefront of innovation. According to the company, it invented the energy-saving CFLs 26 years ago. It has been working with industry bodies such as ELCOMA, Bureau of Energy Efficiency and NGOs towards addressing the country’s power crisis and claims that in 2006 alone, it sold energy-saving products which contributed to a saving of more than a 1000 MW of power. “We are now working on how we can take energy efficiency to the next step and are in the process of researching organic light emitting diodes, which will further reduce energy consumption and also address the contamination risk. It may take many more years, but our endeavour is to redefine the lighting space,” says Sivaraman, adding that the company is engaged with Governments across the globe to build a recycling platform in the space.

Innovation is one of Philips’ focussed activities. In Bangalore it runs the Philips Innovation Campus (PIC), with a 1,000-strong headcount, dedicated to creating high-quality, cost-effective software development capacity to drive the creation of tomorrow’s products and services. From a share of 8 per cent of the total software resource of Philips globally in 1998, PIC’s share has gone up significantly and is now around 20 per cent.

In the healthcare segment too, the company has pioneered some innovations, though they are mostly imported from its overseas operations. Its Ambient Scan, which has recently been installed in some hospitals, helps to give the patient a better ambience when scanning is in the process. “Many patients are afraid of scanners, especially children. The Ambient Scan builds a scenario of their choice. A patient is able to see a choice of images and hear music while being scanned. This puts the patient in a relaxed mode, cutting out the need for a second scan, explains Sharma. In fact, in the in cathlabs segment, where it offers a range of cardiology solutions, it is the market leader. The Indian operations of Philips Medical Systems grew at 22 per cent in 2006.

Where growth is concerned, Sivaraman put it at a healthy double digit, with his company targeting a turnover of between Rs 2,800 crore and Rs 2,900 crore. “The Philips you can see today is in good shape.” Though he rules out acquisitions in the short term and says that the company will be focussing on integration, he is willing to concede that the company “will always keep an open eye on potential buyouts” and “whenever it makes sense, we will make an investment.”

Any plans to relist on the Indian bourses, from where it delisted a few years ago? It delisted from several European countries as well and is now only on the New York and Amsterdam stock exchange.

Philips doesn’t see any point in relisting, as Sivaraman points out that “with globalisation money moves seamlessly across the globe and structures are no longer region-driven”.

So what will be Philips future route be to shore up its top- and bottomline in the country? To innovate in products and concentrate on its local marketing strategies. In short to be consumer-focussed and culture-centric.

Related Stories:
Philips’ India-centric products see demand in overseas markets
Artemis ties up with Philips Medical for R&D in imaging
Philips to focus on lifestyle products

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