Philips: A case of lost opportunities?

By , agencyfaqs! | In | July 25, 2001
From a CTV market share of 11 per cent in 1996 to below 4 per cent today, it's been a hasty descent for Philips. A look at what ails the brand, and how HTA can bail it out

When Sunil Gupta, senior vice-president and general manager, HTA, says that in Philips, HTA realizes it has a big responsibility on its hands, he can't be more right. Neither can Rupam Ganguly, general manager, consumer and trade marketing, Philips India, when he says, "We were in a much more comfortable position in 1995 than we are in today."

The figures speak for themselves. In 1996, Philips had a market share of 11 per cent in colour televisions. Five years on, the picture is dismal. According to ORG-Marg figures for January-April 2001, Philips' market share in CTVs has plummeted to 3.9 per cent - down from the 4.2 per cent figure for the corresponding period last year. While Philips' peers of yesteryear (BPL, Videocon and Onida) have managed holding on the double-digit market shares, newcomers such as Samsung (8.3 per cent), LG (6.8 per cent), Sansui (6.5 per cent), Akai (4.5 per cent) and Aiwa (4 per cent) have stolen ahead of Philips. And Sony (3.1 per cent), TCL (3.2 per cent) and Thomson (2.5 per cent) are snapping at its heels.

Though the situation for Philips may not be as grim in the audio systems market, the fact is that the brand is staring down the barrel. In fact, looking at it one way, the Philips account is one big liability for any agency, in the sense that it could severely dent reputation. Inversely, the brand is equally capable of being salvaged, and the agency could take a lot of the credit that would ensue. A challenging account, most certainly.

But the issue is, what went so terribly wrong with the brand in five short years? "I think that internationally, Philips is a great brand that has somehow floundered because of its inability to convert its inventions into brands," opines Santosh Desai, executive vice-president, McCann-Erickson. "In India, till about three-four years ago, it had been doing well, but suddenly it just went off the radar screen."

Desai feels that Philips made the cardinal mistake of not coming across as a vibrant brand at a time when the market demanded that brands come across as fresh and doing new things. "As opposed to, say, Samsung and LG, Philips did not seem to be a serious player. In fact, Philips should consider itself lucky with the 4 per cent market share it has, considering it has not tried anything new over the last two years. Even in the ad market, Philips is not seen as serious." While he agrees that Philips has been launching new products in the market, he feels that alone is not enough. "There must be an overt signal of an awakening; the battle cannot be fought by products alone. As a consumer, I must be able to defend the purchase of a Philips television to my family, and that reassurance was missing."

Naresh Gupta, account planning director, Grey Worldwide, thinks Philips' problem stems from "problem of portfolio". Making his point, Gupta says, "For the average Indian consumer, Philips is a company that makes CTVs and also makes light bulbs. Now where's the connection? The 'Let's make things better' campaign tried to address this problem, but ended up as a wallpaper. The campaign was not able to do what it had set out to do, and got reduced to a line that endorsed specific products."

The 'Let's make things better' campaign is perceived to be one of the biggest problems with Philips' advertising. While the canvas was huge, the message that eventually came through was pretty diffused. In fact, very few people (ad folk) recall specific ads from this campaign. "At a conceptual stage it's a great thing to say… all this feel-good is fine," Desai is dismissive. "But it is without regard to the Indian context."

Gupta too feels that Philips' abstinence from 'engaging advertising' contributed to loss in market shares. "When you talk about market shares, you've got to give it to the Koreans," he says. "The amount of money they spend on advertising is not funny - and it isn't commensurate to sales. Theirs a case of buying market shares. And Philips should have done at least some of that."

The one thing going for Philips - and HTA - is that neither Desai nor Gupta writes off the brand. "Even today, Philips intrinsically enjoys tremendous amount of goodwill and association with consumers," Desai insists. "It is fundamentally a strong brand, what with its European pedigree and a history of inventions in the consumer electronics category. All that is missing is a character that comes across as strong and vibrant. Now that is something that will need immediate correction."

"Philips will not go away from consumers' minds so easily," Gupta feels. "It is an inherently strong brand, and has some fantastic technology inventions to its credit, both in audio and video. I think all Philips has to do is plan their portfolio - and decide whether to go for image or volumes."

"Being a homegrown name, Philips had the opportunity to make it to the Big Three category in CTVs, but squandered it," says a creative director who has worked on the account previously. "Then, when the Koreans came into this country, Philips could have used the multinational tag to make an impression. It failed to do that too. Now it's going to be uphill. But if Kelvinator can come back from nowhere and become one of the biggest-selling refrigerator models in India, so can Philips. After all, both brands are so similar in the Indian consumer's ethos. But you need the same kind of creativity that made Kelvinator stand out of the clutter."

© 2001 agencyfaqs!