Philips: We're Not Just Light Bulbs

Marketer Uses Umbrella Tack to Show Consumers Breadth of Its Product Line

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YORK, Pa. ( -- They make light bulbs, don't they?

Millions of Americans became more aware of Philips thanks to its media campaign that brought the table of contents closer to the front of magazines, stripped annoying subscription cards from Hearst titles and pared 12 minutes of ad time from "60 Minutes." Yet the $100 million spent in the U.S. by the Dutch marketer on its "Sense and Simplicity" campaign didn't familiarize consumers as much with its products.
Philips news ads show a range of products.
Philips news ads show a range of products.

"Philips is on the right track with the simplify idea," said ISuppli analyst Shyam Magrani. But when it comes to Philips, bread-and-butter categories like flat-panel TVs, "the fact is they're still not the first brand you think of in the U.S. -- they're not even the second brand. That's Sony and Samsung."

Recognizing the mother brand
So though the $30 billion Philips is well-known in Europe, it's trying another experimental marketing approach here a decade after being introduced in the U.S. The marketer is packaging most of its sub-brands, including Norelco, Sonicare, Avent and Magnavox, into a variety of test campaigns that tie back to the mother brand. A guessing-game print ad, for instance, asks readers to find the 18 Philips products in the metro-sleek loft living room and kitchen pictured. An answer key and product list will run on the next page.

The test effort will include TV, print and online elements along with a variety of media strategies, and is set to begin July 9 in three markets: Minneapolis for 18 weeks, Tampa for two separate "media bursts" in July and September, and in Dallas for 14 weeks with online only.

Omnicom Group's DDB, New York, is the creative agency. Philips recently completed a media review by handing the estimated $600 million global business -- including more than $100 million in the U.S. -- back to incumbent Carat. It called the review in part because the simplicity effort did not translate well outside of the U.S., but came back to Carat because Philips liked its renewed commitment to global media "with high-quality outreach geographically."

Small steps
In the U.S., "Philips is in a unique situation," said Eric Plaskonos, director-brand communications at Philips North America. "We're kind of reintroducing the Philips brand in a micro way to see if it would have an effect." The plan is to study and dissect the results from the test markets, both creative and media, to determine best and most effective elements to build into a broader U.S. push.

The campaign builds on the 2004 "Sense and Simplicity" push that raised U.S. awareness from "nowhere to double digits" in the electronics space, Mr. Plaskonos said. According to Interbrand, Philips climbed from No. 65 in its 2004 Top 100 ranking to No. 48 in 2006, and gained more than $1 billion in brand value in the last year.

The corporate push, however, is somewhat counterintuitive as it comes at a time when many marketers have abandoned umbrella advertising under the theory that consumers aren't interested in families of brands. That is, will consumers really care that Philips makes shavers, toothbrushes, baby products, defibrillators and hospital imaging equipment?

Halo effect
Mr. Plaskonos thinks they will. Once consumers recognize the parent Philips brand and its involvement in the wide variety of health-care, medical, and technology fields, their purchase intent, product interest and quality perceptions increase across the board by double digits, he said.

"As they see all these touch points and connect them to Philips, [consumers begin to think that] 'if they make a great piece of $2.5 million medical equipment, than I can pretty much trust in them for a $39 shaver,' " Mr. Plaskonos said.

"If you're just interested in moving product, [corporate branding] is not important," said Rob Enderle, analyst with the Enderle Group. "But if it's a corporate objective to raise the perceived value of the company, it's certainly a worthwhile effort. ... You could argue that GE and other traditional parent brands get a certain amount of cachet from the brands that exist below them."

Then there's the halo effect of consumers connecting the concept of simplicity across all Philips products. Analyst Mr. Magrani cited a personal example of buying two stand-alone CD writers, one from Philips that he said was easy to use with a "beautiful interface; built like it was from Apple." The other was a Sony CD writer that had too many buttons and was "very difficult to use," he said.

Ted Morris, senior VP of global alliances at BrandIntel, said while umbrella branding may not work for every one, it makes sense for companies that are already known for a collection of brands. In the case of Philips, which has a legacy of a branded portfolio of products as well as a reputation of quality, plus cutting-edge and easy-to-use products, it's a good strategy. "What Philips stands for can only benefit the Sonicare and Norelco brands ... there's a clear synergy there," he said. "Smart marketers will use the leverage points of their brands. ... If they don't, they're leaving value on the table."
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