Philips simplifies for new U.S. effort

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Philips has given up trying to be cool. That doesn't mean it's giving up.

The No. 1 European consumer electronics company plans an aggressive, global marketing campaign this fall with an emphasis on the U.S., where it remains a fairly undefined brand.

Simplicity is the over-arching theme of the new effort, shot and produced by Omnicom Group's DDB Worldwide. Philips, based in Amsterdam, spent the past three years under new CEO Gerard Kleisterlee simplifying its systems, processes, and products. Now Chief Marketing Officer Andrea Ragnetti wants to get the word out to a worldwide audience.

"We believe the definition of cool is changing," the Italian-born Mr. Ragnetti said. "We believe it's a better idea to invest in something that is a real competitive advantage-simplicity."

Besides, cool hasn't really worked for Philips, which also owns brands including Norelco, Sonicare, and Magnavox. A 2003 Forrester Research report showed that while 86% of Europeans surveyed recognized the Philips brand, its adopters tended to be "older females with lower technology usage."

"It sounds like they're trying to get everybody on the same page about who they are," said analyst Jon Peddie of Jon Peddie Research. "Whether that translates to cross marketing and cross sales is another thing."

Philips, with relatively flat sales growth over the past decade, wants to evolve into a marketing driven company, said Mr. Ragnetti, to grow from its current $35 billion in worldwide sales to $50 billion over the next five years.

Philips reorganized its marketing operation around several ideas: "a healthy obsession" with consumers and customers' insights; changing and refining processes; and building the brand. "With a strong brand, you can take it other places, like Dell now moving into consumer electronics," Mr. Ragnetti said. "Our brand, in the last 10 years, has been undersupported."

product focus

While the global campaign is still being completed, Mr. Ragnatti said creative executions will focus on specific products across Philips divisions, which includes consumer electronics, lighting, medical systems, semiconductors, and home appliances. In the U.S., Philips has defined its target audience as 35-to-55-year-old men and women with higher than average incomes and education levels.

That group has a lot of overlap with Philips' business to business products such as medical imaging equipment, he said, adding that decision makers who purchase business systems are also consumers who need shavers, TVs and toothbrushes.

"They're a mix of a couple of brands people are familiar with but don't necessarily identify with Philips," said Ross Rubin, director-industry analysts at NPD Techworld. "There may be a beneficial gain for them by projecting a unified message."

Based on past attempts, some are skeptical that Philips (which depending on the category, ranks in the lower half of the top ten U.S. consumer electronics companies) can meet its goals. "This is what, the 10th or 20th time they've geared up in the U.S.? Their chance of being successful this time is probably as good as it was all those other times," said one analyst who declined to be named.

Still, Philips is confident that it has a chance to lay claim to unstaked territory in the electronics and technology space. It's "sophisticated technology made easy for me and you," Mr. Ragnetti said.

Fast Facts

Philips produces annually:

2.4 billion incandescent lamps

30 million picture tubes

Philips Lighting is in:

30% of offices

65% of hospitals

55% of major soccer stadiums

30% of hospitals

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