Philips is growing fast in India
Phillips is pushing forward its presence in India
Philips, the consumer electronics major has introduced various products in India and the world. Recently it introduced the home theatre system Philips HTS9520. It has 360 sound speakers with drivers on the side and the front and also DTS-HD and Dolby TrueHD for a great surround sound. The device has a complete HD 3D Blue-ray player. It comes with Philips Net TV with DLNA Network Line, Wi-Fi and a USB 2.0 port. It has an excellent aluminium finish that gives it a sophisticated and sleek look. It is priced at around Rs.71000 in the Indian market.
Facility for web browsing
Philips BDP7600 has touch sensitive buttons and a very good luck. The connectivity includes two USBs and 7.1 channel analogue audio. It has Wi-Fi facilities, remote control from iOS or Android device, web browsing and 3D playback. But browsing the web with a remote is not working properly.. The player is priced at Rs.15000.
Monitor that can detect human beings
Philips has released its 27-inch LED monitor with model number 273P3. It has been provided a thoughtful sensor that reduces the brightness of the monitor automatically if you are not sitting in front of it, thereby saving 80% of the power. The sensor uses infrared rays for detection of human beings. The panel has a resolution of 1920 x 1080 pixels. It has a response time of 1 ms, brightness of 300 candelas per square metre. Its contrast ratio is high at 20000000. There is a D-Sub, DVI and HDMI connectivity on the back side. The monitor has three USB 2.0 extensions, 2 x 2W speakers and a headphone jack.
Re-entry into mobile phone sector
Philips launched six new mobile phones in India under the brand name Xenium. These phones have a standby battery life of 30 days and a talk time battery life of 8 hours. The price range is Rs.1776 to Rs.8280. Of course, these phones are basic phones and not smartphones.
GoGear Connect 3
Philips introduced an Android 2.3.3-powered portable media player GoGear Connect 3. This will challenge Apple iPad Touch and Samsung Galaxy. The device has a 8 GB or 16 GB storage capacity, 3.2 inch capacitive touchscreen with 480 x 320 pixel resolution, microphone, onboard speaker, Bluetooth and Wi-Fi. The battery life is 4 hours for video and 25 hours for audio. The launching of this product will be in December with an expected price tag of $315 for the 16 GB version.
The global cost cutting measures taken by the parent company will certainly affect its Indian operations also. It is not the same case like Panasonic. In case of Panasonic, the company is going to cut 35000 jobs globally, but it is recruiting 3000-4000 people every year for its Indian operations for the next two years. But in case of Philips, the cost cutting will be mainly in the areas of finance, IT, human resource, real estate, supply chain and manufacturing. The Dutch electronics giant Royal Philips Electronics has decided to cut 4500 jobs globally as part of its 800 million Euros cost cutting plan. The company is working out at the number of jobs that will be lost in India. The company has around 9000 employees in India. Philips has a lighting research facility at Noida in New Delhi and a research facility for IT in Bangalore, India’s technological capital city. Philips has acquired several companies in India in course of its operations. Analysts speculate that the number of job cuts may be from 200 to 500 in India.
Market leader in DVD players
Philips will get 60% of its proposed savings of 800 million Euros from job cuts and the remaining 40% from restructuring its operations. Out of the 4500 jobs that are gong to be axed, 1400 will be in its home turf Netherlands. Philips ranks India as one of the top slots in its strategy. Philips has invested money in the last couple of years in India. It has acquired companies in healthcare and consumer lifestyle business. Philips posted a growth of 10% in 2010 with a revenue of Rs.3725 crore. Because of this huge growth potential perceived by the company, the job cuts may be minimal. Philips has been present for the last eight decades in India. It was present even when India was a British colony. The company is a leading player in the healthcare equipment and lighting sector. It is number two in home theatres and kitchen appliances. It is the market leader in DVD players. In the personal care market, the company is establishing its stranglehold. Realising the importance of the Indian market, Philips has decided to make India its global hub for producing value added products.
In order to counter the low cost Chinese DVD players in the Indian market, Philips introduced sub-Rs.2000 DVD player codenamed as Shakti. Philips also introduced financing scheme for the first time in India to enable consumers to purchase costly products of the company like home theatres. Philips has also revamped its distribution network and is aggressively pushing its products in the Indian market. Philips is also coming out with products that are suited to Indian tastes and conditions. It is innovative in marketing suitable products for India tastes. Out of the 2010 revenues of Rs.3725 crore in India, Philips derived 18% from consumer lifestyle unit. Philips manufactures all its DVDs in India itself. Philips is the market leader in DVD players with a share of 24%. Philips manufactures half of the domestic appliances it sells in India in India itself. The company has made arrangements with some of the makers to manufacture these products in India. That way, it is saving on the import duty and can price its products reasonably in India.
Shanghai, new headquarters for domestic appliances division
Philips is finding it increasingly profitable to sell its consumer lifestyle products in emerging markets like China and India. This is because the American and European economies have been affected by the financial crisis and the demand in these countries is not growing. 40% of the company’s consumer lifestyle products are sold in the emerging markets now. In recognition of this fact, Philips has relocated its headquarters of its domestic appliances business to Shanghai in China. Philips recently acquired the Chennai-based kitchen appliances manufacturer Preethi in order to consolidate its business.
Very popular brand name in India
Philips exited Indian mobile phone market eight years back. Now it is re-entering with an investment of $1 million for marketing its products. Shenzen Sang Fei (SSF) sells Philips brand mobile phones. SSF is a joint venture company between Philips and China Electronics Corporation. But Philips walked out of the joint venture in 2007 and its stake was acquired by China Electronics Corporation. Globally, Philips’ sales have fallen from 26.3 billion Euros in 2008 to 23.1 billion Euros in 2009. In the same period, Philips India’s sales rose from Rs.3133 crore to Rs.3284 crore. Philips wants to grow at a CAGR of 20% till 2015. The Philips brand name is very popular and even people in rural areas are aware of it. Therefore the company felt no need to cultivate its brand image. But now it has appointed brand ambassadors to further build its brand strength. It appointed the Bollywood star John Abraham for its personal care products and musical trio Shankar Ehsaan Loy for its lifestyle products. But the company could well have opted for cricket players instead of these two.
Acquisition of 11 companies
Philips acquired 11 companies in India for 239 million Euros. Philips has drawn big plans in the mother and child care space. Philips already is selling feeding bottles, microwave steam sterilizers, teethers, small mixers and pacifiers. Mother and childcare market in India is estimated at around Rs.2800 crore. Philips’s recent acquisition of the mother and childcare company Avent based in Britain at an investment cost of 406 million pound will spur the company’s progress in this segment. Philips has a market share of 34% in this segment, which it wants to increase to 40% shortly. Philips is posting a triple digit growth in the personal care segment.
Recalls 95000 hair dryers for defect
Philips has recalled 95000 hair dryer units in India due to a potential danger to the customers caused by overheating when left plugged in an electrical connection. The recalled models are HP4931 and HP4940. They were sold in India between September 2008 and February 2011. No accidents have been reported in these models so far. But as a precautionary measure, the company recalled these models. This was the first ever recall by the company in India.
Buy-back of shares
Philips will embark on a $2.8 billion buy-back of shares. This was announced by the company’s CEO Frans Van Houten. Philips also makes Sonicare toothbrushes. The company reported its biggest loss in the last decade. The company also has predicted no improvement in its performance in the near future. Van Houten became the CEO in April. Philips is being challenged by the low cost manufacturers in Asia. The company is planning to delegate production of TVs to a joint venture company in which the Hong Kong-based TPV Technology Ltd will hold 70% stake.
Growing in personal care segment
In the personal care segment, Philips is strengthening its position in the women hair care space and male grooming sector. The company has introduced wide range of shaving and personal care products for men. Men grooming market in India is estimated at Rs.1500 crore. It is growing at around 17% every year. The company is being challenged by Remington and Panasonic. 55% of India’s population fall under the age of 25 and therefore there is a huge potential to be tapped in this segment. The company is selling 27 products under the personal care sector. This sector grew by 50% in 2010. The price range for the company’s products is Rs.725 to Rs.5495. Philips is utilising social network sites to make the customers aware of its products. It is also conducting awareness campaign in college campuses. The retailing policy of the company has also undergone a huge change. Earlier the company was selling its personal care products through small stores and select electronic outlets. It is now selling these products through gadget stores and cosmetic channels besides modern retail stores like Shoppers Stop, Croma and Reliance. Its products are available in all major cities in India. Philips has around 4000 direct points of sales now and plans to double this to 8000 in two to three years’ time.
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