Marketing and Operations Management in Philips Electronics - Assignment Example

?Marketing and Operations Management in Philips Electronics Table of Contents Overview of the Company 3 Marketing Part 4 External Environment 4 Marketing Strategy of Philips 6 Market-Oriented Nature of Philips 6 Marketing Tools Utilised By Company 8 Four P’s of Philips Electronics 9 SWOT Analysis 11 Recommendations/Solutions to the Company 13 Operations Management Part 14 Critical Evaluation of the Operations Management Strategy of Phillips 15 Operations Management Performance Objectives 15 Order Qualifiers and Order Winners of Philips 17 Contribution Made By Operations Management 18 Recommendations/Solutions to the Company 19 References 20 Overview of the Company Royal Philips Electronics is a Dutch multinational company with its main branch in Amsterdam. The three main divisions of the company are Philips Consumer Lifestyle, Philips Healthcare and Philips Lighting. According to the statistics obtained in the 2012, it can be mentioned that Philips is one of the biggest producers of electronic products in the globe (Philips, 2012). The paper is divided into two parts. They are marketing activities of Philips and operations management of Philips. The marketing part of the paper attempts to identify the external environment of Philips and to evaluate the marketing strategy followed by the company. The study further endeavours to analyse various marketing tools used for the marketing of the products of Philips. The paper thus offers suggestions to the company regarding ways through which it can improve marketing activities. Furthermore, the operations management part of the study tries to critically evaluate the operations management strategy of Philips. It attempts to analyse the operations management performance objectives. It further highlights order qualifiers as well as order winners of Philips. It will also try to offer valuable suggestion in order to improve the operations management aspects of the company. Marketing Part External Environment The external environment can be recognised as the outside context within which an organisation tends to survive and operate. The external environment of Phillips can be easily observed by shaping the opportunities and the threats posed by the company, Porter’s five forces model and via competitor analysis. The main political factors impacting the activity of the organisation are employment laws, policy stability, tax policy and environmental regulations. It can be stated that in most of the countries of European Union there has been major alterations in the employment law. It is noted that most of the countries are quite concerned with the environment and are making an attempt to reduce pollution. In such cases, Philips, being a large producer of electronic products, might need to focus largely upon providing environmentally friendly consumer goods to maintain its sustainability (Export Gov, 2012). The United Kingdom is the seventh major economy in the world and the third biggest economy in the European Union. With quite a few trade obstacles, the United Kingdom is the entry market into the European Union for nearly 41000 US exporters. This proves to be quite beneficial for Philips (Export Gov, 2012). The social and the cultural impact on business alter from one country to the other country and from one region to the other region. Philips has its operations in numerous countries and it is because of this reason that the company needs to operate in vast and diverse socio-cultural arenas with workforce belonging to varied cultures. It is quite significant for Philips to adjust themselves with these alterations in terms of customer expectations from region to region and be capable of catering to their needs and requirements. Most of the people belonging to the developed nations pay due attention towards the culture of a company. Philips can be considered as an ethical company who pays due consideration towards the needs and the wants of the customers (Export Gov, 2012). Philips is quite dependent upon the constantly altering technological up-gradations that are made by its research and development department. When new innovations take place, the company is capable of enhancing its operations in order to stay ahead of its competitors which are growing rapidly in the global markets in which Philips operate. The company needs to constantly focus upon bringing in latest technologies so that consumers can be lured to purchase their products (Export Gov, 2012). Philips tries to identify newer ways through which latest products can be developed and innovative products can be offered. The company has introduced a program that ensures high level of quality in products and services. If Philips focuses on making its stores modern and convenient then it can encourage its customers to remain in the stores for longer period of time (Export Gov, 2012). The biggest threats for Philips are that its competitors such as Samsung and LG have started to produce quality goods at relatively cheaper price. The price of certain products of Philips is quite high. The fast changing environment also poses a serious threat upon Philips where new kinds of products are being introduced within a very short span of time (Scribd, 2012). Marketing Strategy of Philips It can be stated that Phillips does not possess adequate marketing strategy for small screen televisions as well as monitors. However, the company has a different marketing strategy for large screens such as flatirons as well as 61 inches television. The strategy followed is that the big screen televisions of the company are marketed individually. This implies that the company goes personally to the customers who are ready to pay for their products. It has segregated the market into small as well as large screens. Market price is considered to be quite sensitive and important factor. The products of Philips have their own positive points and the company has divided its customers as basic, classic, plunger and innovative. It is because of the company’s innovation strategy since years now, it has been capable of enhancing the quality of life of its customers and thus created a strong and trusted brand that can be accessed all over the world. The company is focusing upon making its marketing investments effective enough so that the return on investment and brand strength can be enhanced (Adobe Digital Marketing Suite, 2012). Phillips’ advertisement strategy is created in order to offer customers with an idiosyncratic image of sharper and more focused enterprise. The company invests heavily in advertisement to make the people aware regarding its products in various countries of the globe (Adobe Digital Marketing Suite, 2012). Market-Oriented Nature of Philips The changes made by Philips can be considered to be market-oriented by a considerable extent. The company has been successful at responding to the needs and the wants of the customers. The decisions taken by Philips have been based upon information regarding the customers’ requirements. The main reason behind Philips taking market-oriented approach is that the customers in the present times are becoming quite knowledgeable and thus need more varieties as well as superior quality products. To compete effectively with the competitors, it becomes imperative for Philips to be more sensitive to the needs of the customers. If the customers’ needs and wants are ignored by the company then in such circumstances, the company is likely to lose its sales to its competitors. For instance, the company’s new brand positioning strategy is related to promising the customers a greater relaxing and uncomplicated association with the technology. It has been noted that customers want simplicity in their lives and thus Philips is assisting them in making their lives simple by designing products that suit their needs and wants (Philips, 2011). Marketing Tools Utilised By Company It can be analysed that Philips’ electronics products such as lights make use of Business-to-Business (B2B) marketing campaigns on a regular basis in order to conduct the business in an efficient way in the international markets. Recently, the company undertook a campaign named ‘LED Your Light Shine’ (Philips, 2011). The company’s global campaigns’ most vital challenge is to ensure that the materials of the company can be customised and thus localised so that the local needs can be easily met. The company requires marketing tools that can be lucrative for any receiver irrespective of the country and spotOnvision assists Philips Lighting to create universal localised video campaigns (SpotOnVision, 2012). Philips makes use of the social media in order to involve the customers. The company’s digital strategies have created a major role in building distinct and immersive customer experiences that reach across numerous countries with the web as well as social media as main focal points. The social networking sites such as Facebook along with the company website can assist in expanding the reach of the company’s product. It is through social media sites the company is capable of gaining adequate feedback from the customers (Philips Publication, 2006). In order to endorse its broader digital marketing strategies, Philips required a proven web content management platform. The choice of a particular platform was quite crucial since the company relies on its websites to bring the updated product information and to involve customers, cultivate online level of affluence communities and bring its brand to life via consumer’s individual experience (CBS Interactive, 2011). The key to the success of Philips’ digital marketing attempt is Adobe CQ Social Communities assisting the managers of the company to design immersive social and lifestyle experiences which are dispersed through the main websites and regional sites. From the business perspective, the company is trying to increase the total number of visitors to its websites and thus to enhance the rate of people in the social media (Philips, 2012). The company is evaluating the involvement of the people on the upgraded website by making use of Adobe SiteCatalyst and is gaining huge returns. Social media can be considered as one of the most effective tools which is utilised by the company in order to keep the existing customers involved and thus reach the new customers. It is Adobe CQ Social Communities that make the way by stimulating connections by means of Facebook, Twitter along with numerous other channels (Newscenter, 2003). Four P’s of Philips Electronics Product The various products of Philips Lighting include professional lamps, ballasts, luminaires, Philips color kinetics, Philips lumileds and LED modules among others. It is because of the diversified product categories, the company undertakes numerous product strategies. It practices its strategies according to the country in which it is operating. The company makes use of the straight extension which implies that it introduces a standardised product with similar promotion strategy all over the globe. One of the biggest strengths for the company is it brand equity (Galle & et. al., 2010). Place It has further been noted that Philips makes use of multi-domestic strategy. It tends to customise its products in order to meet the local needs. It has sales as well as manufacturing subsidiaries all over the globe and makes use of the local distributors (Galle & et. al., 2010). Price It is quite significant for the company to create a pricing strategy and thus decide their prices. The company makes use of pricing across products. It sets distinct price for numerous items in the same line so that it can clearly demonstrate a standard version as well as a very good version. Taking into consideration the product-service bundle pricing, the company offers its customers with the scope to purchase extra service contract so that it can protect the consumer’s purchase behaviour. It is because of the fact that the company has innumerable competitors it is forced to make use of market pricing strategies (Galle & et. al., 2010). Promotion Phillips makes use of the magazines and sponsorships in order to promote its products. It also arranges numerous events such as Philips Consumer Lifestyle Event so that it can build good rapport with the customers and thus make the public aware of its products. It needs to be mentioned that the company also makes use of the sales promotion methods such as contests and free trials in order to promote the products (Galle & et. al., 2010). SWOT Analysis Strengths Philips is considered to be a global brand which has nearly 100 years of expertise in lighting. The brand has attained a considerable level of recognition among the consumers all over the world, with high level of consumer awareness. It is one of the biggest producers of small electrical appliances. It is a knowledgeable company and has manufactured numerous products. It is experienced with pricing, promotion, testing, production and service aspects of marketing. With reference to the Wake-Up light, Philips Electronics do not have any direct competitors, because none of the company has products with similar characteristics in the market. Philips as well possesses an entrenched distribution channels (Data Monitor, 2012). Weaknesses It has been recognised that the company’s asset utilisation efficiency as well as capital management capability have been quite poor in comparison to its competitors. Philips along with its subsidiaries had been involved in numerous legal proceedings. During the year 2007, it was noted that more than 50 class-action antitrust complaints had been filed in courts of the United States. It was in the year 2009 that the company obtained a Statement of Objections from the European Commission. The statement revealed the fact that its intention is to hold Philips responsible for anti-trust breach in the CRT industry (Data Monitor, 2012). Opportunities The company has been focusing upon growth by means of acquisition which has been one of the main strategies of the company in all its segments. It is by acquisitions that the company is capable of improving the condition in numerous segments essentially the electronics segment and thus enhance its profitability. There has been rise in the demand for energy efficient related lighting products since past few years because of rise in the price of fuel as well as energy. The demand has further been escalated because of enhanced awareness as well as involvement in ‘green home certification programs’ and by means of government support. Energy efficient lights are capable of saving nearly 40% of energy. It has been noted that Green products demonstrate a vital share of Philips’ revenues in all markets. Philips is investing heavily in Green Innovations and by the end of the year 2012 the company has anticipated to gain nearly 30% of its revenues from Green Products. The other point that can be considered is the development of the electrical chains which has been owned by the foreigners and a strong collaboration between the retailers (Data Monitor, 2012). Threats One of the major threats that electronics manufacturing industry is facing is related to black market, smuggled goods and that of parallel goods. According to the experts, in the coming days the phenomenon related to counterfeiting might get worse. It is expected that there will be rise in the number of counterfeit goods. Low quality counterfeit products tend to undermine the confidence of the consumers in branded products. Exclusivity generally differentiates the offerings of Philips from its competitors. The company also faces threats from environmental as well as governmental regulations (Data Monitor, 2012). Recommendations/Solutions to the Company In order to strive against the rising competition that Phillips faces from LG as well as Samsung, it is quite imperative for the company to prepare its strategies accordingly. It can have a close watch at the strategies and moves made by its competitors and follow it if it finds it feasible to do so. The price of the product needs to be lowered so that the customers do not shift to the competitors. However, it needs to be remembered that it must not degrade the quality of its products at any cost. By focusing upon effective advertising the company will be capable of attracting a large amount of customers. It needs to focus upon increment of the market share so that it can beat the rising competition. It would be prudent for the company to go into the new market segments so that it can increase the sales of its products. Furthermore, it must make intensive use of the social media sites as well in order to involve customers with the products of the company and obtain constant feedbacks from them so that they are capable of making suitable upgrades. Operations Management Part Philips has altered its activities from purchasing to supply management. In the present times, the company looks beyond conventional purchasing limitations to the complete value chain. The company acts as ‘One Philips’ making use of standardised programs as well as tools that are generally supported with the objectives of the company. High innovation in the company implies working in proximity with the suppliers. Philips involves suppliers in the process of product development so that they can assist the company to innovate quickly and thus meet the expectations of the customers. In order to minimise the lifetime costs of the products, the company continuously reviews the supply base and thus generate strong association with strategic suppliers. It influences the supply management by means of consolidated commodity buying at the corporate level and thus its main objective is to gain excellence in its operations by means of best-in-class methods. The focus of the company has been firmly set at ensuring world-class management through detailed arrangement of the entire supply chain and choice of the best suppliers in terms of total cost of ownership comprising quality, reliability as well as timely delivery. It is because of this reason it is capable of forming a solid supply base and thus exaggerating its relationship. It is worthy of stating that Philips works with quite a few and carefully selected supply base of two kinds of suppliers such as Non-Product Related as well as Bill of Material suppliers. One of the vital parts of the company’s supply management plan is outsourcing. It is because of the outsourcing activities that the company is capable of minimising both operational as well as capital costs and thus enhancing the suppleness and diminishing time to market its products. It permits the company to control its core competencies and thus facilities to make use of the suppliers’ technologies and skills (Philips, 2012). Philips’ Semiconductors faced problems related to operation and effectiveness was weakened by Bullwhip effect (Orchampions, 2012). Critical Evaluation of the Operations Management Strategy of Phillips Operations Management Performance Objectives It has been observed that in the first quarter of the year 2012 that the company’s multi-year Accelerate program has gained grip and it is expected that in the near future there is probability that it is surely going to be realised. It is because of the granular performance management system, the performance of the individuals is being escalated. Furthermore, there has been rise in the market share of the company in numerous business market combinations. The company has completed the reinforcement of the leadership team in all of its markets. Programs to enhance the cost, speediness as well as efficacy of the lateral customer value chain are making significant developments. The company plans to reduce its overhead costs and thus increase the profits. The company’s incremental saving has been EUR 37 million in the first quarter of the year 2012. It is expected that its cumulative saving at the end of the year 2012 will be nearly EUR 400 million. Furthermore, it has been observed that in order to gain success and to take the company towards a performance culture, nearly 200 leaders of the company have engaged themselves in immersive behavior alteration program (Poole College of Management, 2012). There are numerous opportunities for the company to minimise unknown, unnecessary as well as inefficient operational difficulties. The dimensions include process variability and matching of the requirements of the customers with the staffing levels among others. Philips maintains close relationship with the operations management leaders in order to define the problems and thus deliver numerous improvement strategies that endorse in continuing its focus upon delivering quality products, while operating as efficiently as possible (Philips, 2012). The company’s electronic healthcare expertise comprises forecasting as well as budgeting. Forecasting and budgeting consists of creation of the processes for numerous departments to more reliably predict so that the operations planning, budget accuracy as well as staff utilisation can be maintained. It also ensures to offer important visibility to facility capacity. The company’s operations manager focuses upon performing closely with numerous departments so that the strategy alignment, performance measures. He further focuses upon processes so that the visibility and predictability of operations can be improved. The product and operations manager of the company also focuses upon coordination of the staff members, facilities as well as equipments so that the productivity of the company can be enhanced and it can realise care delivery mission of the organisation. It can be stated that the operations management program has a significant impact upon the performance of the organisation. Therefore, it is quite crucial to comprehend the driver of operational performance and thus address the main cause of process as well as cost alterations with the organisation (Orchampions, 2012). It can be viewed that Philips has implemented a balanced scorecard method so that it can align the views and mission of the company. The aim of the balanced scorecard has also been to focus employees on how well they are capable of meeting the objectives of the company. It also aims at educating the employees regarding issues that hamper the effectiveness of the overall organisation. The company makes use of the balanced scorecard as a guide with the proper faith that it is quite vital for the company to identify what leads to present performance which is the basis to establish the future events. Balanced scorecard is utilised by the company as a foundation for employees to comprehend management’s plans as well as vision for the future. The company has created four main critical success factors to align determinants evaluating the markets, laboratories and operations with the business success. The four main critical success factors are competence, processes, customers as well as financial indicators. It can be mentioned that the company makes use of the critical success factors in order to link short-term actions with the long-term policies so that it becomes possible for the employees to connect their actions with the stated goals of the company. Phillips has been capable of improving its operational efficiency because of the successful implementation of the balanced scorecard method. The employees of Philips make use of the balanced scorecard method so that they are capable of recovering their performance. Management utilises the scorecard method so that it can express policies and thus support employees with strategy. The scorecard is also utilised at numerous levels of the organisation (Philips, 2012). Order Qualifiers and Order Winners of Philips The criteria needed in the marketplace can be categorised into two parts such as order qualifiers and order winners. An order qualifier can be defined as the feature of the product to even be considered by the customers. An order winner can be defined as features that will be capable of winning the bid or customer purchases. Therefore, it is quite significant for the Philips to offer the qualifiers in order to get into or remain in the market. In order to offer order qualifier, it is crucial for Philips to be as good as its competitors. If Philips is not capable of doing so then it might lead to loss of sales. In order to offer order winners, Philips needs to be far better than their competitors. It is quite imperative to take into account that order qualifiers are as important as order winners. Philips needs to implement considerable care when they are making decisions related to order winners as well as order qualifiers. Order winners as well as order qualifiers are market-explicit as well as time-explicit. They operate in dissimilar groupings in numerous ways in a distinct marketplace with discrete customers. During the late 1990s, the frequent order winners were delivery speed as well as product customisation. While product quality and price which were considered to be order winners tended to be order qualifiers. Therefore, it becomes significant for Philips to create distinct strategies in order to endorse distinct needs of marketing and the strategies are likely to alter with the pace of time (McGraw Hill, 2012). When the views of Philips of order winners as well as qualifiers matches that with the views of the customers, it can be conceived that there is a fit between the two perspectives. When such fit persists then Philips can expect a positive sales performance. A good sales performance can be expected when there is a sound fit between the perceptions of the firm regarding the strength of a product as well as perception of product (McGraw Hill, 2012). Contribution Made By Operations Management The operations management has been of considerable significance for Philips’ marketing success. It has assisted the company to increase the productivity and thus reduce errors. Philips has been capable of becoming quite competitive by minimising the unnecessary costs associated when the resources are dissipated. It is because of the successful application of the operations management; the company is capable of carrying out its tasks in an effective way and thus increase the value of the shareholders (Scribd, n.d.). The company might require facing numerous problems because of the operations management functions. One such issue is related to the level of customisation of products and services. Offering customised goods is labour intensive by nature and its manufacturing is quite time consuming. It also needs highly skilled people in order to offer customised products to the customers. There is need for greater flexible equipments which will add to the cost of the product for Philips. Furthermore, the operations managers like other managers are needed to make ethical decisions. The managers possessing the best intentions might as well make mistakes and thus it might give rise to negative consequences (Scribd, n.d.). Recommendations/Solutions to the Company Phillips has been possessing excellent operations management strategy. However, the company was facing issues in its operations. Therefore, in order to improve the operation of the company it can install a new framework for the purpose of cooperative planning. Software can also be utilised related to operations management so that it can endorse its efforts. Through such initiatives, the company will be capable of enhancing the customer service, sales as well as profitability. It will also facilitate in reducing the inventories as well as obsolescence. References Adobe Digital Marketing Suite, 2012. Philips Express Yourself. Challenges. [Online] Available at: http://www.adobe.com/content/dam/Adobe/en/customer-success/pdfs/philips-case-study.pdf [Accessed May 31, 2012]. CBS Interactive, 2011. 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