Philips' game plan to compete in new economy

By K. T. Jagannathan

PENANG, MALAYSIA, MAY 6. In a bid to entice into its fold the growing number of young people in the Asia-Pacific region, the consumer electronics major Philips has put in place a new game plan.

Aimed at selling Philips to the `digital youth' in this part of the globe, the new approach is the culmination of extensive consumer studies undertaken by the company with `outside help'. Philips as a brand is now viewed as a `middle aged, predictable and boring' one.

The objective of the new endeavour, it appears, is to erase this perception and make it a vibrant brand with a focussed approach even while trying to ensure that it does not `hurt the non-young ones', let alone exclude them.

Outlining the new approach, the company's Vice-President (Marketing), Asia-Pacific, Middle East and Africa, Mr. Aaron Boey, likened the Dutch multinational to ``an old friend who has been around for a long time''. ``We need to change to compete in the new economy,'' he told this correspondent. The Philips brand, Mr. Boey felt, was doing a tough job at the moment. From a cheap radio set to a $12,000 television set, the company was churning out a host of audio and video products.

Making the Philips brand to sell the entire lot was a daunting task, he admitted. Hence the need for a focussed approach, he pointed out. Both from the point of view of reaching out to the target customer and from the angle of spending ad budgets productively, the focussed marketing endeavour does make a lot of business sense.

Why the youth? Mr. Boey was ready with numbers. According to the U.S. Bureau of Census, out of the total 2.87 billion people in Asia nearly 1.86 billion fall in the below 35-year age category. The urban youth constituency in Asia is estimated at around 600 million.

The sheer youth power alone, Mr. Boey insisted, was not the reason for Philips's shift in focus. Studies done in China, Indonesia, Thailand and Malaysia have found the purchase intention for consumer electronics goods to be higher among the youth in the 15-34 age category. The higher purchase intention is found across product categories such as CD player, mobile phone, personal computer, DVD player and mini systems.

Mr. Boey was convinced that the youth today had higher disposable incomes. All these have combined to contribute to a change in the way Philips had thus far looked at this region, he claimed.

With youths turning net savvy, Mr. Boey saw them seeking options, innovations and customisation. A digital youth today ``wants to change his mind and try before buying. Clearly, he needs to be connected,'' the Vice-President felt.

The emphasis, therefore, was to ``stay current and stay relevant''. Surely, he would like to know what Asian youths are like. In his view, an Asian youth lived in his or her own world and always cared to find out how a product fitted into his or her world. They would like to fit in with peers, be modern and different like their friends. The marketing approach of Philips would revolve around understanding the youths, their tone and manner, the trends that drive them, the products and events that they took a fancy for and the events that attracted them. In a nutshell, Mr. Boey would like to position the Philips brand in such a way that a youth would feel - that ``my life can get better with Philips''.

The multinational would focus on opinion leaders and faces of the millennium to reach the Asian youths. ``Opinion leaders are some one like a member of your family whom you look for decision- making. They are the most reliable source of information,'' Mr. Boey pointed out. ``We have entered into joint marketing efforts with five media owners,'' he said.

According to him, Philips would zero in on four millennium faces - music face, sports face, entertainment face and digital face. ``We will have a star strategy for a star product,'' he claimed. With technology pulling down geographical barriers, the Asian youth was feeling as though he was in touch with the rest of the world, he said. ``The use of mass media as a marketing tool will come down and technology will help us to target better,'' he pointed out. Did he not think that Philips' focus on youth is coming a bit too late? ``Indeed we were late. It is better today than tomorrow,'' he quipped. One thing he was sure, though. Philips will not be competing just with its peers in the field but with others who sell themselves to the youth of Asia.

Competing for a share of the youth wallet, Mr. Boey admitted, would be a daunting task.

Though the youth in the Asia Pacific region had come for attention from Philips, Mr. Boey identified India, China, the Philippines, Thailand and Australia as the focus markets for his company as he felt these nations had enormous growth potential. At the moment, these contributed to nearly 75 per cent of the company's sales in this region, he claimed. About a third of the products made it was considered youth products. This, he said, would surely go up to even 50 per cent over the next few years what with the new focus on youth.

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