Degree

Master of Business Administration

Faculty / School

School of Business Studies (SBS)

Advisor

Akhtar Mahmud

Client

Philips

Committee Member 1

Akhtar Mahmud Visiting Faculty Faculty of Business Administration Institute of Business Administration, Karachi

Project Type

MBA Research Project

Abstract / Summary

Preamble

Koninklijke Philips N.V, shortly known as Philips has been trying to become market leader in health technology sector for over a decade. Philips primary purpose is to improve its stakeholder’s health and well-being through meaningful and useful innovations. Philips aims to target around 2.5 billion lives globally by year 2030 along with 400 million lives residing in underserved communities (Philips, 2021).

With this global objective to penetrate into health technology and become top of ladder market leader, Philips launched and added Air Fryers into health household appliances by 2012 in Pakistan. Introduction of Air Fryer in developed western countries proved out to be a success with relatively smooth penetration due to easy acceptance, in-depth penetration, suitable target market and continuously changing and changing dynamics towards a healthier lifestyle in western world. However, Philips struggled with penetration and associations in the market of Pakistan due to certain factors that were still unknown. This research is performed to identify those underlying factors affecting Philips penetration along with consumer behavior for Pakistani individuals and their response towards an innovative yet pricey health techno brand.

Market Dynamics

  • In order to effectively locate pain points for Philips, we carried both primary and secondary research. Primary research was conducted for both quantitative and qualitative methods on around 68 and 60 respondents, respectively.
  • Similarly, secondary research helped to extract the following information about Philips. It was deduced that Philips Air Fryer market size is about 10,000 units in Pakistan for fiscal year 2019-2020.
  • This reinforced that the market penetration is roughly around 0.1% for the same fiscal year. Out of these air fryer users, only 2% market belonging in SEC A and B+ target profile, purchased and used it.
  • However, only a few were able to incorporate it into their daily lives, where majority left using the product after a while.

Philips Brand Equity Analysis

  • According to Milward Brown for the first quarter of 2021, the overall brand equity for Philips (Global) was retrieved as 11,860 million dollars ($11.8 bn) from Kantar (Kantar, 2020).
  • However, quantitative analysis showed weaker brand equity for Philips Air Fryer with weak positive correlation relationship with brand associations and attachments only. Brand loyalty, perceived quality and brand attributes showed insignificant results.
  • Hence, no relationship was developed with an overall brand equity for Philips Air Fryer category.
  • Respondents were mostly able to develop stronger brand recall, loyalty, and association with Philips as Electronics brand due to its past presence and performance for household food appliances, ironings, TV electronics and Lights (Signify).

Competitor and Price Analysis

To further strengthen the research being executed, competitor analysis was performed to comprehend the industry dynamics and current competitors’ performance in air fryers category along with their price points.

  • Major opponent players identified were Haier, West Point, Tefal, Black and Decker, Sencor, Anex and Delonghi occupying more than 55% of the total Pakistan market size while Philips is holding lesser than 45% of the rest.
  • One of the reasons with respect to weaker net purchase index is concluded on reasons like weaker brand awareness, lack of pre-knowledge about this category and low advertising or ATL promotions by the brand.
  • With respect to price analysis, a significant difference in price levels were observed. Brands such as Haier, Dawlance and West Point relatively has a low market retail price ranging from (Rs15,000-Rs16,500), (Rs14,800-Rs18,000) and (Rs13,200-Rs16,500).
  • With comparison to Philips, its air fryer market price point starting price ranged from Rs21,200 to as high as Rs.75,000 for a digital module.

Retail Thumb Print and Channel Analysis

Survey was performed to analyze retail thumb print for air fryers in Karachi.

  • Results from survey showed that there is a relatively small number for online retailers with no online promotions.
  • Furthermore, modern trade channels with larger catchment area, greater number of SKUs and variety of categories, Philips Air Fryer was observed in only few Hypermarkets or Supermarkets such as Carrefour, and Naheed.
  • Their retail presence was missing from one of the largest retail leader of Karachi, Imtiaz.
  • Moreover, not only this, the placements of Philips Air Fryer, in store promotions, call-to-action messages, shelf-talkers, customized displays or even retail in store strategies were all missing.
  • Insights from retailers discovered that no margins were allotted to in-store merchandisers for its promotions and no brand representative was present at the location for consumer’s help and to provide a better lead turnover.
  • Interviews with retailers also identified how majority of shoppers were turning air fryers down to its electricity rating value or the reason that it was on higher price range of the spectrum.

Conclusion and recommendations

  • They should highly focus on retail and distribution strategies with better price promotions and customized displays along with installation of brand representatives.
  • Moreover, respondents highlighted factors such as low taste, and volume issues along with time constraints as a reason why air fryers overall is not being able to penetrate properly mere because of spicy taste palates acquired by Pakistani target market.
  • Hence, to increase Philips air fryer overall frequencies of purchases, they should focus on the above pointers along with higher customer service since, a lot of interviews showed that word of mouth and referrals were the main source of primary marketing in this category.

Goals & Objectives

To increase utility of Philips Air Fryers in Pakistani market with higher penetration while enabling Philips air fryers to have a larger thumb print in brick and mortar as well on online retail presence. Hence, we will be focusing majorly on developing strategies to improve availability and visibility of Philips Air Fryer on retail footprint while creating better awareness for overall target market.

Available for download on Friday, July 16, 2027

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