The bold move by the Dutch electronics giant is part of a strategy to become a design-led company focused on health and well-being
Has the spark gone out of your relationship? Royal Philips Electronics (PHG) reckons it just might have the answer. The $38 billion diversified Dutch giant hopes to give its newly created Consumer Lifestyle business a bit of a buzz with the launch of a new product category known as "relationship care." On Sept. 10, the unit will launch its first new product, initially in Britain and later elsewhere: a range of intimate massagers aimed at couples between the ages of 35 and 55.
It's a bold departure for the 117-year-old Dutch company, better known for making everything from home electronics and small appliances to high-tech medical diagnostic systems. But the move is part of Philips' ongoing transformation from a high-volume consumer electronics maker to a design-led company focused on health and well-being—a strategy that Philips Chief Executive Gerard Kleisterlee believes will open up growth opportunities in both developed and developing markets.
The new range of products will be sold first at British pharmacy chain Boots and upscale department store Selfridges, and over the Internet via Amazon.com (AMZN). Aimed at couples who might normally be unwilling to enter sex shops, the massager range comes in discreet packaging that wouldn't look out of place on the store shelf next to, say, hair dryers or cordless shavers.
Has the spark gone out of your relationship? Royal Philips Electronics (PHG) reckons it just might have the answer. The $38 billion diversified Dutch giant hopes to give its newly created Consumer Lifestyle business a bit of a buzz with the launch of a new product category known as "relationship care." On Sept. 10, the unit will launch its first new product, initially in Britain and later elsewhere: a range of intimate massagers aimed at couples between the ages of 35 and 55.
It's a bold departure for the 117-year-old Dutch company, better known for making everything from home electronics and small appliances to high-tech medical diagnostic systems. But the move is part of Philips' ongoing transformation from a high-volume consumer electronics maker to a design-led company focused on health and well-being—a strategy that Philips Chief Executive Gerard Kleisterlee believes will open up growth opportunities in both developed and developing markets.
The new range of products will be sold first at British pharmacy chain Boots and upscale department store Selfridges, and over the Internet via Amazon.com (AMZN). Aimed at couples who might normally be unwilling to enter sex shops, the massager range comes in discreet packaging that wouldn't look out of place on the store shelf next to, say, hair dryers or cordless shavers.
Sexual Vitality Market
With a retail price of more than $150, the massagers aren't cheap. But Philips says what makes its new product unique is a focus on the couple, not the individual. The ergonomically designed device comes in two abstract shaped parts, each no bigger than the palm of a hand, which can be stored in a small black recharging case. "We wanted to focus on couples because our research showed there was a large unmet need," says Sheila Struyck, head of market-driven innovation at Philips in Amsterdam. "We were looking for products that wouldn't replace one or the other partner."
The idea to move into relationship care was first mooted among members of Philips' advisory "Simplicity Board" more than two years ago. The panel of outside experts (BusinessWeek, 12/11/06), which included a Chinese architect, a British fashion designer, and two Americans (a graphic designer and a radiologist), suggested that if Philips intended to focus on health and well-being, it made sense to explore interpersonal well-being.
The proposal moved from concept to reality when Struyck got involved. As part of the Philips Octagon program, a six-month executive education course run jointly with Wharton School, Struyck and a team of six other Philips managers decided to explore new business opportunities linked to the topic of sexual vitality. Working weekends and evenings, often via e-mail, the team decided there was a big opportunity in the market. Philips figures that the global market for intimate massagers already tops $1 billion annually.
In September 2006, Struyck and her team presented the idea of relationship care as a potential new business opportunity to the Philips board, including Andrea Ragnetti, who is now CEO of the company's Consumer Lifestyle business, formed earlier this year from the merger of two former Philips divisions, Consumer Electronics and Domestic Appliances & Personal Care.
"The hardest thing was finding the right business language," Struyck says.
"How do you discuss a topic like this with a group of mainly men with whom you have no personal relationship?" But Struyck, who was used to tackling sensitive topics thanks to her previous role as European brand manager for Always, the sanitary pads made by Procter & Gamble (PG), managed to convince her colleagues the idea was worth exploring.
With a retail price of more than $150, the massagers aren't cheap. But Philips says what makes its new product unique is a focus on the couple, not the individual. The ergonomically designed device comes in two abstract shaped parts, each no bigger than the palm of a hand, which can be stored in a small black recharging case. "We wanted to focus on couples because our research showed there was a large unmet need," says Sheila Struyck, head of market-driven innovation at Philips in Amsterdam. "We were looking for products that wouldn't replace one or the other partner."
The idea to move into relationship care was first mooted among members of Philips' advisory "Simplicity Board" more than two years ago. The panel of outside experts (BusinessWeek, 12/11/06), which included a Chinese architect, a British fashion designer, and two Americans (a graphic designer and a radiologist), suggested that if Philips intended to focus on health and well-being, it made sense to explore interpersonal well-being.
The proposal moved from concept to reality when Struyck got involved. As part of the Philips Octagon program, a six-month executive education course run jointly with Wharton School, Struyck and a team of six other Philips managers decided to explore new business opportunities linked to the topic of sexual vitality. Working weekends and evenings, often via e-mail, the team decided there was a big opportunity in the market. Philips figures that the global market for intimate massagers already tops $1 billion annually.
In September 2006, Struyck and her team presented the idea of relationship care as a potential new business opportunity to the Philips board, including Andrea Ragnetti, who is now CEO of the company's Consumer Lifestyle business, formed earlier this year from the merger of two former Philips divisions, Consumer Electronics and Domestic Appliances & Personal Care.
"The hardest thing was finding the right business language," Struyck says.
"How do you discuss a topic like this with a group of mainly men with whom you have no personal relationship?" But Struyck, who was used to tackling sensitive topics thanks to her previous role as European brand manager for Always, the sanitary pads made by Procter & Gamble (PG), managed to convince her colleagues the idea was worth exploring.
Company Firewall
Figuring out the potential size of the market wasn't easy. "Googling at our desks we'd constantly hit the company firewall," Struyck recalls with a laugh. "And there's not exactly any Nielsen data available."
So Struyck approached Philips's consumer lifestyle incubator to get the funding needed for customized consumer research. The company ran focus groups and studies across several markets, but soon found that consumers were especially receptive in Britain, where sex toy and lingerie chain Ann Summers can be found on the main shopping streets of most British towns. The research showed that 42% of couples surveyed in Britain were already using some sort of so-called marital aid. And of those who weren't, 35% were willing to try it.
Of course, moving into a potentially controversial area could pose risks for the Philips brand—but not surprisingly, the company disagrees. It believes that the discreet packaging, premium positioning, and tasteful marketing campaign will silence any potential backlash. Philips plans to focus its marketing around upmarket publications such as Vogue and GQ, as well as targeted ads aimed at couples on Facebook. Indeed, Struyck says the extensive research conducted by the company indicates the Philips brand might even be enhanced: When consumers were asked whether they would buy a massager if it were made by Philips, the number of people who said yes increased by one-third.
Figuring out the potential size of the market wasn't easy. "Googling at our desks we'd constantly hit the company firewall," Struyck recalls with a laugh. "And there's not exactly any Nielsen data available."
So Struyck approached Philips's consumer lifestyle incubator to get the funding needed for customized consumer research. The company ran focus groups and studies across several markets, but soon found that consumers were especially receptive in Britain, where sex toy and lingerie chain Ann Summers can be found on the main shopping streets of most British towns. The research showed that 42% of couples surveyed in Britain were already using some sort of so-called marital aid. And of those who weren't, 35% were willing to try it.
Of course, moving into a potentially controversial area could pose risks for the Philips brand—but not surprisingly, the company disagrees. It believes that the discreet packaging, premium positioning, and tasteful marketing campaign will silence any potential backlash. Philips plans to focus its marketing around upmarket publications such as Vogue and GQ, as well as targeted ads aimed at couples on Facebook. Indeed, Struyck says the extensive research conducted by the company indicates the Philips brand might even be enhanced: When consumers were asked whether they would buy a massager if it were made by Philips, the number of people who said yes increased by one-third.
Why Britain?
Why launch in Britain and not in Philips' famously tolerant home market? Mainly because massagers and other marital aids are already big business in Britain. Sales of similar products there total $130 million last year and are expected to increase to more than $200 million in the next three years. Philips says its research indicates that the new range of intimate massagers could boost the market by an additional $120 million.
Armed with that research, Struyck and her team used the rest of the seed money from the incubator (Philips won't disclose how much it spent to develop the product range) on creating preliminary designs. Using fast protoyping, Philips simultaneously developed the technical functionality and the appearance of the product. But operation of the first model wasn't intuitive enough, Struyck says—a big problem for a company whose new brand image is built around the notion of "sense and simplicity." So designers came up with an improved user interface.
With the product now hitting the shelves, Philips hopes the massager will prove a popular gift choice during the coming holiday season. Struyck says there are already a number of other potential products in the pipeline. "We have an ambitious vision of how to build this category," she says. The focus, she says, will be about enhancing the emotional side of intimacy.
"We have an ambitious five-year plan to build this category," she says. "We can tap Philips' competence in everything from lighting to sound to create a broad range of opportunities."
Why launch in Britain and not in Philips' famously tolerant home market? Mainly because massagers and other marital aids are already big business in Britain. Sales of similar products there total $130 million last year and are expected to increase to more than $200 million in the next three years. Philips says its research indicates that the new range of intimate massagers could boost the market by an additional $120 million.
Armed with that research, Struyck and her team used the rest of the seed money from the incubator (Philips won't disclose how much it spent to develop the product range) on creating preliminary designs. Using fast protoyping, Philips simultaneously developed the technical functionality and the appearance of the product. But operation of the first model wasn't intuitive enough, Struyck says—a big problem for a company whose new brand image is built around the notion of "sense and simplicity." So designers came up with an improved user interface.
With the product now hitting the shelves, Philips hopes the massager will prove a popular gift choice during the coming holiday season. Struyck says there are already a number of other potential products in the pipeline. "We have an ambitious vision of how to build this category," she says. The focus, she says, will be about enhancing the emotional side of intimacy.
"We have an ambitious five-year plan to build this category," she says. "We can tap Philips' competence in everything from lighting to sound to create a broad range of opportunities."
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1 comment:
Now this is controversial market news.
The astonishing decision of the world-wide company is getting both negative and positive evaluations.
Is this a versatile and dynamic reaction to growing demand for adult novelty toys, by a market-focused and consumer-targeted modern company? Or vice versa - a direct proof of low company values and profit orientation at any cost?
www.votetheday.com/polls/philips-launches-sex-toys-line-245/
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