Philips: Making Sense of Simplicity

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Case Details:

Case Code : MKTG163
Case Length : 19 Pages
Period : 2004-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Royal Philips Electronics, Inc.
Industry : Electricals and Electronics
Countries : Worldwide

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"So few of the products companies make these days are designed so regular human beings can get them up and running in no time at all."1

- Charles Cooper, Executive Editor, CNET, in December 2006.

"After all, what is the purpose of designing a product for consumers if they are not able to use it?"2

- Paul Ziven, CEO, Philips Electronics North America, in December 2006.

"Many companies recognize the role of design-led innovation. But we at Philips have gone one step further with a special differentiator in this area: we believe in simplicity-led design...which is our springboard to even greater innovation."3

- Gerard Kleisterlee, President and CEO, Philips, in January 2006.


At the Consumer Electronics Show (CES)4 2007 held at Las Vegas, Royal Philips N.V. (Philips), a major player in lighting, medical technology, and consumer electronics, won a CES Innovation Award for the VoIP841, a VoIP5 phone that allowed users to make calls over the Internet without a PC. The company unveiled several other products at the event including the Ambilight range of TVs, the Pronto touch screen universal remote controls, and the AmbiSound home theaters. Each of these products supposedly exemplified the essence of 'Sense and Simplicity', the company's new brand promise, in that they were advanced in technology yet had easy-to-use interfaces and simple designs.

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Philips, a Dutch company, started off as a manufacturer of light bulbs and electrical equipment. Over the years, it remained at the vanguard of technology, credited with several inventions such as the audiocassette, the CD, the DVD, etc.

However, despite its technological prowess, Philips' financial health deteriorated in the 1990s, partly because of a lack of focus, as the company operated in too many industries, and partly because of poor marketing, especially in the intensely competitive consumer electronics industry. The company then embarked on a major restructuring exercise, which included selling off several businesses. In 1995, Philips launched the "Let's make things better" campaign to rejuvenate the Philips brand. Though the campaign was successful in its primary objective, the top management felt that it failed to convey the design excellence and technical superiority of Philips' products. Therefore, in 2004, the 'Sense and Simplicity' campaign was launched.

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1] Charles Cooper, "Why it's so hard not to be a tech grinch,", December 01, 2006.

2] Paul Zeven, "Do people need the gizmos that we are selling?", December 18, 2006

3] "Next simplicity,", January 2006.

4] The Consumer Electronics Show is an annual event showcasing the latest technologies in the consumer electronics industry. The first CES was held in 1967 at New York and since then the event has witnessed the launch of several breakthrough products like the VCR, the CD, the DVD, the HDTV, the Blu-Ray disc, etc.

5] VoIP or Voice over Internet Protocol (also referred to as Internet telephony) is the routing of voice conversations over the Internet or through any other IP-based network.


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