This presentation outlines a final marketing report for Principles of Marketing at Pepperdine University, and reflects the findings of our strategic marketing plan for the Phillips Hue LED lightbulb. The Phillips Hue LED lightbulb gives the consumer the ability to connect their smartphone with any standard-socket indoor lighting system. Our report focused primarily on a marketing strategy targeted towards high end hotels. This report was very well received by our honorable marketing instructor, Professor Frank Sadighian. While the report content is the result of a collaborative effort with three of my classmates, I was responsible for the PowerPoint composition.
4. OurMission:
“Improving people’s lives through meaningful innovation.
Innovation is integral to everything we do. But innovation
does not only mean “new technology”. It can also mean a
new application, a new business model or a unique
customer proposition brought about by an innovative
partnership. By tracking global trends and understanding
the challenges facing people in their daily lives, we ensure
that people’s needs and aspirations are at the heart of our
innovation endeavors.”
5. Philips . . .
• Largest manufacturer of lighting products
• World-class technology, customer service,
and inventions
• Pioneer in the green-technology initiative
• Greenpeace rates Philips as one of the top
10 Environmentally friendly companies in
the world
6. • Healthcare: Imaging Systems, Patient Care & Clinical
Informatics, Home Healthcare Solutions, Customer Services
• Lighting: Lamps, Consumer Luminaires, Professional
Luminaires, Lighting Systems & Controls, Automotive
Lighting, Lumileds
• Consumer Lifestyle: Health & Wellness, Personal Care,
Domestic Appliances, Lifestyle Entertainment
7. High Market Share Low Market Share
High
Growth
Rate
Star Question Mark
Low
Growth
Rate
Cow Dog
8. 1. The Philips brand is very popular
(Leading global lighting company)
2. Philips has the ability to produce
some of the best quality products in
the consumer market
3. Strong innovation capabilities
4. Large global footprint (Serving 100+
countries)
5. Low-cost and highly efficient
manufacturing and supply base.
9. 1. Hue is currently for sale exclusively in
the Apple Store.
2. The High Price of Hue
10. 1. Growing market for energy
efficient products
2. Emergence of new markets,
services and customers
3. Technological change
4. Taxation law (recognized through
energy efficient tax credits)
5. Government regulation and policies
11. 1. Cheaper competitive
products
2. Macroeconomic
changes
3. More competitors enter the market
4. Foreign competitors making similar products,
but utilizing cheap labor
12. • $825 million revenue
• Projected annual growth of 3.4%
• High demand for energy-efficient lighting systems
– environmental concerns, lower electricity costs
• Growth stage of the industry life cycle
• High competition with high barriers to entry
• Philips market share of 43.1%
13. LIFX LED Smart Bulbs
- Kickstarter Project
- Wireless hub-free
- Notifications
- Music sync
Green Wave Smart
LED Light Bulb
- White light only
- Additional physical remote
- $200 initial price, $20 for each
bulb thereafter
14. Product Features Advantages Benefits
Hue LED Smart
Light Bulbs
• Easy to use smart
phone interface
• Interconnectivity
through wireless hub
• Shaped like
traditional light bulbs
• Easy to learn how to
use
• Control lights from
anywhere
• Fits into old fixtures
• Savings in time
• Savings in Time
• Savings in $
LIFX LED Smart
Bulbs
• Interconnectivity
through Wi-Fi
• Social network and
email notifications
• Lights can sync with
music
• Control lights from
anywhere
• Instant notifications
• Quickly create party
environment
• Savings in Time
•Savings in Time
•Savings in Time& $
Greenwave Reality
Smart LED Bulbs
•Wireless hub
connectivity
•Additional physical
remote
•White light
• Control lights from
anywhere
•Allows for more
control
• Cheap replication of
traditional white light
• Savings in Time
• Savings in Time
• Savings in $
15. MARKETS PRODUCTS
Current New
Current Market Penetration
- Phillips Sells Endura LED
- Are In Decline Phase of PlC
- Energy Saving Lamps
- Sell at higher price and
same amount
- Product Can Either fade
away or make minor profit
Product Development
- Time for HUE Led Light Bulbs
- Current Markets of Families
and Average Young Consumers
- Risk as I-phone compatibility
too specific and expensive
New Market Development
- Expand Current Bulbs to
Spas and Clubs
- Lack of interest and
decline could prevent
expansion and sales
Diversification
- Sell to brand new market of
hospitality
- Good expansion and large
industry
- Diversify Phillip’s product line
and increase hotel revenue
16. • Social Media is
imperative in
connection
• Lighting is an important
part of the guest’s stay
• Increased concern for
the environment. 42%
of energy from lighting
and 70% of that is
inefficient. Hue is not
inefficient.
17. • Hermesworldwide.com – economy is
rebounding
• Luxury vacations and luxury hotels are more
popular
Hue can give luxury
hotels favorable
impressions through
customizable options
and Apple functions
18. • Smart Phones are in growth stage of PLC
• Popularity can be a marketing tactic to
intrigue customers
• Ipadsin room : customizability!
• Increased emphasis for
green technology
• Popular pick for hotels
19. • Main competitor – LED LIFX
– Independent and not out yet
• Green Wave Reality Light Bulb
– No color options, not customizable
– However, it is cheaper
20. • EISA (Energy
Independence and
Security Act of 2007)
– Medium screw base and
socket
– Voltage range within 110
and 130 volts
– Minimum CRI rating of 80
– Hue has 91
21. • Large Environmental Emphasis in Today’s
Society
• Baltimore Business Journal – “Lighting
turned off after a time period.”
– Hue is energy efficient so gives more total
usage
22. • Natural Disaster in Hurricane Sandy
– Entire Cities Ran Out of Power
– Entire Hotel would lose lighting
– Need Emergency Response Team
• HUE requires many
resources
• Supply chain manager
must ensure that there
is a stock for
emergency situations
26. • Growing trend for making tablet devices
available to guests in their rooms so they are
satisfied with their room’s modern and “high-
tech” features
• For example, St. Regis in Shenzhen, China and
the Four Seasons in Beverly Hills, California
28. • Objectives: gain market share, social responsibility
• Constraints: newness of the product, type of competitive
markets, current economic condition
• Demand: demand curves, price elasticity
• Costs: associated with production
• Break-Even Quantity
30. Price = $20/bulb (Based on customary/target
pricing)
With 100% mark-up
BEQ = FC (P-UVC)
= 36 545 905.82/(20 – 10)
= 3 654 591 units
BES = 3 654 591 units * 20 = $73 091 811.64
sales
31. Regular Price Bundle Price
with Hue
iTouch $199 $99
iPad Mini $329 $229
iPad $399 $249
Hue – Apple Bundle Price
New, discounted prices for Apple equipment:
32. • The Promotion is a key factor in the success
of this campaign
– As demand is on the rise perfect time for Hue
– No comparison to any hospitality lighting
• Apple functionality and
social media key aspects
• Building relationships
core as well
33. • Brand New Product so Informational
Product Style
– Introduce Hospitality Industry to HUE
– Marketing it with Apple is core
– Both Hue and Apple Benefit from this
• Methods
– TV Apple I-pad advertisements
– Great wide scale exposure
– Large and diverse customer base
34. • Social Media
– Dedicated Managers to manage
hotel accounts
– Hue can create accounts to
build relationships and reach
out to clients
– Constantly Show off Features as
well
• Hotel conventions
– PR team directly represent HUE
– Networking and brand
development
• Mixers
– Gain Data and Keep in Touch
– Generate Buzz Marketing
– Spread the Word
35. • Bulk Sales
– Include some amounts of Apple I-pads with
sales and orders
– Cross Promotional Feature
• Provides Increased Luxury to rooms
• Boston.com – more features in a room, more
satisfaction
• Provides incentive to purchase and a deal
36. • Direct Conversation Through Social Media
• Direct Marketing through TV Ads
• Iphoneapp also a form. Managers might see Ad
on TV
• Direct Meetings
– Best and Most Detailed Information
– Must have all materials and convey FABs
• Conventions
– While PR Manages Image, Sales should gain
interest and desire for product through displays
– Remember to use variety of methods for success
• Di
37. • Sales Team specifically for Hospitality
– Conduct research into expectations and wants
– Must have knowledge of product to explain
– Six Steps
– PBC
– Negotiate Prices and Develop Deals
– Develop Customer Relationships
– Use Need Satisfaction Format of presentation
38. • Corporate system of distribution
• 20 Sales agents who engage in direct selling to
modern luxury hotels
• No need for wholesalers, distributors or stores
• Maintain our own sales force to perform all
channel functions
• Strategic channel alliance with other divisions of
Philips involved in the hospitality industry
• Value created by quick transactional function
39. Adds value to customer experience by having
modern and “high-tech” features at their
fingertips to customize their room
Compatibility with Hotel’s Style/Decor
PerceivedCustomerValueofGuestroom
Perceptual Map
High
HighLow
Other White
LED light bulbs
Hue
40. Limited time: 1 Month
Limited place: The Los Angeles W
Hotel
41. • Profit: high ROI and profit
• Sales: $100 million in sales
• Market Shares: increase the LED light bulb
share in the luxury hospitality market
• Quality
• Customer Satisfaction
• Employee Welfare
• Social Responsibility: promote energy
efficiency
43. Lighting& Bulb Manufacturing LED Bulb Manufacturing
Input Materials:
• Glass and glass products
• Metal wire
• Plastic
• Rubber
• Inert gases.
Input materials:
Different quantities of:
• Synthetic sapphire
• Gallium
• Indium
• Silicon carbide
• Aluminum
• Epoxy resin
• Copper
• LED Manufacturing
requires a combination
of resources used in
these two separate
manufacturing processes
44.
45. • To arrive at total budget we used Philip’s 2011
reported net operating capital for their lighting
division of $6,554,614,000
• Multiply net operating capital by the LS&E
market share of 53%
• Gives the budget for the LS&E and electronics
division
$6,554,614,000 x 53%=$3,473,945,420
46. • Next, apply our estimate of Hue’s 8% budget share to the
LS&E budget to arrive at Hue’s final estimated budget
$3,473,945,420 x 8% = $277,915,633.60
LED Light Bulb
Cost (as a percent
of co. revenue)
X
Hue’s Total Budget
=
Estimated Budget for
Each Cost Category
Profit 7.25% X $3,473,945,420 = $20,148,883
Wages 16.9% X $3,473,945,420 = $46,967,742
Purchases 35.95% X $3,473,945,420 = $99,910,670
Depreciation 6.85% X $3,473,945,420 = $19,037,220
Marketing 2.5% X $3,473,945,420 = $6,947,890
Rent &
Utilities
6.3% X $3,473,945,420 = $17,508,684
Other
Total
23.25%
100%
X $3,473,945,420 =
=
$64,615,384
$3,473,945,420
