Philips drives meaningful, customer-focused innovation

As the economy and society develops people have higher living standards and tend to seek healthier lifestyles. This trend is well reflected in China, where the middle class is expanding rapidly.

Noticing the rising needs of Chinese consumers to enjoy healthier lives, Philips Consumer Lifestyle built its first strategic cooperation with Betty's Kitchen in June to introduce more cooking innovations tailored to the China market.

Cross-media cooperation

"Philips is committed to improving people's lives through meaningful innovations," said Fabian Wong, president of Philips Consumer Lifestyle Greater China.

"Philips Kitchen Appliances have long been trendsetters for consumers and leaders in the industry. As a global brand, Philips is proud of its global network, superior resources and innovative technologies for a healthy lifestyle, which will be brought into this strategic cooperation."

"Betty's Kitchen is an influential lifestyle media that focuses on promoting healthy cuisine. Our common vision and values have led to our first strategic cooperation, which enables us to get closer to consumers and provide them with more innovative and healthy cooking solutions," he said.

People are not only concerned about food safety, nutrition and taste but have become more enthusiastic about leveraging technology and innovations to make family cooking more healthy, convenient and enjoyable.

Wong said the partnership would provide more family kitchen solutions and improve people's lives through healthy cooking.

Think locally, act globally

Philips has achieved steady business growth in the China market in recent years, Wong said.

The company's success stems from his concept of "thinking locally, acting globally", which emphasizes innovation oriented by local consumer needs and supported by global resources for realization, according to Wong.

The cooperation with Betty's Kitchen was also a result of this concept. Consumer feedback resulting from the cooperation is expected to help Philips gain better consumer insights and develop more solutions for Chinese people.

"At Philips, we concentrate on 'localized innovation' which means innovation comes from insight into the demands of local market consumers," Wong said.

"According to the localized innovation strategy, our goal is to set up a complete 'end-to-end' value chain from R&D, production, sales and marketing in China to create a more localized business mode," he continued.

"The innovation achievements are enabled by our global resources across the value chain, and the best practices in China will also radiate to other foreign markets according to their local needs. In this way, we bring about the transformation from innovation for China to innovation in China," Wong said.

Philips has several examples of innovations based on local needs being scaled up worldwide.

The company's non-filter soy milk maker was based on insights into Chinese consumers, who prefer to keep the residue for full nutritional value.

When sold in France, the soy milk maker was modified into a soup maker and comes with a variety of soup recipes.

Similarly, Philips introduced an automatic noodle maker in China last year, which was customized for the Italian market as a spaghetti maker.

The company's rice cooker, which was developed in and for China, was modified for boiling borsch in Russia.

"All these examples are a testimony that we develop, produce and sell products that are based on local consumer insights, rather than simply sell a product that is irrelevant to a local market," Wong said. He added that on a macro level, he believed consumers all aspired to healthier lifestyles.

Focusing on the China market

Philips invested heavily in the growing China market and made a strategic decision to position the country as its "home market" in 2010.

The decision generated a positive impact on the company's business operations as well as its strategic deployment of resources.

Consumer Lifestyle Greater China deepened its business penetration and its consumer insights in the country to satisfy their needs better and faster.

Wong said that, for instance, Philips established focus groups to identify and understand consumer needs and how customers use the company's products.

Philips also conducted tests to analyze user habits and trends.

"Philips is an active listener and a persistent explorer, and maintains the idea of people-oriented products in every innovation to ensure they will satisfy and work for consumers," said Wong.

"We have exhausted our means to gain a true picture of consumer needs, and these specific consumer insights are the basis for our meaningful innovations," he said.

As part of the company's strategy to make China its "home market", Philips relocated its upstream teams to Shanghai in 2011 to facilitate the "end-to-end" value chain. This strategy helped Philips develop more products that truly satisfy local consumer needs and bring them to the market at a faster pace.

With the advancement of the Internet and mobile technology, the world is becoming increasingly digital and connected.

As a result domestic appliance companies are increasingly shifting their focus from offline to online channels and from conventional to smart products.

Wong said that Philips was leading the digital trend and was making efforts to integrate its products with digital technologies.

Keeping abreast of digital trends

"We found that, influenced by the Internet and big data, a growing number of consumers tend to integrate their research and purchase behaviors across online and offline platforms, which we call the ROFO mode-research online/offline, purchase offline/online," he said.

"In addition, consumers will buy different products through different channels. Thus, the most appropriate mode for Philips is to carry out the Internet thinking through the end-to-end value chain which involves product design, pricing, promotion and sales to ensure the best product presented to consumers in the appropriate way," Wong concluded.

Proactively seeking strategic cooperation is also a crucial focus for Philips.

The company signed a deal with Alibaba Group earlier this year. With the help of their big data and e-commerce advantages, Philips could devote itself to creating intelligent, health focused products for Chinese consumers, said Wong.

Philips has also established itself as one of the first foreign brands to use Chinese e-business platforms by expanding its online sales channels and cooperating with Tmall, JD.com and Amazon during the past few years. Wong said "meaningful innovation" guided Philips through a decade of transformation and enabled it to evolve into a diversified, health and wellbeing company.

He said Philips understands the main global trends and challenges and cares if its technologies and innovations meet actual customer needs.

Philips Consumer Lifestyle expects to improve people's quality of life and contribute to more sustainable development through its localized insights and globalized strengths, according to the company.