The Impact of Product Innovation and Up-Marketing on Appliance Purchase Behavior
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1 The Impact of Product Innovation and Up-Marketing on Appliance Purchase Behavior J.B. Hoyt Director, Government Relations Whirlpool Corporation 1
2 Outline Recent trends in higher-end brands and products Features as part of the replacement equation The role of product innovation Economics of early replacement for consumers for manufacturers How to capture the attention of the consumer 2
3 Recent Trends in Higher-end Brands and Products Brand Names: KitchenAid GE Monogram Frigidaire Gallery Bosch Sub-zero, Thermador, Viking, et.al. Stainless Steel Professional-appearing kitchens Kitchens for Cooks 3
4 Recent Trends in Higher-end Brands and Products (cont d) The premium segment has shown twice the market growth of the appliance industry overall Premium Growth = 9%; Overall Growth = 4.5% (CAGR) 4
5 Features as Part of the Replacement Equation The original blockbusters : No-frost Refrigerators Self-clean Ovens More recent developments: Ice makers Countertop Microwave Ovens Food grinder Dishwashers Increased product capacity: Refrigerators Washers Dishwashers Ovens 5
6 The Role of Product Innovation Microwave-Hood Combinations Front-load Washers (full-size) Polara Refrigerated-Range PUR filtered water/ice Gladiator Garageworks garage appliances 6
7 Gladiator --Innovation Meets Efficiency 18 cu.ft. ENERGY STAR Garage Refrigerator/Freezer the only refrigerator designed to operate in the extreme garage environment Stays chilled inside, when it is freezing outside built-in heater keeps refrigerated items chilled, not frozen, even in very cold environments Stays cold inside, when it is hot outside powerful cooling system operates in high heat environments Stays dry, when it is humid outside special heater keeps the outside of the refrigerator from sweating in high humidity environments Rounded tread plate doors sleek and rugged appearance 7
8 Economics of Early Replacement Manufacturers Accelerated replacement Increased sales Allows introduction of innovative concepts & products Early adopters feed broader pipeline Consumers Lower cost of operation Energy Water Maintenance 8
9 Consumer Benefits from Early Replacement--Refrigerator Example Annual Energy Consumption (kwh) Today's refrigerator uses 61% less energy, saving the consumer $59 / year vs 20-year old unit 9
10 How to Capture the Attention of the Consumer Lifestyle changes (cocooning/nesting) Spend more time at home Baby boomers have high discretionary income Functionality Energy, water savings Pure economics Appeal to Green tendencies Color 10
11 New Kenmore Colors 11
12 Summary--Innovation & Up-Marketing Lifestyle changes--desire to spend more time at home; income to make home very comfortable Features--a way to draw attention to appliances Economics--Very significant story Innovation!!--The comprehensive way to provide: Dramatic consumer benefit Economic benefit Lifestyle impact Innovation & Up-Marketing combine to give consumers a more desirable product usage experience along with significant energy savings! 12
13 Thank You!! 13
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