Philips: Turning Simplicity Into Brand Power.

A great story that features what successful brand strategy is about: Philips.

The Situation

A little over a decade ago, Philips found its brand in trouble. Coming from humble beginnings as a maker of light bulbs, Philips found itself poised to enter the new millennium with a massive portfolio of technology products. The future looked bright, save for one major hindrance: the sheer volume of the company’s diverse portfolio confused consumers.

Prior to 1995, this sea of product names and product-specific marketing strategies had overwhelmed Philips. Not only was the marketing strategy for each item inconsistently implemented across company lines, but consumers were also failing to recognize how such a breadth of products could be traced back to Philips. As a company with a global presence, external communications suggested otherwise. Every product division had its own name, identity, and marketing strategy, none of which added any substance or value to the greater Philips brand.

To make matters worse, not only was this external confusion creating problems, but the company faced major issues on an internal level as well. The desired target markets for each product division became overrun by a series of unfocused, overlapping, and narrowly segmented niche demographics, making media investments a hassle. The internal clutter only helped diminish the value of Philips’ brand externally. To correct the problem, it launched the “One Philips” campaign to bring all company assets under the Philips brand name, thus transforming it into a monolithic brand. However, due to continued poor internal communication and new public confusion over the actual meaning of “One Philips”, the campaign did not achieve the results for which the company had hoped.

Fast forward to 2003 when the company decided it was time to implement a new strategy—one that would both reposition the company and eradicate any confusion surrounding the brand's promise, values, and identity for good.

The Move

Following these missteps, Philips realized the need to clarify its vision to consumers.  It turned to market research to uncover what strategy suited the company best. With testing underway, Philips initiated a repositioning of its brand between 2003 and 2004.  “One Philips” ended, and the era of “sense and simplicity” began. This new slogan was chosen to coincide with the company’s redefined branding strategy for the next six years called ‘Vision 2010.’ To further reflect the new brand positioning, Philips also streamlined their multiple product divisions down to three: healthcare, lighting, and consumer products.

Their new message was more than a tagline; it was a promise to the consumer and to the company itself.  It captured the essence of what they wanted to achieve as a result of repositioning—“sense and simplicity” across an array of channels: the Philips image, communications, new concepts, products, and services. When consumers chose Philips, they were choosing “sense and simplicity.” They also believed that anyone who interacted with Philips should see and experience this promise, which is why the company chose to feature it prominently alongside their logo and product advertisements (new and old).

The Result

According to global brand rankings conducted by Interbrand, Philips’ brand value has consistently increased over a span of 6 years. In 2004, at the point of the repositioning, Philips was at its lowest brand valuation ranking, 65. Since then, the company has successfully climbed from 65 to the 42-place position.  As of 2011, Philips is still using the “sense and simplicity” tagline and intends to through 2015.

Our Perspective

Philips’ repositioning represents a perfect example what proper branding should be.  Most strategists will agree that simplicity is a key to effective marketing—if not THE key. Your average consumer does not want to read over the intricate details of a product they do not fully understand, and therein lays the brilliance of “sense and simplicity.” Philips breaks its product descriptions down from complicated jargon to the bare essentials, making it clear and easy to understand for anyone. In most cases, their product descriptions never exceed a single line of text. After all, if it cannot be explained in clear, concise terminology, then chances substantially decrease that the consumer will understand what you are selling to them and why it matters.

Overall, the philosophy has proven to be a true winner for Philips. As with any winning strategy, it is important to make sure that it continues to be relevant for the company’s future. Philips understands this critical piece and has done more than most to see “sense and simplicity” take on a life of its own.  In order to make sure that “sense and simplicity” is maintained across company lines, Philips created a Simplicity Advisory Board who’s role is “to provide an outside perspective” regarding their continued efforts toward upholding their dual promises. To complement the creation of this independent board of experts, Philips also held a special Simplicity Event—most recently in 2008 in Moscow—to communicate to shareholders how far the company has gone in achieving its dual goals.

We even see this promise at work in the healthcare division of Philips. In order to make the medical imaging experience less frightening for patients, the company created what it calls “the Ambient Experience.” Essentially, the Ambient Experience takes the process of medical imaging and personalizes it for the patient, easing their anxiety, and making the hospital feel less like a cold, sterile place.

Through the employment of a sensible and simplistic strategy, Philips successfully went from being a company of endorsed brands to a strong monolithic brand. As far as the company’s future endeavors are concerned, it plans to continue incorporating any acquisitions into the greater Philips brand to build more brand equity in the company name, all with “sense and simplicity” as their guiding brand mantra. If you are looking for a perfect example of what encapsulates a successful brand repositioning, Philips is where to begin.

Brand Timeline

1891 – Philips & Co. is founded by Anton and Gerard Philips

1892-1898 – Philips undergoes multiple logo identity changes

1926 – The Philips ‘wave and stars’ first appear on early radio wave and sound recording devices

1938 – Philips trademarks a new logo, one that combines the wordmark with the emblem introduced in 1926, then is later refined in 1930

1995 – Philips introduces the “One Philips” campaign; this new campaign involves a massive rebranding of all the company’s products under the Philips name; thus, transforming it into a true monolithic brand

2004 – Philips launches the “sense and simplicity” campaign - a mantra, tagline, and corporate philosophy all in one - which continues to guide the company's business today

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