Philips 2004 Annual Report Download - page 10

Creating a market-driven organization
Our efforts to transform Philips into a truly market-driven,
customer-centric organization have resulted in considerable
activity across a broad front. Our efforts to implement
cross-divisional key account management for our top 20 accounts,
both OEM and consumer retail, are fully under way, the aim being
to achieve higher levels of customer satisfaction resulting in more
profitable growth. Our drive to build a strong brand reached a
major milestone in September with the launch of our new brand
positioning, encapsulated in the brand promise ‘Sense and
simplicity’.
Product leadership through innovation
My colleagues on the Board of Management and I actively review
and measure the rate of innovation and new product development
within each product division. This focused attention is already
paying dividends. Medical Systems, for instance, recorded its
strong order intake following the introduction of a number of new,
highly innovative products, such as the Brilliance CT system.
Equally, the stronger performance of our Lighting division is
attributable to a higher innovation rate and our unique, best-selling
Ambilight Flat TV is a great result of cross-divisional cooperation
on innovation.
We are also continuing our successful strategy of joining forces
with major consumer brands to bring innovative new products to
market, the latest being the PerfectDraft home beer system
(with InBev) and the Sonicare IntelliClean power toothbrush
(with Crest/Procter & Gamble).
Reducing indirect costs
After achieving company-wide overhead cost savings of EUR 1
billion in 2003, we continued to simplify our organization and drive
down costs wherever possible. With realized savings of EUR 274
million, we have surpassed our EUR 250 million target for the
year. Improving the efficiency of our business support functions to
‘best-in-class’ levels should allow us to achieve another EUR 500
million in additional annual savings in the next three to four years.
Sense and simplicity
Now let me return to what was a major development at Philips in
2004 – the introduction of our new brand positioning. At its core
is the promise to our customers of a more comfortable, more
intuitive and more straightforward relationship with technology –
and with Philips. We encapsulate this in our new brand promise,
‘Sense and simplicity’. This simple phrase demonstrates our
understanding that people want technology that gets the job done
without drawing attention to itself. Products that are relevant and
meaningful to them – that make sense in the context of their lives.
Solutions that make it easy to enjoy the enhanced experiences that
technology can offer. The advertising campaign that we launched in
the last few months of 2004, illustrates our transformation into a
healthcare, lifestyle and technology company. This campaign
represents significant marketing investment that is intended to
drive preference for Philips over time.
9Philips Annual Report 2004