Philips 2007 Annual Report Download - page 38

Philips Annual Report 200744
Marketing expenditures 1)
in millions of euros
in value as a % of sales
1,200
900
600
300
0
811
3.3
2004
829
3.3
2005
865
3.3
2006
994
3.7
2007
1) Restated to present the MedQuist business as a discontinued operation
In 2007, we continued to invest in building the Philips
brand, supported by a EUR 111 million investment in
the global brand campaign. These efforts resulted in a
substantial year-on-year increase in our brand value, as
reported by Interbrand, rising from USD 6.7 billion in
2006 to USD 7.7 billion in 2007. The Philips brand was
ranked the 42nd most valuable global brand in 2007,
up from 48th in 2006, according to Interbrand.
The 2007 development was primarily driven by increased
appreciation of our Medical Systems business, which
currently has the highest brand value within the Group.
The Interbrand analysis showed that 35% of sales decisions
in the healthcare sector are made based on brand. This
demonstrates the importance of a strong brand for driving
sales in the business-to-business as well as the business-
to-consumer environment. The Philips brand is strongly
positioned to do so.
Brand value
in millions of US dollars
Philips’ Interbrand value % increase previous year
10,000
7,500
5,000
2,500
0
4,378
(2.0)
2004
5,901
34.7
2005
6,730
14.0
2006
7,741
15.0
2007
Research and development
Strong performance in innovation is critical for Philips
to increase its market competitiveness. Through substantial
investments in research & development (R&D), Philips
has created a vast knowledge base. In direct response
to the needs of the market, Philips has adopted a more
end-user-oriented approach to innovation in recent years,
in order to balance investments between projects with
more apparent short-term commercial prospects and
projects creating new options for medium and long-term
value-creation.
Philips’ R&D activities are shared across Corporate
Technologies and the operating divisions. The Chief
Technology Ofcer (CTO) of Philips manages the
enabling technologies across the Company.
Corporate Technologies, employing 2,800 people, invests
in world-class competencies and technologies that are
relevant to the entire Philips Group. In the operating
divisions, some 7,800 employees in 26 countries are
predominantly engaged in the development of products
and applications.
Technology, competence and innovation management
The CTO ofce is focused on technology management,
competence management and innovation effectiveness
across Philips. Competence management in R&D is
supported by a company-wide R&D core curriculum.
The CTO ofce also runs the Innovation Excellence
program, a cross-functional drive towards a market-
driven alignment of all Philips-wide innovation processes.
Research and developmentexpenditures 1)
in millions of euros
in value as a % of sales
2,000
1,500
1,000
500
0
1,662
7.0
2003
1,609
6.6
2004
1,593
6.3
2005
1,659
6.2
2006
1,629
6.1
2007
1) Restated to present the MedQuist business as a discontinued operation
8 Financial highlights 10 Message from the President 16 The Philips Group
Management discussion
and analysis
62 The Philips sectors