Philips 2014 Annual Report Download - page 52

Sector performance 6.2.1
52 Annual Report 2014
In a connected, digital world, consumers are looking for
smart, personalized solutions. Purchase decisions are
increasingly made or inuenced online; this is as true of
consumers in growth geographies such as China, as it is
in developed markets such as Western Europe.
The rise of the middle class in growth geographies is
another trend impacting the retail landscape. This
rapidly expanding group has increasing spending
power.
In 2014, economic headwinds caused continued
pressure on consumer spending in some markets.
However, living a healthy life remained a high priority
for consumers.
6.2.2 About Philips Consumer Lifestyle
At Consumer Lifestyle we aim to make a dierence to
people’s lives by enabling them to make healthy
choices every day, and through conscious healthy
behavior avoid illness. In recent years, Consumer
Lifestyle has been responding to the need and desire
of consumers to take greater control of their own health.
We have largely reshaped our portfolio toward the
healthy living and disease prevention areas of the
health continuum, targeting more attractive markets
with better margins.
The sector is focused on value creation through
category leadership and operational excellence. We are
increasing the quality and local relevance of product
innovation, the speed with which we innovate, and
expanding our distribution to capture increasing
spending power in growth geographies.
Consumer Lifestyle is built around businesses and
markets, enabling us to direct investments to where the
growth is, addressing locally relevant consumer needs.
We take locally developed platforms and adapt them
for other markets or on a global scale.
Our end-to-end approach is accelerating specialist
capability development in mature markets, to enable
eective partnerships with customers and consumers,
and in growth geographies, to enable development of
go-to-market strategies
In 2014 the Consumer Lifestyle sector consisted of the
following areas of business:
• Health & Wellness: mother and child care, oral
healthcare, pain management
• Personal Care: male grooming, beauty
• Domestic Appliances: kitchen appliances, coee,
garment care, oor care, air purication
Philips Consumer Lifestyle
Total sales by business as a %
2014
21Health & Wellness
32Personal Care
47Domestic Appliances
We oer a broad range of products from high to low
price/value quartiles, necessitating a diverse
distribution model. We continue to expand our portfolio
and increase its accessibility, particularly in lower-tier
cities in growth geographies. We are well positioned to
increasingly capture growth in online sales. Over the
course of 2014 we implemented innovative approaches
in online and social media to build our brand and drive
sales in local markets and globally. On the Philips
Global Facebook page for instance, an educational
personal health and well-being campaign helped
increase the number of fans from 4 million to 6 million.
More locally, a UK-focused Domestic Appliances
campaign, which was activated on several social
channels, generated interest from almost 2 million
consumers in just 3 months.
Under normal economic conditions, the Consumer
Lifestyle sector experiences seasonality, with higher
sales in the fourth quarter.
Consumer Lifestyle employs approximately 16,600
people worldwide. Our global sales and service
organization covers more than 50 developed and
growth geographies. In addition, we operate
manufacturing and business creation organizations in
Argentina, Austria, Brazil, China, India, Indonesia, Italy,
the Netherlands, Romania, the UK and the US.
Regulatory requirements
Consumer Lifestyle is subject to regulatory
requirements in the markets where it operates. This
includes the European Union’s Waste from Electrical
and Electronic Equipment (WEEE), Restriction of
Hazardous Substances (RoHS), Registration,
Evaluation, Authorization and Restriction of Chemicals
(REACH), Energy-use of Products (EuP) requirements
and Product Safety Regulations. Consumer Lifestyle
has a growing portfolio of medically regulated products
in its Health & Wellness and Personal Care businesses.
For these products we are subject to the applicable
requirements of the US FDA, the European Medical
Device Directive, the SFDA in China and comparable
regulations in other countries. Through our growing
beauty, oral healthcare and mother and child care
product portfolio the range of applicable regulations
has been extended to include requirements relating to
cosmetics and, on a very small scale, pharmaceuticals.
With regard to sourcing, please refer to sub-section
14.2.8, Supplier indicators, of this Annual Report.