Whirlpool Case Study
Whirlpool’s success as the number two appliance company in the world is due to its strategy of offering products in three alternative price categories – top-of-the-line, medium price, and low end. This strategy has allowed it to expand out of the mature domestic U.S. market (growing at a rate of 2% – 3% per annum), where it is the number one appliance company, into foreign markets, while its early start into Latin America from 1957 has allowed it to become one of the market share leaders in that region today.
The company expanded into the European market by taking over Philips Electronics’ European appliance business, putting it in number 3 place in the region, while Electrolux enjoys the number 1 spot. Sales volumes, however, in the region were growing at lower than the domestic rate because of over capacity from low cost producers. But by focusing on its 3 price strategy the company was able to target the different segments of the region as identified by their market research.Market research also showed them that different customers in different countries prefer different features, for example, for Brazil the company had to establish a new washer (Ideale) that was inexpensive, yet looked expensive so that it may target the country’s 30 million households with monthly incomes below that of the low-end washers who considered owning a washer as a status symbol. To lower costs of production product platforms were designed by Whirlpool to which country-specific features could later be added.Nowadays emerging markets are considered as the drivers of global growth for the company and so the company has had to build brand recognition in these places, as well as convincing these people to purchase more than just washing machines from Whirlpool.
That trend is already growing in China, and it now remains to start in India and Brazil as well.Implications for a Global MarketerThe Company has followed a two pronged strategy: one is the strategy of creating 3 product divisions based on price, and the other is of using market research to act local while going Global. The first strategy has worked favourably for it in its domestic market in the U.S., and seems to also be working in the emerging markets of China, Brazil, and India.One of the key features of Whirlpool’s success is that when faced with a new situation it does not try to use the same methods and products to try to overcome it, like in Brazil, where the company invested heavily in R&D to create a new washer that was inexpensive enough for the Brazilians to afford.
For any marketer this feature of the company would be a great plus as the marketer can stress on the qualities that will benefit the local population to sell the company brand to them.Because the company relied on a lot of market research in the U.S., which led to it becoming the top company in that market, Whirlpool makes sure to start out with market research before entering into any market. This has allowed the company to create locally flavoured appliances that appeal to a specific country’s consumers.
This ‘think global and act local’ policy allows the company to make sure that its products are well received by the consumers, even desired.Currently it looks like the company will be focusing on the emerging markets for further growth in the world and so it is essential for marketers of the company to make sure that the local features of the appliances are highlighted in each market accordingly. In addition, marketers will also have to conduct more market research to understand what it is the local consumers want from their Whirlpool machines, while also ensuring that these consumers buy more than just the washers, they buy all of Whirlpool’s appliances.Recommendations and Additional ThoughtsWhile the company has become successful in the emerging markets as described by the Case, it seems that this was not always true, especially in the mid-1990s because the company faced major issues in the regions. In Brazil, the company was hit with the spiraling interest rates in 1997 and 1998; in China, the company failed to understand the distribution channels and the consumers; and in Asia, the company lost more than its sales in the region (Ramaswamy ; Inkpen, 2006).
It later bounced back with its new washer which was introduced in Brazil, the product platforms innovation, and its ‘think global, act local’ policy.Whirlpool’s success has largely been because of its culture of performing for the benefit of the consumer, which was shown in its being one of the first firms in the U.S. to create a toll-free customer service number in 1967 (Knapp, 1999). The consistency in the company’s mission to look after its customers resulted in the differentiation in the product price categories so that Whirlpool could cater to each class of customer as was economically feasible for the company.The company not only caters to the well-being of the customers’ but also to the well being of its distributors, which automatically results in improving on the customer service the company provides (Tyson, 1996).
Whirlpool also does not shy back from aggressive acquisitions to enter into new markets; something that has allowed it to become a strong competitor in each new market it enters. This acquisition strategy has also allowed it to increase the consumer base and introduce new products through the research gathered from the acquired company (Tyson, 1996).So far the company’s strategies seem to be working for it, especially after the mid-1990s, when the company decided to rethink its methodology of operating in emerging markets. Therefore it is recommended that the company continue to follow its currently applied strategies, especially it focus on continued quality customer service.