Miele Marketing Report 11May2019 PDF

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Universitat Jaume I Castellón de la Plana

Foundations of Marketing

Group:

I

PR:

10

Lecturer:

Víctor del Corte Lora Rosa María Rodríguez Artola

Date of submission: Team name:

Appliance Machina Inc.

Calvo Jives, Javier Chung, Tsz Kwan (Tempo) See, Cheuk Hin (Sam) Lieferink, Kim Yusuf, Kadar

Table of Contents 1 Introduction................................................................................................ 3 2 The firm......................................................................................................3 2.1 History of the firm..................................................................................................... 3 3 Primary sources..........................................................................................4 4 Secondary sources......................................................................................4 4.1 Market share............................................................................................................. 4 4.2 Consumption............................................................................................................. 5 5 Reference market........................................................................................5 6 Relevant market..........................................................................................6 7 Consumers..................................................................................................7 8 Demand calculation.....................................................................................7 9 Internal analysis.........................................................................................7 9.1 Strengths.................................................................................................................. 8 9.2 Weaknesses.............................................................................................................. 9 10 Competitors analysis.................................................................................9 10.1 Levels of competition.............................................................................................. 9 10.2 Direct competitors................................................................................................ 10 10.3 Competitor to attack............................................................................................. 12 11 Segmentation..........................................................................................12 11.1 Identification of final customers............................................................................12 11. 2 Segments in the market....................................................................................... 12 11.3 Attractiveness of each segments..........................................................................16 12 Target market and Coverage strategy.......................................................16 13 Positioning..............................................................................................17 14 SWOT analysis.........................................................................................18 14.1 Opportunities........................................................................................................ 18 14.2 Threats................................................................................................................. 19 16 Mission, vision and values........................................................................21

17 Objectives...............................................................................................21 17.1 Commercial relationship....................................................................................... 21 17.2 Marketing activities.............................................................................................. 22 17.3 Financial issues.................................................................................................... 22 18 Strategies............................................................................................... 22 18.1 Intensive growth strategies...................................................................................23 18.2 Market penetration strategy.................................................................................23 18.3 Strategy of new product development..................................................................23 18.4 Strategy of development of new markets.............................................................23 18.5 Diversified growth strategy/ integration...............................................................23 18.6 Strategies of maintenance or disinvestment.........................................................23 19 Bibliography............................................................................................ 24

1 Introduction

2 The firm Miele is the world’s leading provider of premium domestic appliances for cooking, laundry care and floor care. Furthermore, the company also produces dishwashers, washing machines and dryers for commercial use. In the past few years the company has also started to focus on machines for reprocessing medical instruments and for laboratory needs (Miele Professional). The Miele Group is made up of the two affiliates Miele & Cie. KG, a parent company based in Germany, and Miele Beteiligungs-GmbH a parent company for organizations outside of Germany. Miele conducts production operations in 13 plants at a total of twelve locations, of which most of them are based in Germany. They have production locations in Austria, Romania, China etc. Miele employs a total of 17,660 people around the world, 62% of these employees are located in Germany. Those people employed outside of Germany mainly work in Sales and Customer service. Miele is an important employer and taxpayer and is aware of these responsibilities.

2.1 History of the firm Miele is founded by Carl Miele and Reinhard Zinkann in 1899 as a centrifuge factory. Miele initially established itself as a supplier for many segments of the agricultural industry by offering dairy factory equipment, bicycles, washing machines and automobiles. In 1994 Miele takes a giant step toward satisfying the desires of its customers and becoming more involved in manufacturing fitted products. In the following years Miele presents the new generation of washer-extractors and tumble dryers and the more economical EcoLine washing machine. Today, the company focuses on producing durable domestic and commercial appliances that deliver superior quality, performance and user comfort. (Miele, n.d.).

2.2 Primary sources

In the future it might be useful to conduct a survey or interview, to gain more information about the market from the customers viewpoint. Furthermore, it could be used for a estimation of demand.

2.3 Secondary sources

2.3.1 Market share This statistic depicts the ranking of the most used washing machine brands in the United Kingdom (UK) in 2017, by number of users. In 2017, an estimated 8.2 million people used Hotpoint washing machines. Ranked second and third were Bosch with 5.7 million and Beko with 4.9 million users. Graph 1: Brands of washing machines ranked by number of users in the United Kingdom (UK) in 2017 (in 1,000s)

Source: (Statista, 2019)

2.3.2 Consumption In Graph 2, the statistic shows the percent of households in the United Kingdom that own a washing machine. In 1970, when this survey first started, 65 percent of households owned a washing machine. As of 2017, that number has increased to 97 percent of households owning a washing machine. Graph 2: Percentage of households with washing machines in the United Kingdom (UK) from 1970 to 2017

Source: (Statista, 2019)

3. Market and Demand Analysis 3.1.1 Reference market In the reference market can be differentiated three axes:   

Needs: the need that our products are going to satisfy. In our case, that would be “Washing clothes”. Buyers: Those entities that we are trying to satisfy by selling them our goods. Individuals are the most common buyers of Miele’s products. Technologies: How we can satisfy the buyers’ needs. Among all the different possibilities, washing machines is our bid.

Image 1: Reference market

3.1.2 Relevant market Inside of the reference market we can see the product market of Miele. It is the biggest cube that we can see in the image. It mainly focuses on the sale of washing machine to individuals, although there are other public that is also Miele’s consumers, like other firms and the public sectors. Moreover, the market coverage strategy is the concentration strategy, because Miele has more share market in the individuals’ group Image 2: Relevant market

3.2 Consumers

Washing machine is a necessary application for families and firms. As it will can reduce the time on washing clothes by hand and wash a large amount of clothes at the same time. The final customers are the individuals, they are usually a group of people. So families that go to buy washing machine from the shop which from moving living place; they represent the major part of clients of the firm Miele. Furthermore, there are some other kind of clients that are the organizational customers, constituted by other firms (such as restaurants, hotels or salons) that use washing machine to wash their clothes or reuse towers, and the public sector like government.

3.3 Demand calculation 

Total households

In Graph 3, the statistic shows that there are 27,228,000 households in total in UK. Total households: 7,716,000 + 9,425,000 + 4,473,000 + 3,758,000 + 1,280,000 + 576,000 = 27,228,000

Graph 3: Number of households in the United Kingdom (UK) in 2017, by size (in 1,000)

Source: (Statista, 2019) 

Percentage in owning a washing machine

According to Report “Report 9: Domestic appliances, cooking & cooling equipment”, it indicates that approximately 97% of households own a washing machine.

Image 3: Percentage in owning a washing machine

Source: (Report 9: Domestic appliances, cooking & cooling equipment, 2011)

Total washing machines: 27,228,000 × 97% = 26,411,160



Average price for a washing machine

According to Article “How much should I pay for a new washing machine?”, it shows that the average range for washing machines in UK is from about £300 to £1,000. Therefore, the average price is around £650 in UK. Image 4: Average range for washing machines

Source: (How much should I pay for a new washing machine?)

Total demand: 26,411,160 × 650 = 17,167,254,000 pounds

We can get a total demand of 17,167,254,000 pounds in UK. However, the Image 5 shows the average lifespan of a new washing machine is 11 years. Therefore, the demand of a washing machine per year is 1,560,659,454.55 pounds.

Image 5:

Source: (Is it better to replace my washing machine or repair it?)

Table 1: Demand Calculation Total households

Washing machines in UK

27,228,000

Lifespans (in years)

11

Percentage in owning a washing machine 97%

Washing machines bought by year

Total washing machines

Average Price

26,411,160

£650

2,401,014.545

£650

Total Demand

17,167,254,000

1,560,659,455

4 Competition analysis 4.1 Internal Analysis Miele & Cie. KG is engaged in the manufacture of home appliances, and machines for commercial applications. The company focuses on their product portfolio and are always looking to innovate. They have strong operational capabilities and they improved their financial performances, which now has led to be one of their major strengths. However, there are a few concerns regarding safety issues, which can be considered to be one of their weaknesses.

Strengths Operational presence Growth in revenue Constant innovation Product line & quality Operational capability

Weaknesses Price Safety issues Market share in UK

4.1.1 Strengths Operational presence Miele has manufacturing facilities and sales centers across the world, which enables them to maintain a strong operational presence. They have operations and sales subsidiaries across 100 countries, the company has established itself in economies in Europe, America and Asia. The company has a wider customer base and stronger brand presence due to geographical diversity and manufacturing expertise.

Growth in revenue The company has experienced a strong growth in revenue lately which enables Miele to achieve operational excellence and support growth initiatives. The growth is due to the positive results from both its domestic and international business. Not only has the commercial business seen a growth but also the professional unit has seen a growth in the past 5 years.

Constant innovation The motto of the company is ‘Always better’, making sure consumers lives are simplified is one of their main goals. Miele constantly focusses on innovation based on extensive consumer insight, to meet the real needs of consumers as well as professionals. They consider innovation as a strong driver for growth. Examples are the InfoControl Plus app and SlimLine range.

Product line The company offers a large range of products which helps them serve a large customer base. Miele is established in the European market, and known for its washing machines, but also dishwashers, freezers tumble dryers etc. Furthermore, the company also offers washer-disinfectors for hospitals and medical laboratories. The company had been awarded numerous awards for the products quality.

Operational capability Miele has a strong distribution network and production which helps the company gain operational synergies and enable efficiently serve its customers. The company has 47 branches in 150 countries, and is present in over 3000 ports worldwide. It helps the company reduce market volatility, economic instability and competitive risks in the industry.

4.1.2 Weaknesses Price Miele’s products are more expensive than the budget end of the white goods market. Compared to other competitors Miele is one of the more expensive washing machine brands. This could lead to a smaller customer base willing to pay this amount.

Safety issues The recall of products has weakened the brand image of the company, it has influenced consumer confidence in Miele’s products. It could lead to an increase in operational costs which could affect the company’s profit margin. Furthermore, the company identified a fault in one of their machines connected to an internet network. Hackers could manipulate and control data, these inconveniences affected their reputation and customer confidence.

Market share in UK According to Statista Miele isn’t really established in the United Kingdom yet. Since the washing machine market is really competitive it might be hard to expand this market share in the future.

4.2 Competitors analysis The washing machine market had a massive growth over the last decade with only 65% of household having a washing machine in the 70’s however those figures in 2017 stand at more than 97%. This could be due to an number of factors such as a house appliance become more and more of an necessity as the number of laundry mat has dramatically been declining in the UK and also due the UK economy growing which lead to improve the quality of life.

4.2.1 Levels of competition Budget competition: Regarding the budget competition, we consider products with similar prices that satisfy similar but not equal needs. Applying it to our company we could put as an example the sale of dryers, which offers a product that will satisfy a different need but maybe in some specific cases, buyers will be forced to choose only an option. Generic competition: The generic competition occurs between cases of products or services that satisfy the same need but have great differences between. Exemplifying it to our company; generic competitors would be laundromats, dry cleaners or even products to do the washing by hand.

Competition in product category: These competitors are the one that offer a product that satisfy the same need and characteristics. Some competitors in product category would be for example a washing machine with the hole on the top against a washing machine with his hole on the front. Product form competition: Is the most direct form of competition, in this case competing products have the same characteristics at most points. For example: A high technology washing machine developed by Miele vs a high technology washing machine developed by Siemens.

4.2.2 Direct competitors In order to execute the analysis of our main competitors, we pay special attention to those firms, such as Bosch, LG, AEG etc. That sell similar products to ours, considering all the types of goods that we provide. Bosch Strengths Strong distribution network Strong brand portfolio

Weaknesses Positioning and unique selling proposition is not clearly defined Not able to compete with the leading players in the industry in terms of innovation

Cash flow Performance in new markets Source: (Bosch SWOT Analysis / Matrix) LG Strengths Wide range of products Effective localization of product offerings for growth markets like India, Brazil, China Good after sales service and wide distribution network Subsidiaries enjoy independence in decision making and hence have flexibility in adapting to the local market Source: (SWOT Analysis of LG, 2015) AEG Strengths

Weaknesses

Weaknesses Brand has limited market share compared to market leaders Lack of market share in several products like T.V, Refrigerator etc Brand did not create awareness among the masses about their products.

Leading firms in its industry Build a reliable supply chain Strong dealer community

Not able to compete with the leading players in the industry in terms of innovation Needs more investment in new technologies

Reliable suppliers Strong distribution network Strong brand portfolio Automation of activities

Source: (Aegion Corporation SWOT Analysis / Matrix) Other 3 ways: Competitive Analysis Miele

Bosch

LG

AEG

Objectives Sustainable

Sustainable

Market leader

Sustainable

Strategies

Sustainable

Innovation

Innovation

Innovation

Pricing

The lowest price is around 620 pounds, but most are at least 1000 pounds

300-600 pounds

350-2000 pounds

300-700 pounds

4.3.3 Competitor to attack According to the competitors’ analysis the competitors that could be a direct threat to Miele. Bosch and AEG have both similar strengths as Miele but are in different price ranges. Bosch and AEG are in terms of objectives and strategies most similar to Miele. Bosch is focusing on sustainability like Miele. Furthermore, they both have a strong distribution network and portfolio. According to graph 1 Bosch is one of the market leaders in the UK, which makes them one of the key competitors.

AEG is an established brand, however is in the same level in the UK as Miele when it comes to market share. Therefor the company is a direct competitor to Miele. Just like Bosch and Miele they also have a strong distribution network and portfolio.

5 Segmentation and Positioning Analysis 5.1.1 Identification of final customers This washing machine consumers is someone who must own one due to necessi...