Philips Consumer Electronics unveiled a strategic partnership with Nationwide TV & Appliances at the buying group's summer Prime Time convention, held at Caesars Palace, here, last week. It is the first such deal between the vendor and a buying group, and others may follow.
John Riddle, Philips' retail sales VP, who joined the company in April after a two-decade career with major appliance manufacturer Maytag, outlined the plan. "We have to sell the new technology we have now, and what we have coming, while facilitating a strong return on investment. To do that we need retailers who know how to sell high-end product to early adopters."
Riddle added, "We see Nationwide's members as those that have a sales floor of highly trained salespeople who can demonstrate and sell new technology."
He noted that Philips, which has sold buying groups through distributors over the years and is a staple with several major national chains, "did not effectively sell Nationwide," which is one of the main reasons for the change in strategy. Without mentioning other buying groups, Riddle indicated that Philips is considering similar partnerships with other buying groups in the near future.
While not giving details on the financial aspects of the plan, Riddle did outline Philips' and Nationwide's responsibilities as partners.
"We will sell to Nationwide Philips' highest technology products to select members of the group that can handle these products," said Riddle, who added that other Nationwide members are part of the agreement in different ways. "These select dealers must be able to display, demonstrate and effectively sell these products."
In turn Nationwide members will, "have a voice on new product development, as well as how to bring product into market effectively and profitably."
Riddle added that Philips will give Nationwide dealers more advertising dollars to "build the Philips brand in their markets" with tags on TV ads, print ads and fliers to consumers."
As for the Magnavox brand, the strategy developed in 1996 to market "Magnavox by Philips" has ended, Riddle said. Separate brand strategies for Philips and Magnavox are being developed, with Philips taking the high end. "Philips has become more of a 'cool, hip' brand," based on the company's outlay of $200 million in consumer advertising during the last three years, while "Magnavox is a more mature brand," Riddle said.
Magnavox will still be sold by Nationwide retailers as part of this agreement. "We will still sell Magnavox to the group at opening price points," Riddle said.
Concerning Philips' consumer advertising plans for the second half, Bob McElraevy, strategic communications director, said the company's highly visible and successful program of the last three years will continue this fall.
While not providing budget numbers, McElraevy said that Philips' second half program will focus on products, not just branding. "We will have four spots. One on widescreen TV, two on MP3/CD and one on audio CD." Details on the program are still being developed, but the campaign is expected to begin next month.