Amana Aims At New Niche In $100M Makeover

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Amana, Iowa-This is not your mother's side-by-side refrigerator. Or washer-dryer, electric range, microwave oven or dishwasher. In fact, it's not the Amana your mom knew at all.

Hopefully, say the folks now running the No. 5 majap maker, it's better.

Like a butterfly leaving its cocoon, this tightly held Corn Belt-based business has fully metamorphosed following a two-year, $100 million-plus makeover. The plan: Draw in a new generation of young homemakers by building upon Amana's decades-old reputation for quality and innovation with updated designs and a fresh marketing message.

At the same time, the vendor, a unit of privately held Goodman Holding Co., a Houston-based commercial heating and air conditioning business, is working to reinforce its niche in a tumultuous majap market. Its role, as defined by recently installed president/CEO Chuck Carroll, is that of an affordable, homegrown alternative to the super high-end European brands, and a friend, if not a refuge, for the independent appliance dealer.

"Amana has traditionally focused on the independents and Sears, and we're intent on growing those businesses," said Carroll, a former Rubbermaid honcho who joined the company in January to help orchestrate its renaissance.

Underscoring the point, Carroll has sworn off the home improvement chains, and earlier this year parted company with Best Buy in what he described as "a mutual decision" in order to pursue "the growth that's in the over-$900 area." At the same time, he acknowledged, "we must also find ways to work with the independents to relieve inventory pressures."

That's all music to the ears of the buying groups, whose members are being squeezed by a wave of aggressive pricing that was partly triggered by The Home Depot's no-inventory entry into white goods. "MARTA members have become extremely enthusiastic about Amana," observed the group's executive director Warren Mann following Carroll's keynote address before the rank and file in September.

Carroll, in turn, lauds his corporate parent for initiating the nine-figure imperative in 1998. "After Goodman bought the business from Raytheon, the question was what do we have to do to be a first-class major appliance player," he said. To find the answer, Amana turned to consumers.

"More research has been done in the last two years than in the last 10 combined," noted John Herrington, Amana's marketing VP. "We held focus groups, did quantitative analyses and tore apart competitive brands."

The result: Amana determined that its customer base was aging and decided to target a new core audience comprised of 24- to 54-year-old female homeowners with average household incomes of $60,000, appreciably higher than the industry norm.

To reach them, a $26 million ad campaign dubbed "Funny Women" was devised, featuring young, recognizable comediennes and actresses who touted the quality-of-life conveniences of Amana's products in comic vignettes.

While recasting the company in a hip new veneer, the marketing effort also harkened back to Amana's heritage as a maker of solid, dependable machines through the tag line "Built Better Than It Has To Be." Herrington's team also leveraged the campaign for the trade by developing branded point-of-sale material, in-store signage and tagged TV spots.

"The dealers welcomed it," Herrington said. "The campaign was designed from the female perspective, and they said it helped increase their sales."

Just as Amana's image was updated for the new century, so too were its offerings. Working from the ground up and incorporating the voluminous consumer research, in-house engineers and outside design consultants overhauled the product line to incorporate enhanced ergonomics and value-added features that consumers would be willing to pay more for.

Examined were such details as the feel of knobs and handles, the heft of the oven doors, the pattern of the ceramic cooktop elements, the configuration of refrigerator storage bins, and the translation of common laundry habits into user-friendly wash cycles.

The upshot of that effort is a vastly revamped product assortment that boasts contoured refrigerator doors, pullout freezer drawers, super-capacity ovens and washers, and loads of stainless steel, both inside and out.

Indeed, in a triumph of manufacturing agility, fully 15 redesigned platforms were introduced in Amana's core refrigeration category alone, and 65 percent of this year's sales will be derived from products that weren't available in 1999, Carroll said.

Despite some setbacks, including last month's layoff of 350 employees, or 10 percent of its Iowa work force, due to the loss of Circuit City's business, Amana's makeover appears to be on track.

The manufacturer's room and central air conditioners were praised as "best buys" by Consumer Digest in June, and over the past three months the company successfully rolled out its 5.1-cubic-foot Big Oven and commercial-look, $799 Classic Radarange microwave.

With yet another wave of introductions set for early next year-including an innovative new bottom freezer assortment and a new tier of Energy Department-compliant products-Carroll and his team believe the best is yet to come.


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