Manufacturers of washing machines, ovens, fridges, freezers, dishwashers and dryers are striving to update their brand images.
The white goods market is moving into a slow cycle following last year’s boom, inspired by building society windfalls. Manufacturers are also preparing for the implications of the end of recommended retail prices, which came into effect on September 1, following a 1997 Monopoly & Mergers Commission report giving retailers the right to set their own prices.
Manufacturers play down the prospect of these factors sparking a damaging price-war in white goods, but it is clear they are under pressure to make their brands stand out from the competition.
Hoover, Electrolux, Zanussi and Bosch have all adopted campaigns that are departures from the usual product-led advertising. Meanwhile, Merloni, which markets the Indesit and Ariston brands, has created the position of marketing director (MW September 17) to prepare for the new landscape.
White goods advertising has become more adventurous, sometimes not even featuring the product – a technique which is considered the height of creativity by some in the ad industry.
Last year, the white goods market soared by almost a quarter on 1996 to 2.26bn thanks to windfall payments, post-election consumer confidence and a buoyant housing market.
Sales this year won’t scale those heights, though analysts say 1998 will still be a successful one for white goods. Sales have returned to the 1995/1996 levels and price structure, according to GfK Marketing Services analyst Aaron Rattue.
“Even if growth is flat compared with last year, it will still be very good,” says Rattue.
Kingfisher results for the half-year ended August 1 1998 show its electrical goods chain Comet had improved its like-for-like sales in 1997 by 12.4 per cent, compared with a 0.6 per cent decline in 1998.
But Rattue believes the smaller growth over the next couple of years will focus competition among the manufacturers on features, detail, finish and design.
Electrolux’s 1997 results statement believes design “is becoming increasingly a strategic tool for positioning brands and obtaining greater segmentation in relation to different customer groups”.
Duncan Bird, group business director of Electrolux’s advertising agency Bartle Bogle Hegarty, says: “What we are seeing is not a resurgence in white goods advertising, the brands advertised throughout the Seventies and Eighties – think of Ariston. But what we are seeing now is a significant need to differentiate.”
There is a growing public obsession with cooking as a leisure interest – witness the rise of celebrity TV chefs, cookery books and exotic ingredients. But consumers have become less interested in the appliances that allow creativity in the kitchen, according to Bird. BBH has taken this into account in Electrolux’s new European TV and press campaign.
“The research we’ve carried out across Europe shows the increased fascination with cooking is coupled with a decline in the relevance of appliances in the process,” he says. The research also highlights consumers don’t notice appliance ads.
Electrolux head of marketing Marcus Bleasdale says: “We have tried to break the mould by focusing on what appliances do – how they transform ingredients into food – which has turned white goods advertising on its head.”
The Electrolux advertising push coincides with the launch of a new range of built-in ovens, fridges and washing machines.
For this range the Tricity Bendix and Parkinson Cowan brands have been replaced with generic Electrolux branding. The brand names remain for free-standing appliances.
Bleasdale says: “As the market becomes more sophisticated, consumers want the reassurance of a brand name. Now consumers are more discerning, brand is a key differentiator.”
To reinforce its relationship with the popular interest in food, Electrolux has signed a sponsorship deal with the cable and satellite channel Carlton Food Network, beginning in October.
Other white goods manufacturers are also coming up with new campaigns to promote brand awareness and differentiation. Hoover has launched its first major advertising campaign in 15 years, through Ogilvy & Mather. The “Rely on Hoover to do the homework” idea will form the basis of advertising for the next few years.
Marketing director Charles Gordon says: “We want to make sure it is a brand for today and tomorrow rather than yesteryear.” He claims the campaign has attracted younger consumers than expected, in the 22- to-35 age group.
Bosch is going on screen in October with a new “sexy” execution of its security guard ad. Bosch publicity manager Ken Humphrey says: “The intention of the advertising is to make people ‘Bosch-minded’ before they go into the store.”
And Zanussi has invested in a three-stage 3.5m national poster campaign. The first executions read “The Misappliance of Science” on shots of dried up river beds, nuclear mushroom clouds and a sheep called Dolly and don’t even feature the Zanussi name.
Meanwhile, Whirlpool has appointed marketing director Mike Hooker with a brief to compete directly with Hotpoint, Zanussi and Bosch. Publicis is developing its new TV and press campaign.
Some white goods manufacturers have a lot of branding work to do, since awareness varies greatly according to a 1998 Mintel report, Brand Loyalty in the White Goods Sector. Hoover and Hotpoint score 94 per cent and 93 per cent respectively. But Miele, despite being “a well-established premium white goods supplier in the UK”, scored only 29 per cent.
However, brand loyalty scores reveal a different picture. Hotpoint makes only sixth place, with Hoover even lower down the table, below Aga and Bosch. The leaders are premium brands Zanussi, AEG and Ignis.
In the light of Mintel’s assertion that the brand is only the fourth most important factor for consumers when purchasing white goods – behind value for money, durability and economical running costs – it is clear why manufacturers are desperate to boost brand differentiation.
Some manufacturers are trying to overcome the replacement cycle in white goods by targeting consumers who can afford stylish products. They want them to buy new goods as a fashion statement rather than waiting for the old ones to break down.
Smeg is at the vanguard of products with retro style, offering pastel coloured fridges, stainless steel ovens and a new range designed by Pompidou Centre architect Renzo Piano.
A Smeg spokesman says: “We call our products ‘focus appliances’. They are a talking-point, reflective of lifestyle and a fashion statement. We make appliances the focal point of the kitchen instead of hiding them away.”
Meanwhile, Bosch has collaborated with car maker Porsche on the development of stainless steel electric housewares such as coffee makers, toasters and kettles.
Growth in this premium, style-conscious market will be more dynamic because it is starting from a smaller base, says James McCoy of Mintel. The affluent fashion-conscious are more likely to be loyal.
But the push for brand loyalty may be disrupted by the removal of the recommended retail price system. McCoy comments: “If you take the RRP away, there is less scope for brand loyalty because people will become more fixated by price. The advertising will increase as manufacturers try to gain market share.”
He says the investment in brand campaigns to establish differentiation may be a part of a defensive measure to protect brands from possible price cutting by the retailers.
The manufacturers say they do not believe the abolition of RRP will have much effect. Nevertheless, they are embracing the threat of competition through with their branding campaigns. Whether they succeed will be a measure of how much consumers view white goods as more than just functional products.