A fridge too far for BSH?

Concerned that Bosch is risking its premium tag by being overstretched, BSH Group has launched a no-frills range to fill the void. By Caroline Parry

It is notoriously difficult to build a brand in the white goods market as consumers usually only buy products through necessity, either as first-time buyers or if existing equipment has broken down.

So BSH Group, owner of established premium white goods brands Bosch, Gaggenau, Neff and Siemens, has set itself quite a challenge with the launch of value brand Viva (MW last week).

The range, which is being launched simultaneously in France, Italy and the UK, is aimed at price-conscious consumers who aspire to the design of BSH’s other brands. Viva will not offer consumers the extra features they might expect with a Bosch product and it will not receive a significant above-the-line ad spend.

It is not known what price range Viva will be in, but given its positioning it is likely to start below £250. Viva will be aimed at consumers looking for no-frills white goods. The target markets includes a variety of consumers, from parents buying for children who are going to university, to people who are setting up a new home following separation.

According to BSH Group strategic development director Steve Holton, the launch of Viva is the result of a two-year review of the company’s brands. This has led to the repositioning of Siemens as an added-value and premium range and the revamp of the Neff product range and distribution channels. BSH Group is also working on some changes to its high-end cooking brand Gaggenau, which will be launched in the coming weeks.

The launch of the Viva range aims to avoid price erosion, a thorny issue for the Bosch brand, which Holton says has suffered from in-store discounting as a result of tough retail conditions and the downturn in consumer spending. The group fears that in the long term, these issues could result in Bosch losing its premium positioning.

Holton says: “We have been increasing the accessibility of our brands over the past couple of years, but we have reached the point where we have gone as far as we can without sacrificing the technology.”

He says that the group’s shareholders, Siemens and Robert Bosch, will not compromise on the technology used in the products and for this reason there will always be a minimum cost involved in manufacturing their goods.

Electrolux UK brand and marketing director Andrew Mackay believes that while price erosion has occurred, the major manufacturers, including BSH Group, have encouraged it. He says: “Between the manufacturers we have been spending more than £20m on advertising. This means that there is fierce pricing in some retail channels.”

Holton admits that BSH Group has lowered the price of Bosch products, but says that the launch of Viva will allow it to reposition the Bosch brand as more upmarket.

Other major manufacturers in the white goods sector have also repositioned their brands in recent years. Electrolux has embarked on a strategy of co-branding, introducing the Electrolux logo on to its other brands. This has allowed it to strengthen the position of Electrolux and leave room for it to launch standalone brands outside its core range.

Indesit Company, which was previously known as Merloni Elettrodomestici, has reorganised its brand portfolio. In 2003 it axed the Ariston brand in the UK in order to focus its resources on fewer brands (MW March 27, 2003). It has also revamped the Hotpoint brand with a new logo and positioning, and brought cooker brand Creda into the portfolio as a sub-brand (MW September 23, 2004). This has also allowed it to extend the Hotpoint brand into high-end appliances, which were launched earlier this year (MW February 10).

Holton concedes that building the brand from scratch will be a “serious challenge” but says the group knew it would be a “slow-burn project”. He adds: “It is a bit of a gamble, but in five years if we have a market share of three to four per cent, we will be more than happy.”

Facts and Figures

BSH Group is a 50:50 joint venture between Robert Bosch and Siemens

BSH Group is the third-largest group in the white goods sector, with a 12.1 per cent share. Indesit Company is the market leader, with a 26.1 per cent share, and Electrolux is second, with 12.6 per cent

BSH Group saw a nine per cent increase in sales in 2004 to ââ¬6.84m (£4.6m) compared to E6.3m (£4.2m) the previous year

In volume terms, the market grew by 5.2 per cent last year with more than 19 million units sold

The value of the market also grew last year, from £3.5bn in 2003 to £3.7bn in 2004 (GfK)

The market looks set to continue growing in volume terms with a 1.2 per cent increase for the three months to the end of April. However, it has seen value decline by 0.4 per cent over this period

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