European aspirations

White goods giant Indesit Company is taking its popular UK brand Hotpoint to Europe in a reversal of the established trend for introducing continental and global brands to the UK (MW last week).

The Italian-owned manufacturer, formerly Merloni Elettrodomestici, will initially launch Hotpoint as a dual brand concept alongside Ariston, which it axed in the UK in 2003. The intention is to phase out Ariston altogether in the long term and simplify the brand portfolio – if the Hotpoint brand achieves the same level of popularity that Ariston has enjoyed across Europe.

Hotpoint is the UK’s leading brand in domestic appliances with 16% of the white goods market followed by Indesit, which has a 9% share (GfK). Hotpoint UK brand manager Ian Moverley says the brand has been market leader for 30 years and is seen as a mass-market brand with an image associated with the concepts of faith, trust and reliability. He adds: “We are maintaining these attributes but are repositioning Hotpoint by promoting it as more stylish and aspirational.” He argues that the brand’s expansion into Europe will reflect well on its positioning in the UK as the company will be able to promote it simultaneously across various markets.

Hotpoint began in the UK in 1911 when Earl Richardson invented a new electric iron where the heating element was the same length as the iron, converging to be hot at the same point – hence the name and the formation of Hotpoint Electric Heating Company. In 1989, it became part of a division of the GEC Group called General Domestic Appliances (GDA).

The Indesit company was established in 1975 from the household appliances division of Industrie Merloni and controlled by the Italian Merloni family. It bought Hotpoint in 2002 from GDA.

In 2004, £60m was spent on the Hotpoint brand including a new logo and an £11m above-the-line advertising campaign. Hotpoint became the leading name in the washing machine sector that year, accounting for 24% of volume sales (Mintel).

Indesit European brand marketing director Marco Rota says Hotpoint and Ariston have the same positioning, value and services so it makes sense to merge the brands. The move will be executed in three stages. The first will introduce the rebranding with information and presentations at the point of purchase in stores, while the second step includes an official announcement of the concept; the third stage will encompass the launch of the Hotpoint Ariston Aqualtis washing machine, accompanied by a television ad campaign created by Leo Burnett.

The strategy will be phased in gradually across different countries. Italy will take the lead as the first location to pilot the launch, to be followed by Russia, Ukraine and the Netherlands. Rota aims to complete the European dual-branded launch by March 2008.

Roger Taylor, European senior vice-president of sales for major appliances at rival Electrolux, says it is understandable that Indesit is undertaking this move to focus on a harmonised European brand strategy. But he wonders why they are concentrating on a UK brand. “It is interesting to see that Indesit has picked the Hotpoint brand which is a local, but nevertheless significant, brand in the UK. It will require huge investment and co-ordination.

“There would seem to be other, perhaps internal, reasons why Indesit has chosen to do this. What then happens with the Ariston brand in Europe? Perhaps Indesit wants to have a pan-European brand to compete with the Electrolux brand.”

Rota says the reasoning behind the plan is straightforward. He says that since emotional involvement for consumers in the white goods market is very low, novelty value is a key factor for growth and sales. “This launch is a clear reflection of innovation within the company and will pave the way for us to invest more in communications and further innovation.”

However, senior consultant Amelia Boothman at the Value Engineers warns it is difficult for brands with low awareness to become established in new markets and it will take significant investment and a committed long-term strategy to see solid results. She says Indesit will need to focus on originality and pricing to successfully appeal to consumers, in addition to creating a key point of difference between the Hotpoint-Ariston brand and European rivals.

There is also the question of how the company will tackle the diversity of markets throughout Europe. Rota admits there is zero brand awareness of Hotpoint on the Continent but remains confident: “Our research shows the sound of the word ‘Hotpoint’ has positive associations with technology and innovation.”

Boothman, however, cautions that the Eastern and Western European markets are attracted by dissimilar elements with consumers living in Eastern Europe wanting prestige while their Western counterparts expect ease and efficiency. “Hotpoint is clearly an Anglicised name and Indesit needs to make sure it resonates well in Europe. It is unusual for a UK brand to be transported to the Continent and it needs to ensure it cuts through any British historic associations by establishing a unique proposition.” She suggests a segregated promotional strategy aimed at the two markets could be an apt solution.

Facts and figures
Hotpoint 

• Indesit, formerly Merloni Elettrodomstici, produces home appliances under the Ariston, Hotpoint, Indesit, Scholtes and Stinol names 
• The 32-year-old company is controlled by the Italian Merloni family 
• £60m was spent on the Hotpoint brand in 2004, including a new logo 
• In 2005 Merloni changed its name to Indesit after one of its bestknown global brands. That year, it also entered a joint venture with China-based Wuxi Little Swan to make dishwashers 
• Indesit’s operating profit for the quarter ending March 31, 2007 was £31m (€45.7m) while revenue for the same period was £515m (€757m)