What is a durable good? The question seems simple enough to answer. According
to the U.S. government, it is a good that has an intended life span of 3
or more years. But the recent trend of “soft” and “hard” goods
manufacturers teaming up to market products has made the term more difficult
Lisa Bonnema, Editor, APPLIANCE Magazine
The marketing strategy really isn’t that complicated: team up with
a well-known packaged goods company, design a new product, slap on some well-known
brands, and bingo—you have a great product that meets consumer needs
on all levels.
Royal Philips Electronics of The Netherlands seems to be leading the charge
on the hard goods side. It has partnerships that incorporate everything from
coffee and beer to shaving lotion and toothpaste into their appliances. In
fact, the strategic alliances are a major part of the company’s global
branding strategy. Philips sees them as a way to offer consumers products
it wouldn’t be able develop on its own.
These kinds of alliances are a fundamental part of our strategy,” Paul
Bromberg, head of strategy for Philips’ Digital Appliances division,
said in an announcement of Philips partnership with beer brewer Interbrew. “We
see them as a key to our future. You can expect to see more and more of these
types of partnerships.”
And boy have we. For the trend-setting Senseo™ pod coffee brewer, Philips
teamed up with coffee maker Sara Lee/Douwe Egbers. Unilever was brought in
for a new ironing appliance that dispenses a “smoothing” liquid,
and Nivea provides the shaving gel and lotion for Philips’ CoolSkin
shaver for men. The partnership with Interbrew was for Philips’ PerfectDraft
appliance, a home-use beer dispenser that includes a tap handle, an internal
cooling system, and a 6-L keg.
Most recently, Philips announced an alliance with packaged goods giant Procter & Gamble
(P&G). The two companies teamed up to produce the IntelliClean System,
an integrated power toothbrush and toothpaste dispensing system.
P&G is leading the soft goods side and has partnerships with several
other appliance makers. Applica worked with the company for its Black and
Decker pod brewer, Home Café, which uses Folgers or Millstone coffee
pods. The companies also created a new category in the laundry sector with
their Tide™ Buzz™ Ultrasonic Stain Remover, a powered stain remover
that uses Tide detergent.
The trend has also found its way into floor care. P&G teamed up with
Techtronic Industries, which owns the Dirt Devil brand, to create Swiffer
Sweep+Vac. The rechargeable vacuum uses Swiffer® cleaning cloths to pick
up dirt and debris, while the vacuum sucks up larger objects. And, of course,
the Hoover Floor MATE™ brought together Hoover and cleaning products
maker Reckitt Benckiser to offer consumers a hard floor cleaner that dispenses
LYSOL® and Old English® cleaning products.
While this seems to be a great way to offer innovative products—and
sometimes even create new product categories—I question the “value” being
added here from a business perspective. Small electrics and floor care have
both been fighting against low-price margins for years, and these new “consumable
durables” aren’t exactly premium products, nor are they being
marketed as such in many instances.
Take stick vacuums as an example. Let’s say model A incorporates a
partnership with a packaged goods company and sells for $39.99. Model B,
made by the same company, doesn’t incorporate the trend and sells for
$49.99. While Model B may have more power than Model A, let’s be consumers
for a minute. You have two rechargeable stick vacs, and the one with the “value-added” brand
you recognize is less expensive. Which one would you choose? Is this the
opposite of what manufacturers are trying to accomplish? Are we shooting
ourselves in the foot by making appliances less durable and more consumable,
and in turn, cheaper?
No, according to Phil Brandl, president of the International Housewares Association.
In fact, he believes quite the opposite. “From a business standpoint,
it would seem to offer an opportunity to add value and perhaps get out of
the product commoditization box that consumer products seem to be caught
in. This may add a bit of margin for the suppliers and retailers that are
involved,” he tells APPLIANCE.
Mr. Brandl also thinks the trend represents opportunity for added distribution. “In
the retail environment, it certainly should lend itself to cross-merchandising
opportunities,” he says. “Would you have ever seen an electric
floor care product in the cleaning aisle? Probably not. Does it make sense?
Overall, Mr. Brandl believes these joint alliances will lead to incremental
growth opportunities. “I’m not sure that the purchase of the
pod coffee maker in the mind of the consumer would replace the need they
would have for a multi-cup coffee maker,” he notes.
And research indicates he may be right. Market research firm NPD Houseworld
predicts that coffee pod brewers will end up representing only 5 percent
of the total number of coffee makers sold in the U.S., suggesting that they
won’t completely change consumer behavior. The firm also predicts,
however, that only two manufacturers will succeed in the category, which
suggests that this trend does take careful planning.
As Mr. Brandl points out, the success of this marketing scheme ultimately
relies on what consumers think, which only time will reveal. Even so, I can’t
help but be a little cautious. As the area between “soft” and “hard” goods
gets grayer, will “soft” goods manufacturers start crossing over?
P&G already released its own Scentstories™ product, which plays
scented CDs. That’s an electric appliance if you ask me. And what will
the future hold if the trend does skyrocket for the small appliance segment?
After all, consumer lifestyles are only moving faster, and if a product can
make life easier with little investment, why wouldn’t you purchase
Let’s face it, in the true spirit of capitalism, no one really wants
to share in the long run. Perhaps this new breed of product partnerships
will develop into a new breed of mergers and acquisitions. If that’s
the case, this new product formula may have a larger impact than industry