issue: January 2005 APPLIANCE Magazine 53rd Annual Appliance Industry Forecasts Asia's Strategies for 2005	Share  Printable format  Email this Article  Search
by BJ Spanos, Contributing Editor Significant price erosions of recent years seem to be stabilizing in the face of shrinking margins.

“A competitive unit cost will play an important role, but companies will focus to ensure sustainability by reducing cost of transportation, improving productivity, and securing competitiveness of brand,” said M.Y. Shin, economy researcher for LG Electronics, Ltd..

Mr. Breese agrees, adding that advantages in these areas can somewhat offset disadvantages relative to base product cost. “Manufacturers that can deliver on a number of these elements and be cost competitive will have the best chance of thriving in this environment,” said Mr. Breese.

To address marine shipping costs, Mr. Lee said Samsung has already put a Supply Chain Management program in place to reduce the number of logistics steps and deliver directly to customers’ warehouses. “More activities are planned to lower costs along each stage of the supply chain,” he noted.

Samsung also plans to use innovation to lure consumers into brand loyalty. The company recently announced that it has increased its research and development staff by 60 percent. Samsung also plans to reduce manufacturing low-end products in favor of high-end brands. Whirlpool is employing a similar strategy. By refocusing marketing and service efforts on the customer, manufacturers are hoping to move consumer purchases to higher-end products, where the margins are better.

“The trend in product innovation continues to accelerate, with time-to-market cycles further compressing, and appliance consumers have demonstrated that they are willing to pay more for this innovation and to replace their appliances faster when compelling new products hit the market,” said Mr. Breese of Maytag. “This combined with the fact that consumers in almost all markets are spending more and more on their homes and the contents of those homes should drive shorter replacement cycles and further growth in the appliance industry for some time to come.”