International

Marketing Implementing global

Review
13,3
marketing strategy
An interview with Whirlpool Corporation
56
Ilkka A. Ronkainen
School of Business, Georgetown University, Washington DC, USA, and
Ivan Menezes
Whirlpool Corporation

To gauge the challenges of global marketing implementation in practice, guest

editor Ilkka A. Ronkainen (IMR) talked to Ivan Menezes, vice president, group
marketing, Whirlpool Europe.

IMR:The vision at Whirlpool is to integrate geographical

International Marketing Review,
Vol. 13 No. 3, 1996, pp. 56-63.
© MCB University Press, 0265-1335
businesses wherever possible and leverage capabilities in all
operations. How has this worked in European marketing?
It has worked on two levels as far as Whirlpool is concerned. One is the global
integration and the impact on European marketing, and the second is within
Europe, especially how we manage and how we drive our pan-European
marketing.
In Europe, as you look at our position in the market and our strategy, we
have three key pillars that form the foundation of our strategy in terms of
competitive advantage. One is the building of a pan-European multi-brand
portfolio. We have three core brands across Europe that are positioned on a pan-
regional basis. The second is what we call pan-European operating scale, which
is the way we manage our business in Europe. And the third is the global
leverage scale we bring to the European marketplace. Those are the three key
elements that make us different from our competitors and really the areas in
which we believe we can create competitive advantage in this marketplace. Our
marketing activities in Europe focus on positioning these three brands on a
pan-European basis, targeted at distinct consumers that cut across borders. We
have the Bauknecht brand which is a German high-end brand, positioned at
what may be classified as the status and securities segment. We have Whirlpool
which is the mass-market brand in the middle, targeted at what we call a style
and function segment, and then Ignis which is a value brand.
Our products, communication, pricing and competitive moves are based on
this pan-European positioning for our brand portfolio.
In the appliance business, distribution is the crucial element of the marketing
mix, especially how you manage distribution and build your partnerships with
the trade. The influence of the sales person in the store at the point of sale is key Implementing
because this is a low-incidence purchase and low-involvement product category. global marketing
Consumers coming back into the market do need help and the role of the strategy
salesperson and the dealer is very important. As we deploy this multi-brand
strategy in every market in Europe, we have to link it very much to the
distribution realities, the types of retail formats and distribution places across
Europe and tailor the mix eventually to the realities of the individual market or 57
country. This particularly relates to the elements of below-the-line of
promotional spending, point-of-sale marketing and the channel selection and
channel management side of the marketing mix.

IMR: What does it take to be a successful global marketer in a

national market; i.e. how do you keep roots in local markets while
pursuing global strategies?
The pure consumer marketing side in our business can be managed very well
and effectively across borders. In the last five years we have switched from the
Philips brand to the Whirlpool brand, through a brand-transfer process where
we dual-branded for a period Phillips-Whirlpool, eventually dropped the Philips
name, and now have a single brand, Whirlpool. The whole marketing effort was
very consistent across Europe. In fact, we were the first in this business and in
a lot of businesses in Europe to move to pan-European advertising, where we
had a common campaign developed across Europe. The basic marketing mix
targeted at the consumer was, again, very similar across borders.
However, executing through the trade gets to be very local and the whole
deployment of the sales and marketing mix, particularly pricing, promotion and
point-of-sale elements have to be tailored by the channel needs in a country.

IMR: Would you agree with the statement that “there is no national
(brand) loyalty that x amount of money will not take care of”?
As we look at our market research and segmentation of the market, there is a
third of the market where that is true, because international and national
brands still play an important role. In a general sense, a third of consumers are
fairly strongly brand inclined to the point of being brand loyal. There is another
third which have two or three or four brands that they would choose from in
their consideration set. Then there is a third of the market which really is more
value-oriented and is making a more rational functionality-for-value type of
selection. And it’s really in that segment where that brand loyalty is weak and
for the right value equation of price and benefit, you could swing that consumer.

IMR: The CEO of Whirlpool was quoted stating that “success will
be for those who innovate with new products as well as with new
International features on traditional products”. What is the role of innovation in
Marketing achieving a regional or global competitive advantage?
Review Our business may not be the most exciting of categories in terms of product
13,3 innovation; yet, if you look at the impact it has on consumers’ lives and the value
consumers place on the kinds of products we sell, it’s enormous.
58 The average consumer spends 20 hours a week in activities associated with
washing, cleaning, cooking; in other words, activities in which appliances play
a major role; and that is a huge chunk of one’s time. In fact, after working and
sleeping, it is the biggest time category. The potential to innovate with the core
processes involved with use of home appliances (e.g., fabric care) is huge.
This industry is only at the beginning, we have not come close to exploiting
the potential for innovation. As a matter of fact, our strategy is very much
based on starting with the consumer and accelerating the pace of innovation in
this business.

IMR: What characterizes an effective global/regional marketing

manager; i.e. the type of person needed to implement pan-regional
or global strategies?
You have to be flexible, the not-invented-here syndrome is not acceptable, you
have to be picking up ideas and best practices from different markets and
different parts of the business and transferring them rapidly. It does require an
entrepreneurial, as opposed to a managerial, structured and disciplined
approach. One of the more interesting parts of being in a global or a European
marketing role is that there is always so much going on. There is not enough
time to go after all the opportunities that are on your plate and you are juggling
lots of balls at the same time. It requires constantly picking and prioritizing the
big opportunities and going at them and making decisions fast.

IMR: Would you happen to have a very short profile of one of your
managers who reports to you, as to background? What kind of
background would he/she have?
The classic background would be experience in at least a couple of markets in
Europe and then moving and managing a brand or product line on a pan-
European or global basis. Ideally, cross-functional experience in terms of
having done something outside of marketing, either leading a mega-project,
having a project management role or working in finance or logistics. As we look
at our role, career development programmes for people entering the company
right now, the ideal profile would take you through something like that,
working across a couple of markets. Different sales, marketing plus other cross-
functional experience is needed.
IMR: How has the “not-invented-here” syndrome manifested itself Implementing
within your European operations? With respect to European- global marketing
American relations within the company? strategy
It manifested itself initially because the business we acquired, Philips, ran its
business on a very decentralized basis. Every factory was run differently, every
market was run differently, every country was run differently. And what we
59
have done over the last five years is to standardize our practices and approaches
across markets and factories and product engineering centres. Getting that
harmonized across Europe was more challenging because the way the French
developed and managed their salesforce was totally different from the way it
happened in Germany, or in the UK or Spain. There was more resistance
initially to change; but we have been through so much change in the last five
years that right now this organization is really very used to embracing change.
The not-invented-here (NIH) syndrome rarely exists anymore in Europe. It was
there initially but not even then that strongly. Across the Europe-US axis there
has been a lot of opportunity to take ideas back and forth which has helped
defuse NIH.

IMR: Can you give a concrete example of how NIH was eliminated?
The classic case in the early years was the brand transfer effort from Philips to
the Whirlpool brand and was launched in terms of advertising approach to
take. Phillips was very decentralized; every country had its own advertising
agencies and did its own advertising developed around individual markets. We
had a great opportunity in creating a new brand positioned consistently across
Europe. Part of that strategy involved having a common pan-European
advertising approach. There was a lot of resistance initially from the markets:
Belgium is different, France is different and Italy is different, and that they need
to keep their local adaptation. We made the decision to take this approach, and
then the question was how to do it.
On the advertising front, which has worked well, we created what we call an
international creative council, which had members of the marketing or
advertising people from the key countries. That council worked directly with
the advertising agency, Publicis. We had the advertising agency do the same
thing in that they tapped into the creative network across markets, so that it
would not all come out of the UK or France. Through the creative council, and
the agency structure, we were able to get all the input and, more importantly,
buy-in from the local markets. As we developed this advertising, we had the key
people and experts involved in the development of it and the approval of it.

IMR: What are the lessons from Europe that can be used in other
areas of your operations; e.g. the Americas or Asia?
In a couple of areas, especially for Asia and some of Latin America, we have
clear activities that are getting transferred. One is establishing the Whirlpool
International brand. In Asia now, for example, we are building our position through
Marketing acquisitions and joint ventures. In India, for example, we have acquired the
Review largest manufacturer called Kelvinator of India. Kelvinator is one of the very
well-established brands and our plan is to move that over to the Whirlpool
13,3 brand in a short period of time, much like we did in Europe with our brand
transfer there. Right from the start we have had people from Europe as part of
60 the team on the ground in India and Singapore working on how to make this
happen; taking all the learning and the process that we put in place here, from
how we tracked the kind of market research we did, the approach to advertising,
the approach to the trade, and transferring that across, obviously adapting it to
the requirements in these markets. As we’re now in Asia stepping up fairly
substantial investment in new products, we have an established process called
C2C (consumer to consumer) where everyone talks the same language and
people can tap into engineers and marketing folks from around the world and
we all know what we are talking about in terms of where we are in the product
development process and what ideas can be shared from one region to the other.

IMR: One of these processes is Quality Express? Where and how

did that originate?
Quality Express originated in North America, and as a logistics concept it is
very transferable around the world. In fact, in Europe we are drawing heavily
on the logistics front in terms of work done in North America and our whole
approach to building regional distribution centres. We have dramatically
rationalized the number of warehouses and we are building tailored service
packages for different channels of distribution. In other words, there is lot of
interchange, a lot of sharing of practice from North America to Europe.

IMR: How has the (marketing) organization changed at Whirlpool

in the last five years to reflect changes in the marketplace?
In Europe, we have clearly moved from a very decentralized market, country-
by-country approach, to marketing to a fully-fledged pan-European line-
marketing organization that is responsible for all our brand development
activities, our advertising, communication and product development. We were
not in that position five years ago; these activities were managed at different
levels of local market, to centrally in Europe. That has been the biggest change
accomplished over the last five years.

IMR: Has this change reached global operations?

In the global arena, we are not that far along. Globally, we are adopting common
processes; in fact one of the five core processes we have identified for the
business in total is the brand management process. I work with my
counterparts in North America, Latin America and Asia. In fact, we spent a fair
amount of time last year defining the brand management process and all the
subprocesses and then working on building common capabilities and how we Implementing
manage each of the subprocesses around the world. We are at an early stage in global marketing
that, but that is clearly where I see us in the next couple of years. strategy
IMR: What is the role of headquarters at Benton Harbor in the
development of pan-European marketing strategies?
Benton Harbor can be characterized as the executive committee of the company,
61
which includes the heads of the regional businesses. Their role is to approve
strategies, to allocate resources across the globe and within the region, across
brands, products and markets. An important task is to make sure we are getting
the maximum out of global leverage, because it has got to get a push from the
top, otherwise, everyone tends to operate in their own little world. And then
finally, it is transferring and identifying the best practices. Since Whirlpool is
dedicated to developing customer-focused brands, there is a whole set of
understanding and approaches, learning through development, which
particularly as we move into new markets, the executive committee draw on
past experience.

IMR: What will be the executive committee’s role in the future?

Will this committee increase its power in terms of decision
making?
We are in a single business and we have a clear vision of how we want to
build our position in this business. As a business, we’re pretty focused
right in terms of where we are and where we want to go around the world.
What the executive committee does is making sure that we are steering the
right course and allocating resources effectively and making sure that we
are building the capabilities and have the right skills and execution
capabilities at least to pull off our strategy. We are really not talking about a
bureaucratic structure; the executive committee task is leading the business
and providing the support and allocating resources in line with agreed
priorities.

IMR: What is the role of the individual country manager at

Whirlpool today? How do you see that role changing with
increasing globalization?
Their role will change as does the nature of a lot of jobs today. You always will
have a role of country manager to be a strong leader, and that is very
important. First of all, there will always be a fair proportion of the employee
base, working in these countries. From a leadership standpoint, it is key that
you have the right individual there that understands the company goals
and objectives, and can motivate and build a team of people on the
ground, which can execute regional strategies. The change people talk about
is the change from the old days when country managers ran countries as
International almost separate fiefdoms and made their own decisions, price promoted, ran
Marketing factories, and did everything on their own. Those days have gone, because the
Review role today is much more of leading and managing the customer and trade
partner-channel relationships. It is important to have an integrator at the
13,3 point of execution, because most things that get decided at the centre or
anywhere else do eventually need to get executed in the market. At the end of
62 the day, what is needed is a strong leader in place, who sees the full picture,
who is first a company person, second a country head, and can in fact lead the
team on the ground, serve as the checkpoint against overload coming from
headquarters or anywhere else, and execute the day-to-day business and, in
particular, manage your key customer relationships. Managing customer
relationships, including trade activity, is a local activity.

IMR: Who will that local brand manager report to? Will he report
both to the country manager and to the regional brand director
Whirlpool has centralized most of its brand marketing activities; they are
executed out of one place in Europe. In a sense, we have pulled a lot of that
resource out from country operations. So what is left at the country level is the
whole salesforce, sales management structure and trade marketing activities
focused around promotion and merchandising and the day-to-day pricing
activities with trade partners. We have very limited consumer marketing left at
the country level in Europe, because we handle that at an area or pan-European
level.

IMR: How does Whirlpool manage its regional/global accounts?

We are at the leading edge of managing what we call transnational accounts.
But, it is still a relatively small part of the business. Our sales organization is
structured in a way that both at the area and at the central level there are people
specifically to serve and manage these accounts. However, there is a multilevel
customer relationship that needs to get built here, in that the day-to-day
business typically continues at the national level and really what you are setting
at the regional level is building the basic framework for the partnership.
Typically, the daily basic selling and servicing of the account happens in the
national market. Among such buying groups are Expert, EDA, Euronics. Retail
groups are represented by hypermarkets such as Carrefour and the Metromedia
Group.

IMR: Has the emergence of central Europe allowed you to leverage

your present strategies to that region without much change?
A fair amount; especially the basic strategic elements, products, brands and our
approach transfer very well. The key to success there is in building the right
team on the ground. Those markets are evolving and changing very fast
and competitors are moving into markets such as Hungary, Poland and the
Czech and Slovak Republics. We entered those markets a few years ago and Implementing
have grown very strongly by leveraging our basic pan-European platform of global marketing
products and brands, but then executing with a very strong team on the strategy
ground. Success requires building your position with distribution fast and
then supporting it with the right products and brands, and supporting the
brands. So, as an example, we use the same advertising as we do in western
Europe, and we are building with the Whirlpool brand. We have been very 63
successful in building both market share and position and image in those
markets.

IMR: How many players do you see in the global appliance

industry in the next ten years?
Ours is a global industry in the sense that there is competitive advantage to be
gained from global scale. We are at a position right now where the battles are
still begin fought on regional consolidation grounds. North America is mature
now, battles have been fought and they have shaken out three key players. In
Europe, there is still consolidation to happen and you will end up with three or
four key players. In Asia, the field is wide open; we’ve moved in fast and we
have now the number one position among non-Asian players. However, both
India and China, and the rest of Asia, are absolutely up for grabs and it is the
people who move fast who will stake out a strong position. Latin America,
depending on the country, is going through a lot of changes, in that certain
markets are opening up. So there is no question that consolidation is going to
continue on a global basis. In the next few years we are going to see it being
fought region by region, Europe, Asia, Latin America, and clearly we are going
to be left with fewer players who are going to have important positions globally.
Our success hinges on being the global leader in this business, which is why,
in the last five years, this company has gone through a huge transformation,
from being largely a North American appliance company, to having big
positions around the world today, including what we have done in Asia in the
last two-to-three years.