Annual Report 2013

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Products and services

The Electrolux process for consumer-driven product development enables a high speed of ­product development and, in parallel, development of products that will be preferred by more consumers. The collaboration between marketing, R&D and design is a key factor.

Goals

- 30% - 20% + 50%
Reduce the time from innovation to launch
by 30%
Reduce the number of product varieties by 20% as a result of modularization Increase investment in product development
by 50%

All product development in the Group is based on in-depth consumer insight. By performing extensive number of interviews and home visits, Electrolux gains knowledge of consumer behavior in the use of various household appliances and the needs that exist. Based on this information, Electrolux can develop solutions that facilitate the everyday lives of consumers. The Group has also increased its culinary expertise to enable it to create more innovative products for food preparation, food preservation and cleaning. Key to the above is the transfer of know-how from the Group’s professional business to consumer products.

Accelerated product development

The process for consumer-driven product development is used for all new products. Close collaboration between the Group’s marketing, R&D and design functions – the Innovation Triangle – increases consumer insight and market knowledge thereby enabling products to reach the market at a faster pace and ensuring that these products are preferred by more consumers.

Various teams within these functions currently exist in each sector of the Group. The process also facilitates sales via new channels, in new markets and in ventures into entirely new product categories. In order for a new product to be launched, at least 70% of the consumers in a test group must have expressed a preference for it above similar alternatives in the market. If this requirement is not met, the product is sent back to the product development team to be reworked.

More research and development

Over a number of years, Electrolux has gradually increased its investment into R&D. As a consequence, product quality has been further improved, which, in turn, has led to reduced costs for warranty spend. Since 2009, warranty costs have decreased, essentially, in an amount that corresponds to the increase in R&D costs, and the sum of these two cost items for the entire period was about 5% of net sales. The aim is for this trend to continue. The increased investment in new technology is focused on the development of intuitive and user-friendly control panels as well as solutions with less environmental impact.

Strong global positions

Electrolux aims to develop winning products in various categories and regions by focusing on innovation and cost efficiency. The strongest global position currently held is for cookers, enabling, for example, the Electrolux cooking solutions for the world’s best chefs and restaurants to be leveraged when developing consumer appliances.

Electrolux also commands a strong global position in vacuum cleaners and is growing rapidly in the area of small domestic appliances by utilizing global economies of scale. Other strong positions held by the Group include the market for front-load washing machines and dishwashers, which are segments with low penetration in most markets. Among adjacent product categories, Electrolux identifies major global potential for air-conditioning equipment and water heaters.

Products for various segments and regions

The share of product development that encompasses global projects rose to 35% in 2013 compared with 10% in 2010. The objective is to further increase the level of differentiation for new launches in the premium segment and concurrently be able to profitably compete in the mass-market segments. Brand differentiation, rapid product development and efficient production are required to reach consumers with products in the mass-market segments. The Group’s global manufacturing platforms facilitate the spread of successful launches from one market to another, with adaptations to local preferences. Electrolux also has a number of development centers for household appliances throughout the world, focusing on such rapidly growing areas as induction and steam.

Investments in service and aftermarket

Electrolux offers efficient service, rapid upgrades and a strong range of accessories and consumables. The Group strives to offer the market’s best service. Well-functioning service activities have the dual advantage of increasing customer satisfaction and providing opportunities for profitable aftermarket sales. The long-term ambition is that the share of a product’s sales value that comprises service, consumables and sales of accessories is to increase to a minimum of 10%.

Same product architecture, differentiated design

The Group’s global modularization platforms facilitate the spread of ­successful launches from one market to another, with adaptations to local preferences. The share of product development that encompasses global projects rose to 35% in 2013 compared with 10% in 2010.

Innovation Triangle

1. Develop best-in-class products

2. 70% Preference Rule

3. Reduce Time to Market by 30%

4. Continue investing in premium brands

Close cooperation between R&D, Design and Marketing will increase the pace of launching relevant products in the market.
R&D costs compared with warranty costs
Increased investment in R&D has led to reduced warranty spend. StopSearchHere

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