The Electrolux process for consumer-driven product development enables accelerated development of products that are preferred by increasing numbers of consumers. The collaboration between marketing, R&D and design is a key factor.
-30%
Reduce the time from
innovation to launch by 30%
<5%
Best-in-class quality
in service call rate
+50%
Increase investment
in innovation by 50%
All product development in the Group is based on in-depth consumer insight. By performing an 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 also leverages its specialist culinary expertise to create yet more innovative products for food preparation and preservation. Key to the above efforts is the transfer of know-how and experience from the Group's professional business to the development of new consumer products. Innovation efforts focus on a number of areas aimed at contributing to the culinary experience, a simpler and healthier lifestyle and resource-efficient solutions for the home.
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 increases consumer insight and market knowledge, thereby enabling products to reach the market quicker and ensuring that these products are preferred by more consumers.
Each business area in the Group has teams working with these functions. The process also facilitates sales via new channels, establishment in new markets and 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 the product over similar alternatives in the market. If this requirement is not met, the product is sent back to the product development team to be reworked.
Over the past number of years, Electrolux has gradually increased investment in R&D, which has led to further improvement in product quality and has reduced costs for warranty spend. Also in recent years, warranty costs have decreased significantly, essentially by an amount corresponding 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 to continue this trend. The increased investment in new technology is focused on the development of intuitive and user-friendly control panels, solutions with less environmental impact and new technology that allows appliances to be controlled and connected remotely via the internet.
The most significant environmental impact for the Group is energy and water consumption during the usage of products. Accordingly, Electrolux places great importance on increased product efficiency, and sustainability is one of four prioritized areas in product development. At least one-third of the product development spend is environment-related and includes energy and water efficiency. Material efficiency is growing in importance. Electrolux has successfully introduced recycled material in vacuum cleaners and other household appliances.
A Green Range performance indicator for the most efficient products in core markets enables comparability of environmentally leading products against the total range. A key approach to meeting increasing demand for energy and cost-efficient household appliances from a growing middle class in emerging markets is to rapidly transfer the results of innovations from the premium to the mass-market segment.
The AEG Ökokombi consumes 40% less energy compared to other washer dryers that are rated A for energy efficiency.
Close cooperation between R&D, Design and Marketing is increasing the launch pace of relevant products in the market.
20%
Consumer products with the
best environmental performance
accounted for 20% of total units sold
32%
and 32% of gross profit
Electrolux offers a Green Range comprising the most efficient products to meet the increasing demand for energy and cost-efficient appliances. In 2015, the Green Range represented 20% of products sold and 32% of gross profit. A key challenge is to rapidly transfer innovation from the premium to the mass-market segment.
62%
of users want to
control their air
conditioning via
their smartphones.
Global projects account for an increasing share of product development. The objective is to further increase the level of differentiation for new product launches in the premium segment and concurrently be able to profitably compete in the mass-market segment. Brand differentiation, rapid product development and efficient production are required to reach consumers with products in the mass-market segment. The Group’s global modular platforms facilitate the spread of successful launches from one market to another, with adaptations to local preferences. The platforms also support the company’s objective of offering more resource-efficient products to more consumers worldwide. The modularization program was further expanded in 2015.
Electrolux has about 15 development centers for household appliances throughout the world, focusing on different products and technologies. These centers are currently located in Sweden, Italy, Germany, the US, Brazil, Egypt, and China.
Design students across the world present pioneering ideas for tomorrow’s homes at Electrolux Design Lab, which the Group arranges each year to stimulate new ideas. The winner of the 2015 Electrolux Design Lab was Bloom. For more information see page 159 and www.electroluxdesignlab.com.
Electrolux offers efficient service, rapid upgrades and a broad range of accessories and consumables. The Group strives to offer the market’s best service. Well-functioning service activities have the advantage of increasing customer satisfaction and presenting opportunities for profitable aftermarket sales.
The long-term objective is to increase the share of a product’s sales value that comprises service, consumables and sales of accessories to a minimum of 10%.
New technology opens opportunities for new solutions, such as the remote control of kitchen and laundry equipment, and connected appliances, which is a highly significant area for continued innovation efforts at Electrolux. In 2015, Electrolux launched the Frigidaire Cool Connect, the Group’s first connected air conditioner, which can be programmed through an app on a smartphone or tablet. This allows consumers to remotely turn on and off the device, change temperature and create custom schedules for when and how the device should operate. Among other benefits, this allows them to save money on their energy costs by using the air conditioner only when it is really needed. Market surveys have shown that a full 62% of users want to control their air conditioning via their smartphones.
Electrolux also presented the AEG ProCombi Plus, the market’s first steam oven with an in-built camera. This combines two strong consumer trends: interest in preparing delicious, healthy food and in being able to control preparation remotely.
The Group continues to develop and launch connected products in all major product areas, and joined the AllSeen Alliance in 2014, the broadest collaboration project for developing open source code for connected products. Electrolux has also joined Google’s Early Access Program for its Brillo operating system and Weave communications protocol for the Internet of Things, which aime to develope connected appliances for smart homes.
In 2015, Electrolux launched the Frigidaire Cool Connect, the Group’s first connected air conditioner, and the AEG ProCombi Plus, the market’s first steam oven with an in-built camera which was presented at IFA in Berlin, Germany, the world's leading trade show for consumer electronics and home appliances. Connected appliances is a highly significant area for continued innovation and Electrolux is a member of the AllSeen Alliance, the broadest collaboration project for developing open-source code for connected products.
