Here’s how Philips is making data and AI integral to its marketing plan
We catch up with Nicholas Lee, vice-president and market leader for APAC at Philips Domestic Appliances, as part of The Drum’s Data Deep Dive, to find out how the global giant is recalibrating its go-to-market strategy by deploying data and artificial intelligence (AI) to cater to the post-pandemic consumer.
Of the many things that have changed in the post-pandemic world, one of the major shifts has been to online shopping. It is one shift that is going to define the future of the consumer purchase journey – from the way they will research and discover the products to the way they will close the last-mile transaction. This shift has pushed companies such as Philips to look at overhauling and recalibrating their systems and processes to make them relevant to the new consumer and their ways of shopping.
Philips has brought in a renewed focus to its digital platforms, deploying automation and data capabilities to unlock the power of marketing, especially for its domestic appliances (DA) division. The DA division has products such as air fryers, coffee makers, air purifiers and vacuum cleaners that are allowing consumers to take greater ownership of their health and wellness.
Interestingly, Philips recently announced the completion of the sale of its DA business to Hillhouse Investment, a global investment firm, as a part of its divestment plan. As per the official communication, Philips Domestic Appliances became a standalone business entity on September 1 2021 and the product categories that would be supported under the new Philips Domestic Appliances business include kitchen appliances, coffee appliances, floor care, garment care and air purifiers. The product categories that would continue to remain with the parent company Royal Philips as part of its personal health business would include oral healthcare, mother and childcare, male grooming and beauty.
Here, The Drum speaks to Nicholas Lee, vice-president and market leader for APAC at Philips Domestic Appliances, about the evolution of Philips’s e-commerce strategy, especially over the past year, and how the company is deploying data and AI to make its marketing more intuitive and personalized.
While the shift to online shopping has become a given in the post-Covid world, specifically what kind of changes has it meant for you as a marketer?
There has been a tremendous shift in consumers’ behavior, especially during and post-pandemic. People are spending more time at home and demanding their homes to be safe, comfortable and connected spaces. Nearly half of South East Asian consumers have moved to shopping online, and 80% of new online shoppers are saying they will continue to do so post-pandemic.
E-commerce is no longer just ‘adding to cart’ but much more. Digital platforms such as LazMall and Shopee are reshaping the way people search for, evaluate and eventually buy products. This process also mirrors how consumers are now looking after their health, where they increasingly turn to online platforms to gather information and tools that help them lead healthier lives.
Marketers have to be innovative, and e-commerce has allowed companies to be just beyond the products they sell. It gives them the data and platform to first understand their consumers and then deliver the right product and solutions to them.
How does this impact the on-ground marketing plan to make it more responsive?
From a marketing standpoint, rewards through a wide selection of gifts, promotions and discounts, as well as interactions with customers in a variety of ways, are helping make the consumer purchase journey better.
The rating and reviews function is another tool that impacts the customer journey. While it is considered a non-sales metric, it helps a brand to determine its success on an e-commerce platform. As customers trust reviews more than pure-play advertising, the ability to listen to what the customers are saying in the product reviews is important. It also helps in knowing how to improve on the offerings.
In addition, some other changes that are assisting in improving the brand delivery and performance include:
Helping evaluate the real-time performance of products sales and finetune the e-commerce strategy to make more effective decisions.
Checking the operational excellence of the stores with the chat response rate to monitor consumer interactions, responsiveness, service and order fulfilments.
How has the marketing playbook evolved for the business on the back of data and AI?
The pivot of personal appliances marketing is the customer journey and customer insights, where AI and automation are playing an increasingly important role. As AI can aggregate consumer behavior and provide invaluable insights, more personalized solutions can be designed to give consumers data-driven insights, helping them to make the right choices to protect their health across the spectrum – from healthy eating to healthy living.
The marketing strategies have been customized to help use machine learning to improve customer experiences and provide individualized solutions in real-time.
The future of AI extends seamlessly into personal health solutions – providing intelligent advice and coaching to people based on their individual goals and allowing them to stay healthy and prevent diseases. Going forward, AI will be the catalyst that shifts the needle from automation to personalization to anticipation, and eventually predictive solutions for all.
How has Philips’s e-commerce strategy evolved?
The role of AI and automation will have a large impact on the future of marketing since the use of data will enable greater precision for brands to predict specific programs targeted at a specific group of audiences. These technologies will guide the marketing stack from broad audiences to targeted segments, addressing evolving consumer demands and needs for greater personalization, omnichannel integration and responsiveness, and dynamic engagement between brands and consumers.
Deploying AI in marketing is still a work in progress for many categories. What are the key challenges in this journey?
It is now more important than ever to provide consumers with tailored solutions by providing them with what they want, and we need to empower them to make suitable purchasing decisions.
While AI and technology play an important role in understanding consumer behavior, the marketers’ challenge is in making sense of the data provided and effectively utilizing the solutions/tools on these digital platforms to track, measure and optimize day-to-day sales to build a more direct and long-term relationship with consumers.
Another challenge is whether AI will be fast enough to recognize the changes or shifts in customer behavior to give a meaningful and timely insight, since it needs time to learn and recognize a pattern.
What does this digital shift mean to a marketer in the APAC region?
The APAC region has the fastest-growing and biggest share of retail for e-commerce. By 2025, the e-commerce channel is projected to account for more than 60% of total retail in APAC. In almost all the APAC countries where the company’s division has a presence, a higher online shopping penetration has been observed than the global average and it is growing rapidly.
The hectic lifestyles and a heightened awareness of the importance of overall wellbeing are resulting in consumers looking for smarter solutions to simplify their lives and help them maintain healthy lifestyles. The APAC region is witnessing a huge appetite for innovations that deliver on personalized solutions backed by technological innovations.
Can you share some specific instances of the differentiated narratives deployed in the APAC markets?
While there will be nuances in the different countries, the common link among them is that consumers are looking for innovative products that satisfy their wants and needs. Here are two examples of work done in Indonesia and Australia.
Philips Airfryer to Indonesian households: to market Philips Airfryer to Indonesian households, and to increase product awareness in Indonesia, home to a plethora of cuisines and millions who cook their own food daily, TikTok provided an ideal solution for Philips Domestic Appliances to spotlight its air fryer. This was the brand’s first-ever hashtag challenge and branded content campaign in South East Asia, and a good example of how a creative challenge – coupled with a robust e-commerce strategy – can drive engagement and conversion. Users were encouraged to submit videos of themselves dancing along to cheery music under the hashtag #AirfryerMaster.
Philips LatteGo to Australian consumers: to launch Philips LatteGo in the Australian market, the company decided to deploy humor. Given the launch took place during the pandemic, it was decided to take on a lighter approach that displayed entertainment value while being sensitive to the times. Thus the product was launched via a social strategy with one hero macro influencer to generate social buzz among a highly-engaged audience. Product key messages were integrated into a humorous short-form video to get people talking about the new product launch.