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hirlpool Corporation, headquartered in Ben t on Harbor

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company
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M1ch1gan, Is the world's number 1 appliance company. Th~
Expansion Abroad: Challenges
As the decade of the 1990s drew to a close, however, Whrtwam ·s
. sells more. than $18 billion worth of "white goods" eac h ambitious plans for expanding beyond Europe ,nto Jaoa r and the
year; t hIs cat~gory inc1udes refrigerators, stoves, washing machines,
developing nations in Asia and Latin America hadn't ach;eved tne de-
dryers, and microwave ovens. Whirlpool's success has been achieved
sired results. Noting that Wh irlpool stock underperformed 7 t,e b-J
in part, by offering a brand portfolio of products in different pric~
market of the 1990s, analysts began questioning whether WrlrrNa- s
ranges. These include the premium KitchenAid and Maytag brands as global vision was on target. As one analyst put ,1, · The strateg} ,....a5
well as the medium-priced Amana and Whirlpool brands. been a failure. Whirlpool went big into global maricets ana tr1\-estv"'S
Not surprisingly, the global economic crisis translated into lower have paid for it. Others faulted the company on executlO~ A'"'Otner
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sales in North America and Europe, where Whirlpool generates nearly analyst said, 1 respect Wh irlpool's strategy. They JUSl nirssed o . . . :"1t?
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75 p_ ercent of its revenues. By contrast, sales in Latin America and blocking and tackling . 11

Asia are showing double-digit gains. Whirlpool is not new to for- The challenge Whirl pool faces is rooted part al'} ..., the- ~.,,.1.. ~ ... r~
eign markets; for example, the company has had a presence in Latin of the appliance industry. In Europe, for examp e Ih€ orese"'C2 o"
~merica since 1957. Today, it is the market share leader there, offer- more than 200 brands and 170 factones makes t1-ie a;>o lCn~e r-
ing global brands (Whirlpool, KitchenAid, and Maytag) as well as local dustry highly fragmented and highly compet1t1ve there ~ ect---o ..,). a
(Brastemp) and regional ones (Consul). Swedish company, ranks number 1. Whirlpool's -..·anoL-S ora'lds o"e
At the beginning of 1993, David Whitwam, then chairman and available in 30 countries; however, European aop ,an{:e sa es ... ave
CEO of Whirlpool Corporation, told an interviewer, · "Five years ago been flat for years, w ith sales volumes growing at a F11ere • ,Y .:: oe,..-
cent; industry overcapacity is a ma1or LSSue Although aoc1~-sts ex~t
we were essentially a domestic company. Today abo~t 40 percent of
to see a surge in demand from Central and Eastern Eurooe \\ :., ri a
?u: revenues are overseas, and by the latter part of this decade, a ma-
few years, there will also be an influx of products fron, 10\-..-cost orL"\...
Jonty will be." The former CEO's comments came 3 years after he h_ad
I · . b /'I2I· With ducers in those regions.
Paced his first bet that the appliance industry was glo a ~9 - From its headquarters in Comeno, ltah vvh,npoo1 Europe op-
the acquisition of Philips Electronics' European appliance business for erates manufacturing facilities tn seven countnes In the 1990s
$l billion, Whirlpool vaulted into the number 3 position in Europe. Whirlpool executives began the process of streamhrnng the European
Wh · · E e alone
itwam pledged another $2 billion investment in urop ·
 a
organization to cut costs and increase marg·1ns Wh h .
d . • en e was pres1-
ent of Whirlpool Europe BV, Hank Bowman cut fixed costs by closing didn't give the go-ahead to the Duet concept. In the end, manage.
many of the company's 30 warehouses • Today , the company even ment gave Jones the green light and the Duet was launched . Despite
outsources management of some distribution functions · in 2010 for the fact that it is Whirlpool's most expensive washer-dryer pair, the
example, France's Norbert Dentressangle took over m;nageme~t of Duet has a 20 percent market share in the premium front-loading
washer category.
Whirlpool's national distribution center at Aylesford in Kent, England .

Market Research at Whirlpool Research in Emerging Markets

Market research also drives the search for new products that address
Bowman was confident _that a global market segmentation approach the specific needs of developing markets. In Brazil, for example,
was the key to suc~ess_1n Europe. Whirlpool relies heavily on market Whirlpool's market-entry strategy included acquiring . two local
research to m~in~a1n its leadership in the United States; listening appliance brands, Brastemp and Consul. However, with a basic
to consumers 1s important 1n Europe and Latin America as well washer priced at $300, even the low end of Whirlpool 's product
"Research tells us that the trends, preferences and biases of consum~ lines proved to be too expensive for many Brazilians . Economic data
ers, countfJ'. by country, are reducing as opposed to increasing," indicated that Brazil's 30 million low-income households, many with
Bowman said . Studies indicate that European homemakers fall into monthly incomes of about $220, account for about one-third of
distinct "Eur~-segments"-traditionalists and aspirers, for example- national consumption . Moreover, studies showed that these house-
allowing Whirlpool to duplicate the three-tiered approach to brands holds ranked an automatic washer second only to a cell phone as
that has worked so well in the United States. The Bauknecht brand an aspirational purchase . Whirlpool's researchers convened focus
is positioned at the high end of the market, with Whirlpool in the groups and made visits to representative low-income households.
'.11iddle and lgnis at the lower end . For example, appliance shoppers Marcele Rodrigues is director of laundry technology at Multibras SA
in Germany visiting a department store such as Saturn can choose a Eletrodomesticos, Whirlpool's Brazilian division. "It wasn 't a matter
Bauknecht ECO 9.0 priced at €499 or a Whirlpool for €369 . of stripping down an existing model," he noted . "We had to inno-
Research has also indicated that consumers in different countries vate for the masses."
prefer different types of features . Thus, Whirlpool has begun empha- Whirlpool's response was to develop what it proudly calls the
sizing product platforms as a means to produce localized versions of world's least expensive automatic washer, to be sold under the
ovens, refrigerators, and other appliance lines more economically . Consul brand . The company has a strong team of engineers and
A platform is essentially a technological core underneath the metal industrial designers in Brazil, as well as some of its most technologi-
casing of an appliance. The platform-for example, the compressor cally advanced factories. Despite the fact that Brazil's economy was in
and sealant system in a refrigerator-can be the same throughout turmoil, Whirlpool invested $30 million to develop the new washer,
the world . Country- or region-specific attributes and functionality can the ldeale, to meet the needs of a large class of consu mers who still
be added late in the production cycle. The goal was to cut 1O per- wash clothes by hand . One cost-saving design breakthrough was a
cent from Whirlpool's $200 million annual production development patentable technology that allows the machine to switch from the
budget and achieve a 30 percent productivity increase among the wash cycle to the spin cycle without shifting gears. However, the de-
company's 2,000 member product-development staff. The ultimate sign involves some performance compromises: Compared with more
goal for the platform project team was to reduce the total number expensive models, the spin cycle takes longer and clothes come out
of platforms in the company from 135 to 65. Specific goals include damper. Nevertheless, research indicated that these were not cntica,
reducing the number of dishwasher platforms from 6 to 3 and refrig- issues for most consumers.
erator platforms from 48 to 25. Focus group research also indicated that consu mers would find 2
Whirlpool also conducts usability studies that provide insight into smaller-capacity washer acceptable because low-income fam ilies do
the ways that consumers interact with its products. In one study, for laundry more of~en . Because Brazilian housewives like to wash fl oors
example, engineers and designers stood behind a two-way mirror underneath furniture, the ldeale sits high on four legs as opposed to
and watched as a volunteer put groceries away in a Kenmore Elite resting on the floor as most conventional units do. Perhaps the mos:
refrigerator. The Whirlpool team recorded a variety of data, such as significant thing that the ldeale design team learned from its researc~,
01
the amount of time required for the volunteer to finish the task and was that form matters, too. As Emerson do Va lle, vice president
the number of features she used . The results from these types of stud- Multibras, explained, "We realized the washer shou ld be aesthetically
ies are used to help designers create appliances with a distinctive look pleasing; it's a status symbol for these people." The team selected a
th
and feel. Chuck Jones, Whirlpool's design guru, has made sure that rounded design with a yellow start button and blue lettering _on e
each of Whirlpool's brands has its own "visual design language ." control panel. Because white is widely associated with clean liness ,n
Jones has also been known to trust his gut rather than the data. Brazil, the ldeale is available only in white.
For example, Jones wanted to sell a new front-loading, German-made Although the ldeale incorporates many design features th at ap-
washer and matching "Made in the USA" dryer in tandem . Priced at peal to consumers in Brazil, adaptations of the ldeale platform da re
· ch· d India In In ,a,
$2,000, the combo was known as the Duet. However, company research also being manufactured and marketed in ma an . · f deli-
bl d h ·te·
1 the setting or
indicated that in 80 percent of purchase occasions, consumers buy either the color options include green, ue, an w ,. ted on
a washer or a dryer, but not both together. Complicating matters further, cate fabrics is labeled "sari." Also, the 1nd ian units are moun
one-third of the participants in a focus group did not like the design . casters so they can be moved easily.
Recalling that moment, Jones says, "In the past, that would have been . . uance Market
the kiss of death. This was one of those watershed moments that tested Penetratmg the Chmese App terior would be undesirable
· h whitews
I China an appliance wit a_
ex ·1 F th
dirt eas1 y. or at reason,
the company's fiber. You can't expect consumers to articulate that leap to
the next breakthrough idea. It's our job to lead them there." n ' belief that white .sh~ bfue and gray. In addition, th e
becaus~ of the . vailable in _11gh e/ed " grease removal" for the
Jones stood his ground during a review of the Duet program with the Chinese ldeale is a . china is /ab
senior-level executives. He even threatened to quit if the company heavy-duty wash cycle in
 simple reason that many Chinese use bicycles for daily transportation. By 2009, Whirlpool was still a minor player in China; in terms of
Although the majority of Chinese washing machines have separate market share, it was a distant third behind Haier and M idea . Fettig dosed
tubs for the wash and spin cycles, sales of single-drum washers the company's washing machine plant in Shanghai and transferred pro-
such as the ldeale and a new front-loading model, the Sunrise, are duction to a joint venture with Hisense-Kelon Electrical Holdings. In 201 3,
growing. with an eye to further strengthening Whirlpool's presence, Fettig bought
The company first entered the market in the mid-1990s via joint a 51 percent stake in Hefei Rongshida Sanyo Electric Company. Hefei
ventures with local partners. Whirlpool called its strategy "T-4": of- Sanyo's product strategy is well aligned w ith Whirlpool: TI-.e company
fering refrigerators, washing machines, microwave ovens, and air offers the Rongshida and Royal Star brands at the low end, Sanyo rs a
conditioners, the four most-sought home appliances. Several of the mid-market brand, and Diqua is a premium line. In addition, the Chinese
ventures quickly went sour; 9S one executive recalls, "We quickly company has a strong national distribution network.
jumped into joint ventures without insights into Chinese consumers.
We brought in North American know-how, but we also needed to Discussion Questions
distill local know-how." For one thing, Whirlpool underestimated the 6-10. Describe Whirlpool's global marketing strat egy. Does
speed at which Haier and other local competitors were evolving into Whirlpool use an extension product strat egy or an adapta-
world-class manufacturers. Company executives note that since China tion product strategy?
joined the World Trade Organization in 2001, it has been easier for 6-11. What is the primary reason people buy and own major ap-
Western companies to do business there. pliances such as a washing machine? Is there a secondary
reason as well?
Whirlpool Looks to the Future in Asia and Europe 6-12. What are the key lessons to be learned from Whirlpool's ex-
After a decade of losses, Whirlpool China finally posted a profit in perience in emerging markets?
2006. That same year, Jeff M. Fettig succeeded David Whitwam as
Sources: James R. Hagerty, "Whirlpool Expands tts Presence 1n Eurooe wr.ri tnoes;:
Whirlpool's CEO and chairman. If emerging markets are to be driv- Purchase," The Wall Street Journal (July 11, 201 4), p. B1; James R Hagerty ·wasri
ers of global growth under Fettig's leadership, Whirlpool will have Rinse, and Rebrand," The Wall Street Journal (Septem ber 20. 201 31 o 5 • Boo
to build brand recognition in countries such as Brazil, India, and Tita, "Whirlpool Expands in Asia ," The Wall Street Journal (August i l1 , 2G' 3
p. B2; Anjali Athavely, "High-Tech Looks Put New Soin on Laundry • Th€ Via !.' Street
China. Also, consumers in emerging markets must be persuaded to
Journal (November 2, 201 O); Calum Macleod , UWh1rlpool Spms Ch•na C'"ia'ie'""\QE' -,~:::,
move beyond washing machines to purchase some of the company's Turnaround," USA Today(April 5, 2007), pp . 1B, 2B ; Chuck Satter. ·VJh,r',ood .:mds !ts
other appliances. That trend is already gaining traction: Middle-class Cool," Fast Company (June 1, 2005); M iriam Jordan and Jonathan K..a---o • \.-\al..--+unes
Chinese consumers are splurging on high-end appliances such as for the Masses," The Wall Street Journal (December 9, 2003, oo Bi 82 . K°.atne'"Y'"'
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a side-by-side Whirlpool refrigerator that costs the equivalent of Kranhold, "Whirlpool Conjures Up Appliance Divas, The Wall Srree-r Journal ~ r
27, 2000), p. B1; Peter Marsh and Nikki Tait. · Whirlpool 's ~tfOOT' for Gro-.vtr-: . •
$2,500. Many of the-units find their way into living rooms. As Michael Financial Times (March 26, 1998), p. 8; Peter M arsh and Nikki Tan.. ·°"V1.d oc:oi Stx~
Todman, president of Whirlpool International, noted, "Appliances can to Its Global Guns," Financial Times (February 2, 1998), p 4 ; Greg StE11"1'"'"lt?t:: a,,d Can
be furniture, too. It's a source of pride to own one: 'Gee, look what I Quintanilla, "Tough Target: Wh irlpool Expected Easy Going in Eurooe. and t: Got a 5-+g
can own. I'm doing well."' Shock," The Wall Street Journal (April 10, 1998). pp. A 1, A6