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%
-20%
Reduce the number of product varieties by 20% as a result of modularization
+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 culinary expertise has also been increased in the Group to enable it to create more innovative products for food preparation and food preservation. Key to the above efforts is the transfer of know-how and experience from the Group’s professional business to consumer products. Product development focuses on a number of areas aimed at contributing to the culinary dining 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 sector of 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 last few 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. Since 2009, 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 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.
The most significant environmental impact for Electrolux 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 main markets allows comparability of environmentally leading products against the total range. A key challenge is to meet increasing demand for energy and cost-efficient household appliances by transferring innovation rapidly from the premium to the mass-market segment.
Cooking with steam has long been a key method used in the best restaurants, and it is now spreading to private households. Electrolux has a broad and innovative range of steam ovens for use in the home. In 2014, a new app was launched, the AEG Let’s Taste app for Android and iOS, that allows consumers to remotely control the temperature, time and other functions of their ovens. A camera inside the oven sends images of the dish being prepared to a smartphone or tablet device.
Electrolux offers a Green Range of the most efficient products to meet the increasing demand for energy and cost-efficient appliances. In 2014, the Green Range represented 13% of products sold and 25% of gross profit. A key challenge is to rapidly transfer innovation from the premium to the mass-market segment.
13%
Consumer products with the best environmental performance accounted for 13% of total sold units
25%
and 25% of gross profit
Close cooperation between R&D, Design and Marketing is increasing the pace of launching relevant products in the market.
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 is increasing.
Electrolux kitchen products account for almost two-thirds of the Group’s sales and the company holds strong positions in all major categories of kitchen appliances and commands significant global market shares. Electrolux aims at developing market-leading 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. The Group has strengthened the leading position in built-in appliances in recent years through extensive product launches and partnerships with kitchen manufacturers. 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. Electrolux provides restaurants and industrial kitchens with complete solutions for cookers, ovens, refrigerators, freezers and dishwashers. The strongest position is held in Europe, where about half of all Michelin-starred restaurants uses kitchen equipment from Electrolux.
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. The global market for small domestic appliances is significantly larger than the vacuum-cleaner market and shows significantly faster growth.
Among adjacent product categories, Electrolux identifies major global potential for air-conditioning equipment and water heaters.
To build increased consumer awareness of the value of efficient appliances, Electrolux focuses on efficiency and other sustainability benefits in its global marketing. Market surveys in Australia, Brazil, France, China, Germany and the US have shown that two-thirds of consumers ranked environmental impact as one of the three key factors when purchasing household appliances.
The share of product development that encompasses global projects is increasing. 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 2014.
Electrolux also has a number of development centers for household appliances throughout the world, focusing on such rapidly growing areas as induction and steam.
New technology also opens opportunities for new solutions, such as connected kitchen and laundry appliances. During the year, Electrolux joined the AllSeen Alliance, the broadest collaboration project for developing an open source code for connected products.
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%.
The winner of the Electrolux Design Lab 2014 was Future Hunter-Gatherer. The design concept projects a hologram enabling users to play a game. They can gather food by fishing or hunting, or they can collect food from nature. Information on the food collected is then transmitted to the local grocery store, which in turn delivers the products to the user’s door. The winning concept was created by Pan Wang from China. The purpose of Electrolux Design Lab is to stimulate and activate design students globally by inviting them to present breakthrough ideas for future household environments. For more information www.electroluxdesignlab.com.
The Electrolux Awards enable Electrolux to highlight and reward outstanding performances from employees who drive changes and achieve extraordinary results in line with the Group’s strategy and goals. A number of finalists are selected in each category who are given the opportunity to travel to the head office in Stockholm, Sweden, to participate in The Electrolux Awards Day — a gala prize ceremony in which the winners formally receive their awards.
Sustainability Award
Marketing Excellence Award
Design Award
EMS Best Practice Award
Product Award
Invention Award
Consumer Care Award
Leadership Award
Purchasing Award
Sales Award
At a separate event Electrolux presents
an annual Supplier Award