Philips Lighting Company: The Earth Light

14 Pages Posted: 16 Jun 2009

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

Sheryl Gatto

University of Virginia - Darden School of Business

Tamara Harvey

University of Virginia - Darden School of Business

Abstract

This case describes the introduction and marketing of an extended-life fluorescent bulb to replace incandescent bulbs. With the new bulb selling at retail for $15 to $20, successful marketing of the new bulb will require a major change in buying habits of both consumers and the trade.

Excerpt

UVA-M-0401

Rev. Aug. 26, 2010

PHILIPS LIGHTING COMPANY: THE EARTH LIGHT

In early 1992, Kim Koehler, marketing manager for consumer lighting products at North American Philips, was discussing with Earth Light brand manager Carol O'Neill the problems of consumer education and product positioning for the Earth Light, a “premium-priced, energy-efficient, long-life, compact, fluorescent light bulb.” There was considerable consumer resistance to Earth Light's $ 20 purchase price (compared with less than $ 0.50 for a standard white incandescent bulb). In product positioning, the dilemma was which feature to emphasize: protecting the environment or cost savings to the user. Moreover, although Philips had created the category of compact fluorescents, the name Philips was new in the North American market and had only limited distribution coverage compared with market leader General Electric (GE). Along with these hurdles, Philips needed more manufacturing capacity to meet demand.

Company Background

Philips Lighting Company, located in Somerset, New Jersey, was a division of North American Philips, a wholly owned subsidiary of the Dutch company, N.V. Philips Gloeilampenfabrieken. N.V. Philips was founded after Gerard Philips invented the carbon-filament incandescent lamp in 1890 (an improvement over the tungsten-filament product developed by Thomas Edison in 1879). Light bulbs were one of Philips's first products, and Philips was the world leader in the incandescent light bulb market. Philips Lighting had both consumer and industrial/commercial (IC) divisions. The latter served architects, builders, hotels, stores, hospitals, institutions, offices, and utilities. The IC division was about twice as large as the consumer/retail division, primarily because the company inherited a strong distribution network when it acquired the Westinghouse Lamp Division in 1983. Philips phased out the Westinghouse brand and replaced it with its own Philips brand on all packaging and promotional support.

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Keywords: distribution channels, distribution strategy, market position

Suggested Citation

Farris, Paul and Gatto, Sheryl and Harvey, Tamara, Philips Lighting Company: The Earth Light. Darden Case No. UVA-M-0401. Available at SSRN: https://ssrn.com/abstract=1420530

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Sheryl Gatto

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Tamara Harvey

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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