The Provocateur: How a 130-year-old brand became a digital powerhouse

Thought Leadership11 November 2021

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This special edition of The Provocateur is inspired by the digital transformation of a global health tech giant in China. Described by Wavemaker’s China CEO as ‘a very young 130-year old brand’, Philips is innovating in the world’s most digitally advanced ecommerce market. Its evolution in this vanguard region is packed with useful – and thought-provoking – pointers for any brand reinventing itself as a digital retailer.

Wavemaker CEO Jose Campon and Head of Performance Tanya Xing were joined by Philips marketers Emma Liu and Louise Lv, along with Campaign China. Their hour-long conversation was rich and expansive, covering everything from the Attention Economy to national shopping days. This piece aims to pick out the most interesting lessons for marketers, with apologies to our panel for any nuance lost in the Chinese-to-English translation.

A story of unrelenting innovation

Founded in the Netherlands in 1891, today the company employs 800,000 people in over 100 countries, with over half its sales coming from ecommerce channels. It was one of the first foreign brands to enter the Chinese market, founding its China Innovation Hub 20 years ago. In 2020 Boston Consulting Group named Philips the No1 Medtech business in their ‘Top 50 most innovative companies’.

No1. Digital transformation starts with brand building

Digital transformation tests the internal strength of a brand. It requires self-examination and a profound remodelling from the inside out.

As a ‘century brand’, Philips was well known in most Chinese households, strongly linked to the small household appliance category in consumers’ mindset. But this does not directly create connections with young consumers, nor shape digital scenarios.

So we’ve done a lot of self-examination and repositioning. Based on the core strength of our Philips Group, we redefined Philips as a medical and technological company.

In B2C, our core strategy is to connect with consumers through a healthy lifestyle, including oral, respiratory or sleep health. The Philips Health Living Lab is our content platform to support this proposition. This has helped us to get closer to young consumers in a natural way, making us part of their everyday life.

No2. Respect consumer time in the Attention Economy

Media channels and content formats have become more diverse – now they include news feeds, instant messaging, short and long videos, shopping, social networking, knowledge sharing and so on.

At the same time, ecommerce has transformed shopping – we buy in many different ways on many different platforms, based on our interests, community, content, delivery time and more.

As people’s lives become more digital, their attention is becoming more fragmented, and their purchase decisions more impatient. We call this the ‘attention economy’. It’s not about high-traffic destinations; it’s about winning consumers’ time in many different places.

No3. Digitise your entire business model

Digitisation can upgrade the whole customer journey. But only when we plan it into every aspect of the business model, from marketing and ecommerce to consumer insight, product R&D, the supply chain and customer service.

No4. Mine platform partner data for R&D

With a fragmenting retail ecosystem, opening up new channels is a must. Philips sells on big Chinese commerce platforms like Tmall, JD and Suning.com but are also actively exploring new channels like TikTok, RED and Kwai.

Shelf space is just one aspect of these collaborations. Last year Philips worked with Tmall Innovation Centre (consumers spend an average of 7 minutes per day on Tmall, making it China’s biggest ecommerce platform) to develop a much-loved new shaver especially for GenZ, a product customized and developed through big data.

No5. Stay true to your brand for ecommerce success

When aspiring ecommerce brands are all doing the same thing, it’s crucial to find your brand’s core differentiation point. To distinguish Philips from other small household appliances brands like Xiaomi (a Chinese consumer electronics company) and Dyson, we focus on the field of a healthy life. This is a starting point for us to make all kinds of differentiation and support the healthy life needs of Chinese consumers.

No6. Online shopping just got personal!

Ecommerce in China used to mean Walmart online, Tmall, JD and Pinduoduo, providing a large variety of goods at low prices, every day, at speed – in short meeting the basic needs of consumers.

But the new ecommerce is much more like a large shopping mall. Consumers go there to meet their emotional needs, like entertainment or self-improvement, and buy whatever they feel like on the way.

Ecommerce has become less functional and more interest-based. Content-oriented platforms like TikTok and RED (a social media and shopping space for women described as ‘China’s answer to Instagram), Bilibili (a video-sharing site) and WeChat all have a different angle on ecommerce.

The new ecommerce landscape is changing from simple selling to an integrated platform, including brand exposure, seeding and converting.

No7. Shopping Days are innovation days

China has a series of national shopping days. Outside the country Singles Day (Called Double 11 in China) on 11 November is the most famous, but there’s also 618 (mid-year shopping day on 18 June started by JD.com), and 818 (Douyin’s shopping festival on 8 August). Philips uses these days to experiment and try new things.

For example, 618 was also Father’s Day. Philips created a Father’s Day Marvel gift box for Chinese dads. The Iron Man box was a particular hit, ‘reflecting a father with tough image but tender heart’.

When asked to sum up the spirit of the session, Louise Lv, Head of Philips Personal Health Digital Hub, chose the word evolution.

“Buddhists say that everything is impermanent, and life is about change, so, let’s actively embrace this change and actively lead this digital transformation.”